The string of legal victories for Mortgage Electronic Registration Systems [1] (MERS) continued on Monday with the announcement from parent company MERSCORP Holdings that a court in Dallas, Texas, had ruled in MERS’ favor recognizing the company’s right as beneficiary to notice of a lawsuit under both the U.S. and Texas Constitutions.
In the case of Mortgage Electronic Registration Systems, Inc. v. Summit Residential Services [2], Summit Residential Services acquired an interest in a property following an HOA foreclosure sale, and in 2002, the property was encumbered by a deed of trust granted by the borrower to MERS. Summit filed suit seeking clear title to the property, and in the suit it named only the original lender identified in the MERS deed of trust.
MERS was not provided with notice of the action, nor was it named in the action. Summary judgment was granted to Summit which extinguished the MERS lien in April 2014, and MERS promptly filed its own lawsuit seeking to reinstate its lien. In its suit, MERS contended that it could not be deprived of its protected property without an opportunity to be heard under due process guaranteed by both the U.S. and Texas Constitutions.
The Dallas County District Court, 101st Judicial District, agreed with MERS and entered a Final Judgment vacating Summit’s judgment and reinstating MERS’ lien on the property.
“This judgment confirms that MERS is a necessary party to any lawsuit affecting property interests when MERS is the mortgagee or beneficiary of record. As such, MERS has a constitutionally protected right entitling MERS to notice of the lawsuit,” said MERSCORP Holdings VP for Corporate Communications, Janis Smith. “MERS will vigorously defend its constitutional and statutory right to notice.”
MERS won a number of court decisions [3] just since the second half of 2015 in cases that challenged its right to act as mortgagee. In late September, MERS won decisions in Montana, Georgia, New York, Kentucky, Tennessee, Pennsylvania, and Texas. In January, MERS won its first decision of 2016 [4] in the New Hampshire State Supreme Court.