StatebyStateCompendiumofRecentMERSRelatedLitigation

by John R. Chiles 1 , Katrina D. Chisholm, and Zachary D. Miller

I. INTRODUCTION
Sincetheearlieststagesoftheeconomicmeltdownthathasrockedthefinancialsystembothin the United States and abroad, an inordinate amount of time has been spent searching for someone,orsomething,toblame.ChargesofimproprietyhavebeenleviedagainstWallStreeton aconsistentbasis,andconsumeradvocateshavefocusedgreatamountsofenergyontheareaof mortgagebackedsecurities.Aninstrumentalcogallowingforthebuyingandsellingofmortgage backed promissory notes on the open market is Mortgage Electronic Registration Systems, Inc. ("MERS"), 2 a nationwide database that allows lenders to more easily transfer the rights to a mortgage. Forthelastseveralyears,theseallegationsofimproprietyhavespawnedfederalandstatecourt lawsuits.Theargumentsassertedbyborrowers,eitheroffensivelyordefensively,haveevolved; however,thebasicchargeoftheselawsuitsremainsthesame:theMERSsystemisfatallyflawed anddoesnot,orshouldnot,givetransfereesofmortgagesthroughtheMERSsystemtheauthority to enforce remedies under the mortgages they have obtained. Finding that MERS transfers are invalidwouldhaveaninconceivableeffect,asestimatesarethatMERSholdsmortgagesonnearly sixtymillionAmericanhomes,orsixtypercentofthenation'sresidentialmortgages. 3 This document is a compendium of cases that have addressed central questions critical to the viabilityoftheMERSsystem.Asshownbelow,theargumentsaddressnumerousfactors,fromthe avoidanceofstatecourtrecordingfeestotheabilityofamortgagenomineetotransferbeneficial ownershipinapromissorynote.Asnosinglemethodofcategorizationwouldbeperfect,wehave chosenastatebystateanalysis,withkeydecisionsindicatedandexaminedmorethoroughly.

John R. Chiles is a partner in the Birmingham, Alabama office of Burr & Forman, LLP. Katrina D. ChisholmandZacharyD.MillerareassociatesinBurr&Forman,LLP'sBirminghamoffice.
2 3

AdditionalinformationonMERSisavailableonitswebsite,foundat:http://www.mersinc.org/.

McIntire, Mike, Tracking Homes Through a Firm that Holds Millions, THE NEW YORK TIMES, available at HTTP://WWW.NYTIMES.COM/2009/04/24/BUSINESS/24MERS.HTML (Apr. 23, 2009); see also Kate Berry, ForeclosuresTurnUpHeatonMERS,AM.BANKER,July10,2007,at1.
1

II. OVERVIEWOFMERS
A. HistoryofMERS 1. 2. Created "in order to streamline the mortgage process by using electronic commercetoeliminatepaper." 4 MERS'principalownersaretheMortgageBankersAssociation("MBA"),the Federal National Mortgage Association ("Fannie Mae"), the Federal Home LoanMortgageCorporation("FreddieMac"),BankofAmerica,Chase,HSBC, CitiMortgage,GMAC,AmericanLandTitleAssociation,andWellsFargo. 5 "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")isapprovedbyFannieMae,FreddieMac,GinnieMae,FHAandVA, California and Utah Housing Finance Agencies, as well as all of the major WallStreetratingagencies." 6 Purpose is to track changes in servicing rights and beneficial ownership interests when those interests are sold by the original lender into the secondaryandtertiarymarkets. 7 MERSSystemwascreatedtoreducethecosts,errorsanddelaysassociated withfrequentandnumerousassignmentsofmortgageliens. 8 Comprised of MERSCORP, Inc. and its subsidiary, Mortgage Electronic Registration Systems, Inc. 9 Operated as a membership organization. 10 Almost all mortgage lenders (about 3,000) are members of MERS. 11

3.

4.

5. B.

DescriptionofMERS 1. 2. 3.

AboutUsOverview,MERS,availableathttp://www.mersinc.org/about/index.aspx(lastvisitedMar.7, 2011). TestimonyofR.K.Arnold,PresidentandCEOofMERSCORP,Inc.,BeforetheSubcomm.onHousingand CommunityOpportunity,HouseFinancialServicesComm.,111thCong.5(2010).

6 7 8 5

Id. Id.at78.

See, e.g., Eisen, Laurence, MERS and the Title Industry, 6 TITLE ISSUES CHICAGO TITLE INSURANCE CO. 4 (July/Aug.1997)
9

SeeArnold,supranote5,at11. Id.at5.
2

10

4. C.

Revenue is derived solely from annual membership fees, and loan registrationandservicingtransferfees. 12 MERS maintains a database of mortgage loans that allows servicing rights andtransfersofownershipintereststobetracked,and 13 MERS can be designated by its members to serve as the mortgagee in the publiclandrecords. 14 Doesnotmakeanydecisionsaboutwhethertoloanmoney. Doesnotmakeanydecisionsaboutwhethertosecuritizeamortgageloan. Doesnotmakeanydecisionsaboutwhethertoforeclose. Doesnotserveasarepositoryformortgagedocuments. Doeseliminatetheexpenseofrecordingrepeatedassignments. Does serve as a convenient place for mortgagors to find out information abouttheirmortgages.

TwoMainFunctionsofMERS 1. 2.

D.

MERSRoleintheLendingProcess 1. 2. 3. 4. 5. 6.

III. MERSASAMORTGAGEDATABASE
A. B. C. Not every loan, even those loans made by members, is registered with MERS. Memberstendtoregisteronlyloanstheyintendtosell. 15 Each registered mortgage is assigned a Mortgage Identification Number (MIN) at origination. 16 If servicers change, the borrower can always find out information about the Mortgage by calling MERS or accessing MERS website and referencing the MortgagesuniqueMIN. 17 Through MERS, the borrower can access information about the servicer of the Mortgageand,iftheownerofthenoteconsents,theidentityofthenoteowner.

D.

11 12 13 14 15 16 17

Id. Id.at56. Id.at6. Id. Id.at910. Id.at9.

