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Ruling Affirming MERS’ Authority in California Stands

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 Va., October 11, 2011—The United States Supreme Court this morning released its order denying a writ of certiorari in Gomes v. Countrywide, declining to reconsider lower court rulings in the case. The Supreme Court for the State of California also declined to accept the case earlier this year.

“Courts in California have ruled consistently that MERS’ legal standing as beneficiary gives MERS the authority under state law to take action on behalf of the owner of the note,” said Janis Smith, MERSCORP’s Vice President of Corporate Communications.

The Court of Appeals of the Fourth Appellate District (Division One) of the State of California affirmed MERS’ authority to foreclose in California. In his February 2011 decision in Gomes, Judge Steven R. Denton ruled in favor of MERS, holding that there is no right under California’s non-judicial foreclosure process to allow a plaintiff to bring an action to determine if the note owner authorized the foreclosing party to initiate non-judicial foreclosure. Further, the court found that the language in the deed of trust gives MERS the authority to initiate non-judicial foreclosures, and that the borrower agrees, when signing the deed of trust, that MERS has the right to foreclose. “[E]ven if there was a legal basis for an action to determine whether MERS has authority to initiate a foreclosure proceeding, the deed of trust- which Gomes has attached to his complaint- establishes as a factual matter that his claim lacks merit. As stated in the deed of trust, Gomes agreed by executing that document that MERS has the authority to initiate a foreclosure.”

In a June, 2011 ruling in pdf Ferguson v. Avelo Mortgage (107 KB) , the Court of Appeals of the Fourth Appellate District (Division One) of the State of California again stated that “MERS, as the beneficiary under a deed of trust, has the authority under California law to assign a deed of trust.” “The MERS business model has been upheld by numerous courts around the country, and is operating in all 50 states,” Smith added.

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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. 7, 2011—The U.S. District Court for the Northern District of Georgia on Sept. 29 in pdf Higgs v. Pendergast, et al (1.88 MB) , adopted the Magistrate’s final report and recommendation, dismissing the plaintiffs’ complaint with prejudice and finding that as a matter of law, Mortgage Electronic Registration Systems, Inc. (MERS) had the authority to transfer the security deed to CitiMortgage, giving Citimortgage a right to enforce the security deed.

In her Aug. 11 decision, U.S. Magistrate Judge Janet F. King ruled that the MERS assignment was valid, and that under Georgia law, the note did not need to be transferred to CitiMortgage in order for CitiMortgage to have a right to enforce the security deed. The fact that the assignment was executed by an employee of Citimortgage -- a MERS System member who had been appointed as an assistant secretary of MERS -- in or of itself did not make the assignment fabricated or fraudulent as the plaintiff alleged.

“Judge King’s decision affirms MERS’ legal interest in the security deed and its ability to assign its interest prior to foreclosure by a lender or servicer,” said Janis L. Smith, MERSCORP Vice President of Corporate Communications. “The Court’s decision also adds to the growing body of case law that shows the legality of the MERS business model in Georgia.”

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Arizona court finds claims related to the formation and creation of MERS lack merit

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.5, 2011—In a significant decision affirming the validity of the MERS business model, the U.S. District Court for the District of Arizona dismissed with prejudice 72 cases against Mortgage Electronic Registration Systems, Inc. (MERS). In the multi-district consolidated litigation, the plaintiffs alleged various violations of Arizona, Nevada, Oregon and South Carolina law. The Court found that:

  • MERS' role as beneficiary was proper;
  • The promissory note and deed of trust are not split when MERS is the beneficiary;
  • MERS assignments were proper;
  • MERS and MERS-appointed trustees have the power to foreclose; and,
  • The plaintiffs were not injured by MERS and lacked standing to challenge assignments.

"The Court's dismissal of these 72 cases against MERS, including six class actions, is an extremely significant ruling and shows that claims being made against MERS and MERSCORP alleging fraud, or that security interests are unenforceable, or alleging that foreclosures are inappropriate due to MERS’ presence as a party, are meritless,” said Janis Smith, MERSCORP Vice President for Corporate Communications. “The Court's clearly-worded order affirms the validity of the MERS business model and the exercise of powers associated with it."

