Mortgagee Standing: This Time Mers Is Not The Problem (A/K/A Sloppy Securitization Procedures Strike Again)

In re Idicula, 484 B.R. 284 (Bankr. S.D. N.Y. 2013) –

A servicer acting on behalf of U.S. Bank National Association, as trustee on behalf of holders of asset backed pass-through certificates, moved for relief from the automatic stay in order to proceed with a mortgage foreclosure. Although neither the debtor nor the chapter 7 trustee objected, the court denied the motion because it found no evidence that U.S. Bank owned or had a right to enforce the promissory note secured by the property.  Since U.S. Bank did not show that it had standing to pursue the foreclosure, it did not establish that it had a right to relief from the stay.

This case involved a servicer acting on behalf of a trustee and a mortgage that identified the mortgagee as Mortgage Electronic Registration Systems, Inc. (MERS) as nominee for the initial lender – which sometimes seems like an open invitation to litigate standing. However, this did not trouble the Idicula court.  It noted that (1) it is