The following is a New York Bankruptcy motion for relief from stay ruling from February 10th, 2011
UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF NEW YORK
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In re:
Case No. 810-77338-reg
FERREL L. AGARD,
Chapter 7
Debtor.
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MEMORANDUM DECISION
Before the Court is a motion (the “Motion”) seeking relief from the automatic stay
pursuant to 11 U.S.C. § 362(d)(1) and (2), to foreclose on a secured interest in the Debtor’s real
property located in Westbury, New York (the “Property”). The movant is Select Portfolio
Servicing, Inc. (“Select Portfolio” or “Movant”), as servicer for U.S. Bank National Association,
as Trustee for First Franklin Mortgage Loan Trust 2006-FF12, Mortgage Pass-Through
Certificates, Series 2006-FF12 (“U.S. Bank”). The Debtor filed limited opposition to the Motion
contesting the Movant’s standing to seek relief from stay. The Debtor argues that the only
interest U.S. Bank holds in the underlying mortgage was received by way of an assignment from
the Mortgage Electronic Registration System a/k/a MERS, as a “nominee” for the original
lender. The Debtor’s argument raises a fundamental question as to whether MERS had the legal
authority to assign a valid and enforceable interest in the subject mortgage. Because U.S. Bank’s
rights can be no greater than the rights as transferred by its assignor – MERS – the Debtor argues
that the Movant, acting on behalf of U.S. Bank, has failed to establish that it holds an
enforceable right against the Property.1 The Movant’s initial response to the Debtor’s opposition was that
MERS’s authority to assign the mortgage to U.S. Bank is derived from the mortgage itself which
allegedly grants to MERS its status as both “nominee” of the mortgagee and “mortgagee of
record.” The Movant later supplemented its papers taking the position that U.S. Bank is a
creditor with standing to seek relief from stay by virtue of a judgment of foreclosure and sale
entered in its favor by the state court prior to the filing of the bankruptcy. The Movant argues
that the judgment of foreclosure is a final adjudication as to U.S. Bank’s status as a secured
creditor and therefore the Rooker-Feldman doctrine prohibits this Court from looking behind the
judgment and questioning whether U.S. Bank has proper standing before this Court by virtue of a
valid assignment of the mortgage from MERS.
Continue reading “MERS has no agency – New York Bankruptcy Court: in re Agard”
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