Three Federal Courts Find in Favor of MERS


Reston, Virginia – September 28, 2015 – (RealEstateRama) — MERSCORP Holdings, Inc. today announced that three separate federal courts ruled in Mortgage Electronic Registration Systems, Inc.’s (MERS) favor, dismissing borrowers’ suits to quiet title and affirming MERS’ authority to assign the mortgage lien.

In pdf Bradley v. Branch Banking Trust (BB&T) (243 KB) (Georgia), pdf Garza v. Flagstar Bank, FSB (834 KB) (Texas), and pdf McCarty v. Bank of New York (1.04 MB) (New York), the plaintiffs sued MERS and other financial companies to avoid foreclosure based on claims that MERS could not hold or assign a security instrument. In addition, the plaintiffs in Bradley and Garza alleged that by using MERS in the loan transaction, the note and security instrument were split, making the mortgage or deed unenforceable.

In Bradley, Magistrate Judge Russell G. Vineyard from the U.S. District Court for the Northern District of Georgia found that because “it is undisputed that [the borrower] executed a security deed that conveyed the property to MERS,” the borrower could not claim that he held full title to the property, and therefore, dismissed the quiet title claim. In McCarty, the U.S. District Judge Analisa Torres from the Southern District of New York similarly dismissed quiet title claims against MERS and its co-defendants while also upholding the validity of the deed of trust assignment executed by MERS. In her opinion, Judge Torres held, “Plaintiff voluntarily executed the Deed of Trust to obtain the loan. And even construing the amended complaint liberally, Plaintiff has not alleged a proper basis for a discharge of that loan.” In Garza, Judge David Hittner from the U.S. District for the Southern District of Texas Court upheld the validity of the assignments of the deed of trust and dismissed the borrowers’ claim to quiet title, noting that the borrowers “fail to make any allegations to support their assertion that Defendants’ claim to the property is invalid or unenforceable[.]” The quiet title claims in all three cases were dismissed with prejudice.

Furthermore, the split-the-note claims in Bradley were rejected by applying the Georgia Supreme Court’s decision in pdf You v. JP Morgan Chase (74 KB), while the Garza Court relied on the Fifth Circuit’s rejection of identical claims under Texas law in pdf Martins v. BAC Home Loan Servicing LP (102 KB).

“These federal courts affirmed that MERS can rightfully hold a security instrument on behalf of the lender and its assigns,” said MERSCORP Holdings Vice President for Corporate Communications, Janis Smith. “In addition, the federal court in New York found in McCarty that the borrower’s quiet title and fraud claims were contradicted by the plain language in the mortgage and 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.

CONTACT: Janis Smith
Phone: 703-738-0230

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