Appellate Court Upholds District Court’s Ruling in Favor of MERS in Wrongful Foreclosure Claim

The Ninth Circuit Court of Appeals on Wednesday upheld a decision by a district court that dismissed a borrower's wrongful foreclosure claim against Mortgage Electronic Registration Systems, Inc. (MERS), according to an announcement from MERSCORP Holdings, Inc.

The borrower in the case of Tung Q Lam, v. JPMorgan Chase Bank NA et al contended that MERS lacked the authority to assign the deed of trust because when the promissory note was assigned to subsequent entities, MERS lost its status as agent of the note holder. The Ninth Circuit Court ruled that MERS possessed the authority to assign the deed of trust based on the fact that the borrower agreed in the deed of trust that MERS had the right to "exercise any or all of [the lender’s] interests."

"The authority to assign is a reoccurring issue brought in many of the cases that MERS defends and this authority is routinely upheld by courts across the country," MERSCORP Holdings VP for Corporate Communications Janis Smith said. "MERS has legal authority to act on behalf of the lender – including the right to execute the assignment – and this authority is granted by plain language in the mortgage document signed at closing by the borrower."

MERS has won victories in courts in many states in the last two years over borrowers facing foreclosure who challenged the company's authority to act as mortgagee or assign the deed of trust, including Illinois, Massachusetts, Rhode Island, Ohio, New Hampshire, Montana, Idaho, Arkansas, and Texas.