MERS wins big once more in Federal Court of Appeals

Overturns lower court ruling in suit brought by Pennsylvania county recorder

Scales of justice

For the third time in the last few weeks, MERSCORP Holdings secured a victory in a Federal Court of Appeals, which upheld MERS’ mortgage assignment rights.

MERS, parent of the electronic mortgage registry with the same name, announced that the United States Court of Appeals for the Third Circuit reversed a lower court’s ruling in a lawsuit brought against MERS by the Montgomery County, Pennsylvania, county recorder.

The county recorder sued MERS, arguing that MERS owed the county million of dollars in unpaid recording fees stemming from the transfer of promissory notes as mortgage assignments because MERS mortgage assignments were in violation of Pennsylvania law.

The United States District Court for the Eastern District of Pennsylvania ruled in Montgomery County’s favor, but the United States Court of Appeals for the Third Circuit overruled the lower court’s ruling, finding that the Pennsylvania recording statute does not create a duty to record all land conveyances. 

In its ruling, the Court of Appeals for the Third Circuit ruled in part, “Because we conclude that Pennsylvania’s §351 imposes no duty to record all land conveyances, we will reverse the July 1, 2014 order of the District Court which granted the Recorder’s request for a declaratory judgment and denied the MERS entities’ motion for summary judgment.”

The Court noted that its decision was in line with the opinions of other courts that have rejected similar claims.

In July, the United States Sixth Circuit Court of Appeals ruled in MERS' favor, which saw its mortgage assignment authority challenged in Kentucky,

Later in the month, MERS secured another win from the same court, when the United States Sixth Circuit Court of Appeals issued a ruling that upheld a dismissal by the United States District Court for the Western District of Michigan.

In the Pennsylvania case, the Court also denied Montgomery County’s request to certify questions to the Supreme Court of Pennsylvania noting that “the answer to the issue of state law that decides this case … is so clear that we would be abdicating our responsibilities by punting.”

“This is a significant ruling for the mortgage finance industry in the Commonwealth of Pennsylvania,” said MERSCORP Holdings Vice President for Corporate Communications, Janis Smith.

“MERS has always maintained that no Pennsylvania law, including the recording statute, imposes a duty to record the transfer of a promissory note,” Smith said. “We are pleased the Court of Appeals for the Third Circuit finds the county recorder’s arguments to have ‘no merit.’”


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