Decision: Landmark National Bank v. Kesler

August 28th. The Kansas Supreme Court has issued its opinion in Landmark National Bank v. Kesler (No. 98,489), a complex foreclosure proceeding. In a unanimous opinion, written by Justice Eric Rosen, the Court held that under the circumstances of this case the second-mortgage holder could not undo the foreclosure that had been performed and settled by the first-mortgage holder, owing to the complex legal relationship between that second-mortgage holder, the property and an intermediary company.

Boyd Kesler took out two mortgages against some property in Ford County. The first was with Landmark National Bank. The second with Millenia Mortgage Company. Millenia generated its documents using Mortgage Electronic Registration Systems (MERS), which carried out the administration of the loan, but received none of the money and was not legally the owner of the loan. MERS operates a system where it stands in for lenders who provide the money and allows the trading of loan notes between different institutions.

At some point, via this process Millenia’s ownership of the note transferred (or may have transferred) to Sovereign Bank. Meanwhile Kesler went through bankruptcy proceedings and the first lienholder – Landmark – foreclosed on the property. The property was sold at auction, for more than the amount owed to Landmark and Kesler and Landmark filed a motion to settle the monies between them.

Subsequent to this, Sovereign and later MERS sought to block the foreclosure on the grounds that they (as second lienholders) had not received notification of the sale. As it transpires, Ford County never received a registration for the mortgage as belonging to anyone but Millenia.

The District Court denied this motion, and various appeals resulted. The Kansas Supreme Court rejected the appeal by MERS and Sovereign, finding that since MERS did not own the note its status in law as relates to the mortgage is tenuous. Therefore none of the criteria for setting aside the foreclosure could be met. In ruling this way the Court rejected the amicus brief filed by various financial organizations which endorsed the MERS system, saying that it must follow the law as written, notwithstanding the amicus brief’s complaint that the recording scheme stems from “seventeenth-century property law that is entirely unsuited to twentieth-century financial transactions”.

The Court also rejected a Due Process argument from MERS, finding that throughout the various proceedings it had had its arguments listened to in court and therefore had certainly received the process it was due in this case.

Decision: Landmark National Bank v. Kesler

August 28th. The Kansas Supreme Court has issued its opinion in Landmark National Bank

v. Kesler (No. 98,489), a complex foreclosure proceeding. In a unanimous opinion,

written by Justice Eric Rosen, the Court held that under the circumstances of this case

the second-mortgage holder could not undo the foreclosure that had been performed and

settled by the first-mortgage holder, owing to the complex legal relationship between

that second-mortgage holder, the property and an intermediary company.

Boyd Kesler took out two mortgages against some property in Ford County. The first was

with Landmark National Bank. The second with Millenia Mortgage Company. Millenia

generated its documents using Mortgage Electronic Registration Systems (MERS), which

carried out the administration of the loan, but received none of the money and was not

legally the owner of the loan. MERS operates a system where it stands in for lenders

who provide the money and allows the trading of loan notes between different

institutions.

At some point, via this process Millenia’s ownership of the note transferred (or may

have transferred) to Sovereign Bank. Meanwhile Kesler went through bankruptcy

proceedings and the first lienholder – Landmark – foreclosed on the property. The

property was sold at auction, for more than the amount owed to Landmark and Kesler and

Landmark filed a motion to settle the monies between them.

Subsequent to this, Sovereign and later MERS sought to block the foreclosure on the

grounds that they (as second lienholders) had not received notification of the sale. As

it transpires, Ford County never received a registration for the mortgage as belonging

to anyone but Millenia.

The District Court denied this motion, and various appeals resulted. The Kansas Supreme

Court rejected the appeal by MERS and Sovereign, finding that since MERS did not own

the note its status in law as relates to the mortgage is tenuous. Therefore none of the

criteria for setting aside the foreclosure could be met. In ruling this way the Court

rejected the amicus brief filed by various financial organizations which endorsed the

MERS system, saying that it must follow the law as written, notwithstanding the amicus

brief’s complaint that the recording scheme stems from “seventeenth-century property

law that is entirely unsuited to twentieth-century financial transactions”.

The Court also rejected a Due Process argument from MERS, finding that throughout the

various proceedings it had had its arguments listened to in court and therefore had

certainly received the process it was due in this case.

http://www.kscourts.org/Cases-and-Opinions/opinions/supct/2009/20090828/98489.htm

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7 Responses to “Decision: Landmark National Bank v. Kesler”

  1. Kansas High Court Halts Mortgage Machine « TisonandWills' Blog Says:

    […] The Kansas Supreme Court Blog also has a helpful account. https://kscblog.wordpress.com/2009/09/03/decision-landmark-national-bank-v-kesler/ […]

  2. Kevin Says:

    Attorneys and pro se borrowers have been, and will be, utilizing this decision in other states. In Florida, some judges listen to, while others do not even consider, novel arguments concerning mortgage foreclosure cases. Eventually, the appellate courts and perhaps Supreme Court in each state will have to render their decisions on these arguments.

  3. COMPLAINT | STATE OF DELAWARE v. MERSCORP INC. Go Go Beau! | Deadly Clear Says:

    […] Kansas Supreme Court has issued its opinion in Landmark National Bank v. Kesler (No. 98,489), a complex foreclosure […]

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  7. Housing Legal Mess | Michael Cale Says:

    […] 2. Kansas Supreme Court Blog. Decision: Landmark National Bank v. Kesler.Kansas Supreme Court Blog. August 28, 2009.https://kscblog.wordpress.com/2009/09/03/decision-landmark-national-bank-v-kesler/ […]

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