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State Appeals Court Rules that Tax Lien Purchasers Must Give Notice to MERS

FOR IMMEDIATE RELEASE

CONTACT: Jason Lobo
Phone: 703.652.1660
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Reston, Virginia, May 15, 2013— MERSCORP Holdings, Inc. today announced that a three-judge panel of the Arizona Court of Appeals reversed a trial court decision, which granted quiet title, or outright ownership, of an Arizona property to an individual who was granted an interest in the property after paying the delinquent property taxes.

In pdf Delo v. GMAC Mortgage, LLC (143 KB) , Presiding Judge Garye L. Vásquez and Judges Philip G. Espinosa and Virginia C. Kelly unanimously ruled that “those who purchase tax liens and seek to foreclose on them must give MERS notice of the foreclosure proceedings when they are identified in the deed of trust.”

In this case, Delo, the tax-lien purchaser, failed to name MERS, the record beneficiary of the deed of trust, a defendant in his tax-lien foreclosure lawsuit against the borrowers and original lender or subsequent quiet title action against the loan servicer, GMAC Mortgage and note owner, U.S. Bank (the “GMAC Parties”). Delo claimed that he was not required to name MERS in either action because MERS was only an agent of the original lender, who he named and received a judgment against in his tax-lien lawsuit. In the quiet title action, the GMAC Parties claimed that their interest in the property was superior to Delo’s interest and argued that Delo should have given notice to MERS in both actions, however the trial court disagreed and found that the GMAC Parties were given adequate notice of Delo’s tax-lien lawsuit and their claims in this second lawsuit were now barred. The GMAC Parties appealed the trial court decision and MERS intervened in the present court of appeals matter.

The Court of Appeals found that the deed of trust “not only expressly identifies MERS as the nominee for the lender, but also beneficiary, and the holder of legal title to the Property.” The Court found that Delo should have provided notice of the tax lien foreclosure lawsuit to MERS because MERS’ interest in the property was acquired before Delo had acquired his interest. Therefore, the Court ruled that the trial court should have rendered judgment in favor of the GMAC Parties because their interest in the property was protected by MERS’ record interest.

“It’s important to note that MERS as the designated lender’s nominee under the deed of trust, protects the interests of its members who service or own the particular mortgage loan secured by a MERS security instrument,” said MERSCORP Holdings’ Director for Corporate Communications Jason Lobo. “Many times, as was the case here, homeowners default on their property taxes before defaulting on their mortgage loan. Tax lien purchasers and the taxing authorities should be aware of MERS’ right to notice as agent 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.

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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.

Court Finds That the County Registers Suit Fails on the Merits

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 7, 2013— MERSCORP Holdings, Inc. today announced that Judge Robert Holmes Bell of the U.S. District Court for the Western District of Michigan dismissed a lawsuit filed by Ingham and Branch County, Michigan Registers of Deeds, ruling in favor of MERSCORP Holdings, Inc., Mortgage Electronic Registration Systems, Inc. (MERS) and other member defendants.

In pdf Hertel-Hutchins v. MERS, et al. (156 KB) , Judge Bell dismissed the case on its merits. The Registers alleged that the defendants did not pay transfer tax on assignments of mortgages and that they improperly avoided tax by transferring quit claim deeds for nominal consideration. For many reasons, Judge Bell dismissed these claims, holding that “none of the instruments submitted by Plaintiffs were subject to the transfer tax.” With regard to the assignments of mortgages, the Court relied on the recent Sixth Circuit Court of Appeals’ pdf McLaughlin v. Chase Home Finance (52 KB)  decision, which held that “[a]ssignments of mortgages . . . are specifically exempt from transfer taxes under” Michigan law.

As to the quit claim deeds, the Court held that “nominal consideration on a quit claim deed has been found presumptively valid by the Michigan Court of Appeals.” The Court further explained that these quit claim instruments are not evidence of a sale of property for its full value, and that nominal consideration is typical and valid between agents and principals when the agents “who foreclosed on and purchased properties in their capacity as agents of lenders, return the properties to the lenders, who at all times maintain the beneficial ownership interest in the debt and the property securing the debt.”