MERS Servicer Identification System, MERS Servicer ID, available at https://www.mers servicerid.org/sis/(lastvisitedMar.8,2011).
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IV. MERSASMORTGAGEE
A. MERSActsasMortgageeofRecord 1. WhenMERSservesasmortgageeofrecord,itservesasacommonagentfor allMERSmembers.MERSstatusasmortgageeandnomineeofthelender, anditssuccessorsandassigns,isapprovedbytheborrowerinthemortgage documents. MERS status, as set forth in the mortgage documents, is recordedinthelandrecords. Typically, parties use the Fannie Mae/Freddie Mac Uniform Security Instrument. Threeparties:Borrower,LenderandMERS MERS is named as the mortgagee of record in a nominee capacity for the originallenderandthatlenderssuccessorsandassigns. InterestconveyedtoMERSislegaltitle,grantingMERSthespecificrightto actonbehalfofthelendertoforecloseandselltheproperty. Thelenderretainsbeneficialtitle.

2. 3. 4. 5. 6. B.

CertifyingOfficers 18 1. 2. 3. 4. Where MERS acts as mortgagee on behalf of one of its members, it acts throughcertifyingofficers. Certifying officers are persons elected by individual members to act as officersofMERSwithlimitedauthoritytotakecertainactions. Individualsareappointedtoserveasvicepresidentandassistantsecretary. Authorityisgrantedtothesecertifyingofficersto: a. b. c. d. e. f. g. 5. Executelienreleases; Executemortgageassignments; Initiateforeclosures; Executeproofsofclaimsandotherbankruptcyrelateddocuments; Execute modification and subordination agreements needed for refinancing; EndorsemortgagepaymentchecksmadepayabletoMERS(inerror) byborrowers;and Take other such action and execute documents necessary to fulfill themembersservicingduties.

RequirementsforbecomingaMERScertifyingofficerinclude:

18

Arnold, supra note 5, at 12-13

a. b. c. C.

Beingacompanyofficerofthememberinstitution; HavingbasicknowledgeofMERS;and Passing a certifying examination administered by MERS.

Foreclosures Where MERS Is Mortgagee When MERS is named as mortgagee, foreclosurecanbegininoneoftwoways: 1. Option1ForeclosurecanbeconductedinthenameofMERS a. Noteownerendorsesthenoteinblank(makingitbearerpaper)and turns over possession of the note to a MERS certifying officer, makingMERSthenoteholder. Since MERS is already the mortgagee, MERS can begin the foreclosureprocessassoonasitisinpossessionofthenote. Foreclosure is handled entirely by the MERS certifying officer (who typically is also an employee in the member institutions default department)

b.

c.

2.

Option 2 MERS, acting through its certifying officer, will execute an assignment to the servicer or noteowner (whichever entity is conducting the foreclosure) and the assignment will be recorded in the land records. Oncetheassignmentisrecorded,theforeclosurewillcommence.

V. CHALLENGESTOMERSASMORTGAGEE
A. Recently, MERS has been subjected to attacks by defaulting borrowers and consumer advocates who are attempting to avoid valid mortgage debts. These attackshavecomeonavarietyoffronts,butthefollowingareashavebecomemost popular: 1. 2. 3. 4. 5. WhetherMERSHasStandingtoConductForeclosuresInItsOwnName? Whether Naming MERS As Mortgagee Improperly Splits the Note and Mortgage,ThusInvalidatingtheMortgage? WhetherMERSIsAPartyInInterestWhoIsEntitledToSeekReliefFromAn AutomaticStayinBankruptcy? IsMERSANecessaryPartyWhoIsEntitledtoReceiveNoticeofProceedings RelatedtotheProperty? WhethertheEntireMERSSystemIsFraudulent?

VI. REPRESENTATIVECASESVALIDATINGMERS
Alabama Mortensen v. MERS, No. 090787WSN, 2010 WL 5376332 (S.D. Ala. Dec. 23, 2010) (recognizinganassignmentfromMERStopurchaserasvalid).
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 Crumv.LaSalleBank,N.A.,No.2080110,2009WL2986655(Ala.Civ.App.Sept.18,2009) (concludingthatMERShadthepowertomakeanassignmenttotheforeclosingassignee and that mortgage documents expressly authorized MERS to assign its right to the foreclosingparty). Alaska(nocasesfound) Arizona KeyDecisionCervantesv.CountrywideHomeLoans,Inc.,No.CV09517PHXJAT,2009 WL3157160(D.Ariz.Sept.24,2009) PlaintiffsmadetwoattacksontheMERSsystem: (1) MERS is never really a beneficiary under the deed of trust because it never acquiresatruebeneficialinterest;and (2)theMERSsystemisameansofcircumventingthepublicrecordingsystem. Splitting of Note and Mortgage: Plaintiffs allegations would foreclose the very splittingofapromissorynotefromadeedoftrust.Suchanapproach,ofcourse, would intrude into the realm of thirdparty beneficiary contracts, as well as assignmentsanddelegations. MERSas"ShamBeneficiary":"ThefactthatMERSdoesnotobtainsuchrightsasto collectmortgagepaymentsorobtainlegaltitletothepropertyintheeventofnon paymentdoesnottransformMERSstatusintoasham. CircumventingPublicRecordingSystem:PlaintiffssecondobjectiontotheMERS system similarly has no effect upon their status as borrowers . . . . Any lack of noticeinthepublicrecords,however,tofuturebuyersofPlaintiffsmortgagesdoes notalterPlaintiffsobligationsunderthemortgages.... SeeRobinsonv.WellsFargo,No.CV092066PHXJAT,2010WL2534192(D.Ariz. June18,2010(same).

Court:

KeyDecisionInreMERSLitigation,MDLDocketNo.092119JAT,2011WL251453(D. Ariz.Jan.25,2011) Issue:InvolvesclaimsthatMERSandothersconspiredtocommitfraudandconspiracy tocommitwrongfulforeclosurethroughthecreation,operationanduseoftheMERS system. Split the Note Theory: Should not matter in nonjudicial foreclosure states because defendantsdonotneedtoproducethenotetothepropertyinordertoproceedwitha nonjudicialforeclosure.TheCourtalsorejectedPlaintiffsargumentthatsplittingthe noteautomaticallyvoidsthenotesandtherighttoenforcethemthroughnonjudicial foreclosure. See Maxa v. Countrywide Home Loans, Inc., No. CV108076PCTNVW, 2010WL2836958(D.Ariz.July19,2010)(same).