In its Oct. 3 decision in IN RE Mortgage Electronic Registration Systems (MERS) Litigation, the court relied on the Ninth Circuit Court of Appeals decision in pdf Cervantes v. Countrywide Home Loans, et al. (99 KB)  and rejected the plaintiffs’ argument that when MERS is identified as the beneficiary, the mortgage loan becomes unenforceable so that no party has the power to foreclose. The court also stated that “[a]s specifically agreed to by the Plaintiffs in their Deeds of Trust, MERS holds legal title to the secured interests and is the beneficiary or lienholder of record, as nominee or agent for Plaintiffs’ lenders and the lenders’ ‘successors and assigns’.”

The court also confirmed that the plaintiffs do not have standing to challenge the validity of the MERS assignments. The Court found that, “[The] Plaintiffs are uninvolved and unaffected by the alleged Assignments, and do not possess standing to assert a claim based on such.”

Citing to numerous opinions finding that MERS has the authority to initiate non-judicial foreclosures and substitute the trustee under a deed of trust, the Court held that the foreclosures in these cases were not improper. The plaintiffs also alleged that the parties who initiated the non-judicial foreclosure process did not comply with the statutes governing the same because the notes were rendered unenforceable or the assignments from MERS were invalid. In disposing of these claims, the Court stated that it “… rejects this overarching split the note theory and finds that MERS may perform valid assignments. Again, Courts in Nevada have consistently held that MERS assignments are not cause to enjoin non-judicial foreclosure.”

The Court also dismissed claims for aiding and abetting wrongful foreclosure in light of its findings that there was nothing improper about MERS role as beneficiary or the commencement of foreclosure.

In addition to dismissing the plaintiffs’ cases, the court also denied as untimely a motion to certify a question to the Nevada Supreme Court on whether the identification of MERS as the beneficiary under a deed of trust while the note is retained by the lender results in a split of the note and deed of trust rendering the note unsecured. The Court noted that the plaintiffs only filed the motion to certify after this issue was decided against them and that at least part of the question was resolved by the Cervantes decision.

"A number of important issues were considered and decided by the Court, which had been previously appointed by the panel on multi-district litigation to hear cases in which the plaintiffs asserted common allegations critical of the MERS model," Smith added. The court's detailed and reasoned opinion is a major decision for MERS."

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MERS can lawfully assign its interest

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. 5, 2011—In pdf Smith v. Fannie Mae et al (387 KB) , the Dallas Division of the U.S. District Court for the Northern District of Texas dismissed a complaint against Mortgage Electronic Registration Systems, Inc. (MERS) and other defendants that challenged the validity of the MERS deed of trust assignment. The court also rejected the plaintiffs’ allegations of negligence, wrongful foreclosure and a violation of the Texas Deceptive Practices Act.

In his Sept. 30 decision, Judge Royal Furgeson rejected the plaintiffs’ arguments, stating that “they are premised on the erroneous theory that MERS could not be a beneficiary and could not lawfully assign its interest in the Loan to Bank of America.” The court cited to several recent decisions from other federal courts in Texas including Eskridge v. Fed. Home Loan Mortgage Corp, where the courts held that MERS, as the deed of trust beneficiary, has the right to assign its interest in the deed of trust. The court concludes that the plaintiffs’ deed of trust expressly provided that MERS held the deed of trust for the benefit of the original noteholder and its successors and assigns.

In addition, because the borrowers were not a party to the mortgage assignment, Judge Furgeson found that the plaintiffs had no standing to contest the MERS assignment.

“The Court’s decision adds to the growing body of judicial decisions stating that the MERS business model is legal in the State of Texas,” said Janis L. Smith, MERSCORP Vice President of Corporate Communications. “Judge Furgeson upholds that MERS is a proper beneficiary, and as such, has the legal right to assign its interest in the deed of trust.”

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    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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