High Court, Once Again, Recognizes Agency Relationship between MERS and Note Holder
Reston, Virginia – February 1, 2016 – (RealEstateRama) — MERSCORP Holdings, Inc. today announced that the Supreme Court of New Hampshire affirmed its holding in an earlier decision that the language in a mortgage granted to Mortgage Electronic Registration Systems, Inc. (MERS) as the mortgagee as nominee for the Lender and the Lender’s successors and assigns (MERS Mortgage) evidences an agency relationship between the assignee of a MERS mortgage and the note holder.
In pdf Castagnaro v. Bank of New York Mellon (366 KB) , the borrower filed a wrongful foreclosure action against the Bank of New York Mellon (the “Bank”) claiming that the Bank, as record mortgagee, did not have the authority to foreclose non-judicially under New Hampshire law without also providing evidence it held the borrower’s note. The trial court granted the Bank’s motion to dismiss, finding that the Bank was an agent of the note holder with authority to foreclose because the Bank was the assignee of the MERS mortgage. The plaintiff appealed to the First Circuit Court of Appeals. The First Circuit certified two questions to the New Hampshire Supreme Court relating to whether New Hampshire law requires the foreclosing entity to possess both the note and mortgage at the time of the non-judicial foreclosure.
The Supreme Court responded by referring the First Circuit to its July 24, 2015 pdf Bergeron v. N.Y. Community Bank (102 KB) opinion, which involved similar questions of law and facts. The Supreme Court determined that Bergeron was dispositive of the issues in this case because both cases involved mortgages that created an agency relationship between MERS and the note holder and expressly granted MERS or the assignee of MERS “the power of sale and the right to foreclose and sell the mortgaged property.” In addition, the Court had already ruled that “an agent of the noteholder may properly institute foreclosure proceedings” according to New Hampshire law.
“We are pleased that the Supreme Court of New Hampshire consistently recognizes the plain language in the mortgage agreement signed by a borrower at closing establishes the lawful agency relationship between MERS and a lender and its successors,” said MERSCORP Holdings Vice President for Corporate Communications, Janis Smith. “The New Hampshire Supreme Court ruling recognizes MERS’ authority to take action on behalf of the lender, including assigning the mortgage.”
For descriptions of cases and other materials pertaining to MERS’ business model and role in U.S. housing, please visit www.mersinc.org.
MERSCORP Holdings, Inc. is a privately held corporation that owns and manages the MERS® System and all other MERS® products. It is a member-based organization made up of thousands of lenders, servicers, sub-servicers, investors and government institutions. Mortgage Electronic Registration Systems, Inc. (MERS) serves as the mortgagee in the land records for loans registered on the MERS® System, and is a nominee (or agent) for the owner of the promissory note. The MERS® System is a national electronic database that tracks changes in mortgage servicing and beneficial ownership interests in residential mortgage loans on behalf of its members.
CONTACT: Janis Smith