About A ruling issued by the United States Bankruptcy Court for the Eastern District of California found that, as a matter of law, MERS could not have transferred the note to Citibank from the original lender, Bayrock Mortgage Corp. The Court’s opinion states that MERS and Citibank are not the real parties in interest.
The court found that MERS acted “only as a nominee” for Bayrock under the Deed of Trust and there was no evidence that the note was transferred. The opinion also noted that “several courts have found that MERS is not the owner of the underlying note and therefore could not transfer the note, the beneficial interest in the deed of trust, or foreclose on the property secured by the deed”.
The opinion states: “Since no evidence of MERS’ ownership of the underlying note has been offered, and other courts have concluded that MERS does not own the underlying notes, this court is convinced that MERS had no interest it could transfer to Citibank. Since MERS did not own the underlying note, it could not transfer the beneficial interest of the Deed of Trust to another. Any attempt to transfer the beneficial interest of a trust deed without ownership of the underlying note is void under California law.”
The bottom line is that MERS cannot assign what it does NOT own.
For more see here.