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Federal Court finds MERS Deed of Trust not an Impediment to Non–Judicial Foreclosures in Washington

Reston, Virginia, December 5, 2012—MERSCORP Holdings, Inc. today announced that Judge Ronald B. Leighton of the U.S. District Court, Western District of Washington at Tacoma recently ruled that Mortgage Electronic Registration Systems, Inc. (MERS) involvement in two trust deeds did not prevent the note-holder from initiating the non-judicial foreclosure process or cause injury to the borrowers – a necessary element of a Consumer Protection Act (CPA) claim.

In pdf Kullman v Northwest Trustee Services, Inc. (1.27 MB) , Judge Leighton, citing the recent Bain v. Metropolitan Mortgage Group decision, found that the Washington Supreme Court “did not rule MERS involvement renders a foreclosure per se invalid.” Judge Leighton noted that the borrowers failed to prove that they were harmed by MERS’ role in the foreclosure and that the borrowers admitted that they defaulted on their mortgage. The Court found the plaintiffs’ claims against MERS sought to generate controversy through this action where none exists. The Court also found no merit to plaintiffs’ claims for fraud or violation of Washington’s CPA against MERS and the other defendants.

In pdf Lynott v. MERS, et al. (37 KB) , Judge Leighton, also citing Bain and the Washington Deed of Trust Act, held that U.S. Bank had the authority to foreclose because it was the holder of the borrower’s promissory note and the MERS trust deed assignment did not render U.S. Bank incapable of foreclosing. “Here, Plaintiff’s claims arise from a fundamental misunderstanding of the law,” Judge Leighton wrote. “U.S. Bank is the beneficiary of the deed because it holds Plaintiff’s note, not because MERS assigned it the deed.”

He further noted that J.P. Morgan Chase’s involvement in the foreclosure was also acceptable because it was acting as an agent for U.S. Bank. “The Washington Deed of Trust Act expressly authorizes the use of agents,” he held. Lastly, Judge Leighton ruled that the borrower could not sustain a CPA claim against any of the defendants including MERS because the Bain decision did not create a per se cause of action based solely on MERS’ involvement in the trust deed.

“As we noted in our initial statement concerning the Bain opinion, the Washington Supreme Court did not find that deeds of trust that name MERS as beneficiary prevent MERS members from foreclosing non-judicially,” MERSCORP Holdings Director of Corporate Communications, Jason Lobo, said. “We are pleased that this federal court, the Washington Superior Court and the Washington Court of Appeals have all rejected CPA claims against MERS."

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 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.

Federal Court Sanctions William Butler of Butler Liberty Law, LLC Again

Reston, Virginia, December 4, 2012— MERSCORP Holdings, Inc. today announced that U.S. District Court Judge Donovan W. Frank of the U.S. District Court for the District of Minnesota recently awarded sanctions against William Butler of Butler Liberty Law, LLC to reimburse Bank of America, Mortgage Electronic Registration Systems, Inc. (MERS) and MERSCORP Holdings, Inc. for attorney fees and costs incurred in defending the case.

Butler had filed the case, pdf Mustafa v Bank of America (32 KB)  on behalf of 23 borrowers, alleging that the chain of title to each of their mortgages was broken and the defendants lacked authority to foreclose under Minnesota law because they did not hold the borrowers’ original promissory notes.

In its pdf August 21, 2012, Order (42 KB) , the court granted the motion for sanctions because “[i]n spite of clear, binding precedent to the contrary,” Butler was continuing to assert the “consistently rejected ‘show me the note’ legal theory, along with similarly baseless quiet title and slander of title claims.” This sanction is at least the sixth time Butler has been penalized for similar matters.

Judge Frank’s November 30, 2012, Order directed Butler to pay $21,077.97 in attorney fees and costs incurred by Bank of America, MERS and MERSCORP Holdings. Judge Frank also granted an award of $24,374 in attorney fees and costs requested by other defendants. He noted that the additional sanctions were warranted because the August 21st order established that Butler’s conduct violated minimum legal standards of professional conduct and Butler’s behavior toward the remaining defendants was the same conduct the court found sanctionable as it related to Bank of America, MERS and MERSCORP Holdings.