 Jones v. Wells Fargo Bank, No. CV110197PHXDGC, 2011 WL 683887 (D. Ariz. Feb. 18, 2011) (rejecting the plaintiffs argument that MERS could not assign the deed of trust to purchaser of note, concluding that plaintiffs had consented to MERS designation as beneficiaryandnomineeunderthedeedoftrust). Higton v. Quicken Loans, Inc., No. 2:10CV01320JWS, 2011 WL 333357 (D. Ariz. Jan. 31, 2011) (recognizing MERS status as nominee of Note holder); Kane v. Bosco, No. 10CV 01787PHXJAT,2010WL4879177(D.Ariz.Nov.23,2010)(same). InreMadison,No.2:09bk22225PHXSSC,2010WL3941858(Bankr.D.Ariz.Oct.4,2010) (concluding that MERS system is not a sham and does not perpetrate a fraud upon the borrower and that MERS, as the named beneficiary, also has the power to appoint a trusteeorsuccessortrusteeunderArizonasnonjudicialforeclosurestatute). Arkansas Peace v. MERS, No. 4:09CV00966, 2010 WL 2384263 (E.D. Ark. June 11, 2010) (MERS assignmenttoNotepurchaserwasvalidandproperlygavepurchaserstandingtoappoint anagenttoinitiateanonjudicialforeclosure). MERS v. Stephanie Gabler, et al., Case No. 200417II, Circuit Court of Garland County, Arkansas (2004) (MERS has standing to seek relief for its Writ of Assistance and is the properpartytoforeclosethemortgageasMERSisthemortgageeofrecordandholderof thepromissorynote.) California KeyDecisionGomesv.CountrywideHomeLoans,Inc.,No.D057005,2011WL566737 (Ca.Ct.App.Feb.18,2011) Court first concluded that there was no right of action in California which allows a borrowertofilealawsuittorequireaforeclosingpartytoproveitsrighttoforeclose. UnderCalifornialawMERSmayinitiateaforeclosureasthenominee,oragent,ofthe noteholder . . . . Civil Code Section 2924, subdivision (a)(1) states that a trustee, mortgagee, or beneficiary, or any of their authorized agents may initiate the foreclosureprocess.TheCourtconsideredalsothefactthattheborrowersdeedof trustincludedlanguagewherebytheborroweragreedthatMERShastheauthorityto initiateaforeclosure. See also Germon v. BAC Home Loans Servicing, LP, No. 10CV2482BTM (POR), 2011 WL719591(S.D.Cal.Feb.22,2011)(same);Wadhwav.AuroraLoanServices,LLC,No. CIV. 2:103361WBSDAD, 2011 WL 590911 (E.D. Cal. Feb. 10, 2011) (same); Labra v. CalWesternReconveyanceCorp.,No.C092537PJH,2010WL889537(N.D.Cal.Mar. 11,2010)(same).

Colorado(nocasesfound) Connecticut KeyDecisionChaseHomeFinance,LLCv.Fequiere,989A.2d606(Conn.Ct.App.Mar.2, 2010)

"EvenifweweretoassumearguendothattheassignmentofthemortgagefromMERS totheplaintiffwasinvalid,thedefendant'sclaimfails.GeneralStatutes4917permits theholderofanegotiableinstrumentthatissecuredbyamortgagetoforecloseonthe mortgageevenwhenthemortgagehasnotyetbeenassignedtohim....Thestatute codifies the commonlaw principle of long standing that the mortgage follows the note,pursuanttowhichonlytherightfulownerofthenotehastherighttoenforcethe mortgage."

LaSalle Bank v. Johnson, No. CV085016113, 2009 WL 2872844 (Conn. Super. Aug. 10, 2009) (recognizing MERS status as mortgagee and MERS subsequent assignment of the mortgage). BayviewLoanServicingv.Sanchez,No.CV095004156S,2009WL1874180(Conn.Super. June 10, 2009) (rejecting claim that mortgages naming MERS as nominee for the lender wereinvalid) Delaware(nocasesfound) DistrictofColumbia Wells Fargo Bank, N.A. v. Wrenn, No. 08165 (CKK), 2009 WL 1705692 (D.D.C. June 18, 2009)(notingMERSstatusasthelegalholderoftheDeedsofTrustforthebenefitofthe holderofthePromissorynotes). Florida KeyDecisionTaylorv.DeutscheBankNatlTrustCo.,44So.3d618(Fla.5thDCA2010) Court held a MERS mortgage to be valid under Florida law, and held that MERS may assignitsrightsinthemortgagetotheforeclosingentitywhoholdstheNoteandalso mayassignrightstotheNoteitself. The Florida court held that where MERS is described as the mortgagee under the SecurityInstrumentthedocumentgrantstoMERSlegalstatusundertheUCC,which MERScanassigntotheforeclosingbank. "The written assignment . . . recites that MERS assigned to the appellee, Deutsche Bank, the Mortgage and Note, and also the said property unto the said Assignee forever,subjecttothetermscontainedintheMortgageandNote.Moreimportantly, asanonholderinpossessionoftheinstrumentwhohadtherightsofaholder,MERS assignedtoDeutscheBankitsexplicitpower,grantedbythemortgage,toenforcethe note by foreclosing the mortgage on the subject property. We conclude, accordingly, that the written assignment of the note and mortgage from MERS to Deutsche Bank properlytransferredthenoteandmortgagetoDeutscheBank....MERSwaslawfully actingintheplaceoftheholderandwasgivenexplicitandagreeduponauthorityto makejustsuchanassignment." SeealsoMortgageElectronicRegistrationSystems,Inc.v.Azize,965So.2d151(Fla.2d DCA2007)(holdingthatholderofnotehasstandingtoseekenforcementoftheNote and that Note can be transferred to MERS without having beneficial interest for purposeofinstitutingforeclosureproceedings).

