Before the Court En Banc. Opinion by Justice Hardesty.
In this appeal, the Court addressed the ability of a bank to foreclose when Mortgage Electronic Registration System (MERS) is the named beneficiary of a deed of trust. MERS is an electronic registration system that enables banks to repeatedly sell interests in loans secured by deeds of trust without the necessity of recording multiple transfers. Edelstein, a residential homeowner, challenged the Bank’s ability to foreclose on his property, arguing that by making MERS the beneficiary of the deed of trust and the Bank the beneficiary of the promissory note, the deed of trust and note had been irreparably split. The Court first recognized that to obtain a non-judicial foreclosure in Nevada, a party must be the beneficiary of a deed of trust and the holder of the note. The Court next addressed whether a note and deed of trust could be split and whether, if split, they could be unified to allow foreclosure. The Court adopted the approach from the Third Restatement of Property, under which a note and deed of trust are presumed to be transferred together unless the parties expressly state otherwise. Thus, the note and deed of trust could be split (and were in this case) and could be unified after being split by returning both to the same entity. In this case, the Bank had an assignment of the deed of trust from MERS and had the note, which had been endorsed blankly, rendering it negotiable by the bearer; therefore, the Bank had authority to foreclose. Affirmed. (Kerry S. Doyle, Associate in the Reno office of McDonald Carano Wilson LLP).
