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Mortgage

California federal court holds in MERS’ favor

MERS has statutory right to notice as a beneficiary

The Central District of California federal court held in a ruling Thursday that as the named beneficiary under a recorded deed of trust, Mortgage Electronic Registration Systems has a statutory right to notice. 

 In Mortgage Electronic Registration Systems, Inc., et al. v. Daniel Robinson, et al., MERS filed suit to vacate a quiet title judgment obtained by the defendant in a separate state court action that purportedly extinguished the deed of trust identifying MERS as beneficiary. 

“California law requires a quiet title plaintiff to name as defendants those persons ‘having adverse claims to the title of the plaintiff against which a determination is sought,’” the court held. As such, “[d]efendants were required to name MERS as a defendant in the quiet title action…” since the deed of trust was recorded against their property at the time they filed their state court suit. 

The defendants in the case obtained their state court judgment without providing notice of the lawsuit to MERS. 

Instead of serving notice to MERS, the defendants served notice on the original lender identified in the deed of trust. 

MERS argued to the federal court that the defendants’ lack of notice to MERS violated notice requirements of the California Code, as well as due process protections under the United States and California Constitutions. 

“We are pleased that the Court upheld MERS’s rights, as a recorded beneficiary, to notice of actions affecting its lien interest,” said MERSCORP Holdings Vice President for Corporate Communications, Janis Smith. 

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