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REPORTED IN THE COURT OF SPECIAL APPEALS OF MARYLAND No. 988 September Term, 2010 _______________________________

PAUL SVRCEK v. DIANE S. ROSENBERG ET AL. ______________________________ Woodward, Wright, Davis, Arrie W. (Retired, Specially Assigned), JJ. _______________________________

Opinion by Davis, J. _______________________________ Filed: March 29, 2012

This appeal arises out of a foreclosure sale of property owned by Paul Svrcek, appellant. On October 8, 2009, Diane S. Rosenberg, Mark D. Meyer, and John A. Ansell III, appellees, acting as substitute trustees, commenced an action to foreclose a lien pursuant to a power of sale by filing an order to docket in the Circuit Court for Queen Anne's County. On January 29, 2010, Svrcek's property was sold to "Citibank, N.A. as Trustee for the Certificateholders of Structured Asset Mortgage Investments II, Inc., Bear Stearns ALT-A Trust, Mortgage Pass-Through Certificates Series 2006-4." The circuit court entered a final ratification of the sale on July 14, 2010 and this timely appeal followed. Issues Presented Svrcek presents three issues1 for our consideration, which we have rephrased slightly as follows: I. Whether appellees had the legal right to initiate a foreclosure; II. Whether the appointment of appellees as substitute trustees was not effective because it was executed by an attorney in fact without a power of attorney recorded in the land records of Queen Anne's County; and,

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The issues, as stated in Svrcek's brief, are as follows:

I. Because the appellees did not have the legal right to initiate a foreclosure under the Maryland Rules, the foreclosure should have been dismissed. II. The appointment of substitute trustees is of no effect because it was executed by an attorney of fact without a power of attorney recorded in the land records of Queen Anne's County. III. The deed of trust failed to name an individual as a trustee and was invalid. The legislature may not seek to make an invalid deed valid through special legislation.

III. Whether the deed of trust was invalid because it failed to name an individual as trustee and the Legislature could not make it valid through curative legislation. For the reasons set forth below, we shall affirm. FACTUAL AND PROCEDURAL BACKGROUND On November 4, 2005, Svrcek executed an adjustable rate promissory note in the amount of $486,000 to Taylor, Bean & Whitaker Mortgage Corp. for the purpose of refinancing his property located at 100 Holly Court in Stevensville. The note was secured by a deed of trust, executed on the same date, to Taylor, Bean & Whitaker Mortgage Corp. The deed of trust contained a power of sale provision. It is uncontroverted that, on or before June 1, 2006, Svrcek's loan was sold or transferred into a pool of securitized trust, "Structured Asset Mortgage Investments II, Inc., Bear Stearns ALT-A Trust, Mortgage Pass-Through Certificates Series 2006-4."2 Citibank,

Recently, in Anderson v. Burson, 424 Md. 232 (2011), the Court of Appeals discussed the securitization process and the Mortgage Electronic Registration System (MERS) as follows: Securitization starts when a mortgage originator sells a mortgage and its note to a buyer, who is typically a subsidiary of an investment bank. Christopher L. Peterson, Foreclosure, Subprime Mortgage Lending, and the Mortgage Electronic Registration System, 78 U. Cin. L. Rev. 1359, 1367 (2010). The investment bank bundles together the multitude of mortgages it purchased into a "special purpose vehicle," usually in the form of a trust, and sells the income rights to other investors. Id. A pooling and servicing agreement establishes two entities that maintain the trust: a trustee, who manages the loan assets, and a servicer, who communicates with and collects monthly payments from the mortgagors. Id. Mortgage-securitization investors utilize the Mortgage Electronic
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N.A. was named as Trustee and EMC Mortgage Corporation was named as servicer. It is also uncontroverted that, for about three years, Svrcek made payments on the note to EMC Mortgage Corporation. On or about July 31, 2009, Svrcek received a notice of intent to foreclose on his property. The notice identified the mortgage lender as "TAYLOR BEAN & WHITAKER," the loan servicer as "EMC Mortgage Corporation," and the secured party as "Citibank, N.A.

