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Judge affirms MERS’ role as mortgagee with authority to assign the mortgage, rules that plaintiffs have no standing to challenge MERS assignment

FOR IMMEDIATE RELEASE

CONTACTS: Janis L. Smith
Phone: 703-738-0230
Email: This email address is being protected from spambots. You need JavaScript enabled to view it.

Karmela Lejarde
Phone: 703-761-1274
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Reston, VA, Nov. 15, 2011—The U.S. District Court for the District of Massachusetts in pdf Peterson v. GMAC Mortgage and Mortgage Electronic Registration Systems, Inc. (41 KB)  (MERS) found in favor of GMAC and MERS and dismissed all counts of the plaintiffs’ wrongful foreclosure complaint. In her Oct. 25 ruling, U.S. District Court Judge Rya Zobel rejected the borrowers’ claim that the MERS assignment of the mortgage is invalid, finding that MERS is the mortgagee with the authority to assign the mortgage. Therefore, the MERS assignment of the mortgage did transfer MERS’ interest to GMAC. In their complaint, the plaintiffs alleged that the assignment of mortgage from MERS to GMAC was invalid because MERS never held the underlying note and therefore was not the mortgagee.

Citing other decisions from courts in Massachusetts and other jurisdictions, Judge Zobel also ruled that the plaintiffs as borrowers had no standing to challenge the MERS mortgage assignment because they are “unrelated third-parties with no interest in the assignment.” Judge Zobel also found that under Massachusetts law, when a MERS mortgage assignment is executed before a notary public, that assignment is presumed to be valid.

“Massachusetts courts have repeatedly upheld the validity of MERS assignments and found that borrowers have no standing to challenge assignments between MERS and its members,” said Janis L. Smith, MERSCORP’s Vice President of Corporate Communications. “MERS’ role as mortgagee is clear and transparent to the borrower, and Judge Zobel’s decision adds to the growing body of similar judicial decisions in Massachusetts and around the country that affirm the validity of MERS’ business model.”

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Statement by Janis Smith, MERSCORP’s Vice President for Corporate Communications 
on the complaint filed by the State of Delaware

FOR IMMEDIATE RELEASE

CONTACTS:
Janis L. Smith
Phone: 703-738-0230
Email: This email address is being protected from spambots. You need JavaScript enabled to view it.

Karmela Lejarde
Phone: 703-761-1274
Email: This email address is being protected from spambots. You need JavaScript enabled to view it.

October 27, 2011

Our business model is straightforward and transparent. MERSCORP, Inc., and its subsidiary, Mortgage Electronic Registration Systems, Inc. (MERS) comply with laws as well as county and state recording statutes and mortgage regulations.

There is no merit to the Delaware attorney general’s allegation of deceptive practices, and we refute claims that use of the MERS® System caused confusion to borrowers or any other participants in the mortgage finance system.

Homeowners have free access to their loan servicer information on the MERS® System at all times, and MERS’ website also provides them with access to mortgage counseling and foreclosure prevention organizations. The borrower’s customer relationship is with the servicer, and not with MERS, and federal laws require the servicer to disclose all changes in ownership to borrowers.

MERSCORP has cooperated in good faith with the Delaware attorney general’s office and complied with their requests for information under a subpoena issued earlier this year. The lawsuit they filed was unexpected, and we disagree with the allegations made in their complaint. The MERS® Systems role in the mortgage industry has reduced chain of title issues, provided efficiencies through e-commerce, and resulted in lower mortgage borrowing costs to consumers.

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Download "Quick Facts" for more information about MERSCORP, Inc. and Mortgage Electronic Registration Systems, Inc. (MERS).

Judge also noted that borrowers lack standing to challenge assignments

FOR IMMEDIATE RELEASE

CONTACTS:
Janis L. Smith
Phone: 703-738-0230
Email: This email address is being protected from spambots. You need JavaScript enabled to view it.

Karmela Lejarde
Phone: 703-761-1274
Email: This email address is being protected from spambots. You need JavaScript enabled to view it.

