Does MERS have the authority to substitute trustees?

Facts: A homeowner took out a home loan, executing a promissory note secured by a trust deed naming Mortgage Electronic Registration Systems (MERS) as the named beneficiary. MERS substituted trustees and the owner later defaulted. The substituted trustee filed a notice of trustee’s sale and began to commence foreclosure

Claim: The owner sought to avoid foreclosure, claiming the authority granted to the substitute trustee was invalid since MERS had no authority to substitute trustees as it did not hold the note.

Counterclaim: The substitute trustee sought to proceed with foreclosure, claiming the authority granted to the substitute trustee by MERS was valid and therefore the notice of trustee’s sale was also valid.

Holding: A California Court of Appeals held the substitute trustee was authorized to foreclose since the authority granted to it from MERS as the named beneficiary was valid, as was the notice of default. [Siliga v. MERS (2013) __ CA4th__]

Editor’s note – This adds to the accumulated collection of cases challenging MERS’ authority to sequester the details of a mortgage. This information has traditionally been transparent due to the recording of trust deed assignments with the county recorder’s office. Lenders working with MERS do the public a disadvantage by making it difficult for homeowners to keep track of who holds the note and trust deed on their property, making claims of this nature almost routine.