Tag Archives: Real Estate Deeds

Washington Supreme Court comes down on MERS

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Yesterday the Washington Supreme Court issued its case in  the Certified Question of Bain v. Metropolitan Mortgage.

Here’s the Opinion.

The primary issue before the court was whether MERS can be a lawful beneficiary on a deed of trust, with the power to appoint trustees under the Washington Deed of Trust Act when it does not actually hold the promissory notes that secures the deed of trust.

The court held that only the actual holder of the promissory note evidencing the debt may be a beneficiary with the power to appoint a trustee to foreclose.  Or, as the court put it, “if MERS does not hold the note, it is not a lawful beneficiary.”

The court declined to answer what the legal effect is, if any, of a foreclosure, when MERS did foreclose as the beneficiary.

Our gut is that what is in the past is in the past, unless a borrower can prove fraud, or actual damages, based on Brown v. Household Realty, 146 Wn. App. 157, 189 P.3d
233 (2008) (holding that where the grantor of a deed of trust fails to invoke the remedies provided by the deed of trust act (ch. 61.24 RCW) before the deed is foreclosed in a trustee’s sale, the grantor waives claims based on the underlying obligation secured by the deed). But see RCW 61.24.127 which narrows Brown to some extent.

Bargain at Lenders’ Expense

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Here’s the situation:  Borrower stops paying his condo association dues (and perhaps his mortgage too).  The condo association then starts a condo lien foreclosure lawsuit.  The Lender receives notice of the lawsuit, but … it happens to be a securitized trust that is not very responsive, or some other entity like MERS (Mortgage Electronic Registration Systems) was slow to forward notice of the lawsuit to the lender.  The lender may fall asleep at the wheel, or figure that its deed of trust cannot be trumped.  The lender need not worry, right?  Because it can always step in  and “redeem” the property by paying the condo lien amount to the buyer in foreclosure, up to one year from the sale.  WRONG!  Summerhill Village Homeowners Association v. Roughley, 166 Wn. App. 625 (2012) holds against lenders in this situation, relying on the “you snooze, you lose” rule.  Or perhaps more appropriately put the rule is this:  Lenders lack redemption rights in a condo lien foreclosure.  Start with ten or fifteen thousand dollars and start frequenting Sheriff’s sales.  You could pick up a bargain, like Plumbline Profit Sharing Plan did in this case.

Update on Unit 3905: TRH Lenders, LLC?

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In TEP’s last Hazelrigg post, we showed you that Daniel Chun claims to rent and live in One Lincoln Tower, unit 3905.  Notably, he does not say from whom he rents it.  So TEP did a little research.  Here’s the scoop:

It looks like Tom Hazelrigg’s company, TRH Lenders, LLC, is the landlord.

Jon Eric (he goes by “Eric”) DeGooyer bought the condo in 2006, sold it to Tom Hazelrigg III in 2008.  Hazelrigg and DeGooyer were/are associates.

Hazelrigg III re-titled the condo in a limited liability company called TRH Lenders, LLC.  Here’s the Real Estate Excise Tax Affidavit.  Right now, property tax bills for unit 3905, or King County Tax Parcel No. 638999-1370, go to TRH Lenders, LLC at Hazelrigg’s rented mailbox:  227 BELLEVUE WAY NE #545, BELLEVUE WA, 98004.  And it appears TRH Lenders still owns the condo, although it was in foreclosure at one time.

So far deGooyer’s done a good job keeping from getting burned by Mastro, Hazelrigg and/or Switzer.  If you’re interested in deGooyer, check out the Lehman Paper litigation in U.S. District Court (W.D. Wa.) (RICO case that involved Mastro) or the Michael Albert Price Chapter 7 bankruptcy …  That’s a whole other blog category there.

Finally, does anyone know why the FDIC would be interested in one of Hazelrigg’s other companies, ANT ONE, LLC?  TEP has been receiving quite a few FDIC direct hits from the FDIC along with a few FDIC Google searches for ANT ONE.

Update: TEP Finds the Infamous $1 Joe Paterno Deed

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TEP sets the record straight.  We obtained a copy of the infamous $1 deed.  Recall the New York Times reported that Joe Paterno deeded his house to his wife in order to protect it in case of lawsuits stemming from the Penn State scandal.   The deed corrects a mistake in an earlier 1997 deed.  It looks like this real estate transaction had been planned for years, just as Joe Paterno’s attorneys said so in the New York Times.