Illinois Appellate and Circuit Courts Dismiss Challenge to MERS


Judges strike down “debt collection agency” theory


CONTACT: Janis Smith
Phone: 703-738-0230
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Reston, Virginia, September 22, 2014—MERSCORP Holdings, Inc. today announced that the First Judicial District Appellate Court of Illinois and the Circuit Court for the Nineteenth Judicial Circuit issued rulings dismissing borrowers’ claims that Mortgage Electronic Registration Systems, Inc. (MERS) was operating as an “unregistered debt collection agency.”

In pdf Deutsche Bank v. Cichosz (31 KB) , Presiding Justice Nathaniel R. Howse and Justices Terrence J. Lavin and James Fitzgerald Smith affirmed a lower court’s decision to grant summary judgment to Deutsche Bank. MERS filed the lawsuit in 2009 and later that year Deutsche Bank was substituted in as the plaintiff in place of MERS. The defendants alleged that MERS was operating as an unregistered “debt collection agency” under the Illinois Collection Agency Act (ICAA) when it filed the lawsuit in 2009, which rendered Deutsche Bank’s foreclosure judgment void.

The Court found that the “defendants have demonstrably failed to set forth sufficient facts to establish MERS is subject to the Act … ” and that the “[d]efendants raise no explanation as to why MERS’s alleged activities as an unlicensed debt collector would render all subsequent pleadings, even those relating to a new plaintiff licensed under the Act, a nullity.”

Similarly, in pdf Mortgage Electronic Registration Systems, Inc. v. DeGuzman (97 KB) , the Court dismissed, with prejudice, the defendant’s third amended petition to vacate a foreclosure judgment based on the theory that MERS violated the ICAA. The defendant, as in Deutsche Bank, also alleged that MERS was acting without being licensed as a debt collector under the Act.

In granting MERS’ motion to dismiss, the Court held that “[t]here are no allegations in the record, even if taken as true, that would establish MERS is a collection agency or a debt collector under the Illinois Collection Agency Act.”

“These recent decisions from Illinois courts continue to support that MERS operates within the law and that theories that try to show otherwise will continue to fail in the courtroom,” said MERSCORP Holdings Vice President for Corporate Communications, Janis Smith.

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.