October 3, 2011. Arizona U.S. District Judge James Teilborg dismissed 72 lawsuits, including six class actions, against Mortgage Electronic Registration Systems Inc. (MERS) that challenged MERS' role as a beneficiary on deeds of trust. The plaintiffs in the consolidated actions claimed that because MERS is not a proper beneficiary the deeds of trust to which they agreed are unenforceable, leaving the underlying loan unsecured. Relying largely on a recent 9th Circuit Court of Appeals Decision (Cervantes v. Countrywide Home Loans), Judge Teilborg wrote in his decision that "'[t]his court does not find legal support for the proposition that the MERS system of securitization is so inherently defective so as to render MERS deed of trust completely unenforceable and unassignable."
A MERS press release said
"The Court's dismissal of these 72 cases against MERS, including six class actions, is an extremely significant ruling and shows that claims being made against MERS and MERSCORP alleging fraud, or that security interests are unenforceable, or alleging that foreclosures are inappropriate due to MERS’ presence as a party, are meritless,” said Janis Smith, MERSCORP Vice President for Corporate Communications. “The Court's clearly-worded order affirms the validity of the MERS business model and the exercise of powers associated with it."
IN RE Mortgage Electronic Registration Systems (MERS) Litigation, MDL Docket No. 09-2119-JAT
