Court rules that MERS meets definition of beneficiary

State Court rules in favor of MERS

MERSCORP Holdings, Inc. today announced that a five-justice panel of the Idaho Supreme Court unanimously affirmed a lower court decision in favor of Mortgage Electronic Registration Systems, Inc. (MERS) and three other defendants, dismissing the Plaintiff’s complaint of wrongful foreclosure, ruling that MERS was the beneficiary of the deed of trust with the authority to appoint the successor trustee who initiated the non-judicial foreclosure proceedings.

The judges quoted directly from the subject MERS deed of trust in this case in which MERS is identified as beneficiary “as a nominee for Lender and Lender’s successors and assigns” and found that a nominee is a form of an agent and that an agent has authority to act on behalf of its principal.

The Justices also noted that “[d]esignating MERS as the beneficiary in its representative capacity as nominee of Lehman Brothers and its successors and assigns was legally no different from designating Lehman Brothers and its successors and assigns as the beneficiary.”

MERS’ role and authority confirmed again

Therefore, the panel ruled, “having MERS the named beneficiary as nominee for the lender conforms to the requirements of a deed of trust under Idaho law.” As such, MERS possessed the authority under Idaho law to appoint and direct the successor trustee to conduct the non-judicial foreclosure proceeding.

“Idaho courts have a long record upholding MERS’ role and authority, and this decision, coupled with this same Court’s ruling in Trotter v. Bank of New York, resoundingly validates MERS’ role as trust deed beneficiary under Idaho law,” MERSCORP Holdings’ Director for Corporate Communications Jason Lobo said.

MERS cases continue on, tides are turning

In 2011, Mortgage Electronic Registration Systems Inc. (MERS) became the subject of and onslaught of lawsuits from counties across the nation as District Attorneys allege the company never owned the loans they were facilitating foreclosures for, and in most cases, judges agree, and their authority to facilitate has been denied in several counties.

Dallas County alleged the mortgage-tracking system violates Texas laws and shorted the county anywhere from $58 million to over $100 million in uncollected filing fees due to the MERS system, dating back to 1997, and other counties have tried their hand at suing the company as well, even after it has ceased operations.

Since then, Kentucky and Hawaii have both sided with MERS, signaling a turn in the tide as more judges are favoring the company.

Michigan Appeals court finds MERS role valid

One study claimed that MERS destroyed the chain of title and was one of the most substantial causes of the housing crash, but more judges disagree and are ruling that their role was valid.

A Michigan Appeals court has recently ruled in favor of MERS, finding their role to be valid, affirming a lower court decision to dismiss a wrongful foreclosure complaint which cited Michigan Compiled Law §600.3201(1), concluding “that the foreclosure in this case satisfied the [four-part] requirements…” of the law. The court ruled that a record chain of title existed prior to the foreclosure because MERS recorded its assignment to the mortgage servicer (PHH Mortgage) several months before the sheriff’s sale.

Their ruling noted that the foreclosing lender, PHH, could indeed foreclose because MERS satisfies the Michigan statutory requirement of having “an interest in the indebtedness secured by the mortgage or the servicing agent of the mortgage,” and, because it was MERS’ assignee, PHH also satisfied the requirements.

“Pursuant to our Supreme Court’s decision in Residential Funding Co. v. Saurman…PHH’s ‘ownership of legal title to a security lien whose existence is wholly contingent on the satisfaction of the indebtedness’ is an interest in the indebtedness secured by the mortgage,” they wrote. “Therefore, PHH was authorized to foreclose.”