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Lending / The Ticker

NY judge rules against homeowner, calls MERS lenders agent

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A New York state court ruled in favor of Mortgage Electronic Registration Systems (MERS), dismissing a one-count complaint, alleging that MERS' mortgage was unenforceable, according to MERSCORP Holdings

In Ruiz v. MERS et al., Judge Arthur Pitts of the Supreme Court of the State of New York ruled, "various courts within this and other jurisdictions have interpreted the relationship of MERS and the lender as an agency relationship." 

The borrower claimed that since MERS was the mortgagee and did not own or hold promissory note, the mortgage and note were separated. This in turn, voided the MERS mortgage, the borrower alleged in the case.

"Justice Pitts provided a clear definition of 'nominee' and noted that MERS was, 'in effect, a limited agent' for the lender, which granted MERS the authority to act on its behalf as outlined in the MERS mortgage and MERS membership documents," said director for corporate communications Jason Lobo of MERSCORP.  

He added, "MERS' authority as mortgagee and nominee is plainly written in the standard MERS security instrument that borrowers sign and agree to at closing."

Additionally, Justice Pitts cited three previous court decisions, discussing the MERS-Lender agency relationship.

"MERS was named a nominee by defendant Webster [Webster Bank, N.A., the original lender] as mortgagee for the purpose of recording the mortgage," he said.  "It is readily apparent that the intent of the lender and MERS was to establish a principal agent relationship and as such, not to split the debt and the collateral."

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