 Georgia KeyDecisionDrake(Trustee)v.CitizensBankofEffingham,et.al.,APNo.104033(Bankr. S.D.Ga.Feb.28,2011) Security deed granted to MERS satisfied the requirements of Georgia law and the languageofthesecuritydeedcreatedanagencyrelationshipbetweenthelenderand MERS. There was no split of the Note and Security Deed as a matter of contract by any transferoftheNote,becausetheSecurityDeedexpresslycontemplate[d]thattheNote [could]betransferredfromtheoriginalLender,andthatMERSroleasnomineeforthe Lenderextend[ed]toeachsuccessiveassignee. "...[T]henoteandthedeedmust(anddo)retainalegalnexusexcept'ontherare occasions when a mortgagee will wish to disassociate the obligation and the mortgage,butthatresultshouldfollowonlyuponevidencethatthepartiestothe transfer so agreed. (citing Restatement (Third) of Property (Mortgages) 5.4 (1997).

DistinguishedtheopinioninBellistriv.OcwenLoanServicing,LLC,284S.W.3d619(Mo. App. 2009), stating that the Bellistri case only addressed a situation where the noteholderfailedtodemonstratethatithadanownershipinterestintheNoteorDeed ofTrust.

Johnsonv.MERS,252Fed.Appx.293(11thCir.2007)(statingthatMERSheldtheSecurity Deedas"nominee"forlender). Nicholson v. OneWest Bank, No. 1:10CV0795JEC/AJB, 2010 WL 2732325 (N.D. Ga. Apr. 20,2010)(holdingthatthenomineeofthelenderhastheabilitytoforecloseonadebtor's propertyevenifsuchnomineedoesnothaveabeneficialinterestinthenotesecuredby themortgage,thus,splittingtheNoteandMortgagedoesnotinvalidateeitherdocument, aslongastheforeclosingpartyobtainspossessionofboth). Hawaii Sakalav.BACHomeLoansServicing,LP,No.1000578DAELEK,2011WL719482(D.Haw., Feb.22,2011)(rejectingtheshowmethenoteargumentanddismissingplaintiffsclaim thattheassignmentfromMERSwasinvalid);seealsoKrakauerv.IndyMacMortg.Servs., No.0900518ACKBMK,2010WL5174380(D.Haw.Dec.14,2010)(same). Mierv.Lordsman,Inc.,No.1000584,2011WL285862(D.Haw.Jan.27,2011)(dismissing plaintiffs lack of standing argument as to MERS); see also Phillips v. BAC Home Loans Servicing,LP,No.1000272DAELEK,2010WL5146433(D.Haw.Dec.13,2010)(same). Idaho Trotter v. Bank of New York Mellon, et al., Case No. CV1095, Kootenai County District Court(July2,2010)(findingMERSwasthebeneficiaryofthedeedoftrustunderIdaholaw and,therefore,hadtheauthoritytoassignthemortgage).

 Illinois KeyDecisionMERSv.Barnes,940N.E.2d118(Ill.Ct.App.2010) FindingthatMERScanmaintainforeclosurelawsuitalthoughthebeneficialownership ofthenoteisinanotherpersonandthatIllinoisdoesnotrequirethataforeclosurebe filedbytheownerofthenoteandmortgage. "According to the terms of the mortgage, MERS, as nominee for the lender, had authoritytoacttoenforcethemortgage.Specifically,themortgageprovidedthat... MERShadtherighttoexerciseanyoralloftheinterestsgrantedbytheborrowerinthe mortgage,'including,butnotlimitedto,therighttoforecloseandsell[the]property.' Under those terms, the parties agreed that MERS could bring foreclosure suits in its ownname."

Indiana The Bank of New York Mellon v. Michael R. Green, Case No. 41D010901MF00027, Johnston Superior Court (Sept. 20, 2010) (holding that MERS had the authority to assign themortgagetoBankofNewYorkMellon). Iowa(nocasesfound) Kansas Key Decision Martinez v. MERS, et al., No. 0940886, 2011 WL 489905 (Bankr. D. Kan. Feb.10,2011) AssignmentoftheNoteandMortgagetodifferententitiesdoesnotrenderthemvoid becausesuchasplitmaybeperformedwhenthereisan"agencyrelationship"between theholderofthenoteandtheholderofthemortgage. CourtfoundsufficientevidencetodemonstratethatMERSwasactingastheagentfor the lender by reviewing the language of the Mortgage. MERS also submitted the affidavitofitsTreasurertodemonstratethatanagencyrelationshipexisted. "The fact that MERSand Countrywide chose to use the word nominee, rather than agent,doesnotaltertheunderlyingrelationshipbetweenthetwoparties."

Kentucky InreJessup,APNo.095229,2010WL2926050(Bankr.E.D.Ky.July22,2010)(concluding thatthelanguageinthedeedoftrustissufficienttocreateanomineestatusinfavorof MERS and that MERS may grant signing authority via a Corporate Resolution to permit individualstoassignmortgages). Louisiana(nocasesfound) Maine HSBC v. Murphy, RE08340, Lewiston District Court (2008) (holds that MERS has the authoritytoassignmortgagesbyvirtueofitsstatusasnomineeontheoriginalmortgage).

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 Maryland Parillonv.FremontInvestmentandLoan,No.L093352,2010WL1328425(D.Md.Mar. 25,2010)(dismissingvariousstatelawclaimsagainstMERSandfindingthatMERSisthe beneficiaryoftheSecurityDeed). Massachusetts KeyDecisionInreLopez,No.0910346,2011WL576820(Bankr.D.Mass.Feb.9,2011) Splitting of the Note: The court stated that under Massachusetts law, where a mortgage and the obligation secured thereby are held by different persons, the mortgageisregardedasanincidenttotheobligation,and,therefore,heldintrustfor thebenefitoftheowneroftheobligation.Accordingly,eventhoughMERSneverhad possession of the Note, it was legally holding the mortgage in trust for the Note holder. AssignmentbyaNominee:AstoPlaintiffsclaimthatMERSnomineestatuswaslimited soastopreventMERSfromexecutinganassignmenttotheNotepurchaser,thecourt answeredthatPlaintiffmisunderstoodtheroleofanominee.EventhoughMERSrole asnomineeislimited,itcould,byvirtueofitsnomineestatus,transfertheMortgage onbehalfoftheNoteholder.

