Court Opinion

ID: 9735328
Source: CourtListenerOpinion
Date Created: 2023-08-26 18:09:28.251281+00
Date Added: 2024-06-11T18:26:57.340898
License: Public Domain

PAGE, Justice
(dissenting).
The plain language of Minn.Stat. § 580.02 (2008) requires that assignments of the debt secured by a mortgage be recorded before the mortgage can be foreclosed by advertisement. Further, because, as the court acknowledges, such assignments carry with them equitable interests in the mortgage itself, I believe Minnesota law requires that all assignments of a mortgage be recorded before a foreclosure by advertisement may be commenced.
This case poses a question of statutory interpretation. When interpreting a statute we look first to the plain language of the statute. Munger v. State, 749 N.W.2d 335, 338 (Minn.2008). I therefore begin my analysis with the plain language of section 580.02. Because the plain language of these statutes answers the question we are called upon to answer, it is unnecessary to address anything else.
Section 580.02 requires, before a mortgage may be foreclosed by advertisement, “that the mortgage has been recorded and, if it has been assigned, that all assignments thereof have been recorded.” As the court acknowledges, because foreclosure by advertisement is purely a creature of statute, its provisions must be strictly construed and the foreclosing party must strictly comply with the statutory requirements. Moore v. Carlson, 112 Minn. 433, 434, 128 N.W. 578, 579 (1910).
The court concludes that “an assignment of only the promissory note ... carries with it an equitable assignment of the security instrument,” that is, the mortgage. But, having concluded that an assignment of the promissory note is also an assignment of the mortgage (even if only an equitable one), the court fails to see the implications of that conclusion under the statute. Section 580.02 requires that “all assignments” of the mortgage have been recorded. The legislature could not have been more clear. If the assignment can be made in writing (and there is no reason that these assignments cannot be), it must be recorded before the mortgage can be foreclosed by advertisement. See Backus v. Burke, 48 Minn. 260, 270, 51 N.W. 284, 286 (1892) (“The statute requiring a record governs where in form it is an assignment. ...”).
Not only is this result dictated by the plain language of section 580.02, it is also dictated by what I understand to be the legal structure of the Mortgage Electronic Registration System (MERS). MERS claims to hold legal title, but only legal title, to the mortgage being foreclosed. MERS also claims that in foreclosing mortgages it acts only as nominee for its members. But MERS can act as nominee for only the particular MERS member who holds the promissory note at any particular time and, when that promissory note is assigned between members, the member for which MERS acts as nominee, and on whose behalf MERS holds legal title, necessarily changes. In other words, the entity on whose behalf MERS holds legal title to the mortgage changes every time the promissory note is assigned. Thus, even if the statutory language were not so plain, I would still conclude that transfers of the mortgage resulting from *504assignments of the promissory note between MERS members must be recorded before the mortgage can be foreclosed by advertisement.
The legislative requirement that “all assignments” of the mortgage be recorded before a mortgage can be foreclosed by advertisement is also sound public policy. First, we have observed that
the manifest purpose of this requirement of the statute was to make the contents of the mortgage, and, so far as the statute goes, to make the title to the mortgage, matters of record; and for obvious reasons it was important, not only to the parties to the mortgage itself and to assignees, but to subsequent in-cumbrancers, creditors, and contemplating purchasers, that some permanent and accessible evidence of the existence and contents of the mortgage, and of the title to the same, should be provided.
Backus, 48 Minn, at 269, 51 N.W. at 286. We said again, nine years later, that the provisions requiring that mortgages and their assignments be recorded “were enacted to avoid confusion, and to guard and protect interests in real property of record.” Clarke v. Mitchell, 81 Minn. 438, 441, 84 N.W. 327, 328 (1900). These purposes are not served if the only thing that is disclosed is the identity of the holder of bare legal title to the mortgage and if all others who have had an interest in the mortgage can remain undisclosed.
Second, Minn-Stat. § 580.21 (2008) allows a sale in a foreclosure by advertisement to be set aside provided the action to do so is commenced within 15 years after the sale. By allowing foreclosure by advertisement to be set aside, the legislature did not intend to prevent challenges to foreclosure by advertisement. But by allowing the identities of the assignees of the promissory note to remain hidden, the court’s result essentially eliminates the ability of the mortgagor to assert a wide range of defenses to foreclosure.
Finally, it is apparent with the benefit of hindsight that the ability of lenders to freely and anonymously transfer notes among themselves facilitated, if not created, the financial and banking crisis in which our country currently finds itself. It is not only borrowers but also other lenders who rightfully are interested in who has held a particular promissory note. For example, a lender who holds a promissory note that has become worthless may have an interest in knowing the hands through which that note passed. Under the MERS system, however, the identity of those previous holders is as shielded from the lender’s view as it is from the borrower’s. As a result of the court’s holding, namely, that mortgage transfers between MERS members need not be recorded before a mortgage can be foreclosed by advertisement, neither borrowers nor lenders will ever be able to hold anyone in the chain of transfers accountable. That is not sound public policy.
I therefore respectfully dissent.