First Circuit Court of Appeals Rules MERS “Faithful” to “Mortgage Law”


Distinguished Panel Holds that MERS’ “had the authority twice over to assign”

Reston, Virginia – February 20, 2013 – (RealEstateRama) — MERSCORP Holdings, Inc. today announced that a three-judge panel of the U.S. Court of Appeals for the First Circuit issued a ruling favorable to Mortgage Electronic Registration Systems, Inc.’s role and authority as mortgagee by affirming a U.S. District Court dismissal in Culhane v. Aurora.

“…MERS’ role as mortgagee of record and custodian of the bare legal interest as nominee for the member-noteholder, and the member-noteholder’s role as owner of the beneficial interest in the loan, fit comfortably with each other and fit comfortably within the structure of Massachusetts mortgage law,” Senior Circuit Judge Bruce M. Selya wrote on behalf of the panel. “[T]here is no reason to doubt the legitimacy of the common arrangement whereby MERS holds bare legal title as mortgagee of record and the noteholder alone enjoys the beneficial interest in the loan.”

The panel also held that MERS’ use of signing officers complies with Massachusetts law. Judge Selya was joined by Chief Judge Sandra L. Lynch and the Honorable David H. Souter, Associate Justice (Ret.) of the U.S. Supreme Court, sitting by designation.

While the panel did rule that in Massachusetts a homeowner may, in limited circumstances, challenge a mortgage assignment, it cautioned, however, that such circumstances were limited to where the challenge was being made against an “invalid, ineffective, or void” assignment.

In November 2011, Judge William G. Young of the U.S. District Court for the District of Massachusetts dismissed this case. “The Court holds that there was no flaw in this process. Under Massachusetts law, MERS lawfully held the legal title to Culhane’s mortgage in trust first for Preferred and subsequently for Deutsche,” Judge Young wrote. “[E]ven after the most careful scrutiny, it appears that MERS works rather well as a land registration system.”

“This appellate panel carefully and succinctly analyzed MERS’ role and authority as mortgagee and came to the same conclusion the District Court found months ago,” MERSCORP Holdings’ Director for Corporate Communications Jason Lobo said. “We are pleased that the panel held that ‘the MERS framework is faithful to the age-old tenets of mortgage law in Massachusetts…’ ”

For descriptions of cases and other materials pertaining to MERS’ business model and role in U.S. housing, please visit


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.

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