Case: 15-60672 Document: 00513446319 Page: 1 Date Filed: 03/31/2016
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 15-60672 United States Court of Appeals
Summary Calendar Fifth Circuit
FILED
March 31, 2016
W. C. BURTON; BARBARA BURTON, Lyle W. Cayce
Clerk
Plaintiffs - Appellants
v.
NATIONSTAR MORTGAGE, L.L.C.; FEDERAL HOME LOAN MORTGAGE
CORPORATION,
Defendants - Appellees
Appeal from the United States District Court
for the Northern District of Mississippi
USDC No. 3:14-CV-118
Before WIENER, HIGGINSON, and COSTA, Circuit Judges.
PER CURIAM:*
The Burtons appeal the district court’s ruling granting the Defendants’
motion for summary judgment on claims arising out of the alleged wrongful
foreclosure of the Burtons’ home. The Burtons argue that the district court
erred in finding that Mortgage Electronic Registration Systems, Inc. (MERS
* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
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No. 15-60672
Corporation) 1 validly assigned the deed of trust on the home to Ocwen Loan
Servicing, LLC, which in turn assigned the home to Nationstar Mortgage,
LLC—the company that ultimately sold the Burtons’ home via foreclosure sale.
I
The Burtons purchased their home in Olive Branch, Mississippi back in
2007. The original lender was Taylor Bean & Whitaker Mortgage Corporation.
However, the deed of trust named MERS Corporation, not Taylor Bean, as the
beneficiary. Two years later, the original lender, Taylor Bean, ceased
operations after it was suspended by the Federal Housing Administration.
MERS Corporation subsequently assigned the deed of trust to Ocwen. Ocwen
then assigned the deed to Nationstar. Nationstar foreclosed on the Burtons’
home, and the deed was conveyed to the Federal Home Loan Mortgage
Corporation, better known as Freddie Mac.
II
We review a grant of summary judgment de novo. Kipps v. Caillier, 197
F.3d 765, 768 (5th Cir. 1999). Summary judgment is appropriate “if the
movant shows that there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.” FED. R. CIV. P. 56.
It is helpful to first explain the MERS Corporation and how it operates.
As our sister circuit has explained, the recording process in many states is
often cumbersome to the mortgage industry, especially when companies seek
to bundle mortgage-backed securities together for sale. Cervantes v.
Countrywide Home Loans, Inc., 656 F.3d 1034, 1039 (9th Cir. 2011). By
designating MERS Corporation as the beneficiary holding legal title to the
security interest, the lender is free to sell or assign the beneficial interest to
1 MERS is both a corporation and the actual online mortgage registration system. To
avoid confusion, when referring to the company, rather than the system itself, the court will
refer to “MERS Corporation.”
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other MERS members 2 without recording in the local records; all that is
required is that the transfer be recorded in MERS Corporation’s online
registration system because MERS Corporation continues to hold the deed in
the public records—it just does so on the new lender’s behalf. Id. The
simplicity of this system has clear advantages for lenders; they can transfer as
many times as they would like to other MERS members without recording a
single transfer. Id. It is only when the loan is sold to a nonmember or when
foreclosure is necessary that recording is required. In that latter case, which
is the situation here as the result of a loan default, MERS Corporation assigns
its publicly-held nominal interest to the current lender in its system (that is,
the true party in interest), which is recorded according to state law prior to
foreclosure. See id.
The Burtons’ wrongful foreclosure challenge rests on the alleged invalid
transfer of the deed of trust from MERS Corporation to Ocwen. They contend
that if the initial transfer was invalid, so too was the subsequent transfer to
Nationstar and its foreclosure on their home. The Burtons argue that only the
original lender can make assignments because MERS Corporation is not an in-
fact beneficiary and its legal title under the deed limits its authority to actions
that are “necessary to comply with law or custom or required of the lender.”
The Defendants counter that MERS Corporation, as the named
beneficiary of the deed of trust, had the authority to make the initial transfer
and that the foreclosure on the Burtons’ home was therefore valid.
The deed of trust provides that:
The beneficiary of this Security Instrument is MERS (solely as
nominee for Lender and Lender’s successors and assigns) and
the successors and assigns of MERS. . . . Borrower [Plaintiffs]
understands and agrees that MERS holds only legal title to the
2 MERS members are other lenders who have signed up as participants in the online
tracking system.
