Federal court dismisses wrongful foreclosure lawsuit against mortgage registry, others

SPOKANE, Wash. (Legal Newsline) -- A federal judge earlier this month ruled in favor of the national mortgage registry known as MERS and its co-defendants in a lawsuit alleging wrongful foreclosure and violations of Washington's Consumer Protection Act.


Judge Thomas Rice of the U.S. District Court for the Eastern District of Washington denied a nine-count complaint filed by plaintiff Angela Ukpoma.



Ukpoma asserted a variety of claims stemming from the defendants' -- U.S. Bank National Association, Mortgage Electronic Registration Systems Inc., Select Portfolio Servicing Inc. and Quality Loan Service Corp. of Washington -- efforts to foreclose on her Kettle Falls, Wash., home.


Her main contention was that the defendants no longer have an enforceable security interest in her home given that her loan was sold into a securitized trust.


She also alleged that the defendants violated various state and federal statutes by attempting to foreclose upon an invalid security interest.


In regards to MERS, Ukpoma cited the Washington Supreme Court's decision in Bain v. Metropolitan Mortgage Group Inc., arguing that a wrongful foreclosure claim exists against the mortgage registry because it cannot act as trust deed "beneficiary" under Washington law. Therefore, its assignment of the deed of trust to the foreclosing bank was void.


Rice, in his May 9 order, found that the defendants are entitled to summary judgment on all of the plaintiff's claims.


In particular, the judge found no merit to Ukpoma's reliance on Bain in support of a wrongful foreclosure count against MERS.


"Contrary to Plaintiff's assertions, the fact that MERS is listed as a beneficiary of the deed of trust is not relevant to the outcome of this case," Rice wrote in his 15-page order.


"U.S. Bank is currently in possession of the original note and deed of trust. The note is indorsed in blank, making it payable to the 'bearer' (that is to say, anyone in physical possession) rather than to a specific payee."


Rice rejected all other counts of the plaintiff's complaint, including allegations of violations of the state's CPA.


To prevail on those claims, a plaintiff "must also demonstrate that he or she was injured as a result of the act or practice," the judge wrote.


Read the judge's full order here.


In a statement Tuesday, MERS said Ukpoma relied -- wrongly and unsuccessfully -- on the Bain decision to stall the non-judicial foreclosure of her property after she defaulted.


"We continue to emphasize that struggling borrowers are better served by working with their mortgage servicers and seeking appropriate financial counseling, than by attempting to use the judicial system to avoid valid foreclosures," MERSCORP Holdings Director of Corporate Communications Jason Lobo said.


MERSCORP and Mortgage Electronic Registration Systems Inc. were formed in 1995 to facilitate the growing mortgage finance market.


The privately-held electronic registry is designed to track servicing rights and ownership of mortgage loans in the United States.


From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

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