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Dismiss Borrowers’ Suits to Quiet Title

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, September 25, 2015— MERSCORP Holdings, Inc. today announced that three separate federal courts ruled in Mortgage Electronic Registration Systems, Inc.’s (MERS) favor, dismissing borrowers’ suits to quiet title and affirming MERS’ authority to assign the mortgage lien.

In pdf Bradley v. Branch Banking Trust (BB&T) (243 KB)  (Georgia), pdf Garza v. Flagstar Bank, FSB (834 KB)  (Texas), and pdf McCarty v. Bank of New York (1.04 MB)  (New York), the plaintiffs sued MERS and other financial companies to avoid foreclosure based on claims that MERS could not hold or assign a security instrument. In addition, the plaintiffs in Bradley and Garza alleged that by using MERS in the loan transaction, the note and security instrument were split, making the mortgage or deed unenforceable.

In Bradley, Magistrate Judge Russell G. Vineyard from the U.S. District Court for the Northern District of Georgia found that because “it is undisputed that [the borrower] executed a security deed that conveyed the property to MERS,” the borrower could not claim that he held full title to the property, and therefore, dismissed the quiet title claim. In McCarty, the U.S. District Judge Analisa Torres from the Southern District of New York similarly dismissed quiet title claims against MERS and its co-defendants while also upholding the validity of the deed of trust assignment executed by MERS. In her opinion, Judge Torres held, “Plaintiff voluntarily executed the Deed of Trust to obtain the loan. And even construing the amended complaint liberally, Plaintiff has not alleged a proper basis for a discharge of that loan.” In Garza, Judge David Hittner from the U.S. District for the Southern District of Texas Court upheld the validity of the assignments of the deed of trust and dismissed the borrowers’ claim to quiet title, noting that the borrowers “fail to make any allegations to support their assertion that Defendants’ claim to the property is invalid or unenforceable[.]” The quiet title claims in all three cases were dismissed with prejudice.

Furthermore, the split-the-note claims in Bradley were rejected by applying the Georgia Supreme Court’s decision in pdf You v. JP Morgan Chase (74 KB) , while the Garza Court relied on the Fifth Circuit’s rejection of identical claims under Texas law in pdf Martins v. BAC Home Loan Servicing LP (102 KB) .

“These federal courts affirmed that MERS can rightfully hold a security instrument on behalf of the lender and its assigns,” said MERSCORP Holdings Vice President for Corporate Communications, Janis Smith. “In addition, the federal court in New York found in McCarty that the borrower’s quiet title and fraud claims were contradicted by the plain language in the mortgage and assignment.”

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.

Holds MERS is Beneficiary and Has Right to Assign

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, October 5, 2015—MERSCORP Holdings, Inc. today announced that the Court of Appeal of California for the Third Appellate District affirmed the demurrer granted by the California Superior Court, Nevada County.

In pdf Boyle v. Bank of America, N.A. (167 KB) , the homeowners sued Bank of America and MERS for fraud and wrongful foreclosure, claiming that the MERS deed of trust was invalid because MERS lacked any interest in the promissory note, which rendered the MERS deed of trust and assignment of the deed of trust to Bank of America ineffective. The homeowners alleged that Bank of America’s attempts to foreclose on the property were improper because the defective assignment failed to convey to Bank of America the right to foreclose. The homeowners also claimed that Bank of America lacked the right to foreclose because of the failure to properly transfer the note to a securitized trust that owned the loan. The trial court granted Bank of America and MERS a demurrer on each of the homeowner’s claims.

The Court of Appeal agreed with the trial court’s rejection of the homeowner’s claims, finding that MERS was the original beneficiary under the deed of trust and that its assignment of that interest was not fraudulent. The Court also rejected the borrowers’ reliance on pdf Glaski v. Bank of America (277 KB) , in support of their fraud claim. In Glaski, the Fifth Appellate District permitted a homeowner to challenge the foreclosure based on alleged failures to properly transfer and assign the note and deed of trust, respectively, to the securitized trust that acquired the loan after origination. Here, the Court found that no state or federal court had adopted the Glaski holding and therefore, the Court held that it “… will follow the federal lead in rejecting this minority holding.” Further, the Court held that California’s non-judicial foreclosure scheme did not provide for a judicial action to determine whether the person initiating the foreclosure process is authorized.

