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Mortgage

MERS’ mortgage assignment authority upheld by three Federal Courts

Courts dismiss borrowers’ quiet title lawsuits

MERSCORP Holdings announced Friday that it secured victories in three separate Federal Courts, each of which upheld MERS’ mortgage assignment rights.

MERS, parent of the electronic mortgage registry with the same name, announced that the United States District Court for the Northern District of Georgia Newnan Division, the United States District Court for the Southern District of Texas Houston Division, and the United States District Court for the Southern District of New York dismissed lawsuits brought by plaintiffs who challenged the assignment of their mortgage by MERS.

In Bradley vs. Branch Banking Trust in Georgia; Garza vs. Flagstar Bank in Texas; and McCarty vs. Bank of New York in New York; the plaintiffs sued MERS and other financial companies to avoid foreclosure based on claims that MERS could not hold or assign a security instrument.

Additionally, the plaintiffs in Bradley and Garza alleged that by using MERS in the loan transaction, the note and security instrument were split, making the mortgage or deed unenforceable.

In Bradley, Magistrate Judge Russell Vineyard from the U.S. District Court for the Northern District of Georgia found that because “it is undisputed that [the borrower] executed a security deed that conveyed the property to MERS,” the borrower could not claim that he held full title to the property, and therefore, dismissed the quiet title claim.

In McCarty, the U.S. District Judge Analisa Torres from the Southern District of New York also dismissed quiet title claims against MERS and its co-defendants, while also upholding the validity of the deed of trust assignment executed by MERS.

Judge Torres wrote that the “Plaintiff voluntarily executed the Deed of Trust to obtain the loan. And even construing the amended complaint liberally, Plaintiff has not alleged a proper basis for a discharge of that loan.”

In Garza, Judge David Hittner from the U.S. District for the Southern District of Texas Court upheld the validity of the assignments of the deed of trust and dismissed the borrowers’ claim to quiet title, noting that the borrowers “fail to make any allegations to support their assertion that Defendants’ claim to the property is invalid or unenforceable.”

 The quiet title claims in all three cases were dismissed with prejudice.

“These federal courts affirmed that MERS can rightfully hold a security instrument on behalf of the lender and its assigns,” said MERSCORP Holdings Vice President for Corporate Communications, Janis Smith. “In addition, the federal court in New York found in McCarty that the borrower’s quiet title and fraud claims were contradicted by the plain language in the mortgage and assignment.”

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