Judges say there is no inconsistency in MERS’ designation as both beneficiary and nominee

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 23, 2011—In a unanimous decision, the Court of Appeals of California (First District, Division One) ruled in favor of defendant Avelo Mortgage in pdf Holland v. Avelo Mortgage (242 KB) , finding that Mortgage Electronic Registration Systems, Inc (MERS) was a proper beneficiary and that it can assign the deed of trust.

The court’s opinion, written by Presiding Judge James J. Marchiano, dismissed all counts against Avelo Mortgage. Although MERS was not party to the case, the plaintiff’s complaint alleged that MERS was not a true beneficiary and could not assign its interest in the deed of trust to Avelo, therefore removing Avelo’s authority to foreclose. Judge Marchiano, citing to pdf Fontenot v. Wells Fargo Bank (184 KB) , rejected that argument and wrote that “MERS is the beneficiary of the deed of trust because the deed of trust at issue designates MERS as beneficiary in the document itself.”

The court also rejected the plaintiff’s allegations that the role of MERS was ambiguous. “The record does not support the claimed ambiguity,” wrote Judge Marchiano. “[R]ather, it states that MERS is the beneficiary, acting as a nominee for the lender. There is nothing inconsistent in MERS’s being designated as both the beneficiary and as a nominee, i.e., agent, for the lender.”

“Like many before it, this decision supports and upholds MERS’ role as both the beneficiary and nominee for the lender,” said Janis L. Smith, MERSCORP’s Vice President of Corporate Communications. “The court’s ruling also points out that the clarity of the company’s role is written right into the deed of trust the borrower signed.”

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