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Federal Judge in Michigan Cites Prevailing Law When Rejecting Borrower Claims

FOR IMMEDIATE RELEASE
CONTACT: Jason Lobo
Phone: 703-652-1660
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Reston, Virginia, August 8, 2012—MERSCORP Holdings, Inc. today announced that District Judge Patrick J. Duggan of the U.S. District Court for the Eastern District of Michigan recently dismissed a borrower complaint based on the flawed and frequently rejected theory that transfers of a promissory note splits the note from the mortgage, nullifying the mortgage.

In pdf Marrocco v. Chase Bank, N.A. (22 KB) , Judge Duggan cited court opinions from state ( pdf Residential Funding Co., L.L.C. v. Saurman (62 KB) ) and federal ( pdf Yuille v. Am. Home Mort. Servs., Inc. (178 KB) ) cases in striking down the borrower’s complaint which sought to “Quiet Title,” or extinguish the defendants’ interest in the property, despite his failure to pay the debt.

“The Michigan Supreme Court has recently rejected the legal theory underlying the Complaint,” Judge Duggan wrote. “The Sixth Circuit has also recently recognized that a mortgage is enforceable under Michigan law even if it has been separated from the promissory note.” Judge Duggan concluded that “the validity of the mortgage is unaffected by the separation of the note and mortgage.”

“This 'Split the Note' theory has been rejected in Michigan and other states as well,” said Janis Smith, MERSCORP Holdings’ Vice President for Corporate Communications. “Case law clearly establishes the validity of the mortgage lien and the borrower’s contractual obligation to pay the debt, even when the promissory note is separated from the mortgage deed.”

For descriptions of cases and other materials pertaining to MERS’ business model and role in U.S. housing, please visit www.mersinc.org.

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MERSCORP Holdings, Inc. is a privately held corporation that owns and manages the MERS® System and all other MERS® products. It is a member-based organization made up of approximately 3,000 lenders, servicers, sub-servicers, investors and government institutions. Mortgage Electronic Registration Systems, Inc. (MERS) serves as the mortgagee in the land records for loans registered on the MERS® System, and is a nominee (or agent) for the owner(s) of the promissory note. The MERS® System is a national electronic database that tracks changes in mortgage servicing and beneficial ownership interests in residential mortgage loans on behalf of its members.

FOR IMMEDIATE RELEASE
CONTACT: Jason Lobo
Phone: 703-652-1660
Email: This email address is being protected from spambots. You need JavaScript enabled to view it.

Reston, Virginia, August 7, 2012—MERSCORP Holdings, Inc. today announced that District Judge Richard J. Leon of the U.S. District Court for the District of Columbia recently dismissed an “incoherent” borrower complaint against Mortgage Electronic Registration Systems, Inc. (MERS) and others for failure to support 20 alleged violations of law.

In pdf McCarter v. Bank of New York (363 KB) , Judge Leon’s ruling echoed hundreds of other federal and state decisions across the country rejecting meritless borrower claims against MERS in an attempt to forestall valid foreclosure proceedings.

“Plaintiff’s 59-page complaint, unfortunately, is an incoherent narrative containing numerous allegations that generalize and conclude as opposed to specify and support,” Judge Leon wrote. “Indeed, the complaint reads like a poorly written assortment of generalized grievances about the banking industry that is more closely tied to newspaper articles and investigative reports than the plaintiff’s own situation.”

Therefore, lacking the substance necessary to survive a motion to dismiss, Judge Leon dismissed the lawsuit under Fed. R. Civ. P. 12(b)(6) because “plaintiff fails to nudge her claims across the line from conceivable to plausible.”

“These types of meritless claims are unfortunately quite common,” said Janis Smith, MERSCORP Holdings’ Vice President for Corporate Communications. “More unfortunate, however, is that borrowers, desperate to hold on to their homes, are pursuing baseless legal claims, but not availing themselves of legitimate foreclosure prevention alternatives. We continue to recommend that struggling borrowers contact the company to which they send their mortgage payments and also reach out to a government-approved homeownership counselor for assistance instead of filing lawsuits.”

