By Daniel Edstrom
DTC Systems, Inc.
Coming off of the heels of in re: Agard (http://dtc-systems.net/2011/02/mers-agency-york-bankruptcy-court-agard/), the Honorable Judge Mann from the United States Bankruptcy Court Southern District of California took 76 days to review the Motion for Relief From Automatic Stay for the in re: Salazar Chapter 13 bankruptcy (Bankruptcy No: 10-17456-MM13). The findings of fact and conclusions of law were an amazing reading that confirms many of the issues we have been discussing in regards to loans, securitization and foreclosure. Like Judge Grossman in the agard case, Judge Mann goes to great lengths to research the details that are applicable to this case. Here are some highlights:
- Assignments must be recorded before the foreclosure sale
- Civil Code Section 2932.5 applies to Deeds of Trust
- Recorded assignments are necessary despite MERS’ role
- The Gomes case does not apply [to the Salazar case]
- US Bank or MERS cannot contract away their obligations to comply with the foreclosure statutes
- As a matter of law, Salazar’s acknowledgment cannot be read as a waiver of his right to be informed of a change in beneficiary status.
- MERS System is not an alternative to statutory foreclosure law
- US Bank as the foreclosing assignee was obligated to record its interest before the sale despite MERS’ initial role under the DOT, and this role cannot be used to bypass Civil Code section 2932.5. Since US Bank failed to record its interest, Salazar has a valid property interest in his residence that is entitled to protection through the automatic stay
- Cause does not exist to grant relief from stay
- Denying relief from stay at this time is the least prejudicial option for both parties
Much more is in this memorandum decision. The memorandum decision is available here: http://dtc-systems.net/wp-content/uploads/2011/04/order_br_cally_so_dist_salazar_vs_us_bank_denying_mfrs_mers_4_11_2011.pdf