United States Court of Appeals Upholds Dismissal of Lawsuit against MERS


MERS has Authority to Assign the Mortgage

Reston, Virginia – July 21, 2015 – (RealEstateRama) — MERSCORP Holdings, Inc. today announced that the U.S. Court of Appeals for the Sixth Circuit upheld a dismissal by the United States District Court for the Western District of Michigan, finding the plaintiff’s complaint was based on “meritless claims concerning note-splitting and securitization.”

In pdf Margelis v. IndyMac FSB (166 KB), the plaintiff challenged the assignment of her mortgage by MERS and the subsequent foreclosure, arguing that her promissory note had been separated from her mortgage by securitization, that the separation rendered the mortgage null and void, and that none of the defendants therefore had the authority to assign the mortgage or to foreclose on the property.

In its opinion affirming the district court’s judgment, the Appellate panel held that the borrower’s position on separation of the note and mortgage was erroneous under Michigan law. The Court of Appeals quoted pdfHargrow v. Wells Fargo Bank N.A. (89 KB), in holding that “‘it is lawful for the holder of the mortgage to be different from the holder of the debt’ and there is no bar to the subsequent transfer of the mortgage without a corresponding transfer of the underlying debt.’’ 491 F. App’x 534, 538 (6th Cir. 2012).

“We are pleased that the U.S. Court of Appeals affirmed the district court ruling and held that the mortgage and the debt need not be held by the same party under Michigan law, and the rights to assign and foreclose are not affected by such an arrangement,” said MERSCORP Holdings Vice President for Corporate Communications, Janis Smith. “This decision is consistent with the Michigan Supreme Court’s 2011 ruling in pdf Residential Funding Co., L.L.C. v. Saurman (40 KB), and we believe the case law on this point should be considered settled once and for all.”

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
Phone: 703-738-0230

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