Federal Court in Washington Sides with MERS


Court Disagrees with Plaintiff’s Interpretation of Bain Decision, Rules “Plaintiff’s Position Laks Merit”

Reston, Virginia – February 25, 2013 – (RealEstateRama) — MERSCORP Holdings, Inc. today announced that Chief Judge Marsha J. Pechman of the U.S. District Court, Western District of Washington, held that “Plaintiff’s bare legal conclusions are not sufficient to uphold his claim” and dismissed with prejudice a three-count complaint alleging violations of Washington’s Deed of Trust Act (DTA) and the state’s Consumer Protection Act (CPA).

In Zalac v. CTX Mortgage Corp., Judge Pechman found that under Washington law a foreclosure sale is a prerequisite to any claim alleging DTA violations and since no foreclosure sale actually occurred – only the initiation of the foreclosure proceedings – the plaintiff’s claim fails as a matter of law. “…Washington does not recognize a claim for wrongful initiation of foreclosure proceedings,” she wrote.

Judge Pechman also found no merit to Plaintiff’s allegations of consumer protection violations. “Plaintiff’s position lacks merit because it is a misapplication of the Washington State Supreme Court’s decision in Bain v. Metropolitan Mortg. Group, Inc.,” she held. Judge Pechman found that the Bain decision did not rule MERS’ role in a deed of trust is an automatic violation of the CPA and that the Plaintiff failed to show how he was deceived by MERS. She ruled, therefore, that “[b]ecause Plaintiff has failed to allege any cognizable deceptive or unfair trade or practice arising out of MERS’s involvement, the CPA claim is DISMISSED.”

“Since the Washington Supreme Court’s Bain opinion, multiple courts in Washington have rejected DTA and CPA violation claims against MERS,” MERSCORP Holdings’ Director for Corporate Communications Jason Lobo said. “We have consistently noted that the Bain opinion provided very specific criteria that must be met to prove these DTA and CPA charges. It is also important to note that the Washington Supreme Court did not find that MERS involvement in non-judicial foreclosures is a per se violation of the CPA.”

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.

Jason Lobo
Phone: 703-652-1660

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