“Mr. Butler has given false hope to struggling families and ignored clear edicts from the courts,” MERSCORP Holdings Director of Corporate Communications, Jason Lobo, said. “The claims filed by Mr. Butler are frivolous, and this recent sanction is in addition to other orders, including a $50,000 award in March 2012 and a $75,000 award in June 2012."

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 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, November 1, 2012—Below is a monthly summary of major legal decisions involving either the use of the MERS® System database or Mortgage Electronic Registration Systems, Inc. (MERS) and its role in the mortgage process. Please feel free to contact the MERSCORP Holdings, Inc. This email address is being protected from spambots. You need JavaScript enabled to view it. with any questions and visit the MERS Newsroom for a full list of news releases.

Major Developments

Texas

"Judge Guaderrama rejected Plaintiffs' claims and held that "[s]uch allegations of personal injury is too remote and simply piggy-backs on the direct injury, if any, to the counties." Additionally, Judge Guaderrama agreed with MERS' positions on all counts and empathically ordered the Clerk of the Court to "CLOSE this case."
Notable State and Federal Court Decisions

Idaho

"’The U.S. District Court for the District of Idaho, no stranger to these cases, has ruled definitively that MERS' role as beneficiary is in accordance with Idaho law,’ Janis Smith MERSCORP Holdings' vice president for Corporate Communications said. ‘The judges have been consistently clear that these claims are baseless.’"

Kansas

"[t]he Court found no ambiguity in the Note or the Mortgage in this case. The Mortgage clearly states that the Hansens mortgaged the listed property 'to MERS (solely as nominee for the Lender and Lender's successors and assigns).' "

Nevada

"'Justice James W. Hardesty wrote a detailed decision on behalf of the Court explaining that when MERS serves as the beneficiary of the deed of trust and a different entity holds the promissory note, this does not render either instrument void, and that once the foreclosing lender obtains an assignment from MERS and is the holder of the promissory note, the lender can proceed through the state's Foreclosure Mediation Program."

New York

“Justice Dillon held that BONY submitted “the mortgage, the note, the verified complaint setting forth the facts establishing a claim, and evidence of the mortgagor’s [borrower’s] default” to support its standing to foreclose and, therefore, the trial court should have granted the renewed motion for the appointment of a referee to conduct the foreclosure sale.”

Texas

"In denying review, the Supreme Court let stand a January 5, 2012, Court of Appeals opinion ... [which] noted that "the deed of trust gives the lender as well as the beneficiary the right to invoke the power of sale...the assignment of MERS's status as beneficiary under the deed of trust on February 20, 2009, does not contradict MidFirst's evidence that it succeeded to the rights of the lender under the deed of trust..."

Other Relevant Cases

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 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.

Federal Judge in Texas Rejects Plaintiffs' "Remote" Claim for County Recorder Fees

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, October 31, 2012— MERSCORP Holdings, Inc. today announced that U.S. District Court Judge David C. Guaderrama of the Western District of Texas, El Paso Division, granted a motion to dismiss filed by Mortgage Electronic Registration Systems, Inc. (MERS) and its co-defendants in response to a wrongful foreclosure complaint and unsupported claim to alleged unpaid county recording clerk filing fees in El Paso and Ector counties.

In pdf Huml v. MERS (1.09 MB) , Judge Guaderrama denied the plaintiffs' claim to receive monies based upon allegations "that MERS (and presumably other named defendants) failed to record subsequent transfers of interest in certain real property subject to mortgage; that failure injured the counties by depriving them of the revenues (in the form of lost revenue or uncollected recording fees) they could have earned; and therefore Plaintiffs were injured." Judge Guaderrama rejected Plaintiffs' claims and held that "[s]uch allegations of personal injury is too remote and simply piggy-backs on the direct injury, if any, to the counties." Additionally, Judge Guaderrama agreed with MERS' positions on all counts and empathically ordered the Clerk of the Court to "CLOSE this case."

"We are pleased that this meritless case is finally closed and that the Court found that plaintiffs lack standing to seek rewards for third-party county recorders," Janis Smith MERSCORP Holdings' vice president for Corporate
Communications said. "Complaints with generalized and unsupported allegations are a common foreclosure delay tactic, but multiple opinions by courts in Texas have supported MERS' authority as a mortgagee under Texas law because the deeds of trust signed by borrowers at closing identify MERS as the beneficiary and the nominee for the original lender and its successors and assigns."

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.

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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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