Bassillav.GMACMortgage,etal.,No.09J519(Mass.App.Ct.Dec.4,2009)(holdingthat MERShasauthoritytoassignmortgageinterestwithoutowningorholdingthepromissory note) Michigan Key Decision Corgan v. Deutsche Bank National Trust Co., No. 1:09CV939, 2010 WL 2854421(W.D.Mich.July20,2010) PlaintiffsclaimedthatMERScouldnotforeclosebecauseitwasnottheholderindue courseoftheNoteandhadnolegalrighttoforecloseontheMortgage. CourtstatedthatMichiganlawdidnotrequirethatthenamedmortgageebeaholder in due course of the Note. Court pointed to the language of the Mortgage that specificallygrantedMERStheabilitytoforecloseasthenomineeforthelender. "Plaintiffs clearly and expressly gave MERS the power to foreclose on the defaulted mortgage. That power was never taken away from MERS by an transfer of the mortgageormodificationofsomeofthetermsofthemortgage."

Safford v. Precision Funding, No. 0914925, 2010 WL 548504 (E.D. Mich. Feb. 9, 2010) (dismissingstatelawclaimsagainstMERSwhenMERSactedasnomineeonMortgageand theplaintiffhadfailedtosubmitanyevidencetodemonstratethatMERSdidnothavean interestintheMortgagesufficienttoforeclose). English v. Flagstar Bank, No. 0911705, 2009 WL 3429674(E.D. Mich. Oct. 21, 2009) ("Plaintiff'sargumentthatMERSdidnothavetherighttoinitiateforeclosureproceedings is belied by the record. The mortgage contains an express provision giving MERS the

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 Minnesota KeyDecisionJacksonv.MERS,770N.W.2d487(Minn.2009) CertifiedquestionfromtheUSDistrictCourtfortheDistrictofMinnesota:Wherean entity,suchasdefendantMERS,servesasmortgageeofrecordasnomineeforalender and that lenders successors and assigns and there has been no assignment of the mortgage itself, is an assignment of the underlying indebtedness for which the mortgage serves as security an assignment that must be recorded prior to the commencement of a mortgage foreclosure by advertisement under Minn. Stat. ch. 580? Holding: "Transfers of the underlying indebtedness do not have to be recorded to forecloseamortgagebyadvertisement. Minnesota law expressly permits nominees to record an assignment, satisfaction, releaseorpowerofattorneytoforeclose.

Mississippi(nocasesfound) Missouri KeyDecisionMERSv.Bellistri,No.4:09CV731CAS,2010WL2720802(E.D.Mo.2010) Held that purchaser of property at a tax sale must give notice of redemption to all parties that may have a claim in the property, which could include MERS who had a "publiclyrecordedinterestinthepropertyasbeneficiaryasnomineeforthelenderand thelender'sassigns." Also held that party had to join MERS in any quiet title action and failure to do so divestspartyofinterestintheproperty. Furthermore,heldthatMERShas"barelegaltitletothenoteanddeedoftrustsecuring it,"whichissufficienttocreatestandingtochallengequiettitleaction.

In re Tucker, 441 B.R. 638 (Bankr. W.D. Mo. 2010) (holding that designation of MERS as nomineeintheMortgageis"morethansufficienttocreateanagencyrelationshipbetween MERS and the Lender and its successors in Missouri" and that MERS may exercise any rightsthattheLendermayexerciseundertheMortgage). Montana(nocasesfound) Nebraska(nocasesfound) Nevada KeyDecisionRamosv.MERS,No.2:08CV1089,2009WL5651132(D.Nev.Mar.5,2009) Courtconcludedthat,underNevadalaw,foreclosureproceedingscanbecommenced by the beneficiary, the successor in interest of the beneficiary, or the trustee and, thus,thatMERShadarighttoforeclose.

12

Since the deed of trust expressly named MERS as beneficiary, MERS had the right to commenceforeclosureandtoappointthesubstitutetrustee.

Vazquez v. Aurora Loan Services, No. 2:08CV01800RCJRJJ, 2009 WL 1076807 (D. Nev. 2009) (granting MERS motion to dismiss claims of wrongful foreclosure, negligence and quiettitleaslandrecords"sufficientlydemonstrate[d]standingbyDefendantswithrespect to the loan and the foreclosure conducted pursuant to applicable law and the Nevada foreclosurestatues.") NewHampshire Powersv.AuroraLoanServicing,CaseNo.2132010CV00181,SuperiorCourtofCheshire County,NewHampshire(Feb.25,2011)(MERSstatusasnomineeallowsittoperformits corefunctionoffacilitatingthetrackingofmortgages....ContrarytoPlaintiffsassertions ...theuseofMERSasanomineeisinandofitselfneitherfraudulentnorwrong.) NewJersey(nocasesfound) NewMexico(nocasesfound) NewYork U.S.Bank,N.A.v.Flynn,897N.Y.S.2d855(N.Y.Sup.Ct.2010)("Thiscourtfindsthatwhere, ashere,anentitysuchasMERSisidentifiedinthemortgageindentureasthenomineeof thelenderandasthemortgageeofrecordandthemortgageindentureconfersuponsuch nomineeallofthepowersofsuchlender,itssuccessorsandassigns,awrittenassignment of the note and mortgage by MERS, in its capacity as nominee, confers good title to the assigneeandisnotdefectiveforlackofanownershipinterestinthenoteatthetimeofthe assignment.") MERSv.Coakley,838N.Y.S.2d622(N.Y.App.Div.2007)(findingthatMERShasstandingto commence a foreclosure action based upon the language of the Mortgage itself as the borrower "expressly agreed without qualification that MERS had the right to foreclose uponthepremisesintheeventofadefault"). NorthCarolina Wardv.SecurityAtlanticMortgage,No.5:10CV119F,2011WL474560(E.D.N.C.Feb.4, 2011)(dismissingplaintiffsblanketclaimsthatMERSlackedstandingasnominee) NorthDakota KeyDecisionBrayv.BankofAmerica,No.1:09CV075, 2011WL30307(D.N.D. Jan.5, 2011) Question: Whether MERS, by virtue of its possession of both the note and the mortgage,hasstandingtoforeclose. Court:Theassignmentofadebtsecuredbyamortgagecarriesthesecuritywithit. The Court concluded that MERS is able to enforce the note which was endorsed in blankandinMERSpossession.

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Even if the ownership of the mortgage passed with the ownership of the note pursuant to N.D.C.C. 350301.2, MERS possession of the note would give it ownershipofthemortgage.

