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Lost in New York, MERS claims victory in Kansas

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Nearly one week after a judge in New York ruled that Mortgage Electronic Registration Systems did not have the right to transfer mortgages, MERS is claiming victory in a similar case in Kansas. The United States Bankruptcy Court for the District of Kansas on Feb. 10 found that mortgage servicers may allow MERS to act on behalf noteholders. This means that actions such as foreclosures are valid and enforceable, according to an email from MERS. The case, Martinez v. Mortgage Electronic Registration Systems looked to determine the legality of MERS acting as an agent in operating an electronic database of more than half of all mortgages in the United States. The case is one of many challenging MERS as an acting agent. "The Kansas Bankruptcy Court held that the note and mortgage were never split due to this agency relationship," said MERS spokesperson Karmela Lejarde. "The Court found that Countrywide’s interest is secured, and it has the right to enforce the note and mortgage through its agent, MERS, or on its own by directing its agent to assign the mortgage to it." The Kansas Bankruptcy Court’s ruling on Martinez v. Mortgage Electronic Registration Systems finds the registry is a valid agent for its members and found that the mortgage and note were not split. Judge Robert Grossman, of the Eastern District of United States Bankruptcy Court in the Eastern District in New York found that "MERS did not have authority as 'nominee' or agent, to assign the mortgage absent a showing that it was given specific written directions by its principal." "We disagree with the Court's interpretation because State Courts in New York have already ruled that a written assignment of the note and mortgage by MERS, in its capacity as nominee, confers good title to the assignee," said Lejarde. MERS claims victories in similar cases brought in Arizona, Missouri. Since March 2009, supreme courts in Arkansas, Kansas and Maine have found that MERS had no standing in foreclosure proceedings under their states’ laws, according to coverage in Bloomberg. Write to Jacob Gaffney. Follow him on Twitter @JacobGaffney.

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