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Federal Court in Washington Dismisses Wrongful Foreclosure Suit

A federal judge of the U.S. District Court for the Eastern District of Washington ruled in favor of Mortgage Electronic Registration Systems, Inc. (MERS) and other defendants, ""MERSCORP Holdings, Inc."":http://www.mersinc.org/ announced.


In _Ukpoma v. U.S. Bank_, the judge dismissed a plaintiff's nine-count complaint alleging wrongful foreclosure and violations of the state's Consumer Protection Act (CPA).

The plaintiff's wrongful foreclosure claim was based on the argument that MERS cannot act as a beneficiary of a deed of trust under Washington law and thus, any assignments of the deed of trust by MERS to other entities were void.

The plaintiff cited ""_Bain v. Metropolitan Mortgage Group, Inc._"":http://www.courts.wa.gov/opinions/pdf/862061.opn.pdf when making her argument.


""Contrary to Plaintiff's assertions, securitization of the note through the MERS system did not extinguish the security interest evidenced by the deed of trust,"" wrote Judge Thomas Rice, who further noted U.S. Bank is currently in possession of the original note and deed of trust. ""Thus, by virtue of being in possession of the note, U.S. Bank is the lawful owner. Its right to receive payment on the note does not depend upon any assignment of the note from MERS.""

The judge also dismissed the plaintiff's CPA claim, stating the plaintiff's only alleged injury was the difficulty in determining who actually owned her loan, and the plaintiff failed to explain how the difficulty led to actual injury to her business or property.

""At bottom, Plaintiff simply has not been injured by MERS's involvement with her loan,"" Rice wrote.
All other claims were dismissed as well.

""Unconvinced, Judge Rice explained in detail why a borrower's attempts to halt a non-judicial foreclosure using the Bain decision and claims against MERS will not be successful. 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,"" said Jason Lobo, director of corporate communications for MERSCORP.

About Author: Esther Cho


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