Ohio DeutscheBankNatl.TrustCo.v.Traxler,2010Ohio3940(OhioCt.App.2010)(holdingthat because the Mortgage follows the Note, even without an assignment from MERS the transfer of the Note operated as an equitable assignment of the Mortgage to the purchaser;alsorecognizedMERSauthoritytoassignMortgagewhendesignatedasbotha nomineeandmortgagee). MERSv.Mosley,No.93170,2010WL2541245(OhioCt.App.June24,2010)(findingthat MERS had authority to foreclose on the property because it was named as the lender's nomineeintheMortgage,despitethefactthatithadnobeneficialinterestintheNote.) Oklahoma MERSv.WilliamC.Warden,CJ20057027,DistrictCourtofOklahomaCity(Mar.3,2006) (refusing to vacate a judgment of foreclosure, concluding that plaintiffs argument that MERSlackedstandingtopursuewaswithoutmerit) Oregon Burgett v. MERS, No. 096244HO, 2010 WL 4282105 (D. Or. Oct. 20, 2010) (recognizing thattheMERSsystemdoesnot,inandofitself,violateOregonlaw,butprovidingthatany andallassignmentswouldhavetoberecordedpriortocommencingforeclosure). Stewart v. MERS, No. CV09687PK, 2010 WL 1055131 (D. Or. Feb. 9, 2010) (granting MERS motion to dismiss, finding that U.S. Bank was a real party in interest because the assignmentfromMERStoU.S.BankwasproperunderOregonlaw). Pennsylvania MERSv.Ralich,982A.2d77(Pa.Super.Ct.2009)(affirmingthetrialcourtsdetermination thatthemortgagevestedMERSwiththeauthoritytoenforcetheloan) Strakerv.DeutscheBankNat'lTrust,No.3:09CV338,2011WL398374(M.D.Pa.Feb.3, 2011)(notingthat[a]stheamendedcomplaintandmortgagedocumentsnote,MERSwas thenomineeholdinglegaltitleforFremont,theoriginatinglender.) RhodeIsland KeyDecisionBucciv.LehmanBros.Bank,No.PC20093888,2009WL3328373(R.I.Aug. 25,2009) BorrowersthroughtheMortgagespecificallygrantedtheStatutoryPowerofSaleto MERS, as nominee for Lender and Lender's successors and assigns. "The Mortgage furtherstatedthatifnecessarytocomplywithlaworcustom,MERS(asnomineefor LenderandLender'ssuccessorsandassigns)hastherighttoexerciseanyorallofthose interests,including,butnotlimitedto,therighttoforecloseandselltheProperty.... The fact that paragraph twentytwo of the Mortgage states that the Lender may invoketheSTATUTORYPOWEROFSALEdoesnotnegatethepreviouslanguageinthe
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"MERShastherighttoinvoketheStatutoryPowerofSaleherebecauseitisthenamed mortgageeandnomineeof[thelender]anditssuccessorsandassigns."

SouthCarolina(nocasesfound) SouthDakota(nocasesfound) Tennessee Millsv.FirstHorizonHomeLoanCorp.,No.W201000310COAR3CV,2010WL4629610 (Tenn. Ct. App. Nov. 16, 2010) (dismissing as unripe plaintiffs complaint for declaratory judgmentthattheirmortgagewouldbeunenforceablebasedontheinvolvementofMERS) Texas Hunt v. MERS, No. 031000031CV, 2010 WL 3271966 (Tex. Ct. App. Aug. 20, 2010) (rejectingplaintiffsargumentthatMERSlackedstanding) Athey v. MERS, 314 S.W.3d 161 (Tex. Ct. App. 2010) (affirming trial courts grant of summaryjudgmenttoMERS,holdingthatMERSwasthebeneficiaryofthedeedoftrust and,therefore,hadauthoritytoconductanonjudicialforeclosure).SeealsoRichardsonv. CitiMortgage,Inc.,No.6:10CV119,2010WL4818556(E.D.Tex.Nov.22,2010)(deedof trustexpresslyprovidedthatMERSwastohavepowerofsale). Maxwellv.ChaseHomeFinance,No.H094038,2011WL181345(S.D.Tex.Jan.19,2011) (dismissingplaintiffscookiecuttercomplaintthatMERSlacksstandingtosue). Santarose v. Aurora Bank FSB, No. H100720, 2010 WL 3064047 (S.D. Tex. Aug. 3, 2010) (relyingonlanguageindeedoftrusttoestablishthatMERS,asnominee,hadtherightto foreclose). Utah King v. American Mortgage Network, et al., No. 1:09CV162DAK, 2010 WL 3516475 (D. UtahSept.2,2010)(interpretingthelanguageofthedeedoftrust,heldthatMERShadthe authority to initiate foreclosure proceedings, appoint a trustee, and to foreclose and sell theproperty). Commonwealth Property Advocates, LLC v. CitiMortgage, No. 2:10CV00885, 2011 WL 98491 (D. Utah Jan. 12, 2011) (Plaintiff offers no evidence or legal argument thatMERS cannotcontractfortherightandpowerofforeclosureregardlessofwhoholdsthenote,or the beneficial interest under the trust deed. Nor does Plaintiff demonstrate that such rightsareactuallylostbythetransferofthedebt.) Key Decision Witt v. CIT Group/Consumer Finance, Inc., No. 2:10CV440TS, 2010 WL 4609368(D.UtahNov.5,2010)

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Courtfirstfoundthatlenderdidnothavetoobtaintheconsentoftheborrowerbefore assigningnotetopurchaser. CourtthenstatedthattheNotewasnot"split"withthemortgagebybeingassignedto MERS. Courtnotedthe"wellsettledprecedentinboththeUnitedStatesSupremeCourtand UtahSupremeCourtwhichclearlyestablishthat[t]hetransferofthenotecarrieswith it the security, without any formal assignment or delivery, or even mention of the latter.

