Saturday, February 4, 2012

FYI: Idaho Sup Ct Rejects Borrower's "Standing" Challenge in Non-Judicial Foreclosure, Rejects Related MERS Challenge

The Idaho Supreme Court recently held that parties initiating nonjudicial foreclosure proceedings are not required to demonstrate that they have standing to do so, rejecting the borrower's related MERS challenge.
A copy of the opinion is available at:
A borrower fell defaulted on his home loan.  The trustee notified the borrower of his default, and initiated nonjudicial foreclosure proceedings.  Prior to those proceedings, MERS executed a Corporation Assignment of Deed of Trust, which named Bank of New York Mellon (the "Bank") the beneficiary. 
The borrower sued, alleging that the trustee, the Bank and MERS all lacked statutory authority to foreclose.  The Bank filed a motion to dismiss for failure to state a claim, which the lower court granted.  The borrower appealed. 
On appeal, the borrower argued that in order to initiate judicial foreclosure proceedings, a party must demonstrate that it has standing to foreclose.  In addition, the borrower alleged that MERS did not have authority to execute the Corporation Assignment of Deed of Trust, and that the subject loan might have been satisfied by an insurance policy. 
The Court began its analysis by noting that the borrower did not take issue with whether Idaho's procedural requirements related to nonjudicial foreclosures were satisfied; rather, the borrower argued that the trustee had not demonstrated that it had standing to make use of those procedures. 
Having thus framed the issue before it, the Court had little difficulty in affirming the decision of the lower court.  Although the Court acknowledged that parties must have standing before invoking the jurisdiction of a court, it noted that the foreclosure proceedings at issue here were nonjudicial.  Therefore, the Court held that the Idaho Code Sec. 45-1505 "sets forth all of the requirements to foreclose on a Deed of Trust." 
Because Sec. 45-1505 does not contain a standing requirement, the Court held that "a trustee may institute nonjudicial foreclosure proceedings on a deed of trust without first proving ownership of the underlying note or demonstrating that the deed of trust beneficiary has requested or authorized the trustee to initiate those proceedings." 
The Court declined to review the remainder of the borrower's claims, finding them to be insufficiently supported by authority and/or argument and therefore waived. 
Accordingly, and because there were no allegations that the requirements of Sec. 45-1505 had not been complied with, the Court affirmed the lower court's order dismissing the borrower's claims. 

Ralph T. Wutscher
McGinnis Tessitore Wutscher LLP
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