Financial Services Litigation & Investigation Monitor : Financial Services Lawyer & Attorney : Perkins Coie Law Firm : Government Investigations, Class Actions

In a 4-3 decision, the Michigan Supreme Court approved non-judicial foreclosures instituted in the state by Mortgage Electronic Registration Systems (MERS).  The high court's order overturns an April 2011 lower court decision that determined MERS could not use the state's non-judicial foreclosure mechanism because it had no real interest in the underlying debt.

In the written decision, the Michigan Supreme Court stated that the lower court ruling "is inconsistent with established legal principles governing Michigan's real property law, and specifically foreclosure by advertising."  It continued that the Michigan Legislature did not create "a new legal framework in which an undisputed record holder of a mortgage, such as MERS, no longer possesses the statutory authority to foreclose."

MERSCorp's president and CEO Bill Beckmann stated that the ruling "affirms MERS' business model and will allow the Michigan real estate industry to get back to business and usual."   

Read more at Bloomberg Businessweek: MERS Wins Appeal of Decision Limiting Michigan Foreclosures and Housingwire.com:  Michigan Supreme Court gives green light to MERS

Read the Michigan Supreme Court Order here.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

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

• Email This
• Print
• Comments
• Trackbacks
• Share Link

On October 12, 2009, MERSCORP, Inc. (MERS) and Interthinx announced the launch of a national fraud prevention database that will help lenders seek, identify, and share suspected fraudulent activity in loan applications from the point of origination. MERS FraudALERTSM, powered by Interthinx, will allow lenders to identify potential mortgage fraud through the sharing and reporting of data among the more than 62 million loans currently registered on the MERS® System, according to a MERS press release. Lenders using FraudALERTSM will submit loan application data and incident reports with suspected or confirmed fraudulent activity to a centralized database. The system will then notify other lenders who have loans that may have connections to the data, alerting them to possible fraudulent transactions in their pipelines.  FraudALERTSM will be released during the fourth quarter 2009. 

• Email This
• Print
• Comments
• Trackbacks
• Share Link