Fifth Circuit Court of Appeals Upholds Ruling in MERS’ Favor

Three-Judge Panel Thwarts Borrower’s Attempt at “winning a free house”

Jason Lobo
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Reston, Virginia, September 19, 2012—MERSCORP Holdings, Inc. today announced that a three-judge panel of the United States Court of Appeals for the Fifth Circuit affirmed the July 7, 2011, dismissal of a plaintiffs’ wrongful foreclosure complaint against Mortgage Electronic Registration Systems, Inc. (MERS) and two other defendants.

In Wigginton v. The Bank of New York Mellon, Senior U.S. District Judge A. Joe Fish dismissed the plaintiff’s five-count complaint, which asserted claims of breach of contract, unreasonable collection efforts and defamation based on her belief that MERS’ transfer of its interest in the plaintiff’s deed of trust to the foreclosing lender Bank of New York Mellon (Mellon) and the subsequent foreclosure were unlawful. “Applying Texas law, courts in this circuit have consistently rejected claims based on an allegedly wrongful or illegal foreclosure where the deed of trust specifically grants the defendant a right to foreclose upon the plaintiff’s default,” Judge Fish held. “And the deed of trust, on its face, grants MERS a right to foreclose upon Wigginton’s default, a right Mellon acquired vis-à-vis MERS’ transfer of its interest.”

The Court of Appeals panel found that the District Court’s analysis in dismissing all counts was correct. 

“Winning a free house simply because the mortgage lenders sought to use normal means to recover it from a defaulted debtor would indeed be a lucky strike. But such windfalls are the province of the sweepstakes, not of the federal courts,” the Court of Appeals panel wrote in its judgment. “Dr. Wigginton has apparently enjoyed years of free housing while pursuing this meritless litigation.” Chief Judge Edith H. Jones and Circuit Judges Edward C. Prado and Jennifer Walker Elrod joined in the opinion. The Fifth Circuit Court of Appeals includes Louisiana, Mississippi and Texas.

“The Fifth Circuit Court of Appeals’ ruling emphasizes that MERS has legal authority to act on behalf of the lender, including the right to execute the assignment,” MERSCORP Holdings Vice President of Corporate Communications, Janis L. Smith, said. “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 descriptions of cases and other materials pertaining to MERS’ business model and role in U.S. housing, please visit


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.