Massachusetts Appeals Court Ruling Affirms MERS’ Role

 Court affirms Priority of Mortgage naming MERS as Mortgagee


CONTACT: Janis Smith
Phone: 703-738-0230
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Reston, Virginia, March 18, 2014—MERSCORP Holdings, Inc. today announced that the Commonwealth of Massachusetts Appeals Court affirmed the lower court’s ruling that the mortgage naming Mortgage Electronic Registration Systems, Inc. (MERS) as the mortgagee has priority over the Plaintiff’s mortgage which was recorded after the MERS mortgage because the Plaintiff failed as a matter of law to establish that any exception to the “first in time is first in right” rule applies when MERS is the mortgagee.

In Brian Pehl v. BAC Home Loan Servicing, LP, et al, the plaintiff argued the first mortgage was void because a mortgage cannot be separated from the promissory note it secures. The plaintiff claimed that MERS did not hold the note secured by the first mortgage and further claimed that his second mortgage was superior to the first.

In its order, the Court said, “This assertion is unsupported by law,” and stated that “a mortgage and the underlying note ‘can be split,’ although the mortgagee must hold both the mortgage and the note prior to the commencement of the foreclosure.” See the Massachusetts Supreme Court decision in pdf Eaton v. Federal Natl. Mort. Assn. (596 KB)  In addition, citing to U.S. Bank Natl. Assn. v. Ibanez, the Court noted, “[w]here the mortgage and the note are held separately, the holder of the mortgage holds the mortgage in trust for the purchaser of the note.”

The plaintiff also argued that the MERS assignment was invalid. The Court held that the Plaintiff did not having standing to challenge the assignment and cited to Eaton in which the Massachusetts Supreme Court acknowledged the procedures by which MERS makes assignments. “In any event,” the Court concluded, “even if MERS’s assignment to BANA were invalid, it would not affect the relative priority of the first mortgage and the second mortgage; the second mortgage would remain subordinate to the first mortgage, with MERS retaining title to the latter instrument.”

“The validity of the role MERS played as mortgagee was never in question under Massachusetts statutes, as existing case law supports MERS’s role,” said Janis L. Smith, MERSCORP Holdings Vice President of Corporate Communications. “The decision in this case now becomes another supporting MERS as the mortgagee.”

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.