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Servicing

Kentucky Court of Appeals rules in favor of MERS

MERSCORP Holdings noted that three-judge panel of the U.S. Courts of Appeal for the Sixth Circuit ruled in favor of MERS, its parent company Mortgage Electronic Registration Systems and a number of MERS members.

The U.S. Court of Appeals affirmed a U.S. District Court dismissal of a recording fee suit that was filed jointly by Christian and Washington County Clerks in Kentucky. 

"It is undisputed that the Kentucky recording statutes… do not expressly provide the Clerks with a cause of action," Circuit Judge Helene N. White wrote on behalf of the panel. "Clerks are not within the class of persons the Kentucky legislature intended to protect under the recording statutes." 

Almost a year ago, Chief Judge Joseph McKinley of the U.S. District Court for the Western District of Kentucky, Paducah Division, dismissed the case with prejudice, meaning the court cannot be asked to rule on the same issue again.

"There is nothing in the plain language of the statute that indicates that the statute was designed to be enforced by a county clerk," Judge McKinley held.  "Had the General Assembly wanted to allow county clerks to file lawsuits regarding recording fees, it certainly knew how to do so."

Director for Corporate Communications Jason Lobo at MERS noted that the company has consistently held that the use of the MERS System to register mortgage loans fulfills the purpose of the recording statutes.

"The statutes’ intent is to assure that liens are discharged when an underlying loan is paid off, to give subsequent purchasers and lenders notice of recorded liens and to allow creditors to give notice of their secured interest in the property," Lobo said. "MERS’ business model is consistent with these purposes."

Similarly, MERS has prevailed in other recording fee cases in Arkansas, Florida, Illinois, Iowa and Missouri.

cmlynski@housingwire.com

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