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Federal Court Affirms MERS’ Right to Assign its Interest

FOR IMMEDIATE RELEASE

CONTACT: Janis Smith
Phone: 703-738-0230
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Reston, Virginia, May 23, 2014—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, L.P. (BAC) and Fannie Mae, affirming a lower court’s decision dismissing claims of wrongful foreclosure.

In  pdf Singha v. BAC Home Loans Servicing, L.P. (374 KB) , Chief Judge Carl E. Stewart and Judges Emilio M. Garza and Leslie H. Southwick upheld MERS’ role as the original beneficiary of a deed of trust and MERS’ authority to assign its interest in the deed of trust to BAC. BAC subsequently filed a foreclosure.

Citing pdf Martins v. BAC Home Loans Servicing, L.P. (102 KB)  722 F.3d 249 (5th Cir. 2013), the Court re-affirmed that “Texas recognizes assignment of mortgages through MERS and its equivalents as valid and enforceable,” and that MERS “may assign a deed of trust just as any other holder or beneficiary.” As the assignee of MERS, BAC had standing to foreclose.

The Court further held that the borrowers lacked standing to challenge the validity of the assignment of the deed of trust from MERS to BAC “because it does not clearly appear they were intended to be third-party beneficiaries of it.” See pdf Reinagel v. Deutsche Bank Nat’l Trust Co. , 735 F.3d 220 (5th Cir. 2013).

“The Court of Appeals’ ruling is consistent with other decisions validating MERS’ role as beneficiary under the deed of trust and its authority to execute assignments,” said MERSCORP Holdings Vice President for Corporate Communications, Janis Smith.

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 Affirms that MERS Holds a Legal Interest as Mortgagee and Had a Right to Notice

FOR IMMEDIATE RELEASE    

CONTACT: Janis Smith
Phone: 703-738-0230
Email: This email address is being protected from spambots. You need JavaScript enabled to view it.

Reston, Virginia, May 16, 2014—MERSCORP Holdings, Inc. today announced that the Court of Appeals of Ohio Eighth Appellate District affirmed the trial court’s orders determining that MERS, as the mortgagee of record, was a necessary party to the action and had a legal interest in the property. The appellate court also found that MERS had authority to assign the mortgage and that its assignee had a right to intervene in the action.

In pdf Wood v. Fillinger (349 KB) , appellant John Wood sought appeal of the Cuyahoga County Court of Common Pleas’ orders issued in his action to foreclose on a mortgage loan he had given to Ms. Fillinger.  Mr. Wood failed to name MERS as a party to the foreclosure action.  The trial court determined that MERS had a legal interest in the property and was a necessary party to the action.  Chase, as MERS assignee, intervened in the case.  The orders denied his motion for default against the original lender and granted summary judgment in favor of MERS and Chase Home Finance, LLC.

In his opinion, Judge Sean C. Gallagher said, “Like the trial court, we will not disregard that appellant had notice of a superior lien held by MERS, as nominee for RBC, yet he failed to bring MERS into the case.” The court rejected the argument that a default judgment against the original lender could extinguish the lien on the property.

Judge Gallagher also confirmed that “Because MERS was designated as both the nominee for the lender and the mortgagee, it had the authority to assign the mortgage.”  Based on the assignment executed by MERS, Chase, as the assignee, held the first mortgage lien on the property and was the real party in interest in the action.

“Judge Gallagher validated that MERS, as the recorded mortgagee, had a right to notice of actions affecting its lien interest and that MERS has legal authority to act on behalf of the lender—including the right to execute an assignment,” said MERSCORP Holdings Vice President for Corporate Communications, Janis Smith.

 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.

United States District Court Grants MERS’ Motion to Dismiss

FOR IMMEDIATE RELEASE

CONTACT: Janis Smith
Phone: 703-738-0230
Email: This email address is being protected from spambots. You need JavaScript enabled to view it.

Reston, Virginia, May 15, 2014—MERSCORP Holdings, Inc. today announced that the United States District Court for the Middle District of Tennessee ruled that MERS has the authority to act as the agent of any valid note holder and granted MERS’ motion to dismiss.

In pdf Thompson v. American Mortgage Express Corp. Thompson v. American Mortgage Express Corp. (43 KB) , the borrower alleged there was a cloud on her title because her loan had been securitized and therefore none of the named defendants in the case held any interest in the property. The borrower also alleged that MERS had no right to assign her mortgage because MERS was only the nominee for the original lender, not the subsequent purchasers of the note.

Relying on an earlier decision of the United States Court of Appeals for the Sixth Circuit which affirmed the MERS business model, United States District Judge Todd J. Campbell said in his opinion, “Courts have consistently upheld the validity of MERS’s role as nominee for a promissory note’s lenders and assigns and as beneficiary under a deed of trust.” See pdf Dauenhauer v. Bank of New York Mellon , 2014 WL 1424494 (6th Cir. April 15, 2014). He found that MERS therefore could legally assign the mortgage as the nominee for such subsequent note holders.

“Courts continue to rule that MERS has legal authority to act on behalf of the lender and the lender’s successors and assigns, including the right to execute an assignment,” said MERSCORP Holdings Vice President for Corporate Communications, Janis Smith. “Courts recognize that this authority is granted by plain language in the mortgage document signed at closing by the borrower.”

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.

 

Court Dismissed Wrongful Foreclosure Lawsuit

FOR IMMEDIATE RELEASE

CONTACT: Janis Smith
Phone: 703-738-0230
Email: This email address is being protected from spambots. You need JavaScript enabled to view it.

Reston, Virginia, May 14, 2014—MERSCORP Holdings, Inc. today announced that the United States District Court of New Hampshire granted MERS’ motion to dismiss a wrongful foreclosure lawsuit.

In pdf Lovy v. Fed. Nat’l Mortgage Ass’n (138 KB) , the Plaintiffs filed an action seeking damages for wrongful foreclosure and to quiet title premised on the alleged invalidity of an assignment executed by MERS, in addition to other claimed violations of state and federal consumer laws.

United States District Judge Steven J. McAuliffe noted that the United States Court of Appeals for the First Circuit had recently discussed MERS’ role in the national mortgage market in some detail in Culhane v. Aurora Loan Servs., 708 F.3d 282 (1st Cir. 2013), and had “unequivocally ruled that MERS may validly possess and assign a legal interest in a mortgage.” See pdf Serra v. Quantum Servicing Corp. (48 KB) , No. 13-1557 (1st Cir. Mar. 31, 2014). “Consequently,” he said, “plaintiffs’ assertions to the contrary are without legal merit.” The Court noted that more recently factually similar claims had been found legally deficient by the First Circuit in pdf Butler v. Deutsche Bank Trust Co. (55 KB) , No. 12-2108 (1st Cir. Apr. 4, 2014).

In light of these holdings, the Court analyzed Plaintiffs’ claims finding them insufficient to give rise to a plausible claim against MERS and concluding that the defendants had the legal right to exercise the power of sale provision of the mortgage. In dismissing Plaintiffs’ slander of title claims, the Court reasoned “MERS was entitled to record Plaintiffs’ Mortgage deed under New Hampshire law and had no other practical means of securing … the loan.” Therefore, the mortgage did not create a cloud on Plaintiff’s title.

“Although the First Circuit cases cited by the Court dealt with Massachusetts properties, the District Court of New Hampshire nonetheless adopted their holdings as consistent with New Hampshire law, and struck Plaintiffs’ wrongful foreclosure and slander of title claims,” said MERSCORP Holdings Vice President for Corporate Communications, Janis Smith. “This court, as others have consistently done before it, held that MERS has legal authority to act on behalf of the lender.”

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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    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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