ILNews

Justices tackle home foreclosure issue involving MERS

Back to TopCommentsE-mailPrintBookmark and Share

Indiana Justice Mark Massa, writing for the court Thursday, delved into the history of the Mortgage Electronic Registration Systems Inc. and its role in today’s mortgage industry in a case involving a foreclosed home in Madison County.

The opinion, Citimortgage, Inc. v. Shannon S. Barabas a/k/a Shannon Sheets Barabas, ReCasa Financial Group, LLC, and Rick A. Sanders, 48S04-1204-CC-00213, provides background on how the mortgage industry has changed from involving just a borrower and lender to now include a lender, loan servicer, title company, and a whole host of other parties. Massa explains the creation in the 1990s of MERS, which maintains a computer database that tracks servicing and ownership rights of mortgage loans in the U.S. MERS member banks list MERS as “nominee” for lender and as “mortgagee” on their mortgage documents.

Shannon Barabas obtained a mortgage through Irwin Mortgage Corp. in 2005, to which the agreement said that the security instrument is given to MERS “(solely as nominee for Lender, as hereinafter defined, and Lender’s successors and assigns), as mortgagee.”

Two years later, she took a second mortgage out with ReCasa Financial Group. But she couldn’t keep up on payments with ReCasa, and it filed suit for foreclosure of the mortgage and for a sheriff’s sale. Irwin disclaimed any interest in the real estate in 2008. The sheriff’s sale occurred in January 2009.

In April 2009, MERS assigned the Irwin mortgage to Citimortgage. Citmortgage then filed a motion pursuant to Ind. Trial Rules 24(A) and 60(B) seeking to intervene in the foreclosure suit and asking that the judgment granted to ReCasa be subject to the mortgage now held by Citimortgage. The trial judge ultimately denied the motion.

The justices unanimously held that Citimortgage has the right to intervene. They found the mortgage contract Irwin had with MERS to be ambiguous and that the parties intended to designate MERS as the lender’s agent.

“This agency relationship conferred various rights upon MERS, including rights that constitute protected property interests sufficient to entitle MERS—and Citimortgage standing in the shoes of MERS—to meet the first requirement for intervention of right,” Massa wrote. MERS’ interest in the mortgage survived through its other principals, including Citimortgage.

The high court also found that disposition of the foreclosure case may impair Citimortgage’s interest and that no other party is adequately representing that interest. Citimortgage’s motion to intervene was timely, as well as its motion for relief, because ReCasa failed to provide Citimortgage or its agent MERS with notice of the foreclosure suit.

Massa pointed out that this case highlights issues with using laws established in 1877 to deal with a modern mortgage industry. The drafters of the original version of I.C. 32-29-8-1 couldn’t have imagined more than two or three actors involved, Massa wrote. The General Assembly may soon have to modernize the law to accommodate “this new and larger cast of characters,” he wrote.

The case is sent back to the trial court with instructions to grant the motion to intervene and amend the default judgment to provide that ReCasa took Barabas’ property subject to Citimortgage’s lien.  

 

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in Indiana Lawyer editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
2015 Distinguished Barrister &
Up and Coming Lawyer Reception

Tuesday, May 5, 2015 • 4:30 - 7:00 pm
Learn More


ADVERTISEMENT
Subscribe to Indiana Lawyer
  1. A traditional parade of attorneys? Really Evansville? Y'all need to get out more. When is the traditional parade of notaries? Nurses? Sanitation workers? Pole dancers? I gotta wonder, do throngs of admiring citizens gather to laud these marching servants of the constitution? "Show us your billing records!!!" Hoping some video gets posted. Ours is not a narcissistic profession by any chance, is it? Nah .....

  2. My previous comment not an aside at court. I agree with smith. Good call. Just thought posting here a bit on the if it bleeds it leads side. Most attorneys need to think of last lines of story above.

  3. Hello everyone I'm Gina and I'm here for the exact same thing you are. I have the wonderful joy of waking up every morning to my heart being pulled out and sheer terror of what DCS is going to Throw at me and my family today.Let me start from the !bebeginning.My daughter lost all rights to her 3beautiful children due to Severe mental issues she no longer lives in our state and has cut all ties.DCS led her to belive that once she done signed over her right the babies would be with their family. We have faught screamed begged and anything else we could possibly due I hired a lawyer five grand down the drain.You know all I want is my babies home.I've done everything they have even asked me to do.Now their saying I can't see my grandchildren cause I'M on a prescription for paipain.I have a very rare blood disease it causes cellulitis a form of blood poisoning to stay dormant in my tissues and nervous system it also causes a ,blood clotting disorder.even with the two blood thinners I'm on I still Continue to develop them them also.DCS knows about my illness and still they refuse to let me see my grandchildren. I Love and miss them so much Please can anyone help Us my grandchildren and I they should be worrying about what toy there going to play with but instead there worrying about if there ever coming home again.THANK YOU DCS FOR ALL YOU'VE DONE. ( And if anyone at all has any ideals or knows who can help. Please contact (765)960~5096.only serious callers

  4. He must be a Rethuglican, for if from the other side of the aisle such acts would be merely personal and thus not something that attaches to his professional life. AND ... gotta love this ... oh, and on top of talking dirty on the phone, he also, as an aside, guess we should mention, might be important, not sure, but .... "In addition to these allegations, Keaton was accused of failing to file an appeal after he collected advance payment from a client seeking to challenge a ruling that the client repay benefits because of unreported income." rimshot

  5. I am not a fan of some of the 8.4 discipline we have seen for private conduct-- but this was so egregious and abusive and had so many points of bad conduct relates to the law and the lawyer's status as a lawyer that it is clearly a proper and just disbarment. A truly despicable account of bad acts showing unfit character to practice law. I applaud the outcome.

ADVERTISEMENT