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Research Guide to Foreclosure Law in Missouri and Illinois: Research Strategies

Problem 1

Property is located in Missouri so Missouri law is relevant.  The first step would be to find elements of wrongful foreclosure. I started with the Mo Prac Foreclosure Manual § 6:15.

“Under Missouri law, the term “wrongful foreclosure” has been used both in suits in equity as a basis for setting aside a foreclosure sale and in suits at law as a basis for recovering tort damages.”  Additionally, the Foreclosure Manual mentions that setting aside a foreclosure sale and recovering damages for wrongful foreclosure are mutually exclusive remedies, so Plaintiff would not be able to recover both.

The article states that “a suit in equity to set aside a trustee's deed for irregularity and a suit at law for damages for wrongful foreclosure are mutually exclusive remedies” so right away, it is clear the Plaintiff will not have an action for both types.

For a suit in tort for damages the mortgagor must plead and prove that he was not in default.  The Plaintiff didn’t allege in her complaint that she was not in default, so the tort action would most likely be dismissed.  A quick search of Missouri case law for something like: “’wrongful foreclosure’ within the same sentence as default” will confirm this. 

According the Foreclosure Manual, a suit in equity to have the sale set aside doesn’t require the mortgagor to be in default.  The article simply states that an action for wrongful foreclosure in which the Plaintiff was in default is an “improper execution of a rightful foreclosure.” 

 Since foreclosure, if rightful, is governed by statute, the next step would be to check the statutes to see if the foreclosure was, in fact, improperly executed.  Just browsing the sections in chapter 443 of the Revised Statutes of Missouri, a couple statutes jump out right away as being relevant.   The statutes set out the required content for the notice as well as the publication requirements and whether or not postponement of the sale requires republication.

 The alleged basis of Plaintiff’s action are all inconsistent with the statutory requirements, but the next step is to check case law to find out whether those violations are enough support the cause of action for wrongful foreclosure. 

 Lastly, of course, Shepardize the cases.

Problem 2

Looking first at the Mo Prac Foreclosure Manual, § 6:17 discusses standing and ownership versus possession of the note. While the borrower has no legal right to demand that the original note be exhibited to him, the Manual suggests that challenging the foreclosing party’s interest in the property may be successful in cases where the proper documentation didn’t record the transfer of rights.  The likelihood of success would depend on whether MERS has proper documentation of the transfer of the deed and note.

The next step would be to look at the case law. One appeals case in Missouri suggests that Plaintiffs might be successful if MERS cannot produce evidence of the transfer of the note. In Bellistri v. Ocwen (284 S.W.3d 619), the Deed of Trust was assigned to MERS while the Note –the right to collect the money — was assigned to a securitized trust, ultimately owned by various investors.   The “chain” of assignments of the Note was not properly recorded. The court held that lender ought to be able to prove it is owed the money that was not paid before it can go to court to claim a right in the property (Bellistri v. Ocwen, 284 S.W.3d 619).  Checking cases that cite Bellistri, some in other jurisdictions, reveal mixed results.  Cases challenging rights of the transferee/assignee/purchaser of mortgages, notes or both, seem to turn on the facts—who the “note” was assigned or sold to (cases asserting the defense against MERS or its members seem to be generally unsuccessful) and the language of the various interest—beneficiary, nominee, etc.

The key with this problem is not limiting research to Missouri state cases only.  Cases dealing with foreclosure issues may end up in federal district courts or in bankruptcy courts.  When conducting online case research, an important step is to search state and related federal opinions.