Reston, VA, Oct. 14, 2011—The U.S. District Court for the District of Hawaii ruled in pdf Sakala v. BAC Home Loans (130 KB)  that an assignment by Mortgage Electronic Registration Systems, Inc. (MERS) to BNY Mellon is valid, and that BNY Mellon possessed the authority to foreclose when the borrower defaulted on the mortgage loan.

In his Oct. 4 ruling, U.S. District Court Judge David Alan Ezra wrote that under Hawaii law, the plaintiff had no standing to challenge the assignment’s validity because they were not party to that agreement.

“In Hawaii, generally third parties do not have enforceable contract rights,” wrote Judge Ezra. He cited the Livonia Property Holdings v. Farmington Road Holdings decision, stating that “as a stranger to both the PSA (‘Pooling and Servicing Agreement’) and the assignment and without any evidence or reason to believe that he was an intended beneficiary of either contract, Plaintiff may not dispute the validity of the PSA or assignment.”

The court also rejected the plaintiffs’ allegations that MERS’ status as mortgagee caused the mortgage and the promissory note to become “split” from each other because they were not held by the same entity, and ruled that BNY Mellon could foreclose because they were acting as the agent of the noteholder.

In addressing the plaintiff’s attack on the MERS assignment on the grounds that MERS was a “sham” mortgagee and the MERS system is fraudulent, the court cited extensively to the recent decision from the Ninth Circuit Court of Appeals in Cervantes v. Countrywide Home Loans, Inc., which the court noted is the controlling precedent. The Sakala decision also found that MERS’ role in the mortgage loan process is not fraudulent and that no false or misleading statements were made to the plaintiff regarding the MERS system, or that the designation of MERS in the plaintiff’s mortgage caused the plaintiff any injury. The court ruled that the MERS assignment is valid, and that MERS properly assigned its right to foreclose to BNY Mellon. Judge Ezra wrote, “[d]espite Plaintiff’s protestations to the contrary, there is nothing illegal or unlawful about such an arrangement.”

“The Hawaii Court’s ruling is consistent with rulings from around the nation, affirming the validity of MERS assignments,” said Janis L. Smith, MERSCORP Vice President of Corporate Communications.

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Reston Va., October 14, 2011—We have not seen the lawsuit yet. The MERS business model and practices comply with the recording statutes and regulations of Ohio. This position has been upheld in numerous cases in Ohio courts and countless cases across the country on the state and Federal level. We are confident that MERS’ business practices will be upheld in court as complying with Ohio law.

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  • About Us

    About Us

    Today’s financial services industry depends on technological innovations to provide its customers with access to information, increased efficiency and reduced processing costs. MERSCORP Holdings, Inc. owns and operates the MERS® System, a national electronic registry system that tracks the changes in servicing rights and beneficial ownership interests in mortgage loans that are registered on the System.

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  • MERS® eRegistry

    MERS® eRegistry

    The MERS® eRegistry is essential to the eMortgage world. It is the legal system of record for identifying the Controller (holder) and Location (custodian) for the authoritative copy of a registered eNote. Lenders today are closing eNotes and selling them into the secondary market. Both Freddie Mac and Fannie Mae require that Lenders register their eNotes on the MERS® eRegistry.

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  • Information for Homeowners

    Information for Homeowners

    Homeowners today want information about their mortgage loans. Some are facing financial hardship and are struggling with mortgage payments. Information and helpful resources are available. 

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  • Neighborhood Benefits

    Neighborhood Benefits

    Title agents, government agencies and others looking for information about mortgage loans registered on the MERS® System can use Servicer ID or MERS® Link. This public access is often used by local municipalities to identify the servicer responsible for maintaining vacant or abandoned property.

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  • Media Room

    Media Room

    The MERSCORP Holdings, Inc. Media Room provides press contact information and facts about the company and its subsidiary, Mortgage Electronic Registration Systems, Inc. (MERS). These materials are provided to help national, regional and local media better understand the companies' business model and role in the U.S. housing finance system.

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