Federal Court of Appeals Rules Kentucky Law does not Require the Recording of Transfers of Promissory Notes


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Reston, Virginia, July 17, 2015—MERSCORP Holdings, Inc. today announced that the United States Sixth Circuit Court of Appeals issued a ruling that the Kentucky recording statutes do not require a recording in the land records when promissory notes are transferred.

In pdf Higgins v BAC Home Loans Servicing, (100 KB) the plaintiffs alleged that transfer of notes was an assignment of the underlying mortgages that for the purposes of Kentucky’s recording statutes requires note assignments to be recorded. The Court points out that the Kentucky legislature distinguishes between mortgage assignments which must be recorded and note assignments for which recording is optional. While it is true that by operation of Kentucky law, an equitable interest in the mortgage is acquired when a note is transferred, the Court recognizes that “The text, structure, and purposes of Kentucky’s recording statutes compel the conclusion that recording is not required when a party acquires merely an interest in the mortgage, without acquiring the actual mortgage deed.”

In his opinion, Circuit Judge John M. Rogers concluded, “Because it is undisputed that defendants transferred only promissory notes and did not fail to record any transfers of mortgage deeds, defendants did not violate KRS 382.360(3) and the district court should have dismissed plaintiffs’ action on that basis.”

“We’re pleased that the United States Sixth Circuit Court of Appeals recognized that Kentucky’s recording laws are consistent with MERS’ practices,” said MERSCORP Holdings Vice President for Corporate Communications, Janis Smith. “The Court confirmed that the Kentucky recording statutes do not require that promissory notes be recorded.”

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. 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.