There has been much commentary that MERS has no authority to commence foreclosure proceedings and is perhaps some kind of conspiracy for evil purposes cooked up by lenders. A lot of these decisions come from relatively small states, where a mortgage or deed of trust must be foreclosed "judicially," i. e. by filing a lawsuit. California has one of the largest if not the largest mortgage market in the country. In CA, most deeds of trust are foreclosed "non-judicially," that is, by a private trustee sale. There have been many lawsuits filed to enjoin or set aside such trustee sales on the theory that MERS, as a "nominee beneficiary," does not have authority to commence foreclosure proceedings. A new case out of the California Court of Appeal holds that under the doctrine of "estoppel by deed," the borrower grants MERS that authority in the form deed of trust. The court also found that allowing a lawsuit to be filed to determine the lender who purportedly actually has "standing" or holds the note would be contrary to public policy, and would eviscerate California' system of non-judicial foreclosures.
Gomes v. Countrywide Home Loans, Inc. (2011) 192 Cal.App.4th 1149.