MEMORANDUM OPINION AND ORDER
JOHN J. THARP, Jr., District Judge.
Azlan Dameer, one of the defendants in this mortgage foreclosure action, moves to dismiss the complaint brought against him, as current owner of the subject property, and Deidre Christian, the mortgagor. Dameer contends that the plaintiff, Deutsche Bank National Trust Company, in its capacity as trustee of the real estate securitization trust that allegedly owns the mortgage, lacks standing to foreclose on the mortgage. For the reasons that follow, the motion to dismiss is denied.
With exceptions discussed later, in assessing a motion to dismiss for lack of standing pursuant to Federal Rule of Civil Procedure 12(b)(1), the Court must accept as true all well-pleaded factual allegations in the complaint, and draw all reasonable inferences in favor of the plaintiff. Scanlan v. Eisenberg, 669 F.3d 838, 841 (7th Cir. 2012). The facts are taken from the Amended Complaint (Dkt. # 5) and recited with this standard in mind.
On November 20, 2006, defendant Deidre Christian executed a mortgage for property at 8005 S. Euclid Avenue in Chicago. According to the mortgage, which is attached to complaint, New Century Mortgage Corporation was the lender, while Mortgage Electronic Registrations Systems, Inc. ("MERS"), acting as nominee for New Century, was the mortgagee. On the same date, Christian executed an adjustable rate balloon note.
Christian's mortgage was securitized-sold to a third party that groups large amounts of debt for resale to investors. This was done by way of a Pooling and Servicing Agreement (PSA) in 2007. Christian later defaulted on the mortgage, failing to make payments from October 1, 2010, through the present. After the borrower's default, the mortgage was assigned by MERS, as nominee for New Century, to Deutsche Bank National Trust Company (DBNTC), as trustee for a securitization trust, Morgan Stanley ABS Capital I Inc. Trust 2007-NC2 Mortgage Pass-through Certificates, Series 2007-NC2 (the "trust"), pursuant to an Assignment of Mortgage, attached as Exhibit C to the Amended Complaint. DBNTC then filed this action to foreclose on the mortgage, alleging that it is "the legal holder of the indebtedness and the owner of the mortgage given as security therefore [sic]."
Defendant Dameer-defendant Christian has never appeared-argues that DBNTC lacks standing to bring this action because it does not own the mortgage. Standing is a component of Article III's case-or-controversy requirement and is therefore an element of subject matter jurisdiction. Apex Digital, Inc. v. Sears, Roebuck & Co., 572 F.3d 440, 443 (7th Cir. 2009). Where, as here, there is a factual-not facial-challenge to jurisdiction, the Court looks beyond the jurisdictional allegations of the complaint and views whatever evidence has been submitted on the issue to determine whether subject matter jurisdiction exists. Id. at 444. Once there is evidence that calls standing into question, the presumption of correctness that is accorded to a complaint's allegations falls away, and the plaintiff bears the burden of coming forward with competent proof that standing exists. See id. at 444-45.
To have Article III standing, the plaintiff must have "a personal injury fairly traceable to the defendant's allegedly unlawful conduct and likely to be redressed by the requested relief." G & S Holdings LLC v. Continental Cas. Co., 697 F.3d 534, 540 (7th Cir. 2012) (citing Allen v. Wright, 468 U.S. 737, 751 (1984)). Here, the complaint's allegations are sufficient to establish Article III standing: there is a mortgage in default owing to the defendants' failure to make payments, and a judgment of foreclosure would remedy the default. See HSBC USA, N.A. v. Hardman et al., No. 12 C 00481, 2013 WL 515432, at *2 (N.D. Ill. Feb. 12, 2013).
But even if constitutional standing is established, there are also prudential limitations of the court's exercise of jurisdiction. Id. One of the prudential standing requirements is that the plaintiffs must assert their own legal rights and interests, and cannot rest their claims to relief on the legal rights or interests of third parties. Id. at 540-41 (citing Warth v. Seldin, 422 U.S. 490, 499 (1975). A similar concept is expressed through the statutory requirement that every action must be prosecuted by the "real party in interest." See Fed.R.Civ.P. 17. It is this aspect of prudential standing that defendant Dameer's motion invokes, although not explicitly.