For descriptions of cases and other materials pertaining to MERS’ role and business model in U.S. housing, please visit www.mersinc.org.

###

MERSCORP Holdings, Inc. is a privately held corporation that owns and manages the MERS® System and all other MERS® products. It is a member-based organization made up of approximately 3,000 lenders, servicers, sub-servicers, investors and government institutions. Mortgage Electronic Registration Systems, Inc. (MERS) serves as the mortgagee in the land records for loans registered on the MERS® System, and is a nominee (or agent) for the owner(s) of the promissory note. The MERS® System is a national electronic database that tracks changes in mortgage servicing and beneficial ownership interests in residential mortgage loans on behalf of its members.

FOR IMMEDIATE RELEASE
CONTACT: Jason Lobo
Phone: 703-652-1660
Email: This email address is being protected from spambots. You need JavaScript enabled to view it.

Reston, Va.—Below is a monthly summary of major legal decisions involving either the use of the MERS® System or Mortgage Electronic Registration Systems, Inc.(MERS) and its role in the mortgage process. Please feel free to contact the This email address is being protected from spambots. You need JavaScript enabled to view it. at MERSCORP Holdings, Inc. with any questions and visit the Newsroom for a full list of news releases.

Major Developments

Delaware

“The agreed upon measures are consistent with steps we’ve taken nationally to improve offerings to our constituencies and are natural outcomes of our responsiveness to the rapidly changing market-reform environment.”

Minnesota

“‘Butler’s insistence on re-litigating losing arguments is staggering, and it comes with a cost, because it multiplies the expense of litigation and monopolizes scarce judicial resources,’ Judge Montgomery wrote. ‘Moreover, no one, not even Butler, can reasonably or competently believe in the merits of any of these arguments. Butler’s persistent filing of frivolous arguments is egregious and merits sanctions…’”

Notable State and Federal Court Decisions

Arizona

“In Buchna, Judge Mary H. Murguia of the U.S. District Court for the District of Arizona granted MERS’ motion to dismiss finding that MERS is a valid beneficiary under Arizona law with the authority to enforce the Deed of Trust.”

California

“Not only has the notion that MERS doesn’t have authority to assign been routinely rejected as baseless by courts, including multiple courts in the California system, it’s also an ineffective strategy for avoiding foreclosure after default.”

Georgia

“In a decision filed last month, Dehdashti v. The Bank of New York Mellon, Judge Batten agreed with MERS that the plaintiff lacked ‘standing to challenge the validity of the assignment because she was not a party to the assignment.’”

Idaho

“All other claims were similarly dismissed for lack of merit, including allegations that MERS has no authority under Idaho law to assign its interest in the Deed of Trust. ‘This position has been routinely rejected by the courts, including this Court,’ Judge Winmill wrote.”

“District Judge Darren B. Simpson of the Bonneville County District Court in Idaho denied the borrowers’ attempt to use the judicial system as a ‘fishing expedition in search of flaws in the Trust Deed or the Note,’ while at the same time upholding and explaining in detail MERS’ role and authority as trust deed beneficiary.”

Michigan

“In Hargrow v. Wells Fargo Bank N.A., the Sixth Circuit panel rejected the plaintiffs’ claims that, among other things, Wells Fargo, as an assignee of MERS, was not entitled to foreclose because it did not own an interest in the indebtedness…”

Oregon

“We disagree with today’s ruling from the Oregon Court of Appeals’ in Niday v. GMAC Mortgage LLC, et al. Importantly, however, we note that the Appellate decision does not impact judicial foreclosures. Nor does it affect the validity of mortgages or deeds of trust recorded in MERS’ name in Oregon.”

