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Laurie Hobson v. Wells Fargo Bank

February 15, 2012

LAURIE HOBSON, PLAINTIFF,
v.
WELLS FARGO BANK, N.A., A SOUTH DAKOTA CORPORATION; FEDERAL HOME LOAN MORTGAGE CORPORATION, A FEDERALLY CHARTERED CORPORATION, DBA FREDDIE MAC; MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., A DELAWARE CORPORATION; AND DOES 1-10 AS INDIVIDUALS OR ENTITIES WITH AN INTEREST IN THE PROPERTY COMMONLY KNOWN AS: 3945 S. OAK BROOK WAY, BOISE, IDAHO 83706 DEFENDANT.



The opinion of the court was delivered by: B. Lynn Winmill Chief Judge United States District Court

MEMORANDUM DECISION AND ORDER

INTRODUCTION

The Court has before it Defendants Wells Fargo Bank, N.A.'s Motion for Summary Judgment (Dkt. 8). Having reviewed the Motion and Plaintiffs' response, the Court has determined that the Motion is suitable for disposition without oral argument. For the reasons set forth below, the Court will grant Wells Fargo's motion for summary judgment.

BACKGROUND

This case involves the validity of a non-judicial foreclosure sale of a property located in Boise, Idaho. Plaintiff Laurie Hobson claims that Wells Fargo did not have the authority to foreclose on the property, and she brings an action to quiet title on the property.

Hobson obtained a home mortgage loan on March 26, 2007 in favor of Suntrust Mortgage, Inc for $149,000. Howell Aff., Ex. A, Dkt. 8-3. On that same day, Hobson signed a promissory note and a deed of trust against the property, securing the note. The Deed of Trust designated Mortgage Electronic Registration Systems, Inc. ("MERS) as the beneficiary. Id.

In Cervantes v. Countrywide Home Loans, Inc., 656 F.3d 1034 (9th Cir. 2011), the Ninth Circuit described "how MERS works":

MERS is a private electronic database, operated by MERSCORP, Inc., that tracks the transfer of the "beneficial interest" in home loans, as well as any changes in loan servicers. After a borrower takes out a home loan, the original lender may sell all or a portion of its beneficial interest in the loan and change loan servicers. The owner of the beneficial interest is entitled to repayment of the loan.

Id. at 1038-39. The loan servicer collects payments from the borrower, sends the payments to the owner of the beneficial interest (or lender, for simplicity), and handles any administrative aspects of the loan. Id. at 1039. The various companies that participate in the mortgage industry, such as those originating loans, buying or investing in the beneficial interest, or servicing loans, become members of MERS and pay a fee to use the tracking system. Id.

As the process of recording the promissory note and the deed of trust became more cumbersome because of the increased trading of bundled mortgages as mortgage-backed securities, mortgage-industry companies began to rely more and more on MERS in order to avoid the need to record multiple transfers of the deed. Id. MERS serves as the nominal record holder of the deed on behalf of the original lender and any subsequent lender. Id.

When the loan is originated, the deed of trust designates MERS as the "nominee" for the lender and the lender's successors and assigns, and as the deed's "beneficiary," which holds legal title to the security interest. Id. If the lender sells or assigns the beneficial interest in the loan to another MERS member, the change is not recorded in the county records but only in the MERS database. If it is sold to a non-MERS member, it is recorded in county records and no longer tracked in the MERS system.

In this case, MERS executed an Assignment of Deed of Trust on December 14, 2010, assigning the Deed of Trust, together with the Note, to Wells Fargo. Howell Aff. at Ex. B. Wells Fargo then appointed Northwest Trustee Services, Inc. ("Northwest Trustee") as the successor trustee under the Deed of Trust. Id. at Ex. C. The Assignment of Deed of Trust and the Appointment of Successor Trustee were recorded in Ada County records on December 21, 2010. Id. ¶ ¶ 3, 4.

When Wells Fargo obtained the note, it commenced foreclosure proceedings against the Property because Hobson had previously defaulted in July 2010. A notice of default was recorded on December 21, 2010, and, a trustee's sale was completed on May 12, 2011. Id. at Ex. E. At the sale, Wells Fargo submitted a credit bid in the amount of $149,000. Stenman Aff. ¶ 6, Dkt. 8-2. After the trustee's sale, Wells Fargo assigned the bid and interest in the property to the Federal Home Loan Mortgage Corporation ("Freddie Mac"). Id. ¶ 7. On May 16, 2011, a Trustee's Deed conveying the property to Freddie Mac was issued, and on May 17, 2011, the Trustee's Deed was recorded.

Now Hobson claims that MERS did not have the authority to assign the Deed of Trust, and therefore Wells Fargo did not have the authority to conduct a non-judicial foreclosure of the property. Hobson also asserts that Wells Fargo's assignment of the credit bid to Freddie Mac after the credit bid was made and accepted violates Idaho non-judicial foreclosure laws, as well as the statute of frauds because there is no writing evidencing the assignment. In filing this action, Hobson asks the Court to determine "who or what entity has a valid, legal claim to the beneficial ...


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