Judge Bell also found that the Registers of Deeds for the two Counties lacked standing to challenge alleged violations of Michigan’s County Real Estate Transfer Tax Act (CRETTA). “Michigan statutes expressly define the powers of registers of deeds…but no statute authorizes a register of deeds to file lawsuits,” Judge Bell ruled. “Moreover, no statute empowers a county’s board of commissioners to authorize a register of deeds to do so.”

Despite the County Registers’ lack of standing, Judge Bell commented sternly on their arguments, saying, “Plaintiffs’ complaint and briefs make inaccurate statements of the law under the CRETTA and allege far-fetched theories of liability…the Court will not allow Plaintiffs to continue ‘fishing’…when transfer taxes are indisputably not owed...”

“We are pleased that Judge Bell addressed the liability question and invested his time in debunking each of the Plaintiffs’ fanciful theories in this decision, despite their inability to bring the suit on procedural grounds in the first place,” said MERSCORP Holdings’ Director for Corporate Communications Jason Lobo.

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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 2, 2013—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 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 MERS Newsroom for a full list of news releases.

Major Developments

Idaho

  • Idaho Supreme Court: MERS Meets Definition of Beneficiary, April 26, 2013
    "Justice Eismann, joined by Chief Justice Roger Burdick and Justices Joel D. Horton, Jim Jones and Warren E. Jones, quoted directly from the subject MERS deed of trust in this case in which MERS is identified as beneficiary 'as a nominee for Lender and Lender's successors and assigns' and found that a nominee is a form of an agent and that an agent has authority to act on behalf of its principal. Accordingly, the panel found that MERS as an agent of the original lender, Lehman Brothers Bank, FSB ("Lehman Brothers"), and its successors and assigns 'is the representative of the principal and acts for, in the place of, and instead of, the principal.' "

Rhode Island

  • MERS' Role in Rhode Island Affirmed by State Supreme Court, April 12, 2013
    "In reviewing the language contained in the mortgage, the Court found the language to be 'clear and unequivocal' when defining MERS as the mortgagee and agreed with the trial justice's reasoning by finding that 'the plaintiffs explicitly granted the statutory power of sale and the right to foreclose to MERS,' and therefore that MERS had the 'contractual authority to exercise that right.' "

Oklahoma

  • MERS Wins Dismissal of Recorder Fee Suit, April 30, 2013
    " '[Oklahoma's recording statutes] clearly have the purpose of providing notice to the world of the asserted interests in property and do not convey a cause of action other than to those with a direct interest in the property or mortgage,' Judge Walkley wrote. '[T]his court finds there is no private right of action to enforce the provision [sought by the Board of County Commissioners].' "

Michigan

  • MERS Wins Federal Lawsuit in the Sixth Circuit, April 18, 2013
    " 'Even were the assignment from MERS to U.S. Bank invalid, thereby creating a defect in the foreclosure process under [Michigan law], Plaintiff has not shown that he was prejudiced,' Circuit Court Judge Clay wrote. 'He has not shown [double liability]; he has not shown that he would have been in any better position to keep the property absent the defect; and he has not shown that he has been prejudiced in any other way.' "

Minnesota

  • MERS Prevails Again in the Eighth Circuit, April 10, 2013
    "In Jerde v. JPMorgan Chase Bank N.A. and Dunbar v. Wells Fargo Bank N.A., Judges Raymond W. Gruender, Bobby E. Sheppard and Roger L. Wollman joined other appeals court and district court judges in rejecting Butler's 'show me the note' theory and other arguments intended to stall valid  foreclosures."