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interests granted by the Borrower in this Security Instrument,
but, if necessary to comply with law or custom, MERS (as
nominee for Lender and Lender’s successors and assigns) has
the right: to exercise any or all of those interests, including, but
not limited to, the right to foreclose and sell the Property; and
to take any action required of Lender including, but not limited
to, releasing and canceling this Security Instrument.
A separate provision permits the deed to be “sold one or more times without
prior notice to the borrower.”
The deed of trust thus gives MERS Corporation legal title to the home
as the beneficiary and the inherent power to make successive assignments of
the mortgage. This comports with industry custom—in fact, it’s the very
purpose of the system. The Burtons’ main argument thus appears to be that
despite the plain language of the deed of trust and industry custom, MERS
Corporation cannot exercise these rights because it is not the in-fact
beneficiary. But as the district court rightly noted, the effect of this contractual
language is well established. Courts in this circuit and throughout the country
have held that similar—if not identical—language does permit MERS
Corporation to make subsequent assignments, even though it is only a nominal
beneficiary. See, e.g., Brisby v. Moynihan, 2014 WL 2940874, at *3 (S.D. Miss.
June 30, 2014) (holding that deed of trust authorized MERS to make
assignments); Hudson v. Citimortgage, Inc., 2013 WL 6284045, at *3 (N.D. Tex.
Dec. 2, 2013) (holding that “[a]s the beneficiary of the [d]eed of [t]rust, MERS
held legal title to the Property and had the right to foreclose and sell the
Property upon default, and therefore MERS had the inherent authority to
assign the [n]ote and [d]eed of [t]rust.”), aff’d, 582 F. App’x 537 (5th Cir. 2014);
Hobson v. Wells Fargo Bank, N.A., 2012 WL 505917, at *5 (D. Idaho Feb. 15,
2012) (holding that as the designated beneficiary of a deed of trust, MERS had
the authority to assign its interest); Espeland v. OneWest Bank, FSB, 323 P.3d
2, 12 (Alaska 2014) (“As nominee, MERS had the authority to take any action
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that the actual beneficiary could have taken, including transferring its
nominal beneficial interest to another party.”); Lane v. Vitek Real Estate Indus.
Grp., 713 F. Supp. 2d 1092, 1099 (E.D. Cal. 2010) (holding that under
California law MERS has standing to foreclose as the nominee for the lender
and beneficiary of the deed of trust and may assign its beneficial interest to
another party).
The only authority the Burtons point to for their contrasting
interpretation of the contractual language is Hooker v. Northwest Trustee
Services, Inc., 2011 WL 2119103 (D. Or. 2011), reversed on other grounds in
572 F. App’x 512 (9th Cir. 2014), which they allege shows that MERS
Corporation could not assign the deed of trust because it was not the in-fact
beneficiary of the deed. Their reliance on that case is inapposite. In Hooker,
the district court held that despite the terms of the deed, Oregon law prohibits
third parties, such as MERS Corporation, from avoiding state recording laws
by holding a nominal beneficial interest on behalf of numerous successive
MERS members who are the in-fact beneficiaries. See id. at *2–3. Mississippi
law, however, has no such requirement—indeed, Mississippi law expressly
allows an agent or representative such as MERS Corporation to be named a
beneficiary in a deed of trust, even when it is merely holding the interest on
behalf of the true beneficiary (that is, the current lender in the registration
system). See MISS. CODE ANN. § 89-5-37 (“The assignment or transfer of a
secured indebtedness need not be filed for record nor entered on the margin of
the record if the holder thereof is represented by an agent, trustee or the like
disclosed as beneficiary in the mortgage or deed of trust.”); see also Brisby, 2014
WL 2940874, at *3 (applying Mississippi law to hold that the deed of trust
authorized MERS Corporation to make assignments).
Hooker thus is based on a unique feature of Oregon law. Unlike Oregon,
Mississippi permits nominal beneficiaries to hold legal title and make
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assignments so long as they are disclosed in the deed of trust. See MISS. CODE
ANN. § 89-5-37. Under governing state law, we therefore must enforce the clear
terms of the deed of trust that empowered MERS Corporation to make
subsequent assignments.
The judgment is AFFIRMED.
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