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Federal Circuit Court Panel Rejects “Show Me the Note” Theory

FOR IMMEDIATE RELEASE
Jason Lobo
Phone: 703.652.1660
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Reston, Virginia, May 28, 2013 – MERSCORP Holdings, Inc. today announced that a three-judge panel of the United States Court of Appeals for the Fifth Circuit ruled in favor of BAC Home Loans Servicing, LP. (BAC) and Fannie Mae, affirming a lower court’s decision dismissing claims of wrongful foreclosure. The Fifth Circuit Court is a federal court with appellate jurisdiction over the district courts of Louisiana, Mississippi and Texas.

In pdf Martins v. BAC Home Loans Servicing, LP (102 KB) , Judges Jerry E. Smith, Edward C. Prado and Priscilla R. Owen dismissed the plaintiff’s “show-me-the-note” theory alleging that the defendant lacked standing to foreclose because the assignment of the mortgage by MERS to BAC separated the note from the deed of trust, rendering the mortgage unenforceable and invalid.

“Numerous district courts have addressed this question, and each one to analyze Texas law has concluded that Texas recognizes assignment of mortgages through MERS and its equivalents as valid and enforceable,” Judge Smith wrote on behalf of the panel. The Court further held that Texas differentiates between enforcement of a note and foreclosure, with the latter enforcing a deed of trust, and can be accomplished without judicial supervision. Importantly, the Court noted that “the mortgage was assigned by MERS, which had been given such power, including the power to foreclose, by the deed of trust.”

“The Court of Appeals’ affirmation of the lower court’s decision is consistent with countless other decisions rejecting the ‘show-me-the-note’ theory and validating MERS’ authority to assign mortgages,” MERSCORP Holdings Director for Corporate Communications Jason Lobo said.

For description 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.

Washington Courts Continue to Dismiss Wrongful Foreclosure Lawsuits against MERS Post-Bain

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, May 21, 2013 – MERSCORP Holdings, Inc. today announced that Judge Thomas Rice of the U.S. District Court, Eastern District of Washington, recently ruled in favor of Mortgage Electronic Registration Systems, Inc. (MERS) and its co-defendant members, denying a nine-count complaint alleging wrongful foreclosure and violations of Washington’s Consumer Protection Act (CPA).

In pdf Ukpoma v. U.S. Bank (285 KB) , the plaintiff, citing the Washington Supreme Court’s decision in Bain v. Metropolitan Mortgage Group, Inc., argued that a wrongful foreclosure claim exists against MERS because MERS cannot act as trust deed “beneficiary” under Washington law and therefore its assignment of the deed of trust to the foreclosing bank was void. Judge Rice found no merit to the plaintiff’s reliance on Bain in support of a wrongful foreclosure count against MERS.

“The fact that MERS is listed as a beneficiary of the deed of trust is not relevant to the outcome of this case,” Judge Rice wrote, ruling that since U.S. Bank was the holder of the plaintiff’s note and deed of trust, it had the authority to foreclose.

Judge Rice methodically rejected all other counts of the plaintiff’s complaint, including allegations of violations of Washington’s CPA. To prevail on CPA claims, a plaintiff “must also demonstrate that he or she was injured as a result of the act or practice,” he held. Judge Rice dismissed this claim, ruling that the “Plaintiff simply has not been injured by MERS’s involvement with her loan.”

“Here in Ukpoma, the plaintiff relied on the Bain decision in an attempt to stall the non-judicial foreclosure of her property after she defaulted on her loan,” MERSCORP Holdings Director of Corporate Communications Jason Lobo said. “Unconvinced, Judge Rice explained in detail why a borrower’s attempts to halt a non-judicial foreclosure using the Bain decision and claims against MERS will not be successful. We continue to emphasize that struggling borrowers are better served by working with their mortgage servicers and seeking appropriate financial counseling, than by attempting to use the judicial system to avoid valid foreclosures.”

For description 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, May 20, 2013 – MERSCORP Holdings, Inc. today announced that Justice Brian T. Tucker of the New Hampshire Superior Court ruled in favor of Mortgage Electronic Registration Systems, Inc. (MERS), dismissing a borrower’s “difficult to decipher” claim that transfers of his promissory note while MERS held the mortgage created a cloud on his title. The borrower also cited other allegations of fraud.

In pdf Bennett v. MERS (484 KB) , Justice Tucker, citing the U.S. Court of Appeals for the First Circuit’s ruling in  pdf Culhane v. Aurora Loans Services (115 KB) , held that “[t]he fact that the Note has been transferred does not affect MERS’s status as mortgagee, since it operates under a system in which it remains as mortgagee if the note is sold by one MERS member to another.”

The Plaintiff asserted that failure to record transfers of the note while MERS held the mortgage rendered the MERS mortgage unenforceable, together with other unspecified acts of fraud, left MERS’ interest in the property void. Justice Tucker was unconvinced and found that “the mortgage says the Note may be sold and that MERS will remain as mortgagee for [the original lender’s] ‘successors and assigns.’ ”

“There should be no surprise by Justice Tucker’s decision since MERS’ authority as mortgagee and nominee are identified in the mortgage, which borrowers sign and agree to at closing,” MERSCORP Holdings’ Director for Corporate Communications Jason Lobo said.

For description 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
Jason Lobo
Phone: 703.652.1660
Email: This email address is being protected from spambots. You need JavaScript enabled to view it.

Reston, Virginia, May 16, 2013 – MERSCORP Holdings, Inc. today announced that a five-justice panel of the Alabama Supreme Court affirmed a lower court’s decision which in part validated MERS’ ability to assign mortgages as the nominee for the original lender and its successors and assigns.

In pdf Federal National Mortgage Association v. Steele (523 KB) , Chief Justice Roy S. Moore, and Associate Justices Glen Murdock, Michael F. Bolin, James Allen Main and Tommy Bryan unanimously ruled without opinion that the lower court properly upheld Fannie Mae’s ejectment action judgment against the borrowers. MERS was not a party to the lawsuit.

The borrowers defaulted on their loan and after a completed non-judicial foreclosure and sale the foreclosing servicer conveyed title to the property to Fannie Mae. Fannie Mae received a judgment in its favor in the subsequent ejectment action and the borrowers sought to set aside the judgment. The borrowers claimed that the underlying foreclosure was invalid because Mortgage Electronic Registration Systems, Inc. (MERS) was not authorized to assign the mortgage to the servicer who conveyed title to the property to Fannie Mae after the foreclosure sale.

The trial court denied the borrowers’ request; affirmed Fannie Mae’s standing to bring the ejectment action and the judgment in favor of Fannie Mae. The trial court found that the borrowers’ claim regarding MERS’ lack of authority to assign the mortgage as “being contrary to Alabama law” because “[t]he ability of MERS to assign a mortgage or take other actions as the nominee for a lender and that lender’s assigns in a mortgage has been affirmed in Alabama.”

“The fact that MERS was named as the original mortgage… and subsequently executed an assignment of mortgage to Everhome Mortgage Company does not cause the judgment in favor of FNMA to be void,” Circuit Court Judge Eugene Verin wrote in the lower court ruling. The Alabama Supreme Court agreed and affirmed the lower court’s decision without opinion.

“The Alabama Supreme Court’s ruling leaves undisturbed MERS’ role as a mortgagee and its authority to assign a mortgage, which is consistent with other court rulings across the country,” MERSCORP Holdings Director of Corporate Communications Jason Lobo said.

For description 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.

  • 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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    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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