U.S. Court of Appeals for the Tenth District Affirms Summary Judgment


CONTACT: Janis Smith
Phone: 703-738-0230
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'Split the Note Theory’ Unsuccessful Again

Reston, Virginia, June 27, 2016—MERSCORP Holdings, Inc. today announced that the Tenth Circuit Court of Appeals affirmed the Wyoming bankruptcy court’s order granting summary judgment to Bank of America and held that there is nothing impermissible in the arrangement of one entity holding the mortgage in a representative capacity for the beneficial owner of the debt.

In pdf Barney v. Bank of America (44 KB) , the bankruptcy trustee sought to avoid a mortgage on the debtors’ property that had been assigned to MERS and subsequently assigned to BAC Home Loans. The trustee argued that the mortgage was unenforceable because neither MERS nor its assignee was the note holder during the time each entity was the mortgagee identified in the local land records.

The U.S. Court of Appeals for the Tenth District rejected the trustee’s argument and cite its holding in In re Trierweiler, where the Court found that “The Trustee has pointed to no Wyoming authority that prohibits the loan originator from agreeing to have someone other than the beneficial owner of the debt hold the mortgage and enforce the debt as its agent. We note that Wyoming has a statute that contemplates conveying real estate to a mortgagee in a representative capacity, which suggests that Wyoming allows original parties to a note and mortgage to name someone other than the noteholder as the mortgagee.”

“We are pleased that the U.S. Court of Appeals for the Tenth District affirmed the Wyoming bankruptcy court’s order,” said MERSCORP Holdings Vice President for Corporate Communications, Janis Smith. “This holding is consistent with prior rulings and is another example of unsuccessful reliance on the ‘split the note’ theory.”

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. Users of the MERS® System include 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.