New York State Supreme Court Rejects Mortgage/Note “Splitting” Claim

MERS Prevails over Frequently Used Stalling Tactic Once Again


Jason Lobo 
Phone: 703-652-1660
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Reston, Virginia, February 12, 2013—MERSCORP Holdings, Inc. today announced that Justice Arthur G. Pitts of the Supreme Court of the State of New York, Suffolk County, recently ruled in favor of Mortgage Electronic Registration Systems, Inc. (MERS) and other defendants, dismissing a one-count complaint alleging that the MERS mortgage was unenforceable.

In Ruiz v. MERS et al., Justice Pitts ruled that “various courts within this and other jurisdictions have interpreted the relationship of MERS and the lender as an agency relationship.” 

The borrower alleged that because MERS as mortgagee did not own or hold her promissory note, the mortgage and note were separated (or “split”) which in turn voided the MERS mortgage – a frequently used and unsuccessful legal argument to forestall valid foreclosure proceedings involving MERS security instruments.

In his ruling, Justice Pitts cited three prior court decisions from New York and two from other states discussing the MERS-Lender agency relationship.  “MERS was named a nominee by defendant Webster [Webster Bank, N.A., the original lender] as mortgagee for the purpose of recording the mortgage,” he held.  “It is readily apparent that the intent of the lender and MERS was to establish a principal agent relationship and as such, not to split the debt and the collateral.” 

“Justice Pitts provided a clear definition of ‘nominee’ and noted that MERS was, ‘in effect, a limited agent’ for the lender, which granted MERS  the authority to act on its behalf as outlined in the MERS mortgage and MERS membership documents,” MERSCORP’s Director for Corporate Communications Jason Lobo said.  “MERS’ authority as mortgagee and nominee is plainly written in the standard MERS security instrument that borrowers sign and agree to at closing.”

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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.