In his motion to dismiss, Dameer does not dispute that New Century (through MERS as its nominee) was the mortgagee nor that the loan is in default. Rather, he argues that DBNTC lacks standing to bring this action because it has no right to enforce the note. Dameer argues that the assignment of the mortgage and transfer of the note to DBNTC were invalid because (1) the note lacked a written endorsement, and (2) the transfer and the assignment did not comport with the requirements of the Pooling and Servicing Agreement (PSA), portions of which are attached to the motion as exhibits. In response, DBNTC argues that (1) its allegations and its attachment of the mortgage and note to the complaint are sufficient evidence of its possession of the note; (2) as a non-holder in possession, it is entitled to enforce the note pursuant to the Illinois Uniform Commercial Code § 3-301; (3) it is the contractual assignee of the mortgage under the terms of the PSA; and (4) the defendant cannot enforce the PSA because he is neither a party nor a third-party beneficiary to that agreement.
Dameer's first argument, that the purported conveyance of the note was invalid because the note was not endorsed, fails as a matter of law. The note attached to the amended complaint bears no endorsement, but that does not end the inquiry as to whether DBNTC might nevertheless have the right to enforce it.
By its terms, the mortgage is governed by the law of Illinois ("the jurisdiction in which the property is located.") Am. Compl. Ex. 1 ¶ 16. DBNTC points out that under Illinois law, a negotiable instrument can be enforced by a non-holder in possession of the instrument that has the rights of a holder.See 810 ILCS 5/3-301(ii). A non-holder in possession is an entity that "is a successor to the holder or otherwise acquired the holder's rights." 810 ILCS 5/3-301, U.C.C. Comment. The purported holder must show "delivery to it with an interest to pass title." FDIC v. Linn, 671 F.Supp. 547, 533 (N.D. Ill. 1987) (applying Illinois law). In this case, DBNTC has provided sufficient evidence that it is a non-holder in possession of the note. For one, DBNTC possessed copies of the mortgage and the note, and attached them to its complaint as required by 735 ILCS 5/15-1504. Second, DBNTC has provided sufficient evidence that it acquired the right to enforce the note from MERS through the assignment. See Deutsche Bank Nat. Trust Co. v. Tapla, No. 11 C 4338, 2013 WL 4804855, at * 2 (N.D. Ill. Sep. 9, 2013); Hardman, 2013 WL 515432, at *4.
The Court questions whether it is even necessary to resort to the UCC law of negotiable instruments generally. "The Foreclosure Law governs the mode of procedure for mortgage foreclosures in Illinois... and any inconsistent statutory provisions shall not be applicable." MERS, Inc. v. Barnes, 940 N.E.2d 118, 122 (Ill.App.Ct. 2010) (internal quotation marks and citations omitted). Pursuant to the Foreclosure Law, 735 ILCS 5/15-1101 et seq., "Illinois does not require that a foreclosure be filed by the owner of the note and mortgage"; moreover, "plaintiff can maintain a lawsuit although the beneficial ownership of the note is in another person." Barnes, 940 N.E.2d at 124. The form mortgage foreclosure complaint set forth in the Foreclosure Law (on which the instant complaint obviously is modeled) makes clear that the action may be brought by "the legal holder of the indebtedness, a pledgee, an agent, the trustee under a trust deed or otherwise." See id. (quoting 735 ILCS 5/15-1504 (a)(3)(N)). Furthermore, foreclosure is a right of the mortgagee, and under the Foreclosure Law, a "mortgagee" is "(i) the holder of an indebtedness or obligee of a non-monetary obligation secured by a mortgage or any person designated or authorized to act on behalf of such holder and (ii) any person claiming through a mortgagee as successor. " Nothing in Dameer's arguments addresses these ...