Other Notable Decisions

 Rhode Island

  • RI Superior Court: Plaintiff's Arguments vs. MERS Consistently Rejected, April 10, 2013
    " 'It is well-established that MERS and an assignee of MERS...may properly invoke the statutory power of sale as granted to the mortgagee by the plain, unambiguous language of the Mortgage,' Justice Rubine held. 'Plaintiff, through her acknowledgement and execution of the Mortgage, explicitly granted to MERS, and to the successors and assigns of MERS, the right to exercise the statutory power of sale and to foreclose on the Property.' "

Washington

  • WA Superior Court Recognizes MERS as Agent of Beneficiary, April 16, 2013
    "In Peeters v. Green Tree Servicing, LLC, Judge Weiss granted the defendants' motion for summary judgment, dismissing all claims against the defendants, finding the 'Plaintiff's Complaint fails, as a matter of law...' "

Oregon

  • "Split the Note" Theory Rejected in Oregon, April 5, 2013
    " 'Apparently the main basis of the claim pleaded in the complaint is that the note has been securitized and separated from the deed of trust...' Judge Tiktin wrote. However, Judge Tiktin found that 'plaintiff has not alleged that the circumstances required ORS 86.735 to non-judicially foreclose a trust deed have not been met [by the defendants] and plaintiff has not pointed to any provision of the non-judicial trust deed foreclosure statutes that requires the presentation of documents, including the note, to the debtor as a prerequisite of proceeding non-judicially.' "

Michigan

  • Michigan Appeals Court Finds MERS Role Valid, April 15, 2013
    "In Mitchell v. PHH Mortgage Corp., Judges Jane M. Beckering, Kirsten F. Kelley and Joel P. Hoekstra, citing Michigan Compiled Law §600.3201(1), concluded 'that the foreclosure in this case satisfied the [four-part] requirements...' of the law."

Georgia

  • Georgia Court of Appeals Validates MERS' Role and Authority, April 17, 2013
    "In Larose v. Bank of America, N.A., a majority opinion written by Judge Carla Wong McMillian and joined by Presiding Judge Anne Elizabeth Barnes, Judge Elizabeth L. Branch, Presiding Judge Sara L. Doyle, and Judge William M. Ray II, held that 'we are bound by the reasoning in this Court's case of Montgomery v. Bank of America...issued today on this very issue.' Montgomery, the panel wrote, 'holds that nothing in Georgia law requires that an assignee of a security deed granting the right to foreclose must also hold the note before initiating foreclosure proceedings.' "

Montana

  • Montana Court: "Law Permits MERS to Act as Nominee for the Lender," April 9, 2013
    " '...[N]umerous Montana trial courts have consistently upheld MERS' legal capacity to exercise the rights granted to it by borrowers in a deed of trust, consistent with the findings of other courts around the nation,' Judge Brown wrote. 'Montana law permits MERS to act as nominee for the lender in exercising the rights of a beneficiary under § 71-1-303, MCA, as the Deed of Trust expressly provides in this case.' "

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.

Court Finds Cleveland, County Oklahoma Board of Commissioners Lacks Standing

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, April 30, 2013— MERSCORP Holdings, Inc. today announced that Oklahoma State District Judge Lori Walkley of the Cleveland County, Oklahoma District Court dismissed a recording fee suit filed by the Cleveland County Board of County Commissioners, ruling in favor of MERSCORP Holdings, Inc. and Mortgage Electronic Registration Systems, Inc. (MERS).

In pdf Board of County Commissioners of the County of Cleveland v. MERSCORP Holdings, Inc., et al. (157 KB) , Judge Walkley dismissed a class action suit filed on behalf of Cleveland County and others similarly situated in the State of Oklahoma. The plaintiff sought to compel the defendants to record mortgages and mortgage assignments, past and future, and to pay the associated recording fees. Plaintiff also brought claims for unjust enrichment and civil conspiracy.

Judge Walkley dismissed the case in its entirety, holding that there is no private right of action to enforce the provisions of the statutes (46 O.S. §1 et seq.) the County sought to enforce.

"[Oklahoma's recording statutes] clearly have the purpose of providing notice to the world of the asserted interests in property and do not convey a cause of action other than to those with a direct interest in the property or mortgage," Judge Walkley wrote. "[T]his court finds there is no private right of action to enforce the provision [sought by the Board of County Commissioners]."

"Courts across the country are dismissing recorder fee lawsuits, including counties in Iowa, Florida, Arkansas, Illinois, Missouri and Kentucky," MERSCORP Holdings' Director of Corporate Communications Jason Lobo said.

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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