MERS Wins Dismissal in California Court of Appeal


Reston, Virginia, – July 18, 2014 – (RealEstateRama) — MERSCORP Holdings, Inc. today announced that the Court of Appeal of the State of California Second Appellate District affirmed the trial court’s order dismissing a wrongful foreclosure lawsuit.

In Matlock v. J.P. Morgan Chase Bank, N.A., et al., the plaintiffs had taken out a mortgage loan secured by a deed of trust that named Mortgage Electronic Registration Systems, Inc. (MERS) as the beneficiary as nominee for the original lender. The plaintiffs subsequently defaulted on this loan and were subject to a foreclosure action. In response, the plaintiffs brought an action against several financial institutions, including MERS, with a variety of claims alleging defects in the loan and foreclosure process. With respect to MERS, the plaintiffs claimed that MERS’ assignment of the loan’s deed of trust to U.S. Bank was improper and invalid, and as a result U.S. Bank’s appointed trustee, California Reconveyance Company, lacked standing to bring the foreclosure action.

The Court of Appeal held that under California law, because the plaintiffs were not a party to the assignment transaction, they did not have standing to challenge the validity of the assignment. In rejecting the plaintiffs’ position, Acting Presiding Justice Victoria Gerrard Chaney held that the only relevant parties to the assignment were MERS and U.S. Bank. The Court further explained that the “Plaintiffs lack standing to enforce any agreements relating to the transfer because they were not injured by it—their obligations under the loan remain unchanged.”

The appellate court also rejected the plaintiff’s’ attack on the assignment by MERS because they were in default of their mortgage payment obligation. “A debtor who is in default of a mortgage loan must allege a credible tender of the amount due to maintain any cause of action for wrongful foreclosure.” The plaintiffs’ other claims, unrelated to MERS, were likewise dismissed by the Court of Appeal on various legal and factual grounds.

“In a similar case last month, the Court of Appeal of the State of California Second Appellate District affirmed the dismissal of a borrower’s foreclosure challenge,” said MERSCORP Holdings Vice President for Corporate Communications, Janis Smith. “This Court is showing a pattern that the law is established about challenging the MERS assignment.”

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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