Mortgage

Court of Appeals rules for MERS in lawsuit from Iowa county

County claimed MERS withheld recording fees

MERSCORP is now two-for-two in legal challenges accusing the company of withholding recording fees from local governments when a mortgage is assigned.

Last week, the U.S. Court of Appeals for the Eighth Circuit ruled on an appeal brought by 87 Minnesota counties and upheld the District Court of Minnesota’s decision, which found that there is no mandatory recording requirement under Minnesota law and dismissed the challenge brought by the counties against MERS.

But that wasn’t MERS’ only victory in front of the Court of Appeals last week. The U.S. Court of Appeals for the Eighth Circuit also ruled last week on a challenge brought by Plymouth County, Iowa, which accused MERS of “being unjustly enriched” by not paying recording fees to the county for mortgage assignments.

The U.S. District Court had previously granted a motion to dismiss with prejudice in the case, stating that there “can be no unjust enrichment if there is no obligation to record the mortgage or mortgage assignment.”

Plymouth County argued that, despite no obligation under Iowa law to record a mortgage assignment, MERS was unjustly enriched “because it enjoys the protection afforded by recording mortgage assignments at the expense of the county.”

The Eighth Circuit concurred with its previous ruling in the Minnesota case and ruled in MERS’ favor.

In its ruling, the Eighth Circuit said, “When state law imposes no duty to record a mortgage or subsequent assignment, a county cannot successfully state a claim for unjust enrichment.”

The Eighth Circuit concluded that with no legal obligation to record, lenders could not possibly have withheld recording fees that should have been paid to the county.

“We believed that there was no merit to the claims made in the complaint,” said MERSCORP Holdings Vice President for Corporate Communications, Janis Smith. “We are pleased with the Court’s decision.”

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