MERS can act on lender’s behalf and perform any action required of the lender

FOR IMMEDIATE RELEASE

CONTACTS:
Janis L. Smith
Phone: 703-738-0230
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Karmela Lejarde
Phone: 703-761-1274
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Reston, Virginia, December 29, 2011—The Virginia Supreme Court on Dec. 20 rejected the borrower’s petition for appeal in pdf Graves v. Mortgage Electronic Registration Systems, Inc. (593 KB)  (MERS) and let stand the June 29 decision of the Fairfax County Circuit Court, which stated that under the terms of the deed of trust, MERS can exercise the rights of a lender, including appointing a substitute trustee.

“By signing the Deed of Trust, Graves agreed that MERS, as nominee for lender and lender’s successors and assigns, has the right to foreclose on the Property and recognizes that MERS could take any action required of lender,” wrote Circuit Court Judge Jonathan Thacher. “Deeds of trust are treated as contracts, and nothing under Virginia law appears to prohibit a lender and borrower from agreeing to allow a third party, such as MERS, to enforce the terms of a deed of trust.”

The Virginia Supreme Court also left undisturbed the lower court’s ruling that the deed of trust gives MERS the authority to appoint a substitute trustee. As the Circuit Court stated, when the language of a deed of trust such as Graves’ clearly states that MERS is the nominee of a lender and may act on its behalf in the event of a default, statutory requirements regarding the appointment of substitute trustees do not apply.

“The Virginia Supreme Court’s ruling should clarify MERS’ role in the deed of trust,” said Janis L. Smith, MERSCORP’s Vice President of Corporate Communications. “The state’s highest court found no error in the Circuit Court’s ruling that MERS can take any action required of a lender, and that Virginia law does not forbid a lender and borrower from giving MERS the authority to enforce the terms of a deed of trust.”

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