MERS Notches Win in Florida; Hailed as Protection of Creditor’s Rights

The Second District Court of Appeals of Florida today ruled that MERS has the right to be a party in a foreclosure action, a victory that industry insiders say will help change how foreclosures are processed in the state. “We undertook this lawsuit not just for MERS but for the industry as a whole,� said R.K. Arnold, President & CEO of MERS. “This victory is for the entire mortgage lending community because MERS is no different than a servicer when it comes to foreclosures, and this case was our opportunity to prove it in court.� MERS is an industry utility that operates an electronic loan registry that eliminates the need for assignments when trading mortgage loans. Borrowers name MERS as mortgagee for the lender on deeds of trust and mortgages that are recorded in the county land records. Lenders then register the loans on the MERS System and electronically track changes in servicing and beneficial ownership rights over the life of the loan.

MERS acts as nominee in the county land records for the lender and servicer. Any loan registered on the MERS System is inoculated against future assignments, because MERS remains the nominal mortgagee no matter how many times servicing is traded. MERS as original mortgagee (MOM) is approved by Fannie Mae, Freddie Mac, Ginnie Mae, FHA and VA, California and Utah Housing Finance Agencies, as well as all of the major Wall Street rating agencies. MERS officials said the ruling has broad industry-wide implications for the state of Florida, which now formally confirms that holders, including MERS and traditional servicers, can be a party in a foreclosure. The decision affects more than just MERS foreclosures, since an adverse ruling could have halted foreclosures by mortgage servicers as well. According to the text of the decision, “The holder of a note has standing to seek enforcement of the note.â€? It also stated that “standing is broader than just actual ownership of the beneficial interest in the note,â€? and that “[t]he Florida real party in interest rule permits an action to be prosecuted in the name of someone other than, but acting for, the real party in interest.â€? The company has been fighting similar court battles in jurisdictions throughout the U.S. as it seeks to gain precedent for its business model, which it says helps servicers and secondary markets better track and service a loan throughout its lifecycle. A similar case in Miami-Dade County’s Third District Court of Appeals is pending, MERS officials said. For more information, visit

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