Rhode Island

“Citing previous decisions in Kriegel v. MERS, Breggia v. MERS, and Payette v. MERS, Justice Rubine ruled instead that MERS is a valid mortgagee under Rhode Island law with the authority to act on behalf of the current note owners, including assigning and/or foreclosing the mortgages MERS holds as mortgagee on the properties.”

Utah

“‘The Tadeharas’ interpretation of § 57-1-35 was squarely rejected by the Utah Court of Appeals in Commonwealth Property Advocates...,’ Circuit Judge Murphy wrote on behalf of the panel.”

For descriptions of cases and other materials pertaining to MERS’ business model and role in U.S. housing, please visit www.mersinc.org.

###

MERSCORP Holdings, Inc. is a privately held corporation that owns and manages the MERS® System and all other MERS® products. It is a member-based organization made up of thousands of lenders, servicers, sub-servicers, investors and government institutions. Mortgage Electronic Registration Systems, Inc. (MERS) serves as the mortgagee in the land records for loans registered on the MERS® System, and is a nominee (or agent) for the owner of the promissory note. The MERS® System is a national electronic database that tracks changes in mortgage servicing and beneficial ownership interests in residential mortgage loans on behalf of its members.

FOR IMMEDIATE RELEASE
CONTACT: Jason Lobo
Phone: 703.652.1660
Email: This email address is being protected from spambots. You need JavaScript enabled to view it.

Reston, Virginia, July 30, 2012 – MERSCORP Holdings, Inc. today announced that District Judge Darren B. Simpson of the Bonneville County District Court in Idaho denied the borrowers’ attempt to use the judicial system as a “fishing expedition in search of flaws in the Trust Deed or the Note,” while at the same time upholding and explaining in detail MERS’ role and authority as trust deed beneficiary.

In Wilkins v. First Magnus Financial Corporation, Judge Simpson rejected plaintiffs’ complaint to “quiet title,” or grant outright ownership of the property, alleging wrongful foreclosure against Mortgage Electronic Registration Systems, Inc. (MERS) and three other defendants by citing Idaho and federal case law. Judge Simpson granted the Defendants’ motion to dismiss and noted that “…sister courts in Bonneville and Jefferson counties have held that the ‘legal title’ clause [contained in the MERS Deed of Trust] is an expression of the relationship between MERS and the lender, which gives MERS power, if necessary to act on behalf of the lender as its representative.”

Judge Simpson further ruled that MERS’ role as beneficiary only and not note-holder did not “split” the Trust Deed from the Note because under Idaho law the Trust Deed follows the note and MERS’ agency relationship as beneficiary continued with each subsequent holder of Plaintiffs’ Note. “Idaho law allows the assignment of loans,” he wrote. “The mere fact that the transfer occurs does not sever the note from the deed of trust.”

“MERS’ authority and duties as trust deed beneficiary was ruled valid and appropriate by this court as it has been in hundreds of similar lawsuits across the country,” said Janis Smith, MERSCORP Holdings’ Vice President for Corporate Communications. “Struggling borrowers should contact the company to which they send their mortgage payments and also reach out to a government-approved homeownership counselor for assistance. Pursuing meritless legal theories regarding MERS is costly and time consuming.”

For descriptions of cases and other materials pertaining to MERS’ role and business model in U.S. housing, please visit www.mersinc.org.

###

MERSCORP Holdings, Inc. is a privately held corporation that owns and manages the MERS® System and all other MERS® products. It is a member-based organization made up of approximately 3,000 lenders, servicers, sub-servicers, investors and government institutions. Mortgage Electronic Registration Systems, Inc. (MERS) serves as the mortgagee in the land records for loans registered on the MERS® System, and is a nominee (or agent) for the owner(s) of the promissory note. The MERS® System is a national electronic database that tracks changes in mortgage servicing and beneficial ownership interests in residential mortgage loans on behalf of its members.

  • 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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    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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    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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