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Registration System (MERS), a private land-title registration system created by mortgage banking companies to expedite the securitization process. See Jackson v. Mortg. Elec. Registration Sys., 770 N.W.2d 487, 490 (Minn. 2009). MERS increases the efficiency and profitability of mortgage markets by skirting the traditional land-title recording process in localities, which can be costly and time consuming, and replacing it with the industry's own electronic tracking system. See Jackson, 770 N.W.2d at 490-91. To do so, the mortgage broker names MERS as a nominal mortgagee in the mortgage. Then, subsequent transfers of the mortgage are recorded electronically and entirely on MERS while the original mortgage, recorded in the public land title records, remains unchanged. Jackson, 770 N.W.2d at 490; Peterson, supra, at 1371. MERS's industry-appreciated virtues have made it a near ubiquitous aspect of contemporary residential mortgages; two-thirds of all newly originated residential loans in the United States name MERS as the nominal mortgagee. See Jackson, 770 N.W.2d at 491-92; Peterson, supra, at 1370. Anderson, 424 Md. at 237-38. In the case before us, the Deed of Trust identified "MERS" as the beneficiary: (E) "MERS" is Mortgage Electronic Registration Systems, Inc. MERS is a separate corporation that is acting solely as a nominee for Lender [Taylor, Bean & Whitaker Mortgage Corp.] and Lender's successors and assigns. MERS is the beneficiary under this Security Instrument. MERS is organized and existing under the laws of Delaware, and has an address and telephone number of P.O. Box 2026, Flint, MI 48501-2026, tel. (888) 679MERS. -3-

as Trustee for the Certificateholders of Structured Asset Mortgage Investments II, Inc., Bear Stearns ALT-A Trust, Mortgage Pass-Through Certificates Series 2006-4," which we shall hereinafter refer to as "Citibank, N.A. as Trustee." On October 8, 2009, appellees Diane S. Rosenberg, Mark D. Meyer and John A. Ansell III, acting as substitute trustees, filed in the Circuit Court for Queen Anne's County an order to docket pursuant to Maryland Rules 14-2043 and 14-207.4 The

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Maryland Rule 14-204(a) (2009 Supp.) provided:

(a) Who may file. (1) Under power of sale. Subject to compliance with subsection (a)(3) of this rule, any individual authorized to exercise a power of sale may institute an action to foreclose the lien. (2) Under assent to decree. A secured party may file an action to foreclose the lien under an assent to a decree, except that an action to foreclose a deed of trust shall be instituted by the beneficiary of the deed of trust, any trustee appointed in the deed, or any successor trustee. (3) Fractional owners of debt. Except when the lien instrument is a deed of trust, a power of sale may not be exercised, and the court may not enter an order for a sale under an assent to a decree, unless the power is exercised or application for an order is made or consented to by the holders of 25% or more of the entire debt due under the lien instrument. (b) Priority of actions. If more than one party is authorized under these Rules to file an action to foreclose a lien, the first such party to file an action acquires the exclusive right to foreclose.
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Maryland Rule 14-207 (2009 Supp.) provided:

(a) Pleadings allowed. (1) Power of sale. An action to foreclose a lien pursuant to a power of sale shall be commenced by filing an order to docket. No process shall issue. (2) Assent to a decree or lien instrument with no power of sale or assent to a decree. An action to foreclose a lien pursuant to an assent to a decree or pursuant to a lien instrument that contains neither a power of sale nor an assent to a decree shall be commenced by filing a complaint to foreclose. If the lien instrument contains an assent to a decree, no process shall issue. (3) Lien instrument with both a power of sale and assent to a decree. If a (continued...)

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order to docket was accompanied by a number of documents, including: (1) a copy of the promissory note executed by Svrcek and naming Taylor Bean & Whitaker Mortgage Corp.

(...continued) lien instrument contains both a power of sale and an assent to a decree, the lien may be foreclosed pursuant to either. (b) Exhibits. A complaint or order to docket shall be accompanied by: (1) a copy of the lien instrument supported by an affidavit that it is a true and accurate copy, or, in an action to foreclose a statutory lien, a copy of a notice of the existence of the lien supported by an affidavit that it is a true and accurate copy; (2) an affidavit by the secured party, the plaintiff, or the agent or attorney of either that the plaintiff has the right to foreclose and a statement of the debt remaining due and payable; (3) a copy of any separate note or other debt instrument supported by an affidavit that it is a true and accurate copy and certifying ownership of the debt instrument; (4) a copy of any assignment of the lien instrument for purposes of foreclosure or deed of appointment of a substitute trustee supported by an affidavit that it is a true and accurate copy of the assignment or deed of appointment; (5) an affidavit with respect to any defendant who is an individual that the individual is not in the military service of the United States as defined in the Servicemembers Civil Relief Act, 50 U.S.C. app.

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