Kingv.AmericanMortg.Network,Inc.,No.1:09CV162DAK,2010WL3516475(D.Utah Sept.2,2010)(dismissingplaintiffssplitthenoteargument). McGinnisv.GMACMortgageCorp.,No.2:10CV00301TC,2010WL3418204(D.UtahAug. 27,2010)(dismissingplaintiffsclaimthatMERSlackedstandingtoconductforeclosure). Rhodes v. Aurora Loan Services, No. 2:10CV00230, 2010 WL 3219310 (D. Utah Aug. 13, 2010) (Although MERS does not own the note, it is given authority to foreclose on the notebythenotesownerthroughthelanguageinthetrustdeed.Courtshaveconsistently heldthatMERShastheauthoritytoforecloseinbehalfofthelenderandthatMERSneed notpossessthenoteinordertoappointatrusteeinbehalfofthelenderwhodoeshold thenote.) Burnett v. MERS, No. 1:09CV00069DAK, 2009 WL 3582294 (D. Utah Oct. 27, 2009) (MERS had authority under the Deed of Trust to initiate foreclosureproceedings and to appointWoodallassuccessortrustee.) Vermont(nocasesfound) Virginia RamirezAlvarezv.AuroraLoanServices,LLC,No.01:09CV1306,2010WL2934473(E.D. Va.July21,2010)(MERShadtheauthorityandabilitytoenforcethetermsofthesecurity instruments.) KeyDecisionTapiav.U.S.Bank,718F.Supp.2d689(E.D.Va.2010) "The Deed of Trust authorized MERS to foreclose the Property in the event that Plaintiffsdefaultedontheloan." "BysigningtheDeedofTrust,PlaintiffsagreedthatMERS,asnomineeforLenderand Lenderssuccessorsandassigns,hadtherighttoforeclosethePropertyandrecognized thatMERScouldtakeanyactionrequiredofLender. Alsofindingthattheborrowershadfailedtosubmitany"legallysupported"argument astowhyMERSasnomineedidnothavetherighttoforecloseandselltheborrower's propertyinaccordancewithlaworcustom.

Merinov.EMCMortg.Corp.,No.1:09CV1121,2010WL1039842(E.D.Va.Mar.19,2010) (rejectingsplitthenoteargumentastheholderoftheinstrumentretainstheabilityto foreclose);Horvathv.BankofNewYork,N.A.,etal.,No.1:09CV01129,2010WL538039 (E.D.Va.Jan.29,2010)(same).

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 Washington Cebrunv.HSBCBankUSA,N.A.,No.C105742BHS,2011WL321992(W.D.Wash.Feb.2, 2011) (rejecting plaintiffs claims regarding MERS not being a beneficiary under the security instrument. In so ruling, the Court considered that plaintiffs had signed a mortgagethatexpresslynamedMERSasbeneficiary.) Key Decision Daddabbo v. Countrywide Home Loans, Inc., No. C091417RAJ, 2010 WL 2102485(W.D.Wash.May20,2010) PlaintiffssolebasisforblockingtheforeclosureistheircontentionthatMERShasno beneficial interest in the note that the deed of trust secures, and that Recontrust therefore has no power as MERSs designee to initiate a foreclosure action. This assertion is baffling. The deed of trust, of which the court takes judicial notice, explicitlynamesMERSasabeneficiary.ThedeedoftrustgrantsMERSnotonlylegal titletotheinterestscreatedinthetrust,buttheauthorizationofthelenderandanyof its successors to take any action to protect those interests, including the right to forecloseandselltheProperty.

Vawterv.QualityLoanServiceCorp.ofWashington,707F.Supp.2d1115(W.D.Wash.Apr. 22,2010)(dismissingclaimonbasisthatMERSwasproperlyabeneficiaryandentitledto effectsaleofdefaulteduponproperty) WestVirginia(nocasesfound) Wisconsin KeyDecisionCountrywideHomeLoansServicing,LPv.Rohlf,No.2009AP2330,2010WL 4630328(Wis.App.Nov.17,2010) DistinguisheddecisionofLandmarkv.Kesler,216P.3d158(Kan.2009). "ThemortgagedesignatesMERSasthemortgageeandAmericanSterlingBankasthe lender. MERS is also designated American Sterling Bank's nominee which allows it to act as American Sterling Bank but not possess any ownership rights. The note referencesthemortgageasthecontrollingsecurityinstrument.Themortgageprovides that the note and mortgage may be sold one or more times. The note and the mortgagesecuringthenotearetobeconstruedtogether.Theassignmentofmortgage transfersboththenoteandmortgage.[Plaintiffs]presentednoevidencetorefutethe assignmentofboththenoteandmortgagetoCountrywide." Plaintiffs also "failed to establish that MERS designation as nominee for American SterlingBankdidnotincludeauthoritytoassignthenote.Moreover,[t]hejudgment of foreclosure and sale determines the parties' legal rights in the underlying obligation.

Wyoming InreRelka,No.0920806,2009WL5149262(Bankr.D.Wyo.Dec.22,2009)(findingthat MERS had properly assigned the mortgage to the note purchaser and validating foreclosure).

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VII. CASESPRESENTINGQUESTIONSREGARDINGMERSVALIDITY
Arkansas MERSv.SouthwestHomesofArkansas,301S.W.3d1(Ark.2009) ActionbyMERStosetasideadecreeofforeclosurewhereMERShadnotbeenserved withprocess.ThecircuitcourtdeniedMERSmotion,concludingthatMERS,asmere agentofthelender,wasnotanecessarypartythatwasentitledtoreceiveserviceof process. "We specifically reject the notion that MERS may act on its own, independent of the direction of the specific lender who holds the repayment interest in the security instrumentatthetimeMERSpurportstoact.[A]nagentisauthorizedtodo,andtodo only,whatitisreasonableforhimtoinferthattheprincipaldesireshimtodointhe lightoftheprincipal'smanifestationandthefactsasheknowsorshouldknowthemat thetimeheacts. "MERS holds no authority to act as an agent and holds no property interest in the mortgaged land. It is not a necessary party. In this dispute over foreclosure on the subjectrealpropertyunderthemortgageandthedeedoftrust,completereliefmaybe grantedwhetherornotMERSisaparty.MERShasnointeresttoprotect.Itsimplywas notanecessaryparty."

Idaho InreSheridan,No.0820381,2009WL631355(Bankr.D.IdahoMar.12,2009) WithoutdecidingwhetherMERS,asnominee,wouldhavetherighttolifttheautomatic stay,thebankruptcycourtdeniedtherequestforstayreliefonthebasisthattherewas noproofthatthetrusteeonwhosebehalfMERSwaspurportingtoacthadanyinterest inthenoteordeedoftrust.

