97 So. 3d 770
Ala. Civ. App.2012Background
- On October 8, 2007, Nelsons executed a promissory note to Global for $114,000 and a mortgage to MERS (as nominee for Global).
- Nelsons received a Notice of Assignment informing servicing rights were transferred to Flagstar effective December 1, 2007.
- Flagstar accelerated the loan in 2008; foreclosure notices and forbearance discussions occurred with loss-mitigation efforts.
- In 2009, after default, Nelsons obtained a trial HAMP modification; foreclosure proceedings continued with multiple postponements.
- January 25, 2010, MERS, as Flagstar’s nominee, conducted a foreclosure sale; MERS then conveyed the property to Fannie Mae via special warranty deed dated January 27, 2010.
- February 5, 2010, Fannie Mae filed ejectment suit claiming ownership by virtue of MERS’s deed; Nelsons challenged standing and validity of the foreclosure deed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Flagstar was the holder of the note before MERS initiated foreclosure | Nelsons: Flagstar not holder; no assignment of mortgage to Flagstar before foreclosure. | Fannie Mae: Flagstar as assignee/holder authorized to foreclose under power of sale. | Court held no evidence Flagstar held the note before 2009; thus authority to foreclose was not proven on summary judgment. |
| Whether MERS could convey to Fannie Mae the interest in the property | Nelsons: MERS had no interest; foreclosure deed void; no standing for ejectment. | Fannie Mae: §35-10-12 permits the owner to foreclose; MERS’s deed valid if authority exists. | Court held lacking evidence that Flagstar held the note before 2009; MERS’s foreclose deed void; Fannie Mae lacked standing. |
| Whether Fannie Mae has standing to eject the Nelsons | Nelsons: without valid assignment or holder, Fannie Mae lacks standing. | Fannie Mae: as bona fide purchaser/owner via MERS deed, standing to eject. | Court vacated judgment; ejectment lacked subject-matter jurisdiction due to lack of standing. |
Key Cases Cited
- Cadle Co. v. Shabani, 950 So.2d 277 (Ala.2006) (standing and title issues govern ejectment actions)
- Byrd v. MorEquity, Inc., 94 So.3d 378 (Ala.Civ.App.2012) (proof of ownership as to foreclosing party; summary-judgment standards)
- Harton v. Little, 176 Ala. 267, 57 So. 851 (Ala.1911) (note negotiability and mortgage references do not destroy negotiability)
- First Nat’l Bank of Birmingham v. De Jernett, 159 So. 73 (Ala.1935) (acceleration clauses and negotiability considerations)
- West v. Founders Life Assurance Co. of Florida, 547 So.2d 870 (Ala.1989) (substantial evidence standard in summary judgments)