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MERS wins again; this time in Pennsylvania

Superior Court upholds ruling on MERS’ authority to assign mortgage

scale and gavel

MERSCORP Holdings secured another court victory in a suit brought against the company by a disgruntled mortgagor that claimed MERS didn’t have the authority to assign a mortgage.

The Superior Court of Pennsylvania has affirmed a lower court’s ruling that showed that MERS had the authority to assign a mortgage and rejected the mortgagor’s wrongful foreclosure claims.

The mortgagor, Matthew Gibson, sued Bank of America (BAC), claiming that the bank did not hold the note securing his mortgage and therefore had no rights to foreclose.

Gibson also claimed that MERS did not have the authority to assign the mortgage.

The lower court initially ruled that Bank of America did hold the note on the mortgage and that MERS did indeed have the right to assign the mortgage.

In the lower court’s ruling, Victor Stabile wrote, “Appellant’s mortgage granted MERS the right to exercise ‘any and all’ interests incidental to legal title. Those rights include the ability to assign the mortgage.”

Gibson then appealed those decisions to the higher court, which upheld the lower court’s ruling.

In the ruling, the Superior Court stated that Gibson’s mortgage contained the following language:

“Borrower understands and agrees that MERS holds only legal title to the interests granted by Borrower in this Security Instrument, but, if necessary to comply with law or custom, MERS (as nominee for Lender and Lender’s successors and assigns) has the right: to exercise any or all of those interests, including, but not limited to, releasing and cancelling this Security Instrument.”

MERS’ victory is the latest in a string of legal triumphs, in which courts of various levels continue to affirm MERS’ authority to assign mortgages.

“These holdings are consistent with prior rulings throughout the country that have confirmed MERS’ authority to assign a mortgage,” said Janis Smith, MERS’ vice president for corporate communications, said. “This authority is established by plain language in the mortgage document signed by a borrower at closing.”

In August, the U.S. District Court of Minnesota issued three rulings confirming lower court rulings that showed that Bank of America, Wells Fargo (WFC), and Bank of New York Mellon (BK) had all established unbroken chains of title under Minnesota law by producing mortgages in which MERS was named the original mortgagee and subsequent assignments by MERS to the foreclosing entities.

Earlier in August, the U.S. Court of Appeals for the Fifth Circuit also affirmed MERS’ authority to assign a mortgage in a case in which the plaintiff appealed the dismissal of his wrongful foreclosure suit, claiming, among other things, that the recorded security instrument “constituted a fraudulent claim against real property because MERS never acquired a security interest in the mortgage properties, and therefore, the recording denominating MERS as a beneficiary of the security instruments are fraudulent.”

In July, the U.S. Court of Appeals for the Ninth Circuit affirmed a ruling in a similar case. In Mickelson v. Chase Home Finance LLC, the plaintiffs sought to invalidate a completed foreclosure sale by alleging Consumer Protection Act claims against MERS as well as Deed of Trust Act violations against the foreclosing trustee, Northwest Trustee Services, Inc

The Court of Appeals ruled in MERS’ favor in that case as well.

And in June, the U.S. Court of Appeals for the First Circuit and the Massachusetts Superior Court both affirmed dismissals of wrongful foreclosure lawsuits, both of which had challenged MERS’ authority to assign a mortgage.

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