Kansas LandmarkNationalBankv.Kesler,216P.3d158(Kan.2009) Facts: MERS was mortgagee as nominee for the owner of the junior mortgage loan. First mortgagee foreclosed, but did not notify MERS even though MERS was the recordedmortgagee.Withoutnotice,MERSfailedtodefend,andadefaultjudgment was entered extinguishing the second mortgage. Property was sold to a third party. MERS moved to vacate the default, arguing that it had not received notice of the foreclosure. The Court denied MERSs motion, but did not address whether MERS was entitled to notice.Instead,theCourtsimplystatedthat,evenifMERSwouldhavebeenentitledto notice,MERSwouldnothavehadameritoriousdefensetotheaction. TwoviewsonKesler: First view, and the one adopted by MERS, is that Kesler is a narrow decision. Specifically,proponentsofthisviewclaimthatKeslerwasbasedonprocedure(high

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Thealternateview,andoneendorsedbyconsumeradvocates,isthatthisdecision questionsMERSrighttonoticeofforeclosureactions. KeyPoints:MERSdidnotreceivenoticeofthesuitbecausetheforeclosingparty sent notice to the lender on the second mortgage. Court did not recognize that MERShascapacitytoactonbehalfofanassigneeofthenotebecauseofitslegal titleasmortgagee.Courtdisregardedtheproprietyofusingnomineesinsecured transactions.

Maine MERSv.Saunders,2A.3d289(Me.Aug.12,2010) Court concluded that MERS is not a mortgagee within the meaning of Maines foreclosure statute, 14 M.R.S. 63216325 and, therefore, had no standing to foreclose.Courtconcluded,however,thatrealpartyininterestwasDeutscheBankand thattheCourtdidnoterrbysubstitutingthelenderforMERS. MERSarguedthatitwastheholderofboththemortgageandthenote,butdidnot submit any evidence regarding whether real property secured the note or whether, particularly, the real property of the borrowers was involved. Borrowers provided evidence(RFAsansweredbyMERS)thatshowedthatthebankwastheholderofthe note. Becauseofthisdispute,theCourtdeniedsummaryjudgmenttoMERS.Later,thebank wassubstitutedasapartyinplaceofMERS,andtheCourtgrantedsummaryjudgment infavorofthebank. As to MERS standing: The relationship of MERS to the transaction between the [borrowers]and[theirlender]isnotsubjecttoaneasydescriptionorclassification. The Court noted that MERS is not mentioned in the note and has no interest in the note. Inthemortgage,MERSisdefinedasaseparatecorporationthatisactingsolelyasa nominee for Lender and Lenders successors and assigns For the purposes of recordingthismortgage,MERSisthemortgageeofrecord.Theonlyrightsconveyed to MERS is bare legal title to the property for the sole purpose of recording the mortgageAccordingly,becauseMERSsolerightistorecordthemortgage,itlacks standingtoforecloseasthemortgagee.

Missouri Bellistriv.OcwenLoanServicing,LLC,284S.W.3d619(Mo.Ct.App.2009) CourtheldthatbecauseMERSneverheldthepromissorynoteitsassignmentofthe deedoftrustseparatefromthenotehadnoforce,thusprohibitingtheassigneeofthe deedoftrustfromforeclosing.

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"When the holder of the promissory note assigns or transfers the note, the deed of trustisalsotransferred.Anassignmentofthedeedoftrustseparatefromthenotehas no force.Effectively,the note and the deedof trust areinseparable, and when the promissorynoteistransferred,itvestsinthetransfereealltheinterest,rights,powers andsecurityconferredbythedeedoftrustuponthebeneficiarythereinandthepayee inthenotes. CourtrecognizedthatwhentheholderofaDOTisanagentfortheholderofthe note,noimpropersplittingoccurs.

NewYork LaSalleBankv.Lamy,824N.Y.S.2d769(N.Y.App.Div.2006) Statingthatanomineeoftheownerofthenoteandmortgage,suchasMERS,maynot prosecuteamortgageforeclosureactioninitsownname asnomineeforthe original lender because it lacks ownership of the note and mortgage at the time of the prosecutionoftheaction." Facts:Servicerofmortgageloansoughtrelieffromtheautomaticstay. TheCourtframedtheissueasfollows:TheDebtorsargumentraisesafundamental questionastowhetherMERShadthelegalauthoritytoassignavalidandenforceable interestinthesubjectmortgage.BecauseU.S.Banksrightscanbenogreaterthanthe rightstransferredbyitsassignorMERStheDebtorarguesthattheMovant,actingon behalfofU.S.Bank,hasfailedtoestablishthatitholdsanenforceablerightagainstthe Property. Additional Facts: Because the state court had already entered a judgment of foreclosure in favor of US Bank, the bankruptcy court concluded that the Debtors objectiontothemotionforrelieffromtheautomaticstaymustbeoverruledpursuant totheRookerFeldmandoctrine. The Court went on to address whether, absent the state court foreclosure order, US Bank and its agent would have had authority to foreclose where the assignment had come from MERS. No evidence was produced showing that US Bank holds the note. OnlyanAssignmentofMortgagebyMERSwasproduced. Forthesereasons,theCourtwasnotsatisfiedthatUSBankhadreceivedtransferofthe notebyassignment.Further,therewasnoevidencebeforetheCourtshowingthatUS Bankhadphysicalpossessionofthenote.TheMotionforrelieffromstaydidnoteven explicitlystatethatUSBankheldthenote.NotonlywasUSBanksnoteholderstatus defective,butitalsocouldnotshowthatitwastheholderoftheMortgage. Court:Firstrejectedtheargumentthatthemortgagestayswiththenote,findingthat theMERSsystemitselfalteredthispracticebynamingMERSasmortgageeandsome other party as the noteholder. In order to prove standing to foreclose, the Court stated,USBank(oritsagent)mustshowthatUSBankisavalidassigneeofboththe NoteandtheMortgage.
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InreAgard,No.81077338reg,2011WL499959(Bankr.E.D.N.Y.Feb.10,2011)

TheCourtalsorejectedtheargumentthatMERSmembershiprulescreatedanagency relationship. Thecourtalsoconcludedthatnoagencyrelationshipwas createdbecauseitwasnot memorializedinwritingasrequiredbytheStatuteofFrauds.

Formoreinformation,pleasecontacttheauthorat:
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