“We are pleased that this Court found, once again, that MERS can hold and assign a mortgage,” said MERSCORP Holdings Vice President for Corporate Communications, Janis Smith. “MERS has legal authority to act on behalf of the lender, an authority 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.

MERS is a Beneficiary with the Power to Assign

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, October 14, 2015—MERSCORP Holdings, Inc. today announced that the United States Court of Appeals for the Fifth Circuit affirmed a dismissal in MERS’ favor.

In pdf Ferguson v. Bank of New York Mellon Corp. (128 KB) , borrowers sued MERS, their servicer and the trustee seeking an injunction and declaratory relief preventing the trustee from foreclosing. They alleged that Bank of New York Mellon violated the false lien statute by falsely asserting a right to foreclose. The district court granted MERS and Bank of New York Mellon’s motion to dismiss. On appeal, the borrowers argued that the MERS assignment was void because Texas law did not permit MERS to act as beneficiary of a Deed of Trust.

In its decision, the Fifth Circuit determined that the borrowers agreed to a deed of trust that explicitly designated MERS as the beneficiary with a right to exercise all the interests in the deed of trust. Similarly, the Court rejected the borrowers’ argument that book-entry systems were prohibited from acting as beneficiaries under the Texas Property Code. Citing to pdf Harris County v. MERSCORP, Inc (446 KB) ., which involved deeds of trust with similar language, the Court “concluded MERS had committed no fraudulent misrepresentation because it was a valid beneficiary as a matter of contract law and under [Texas Property Code].” The Court further found that the Texas Property Code “grants MERS authority to act as a beneficiary of DOTs by including book-entry systems in [the Code’s] definition of ‘mortgagees’ …” As the beneficiary, the Court held that MERS had the right to assign the deed of trust. “Therefore, MERS’ acting as the beneficiary did not render the transfer to BNY void …”

Finally, the Court found the false lien claim was “entirely derivative” of the assignment challenge, and that the right to foreclose the MERS Deed of Trust was validly created, and effectively assigned by MERS to Bank of New York Mellon.

“We are pleased that this Court confirmed that MERS can hold and assign a mortgage,” said MERSCORP Holdings Vice President for Corporate Communications, Janis Smith. “MERS has the legal authority to act on behalf of the lender and, as this Court noted, the deed of trust agreed to by the borrowers ‘explicitly designated’ MERS as the beneficiary.”

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.

Deed of Trust with MERS as Nominee and Assignment by MERS Established a Valid, Secured Interest

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, October 27, 2015—MERSCORP Holdings, Inc. today announced that the Supreme Court of Montana, in a majority opinion last week, held that “a recorded deed of trust and chain of assignments, including assignments by MERS, can establish a secured interest in real property.” The Supreme Court in pdf Goodwin v. MERS, MERSCORP, et. al (123 KB) affirmed a ruling of the Eleventh Judicial District Court in Flathead County, noting that “the District Court’s interpretation and application of the law were correct.”

The District Court ruled earlier this year in favor of Mortgage Electronic Registration Systems, Inc. (MERS), MERSCORP Holdings, Inc., and others, in a quiet title action filed by the plaintiff after he defaulted on his mortgage payments and received notice of a trustee’s sale. In his complaint, the plaintiff alleged violations of various state and federal mortgage laws regarding notice and assignment of mortgages. MERS was the named beneficiary as nominee for the lender and the lender’s successors and assigns on the plaintiff’s deed of trust. The District Court granted the Defendants’ (MERS and others) motion for summary judgment, holding that the plaintiff (Goodwin) had presented no admissible evidence demonstrating genuine issues of material fact as to the Defendants’ interest in the Property.

“We are pleased that the Montana Supreme Court agrees that a deed of trust naming MERS – and any subsequent assignments by MERS – can establish a secured interest in real property. In the opinion of the Court, the law on this point is settled,” said MERSCORP Holdings Vice President for Corporate Communications, Janis Smith. “MERS has the legal authority to act on behalf of the lender, including authority to assign, and 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.

  • 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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    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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    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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