The Appeals Court of Massachusetts became the latest court to uphold the validity of the assignment of a mortgage by Mortgage Electronic Registration System (MERS [1]) on Friday, according to an announcement from MERSCORP Holdings, parent company of MERS.
The borrowers in the case of Hoyt v. BAC Home Loan Servicing [2] had previously challenged a lower court's ruling that MERS' assignment of a mortgage was valid. The Appeals Court ruled that under Massachusetts law, a mortgage's legal interest may be separated from the beneficial interest in the debt it secures.
The court also ruled that the assignment of the mortgage by MERS was valid, and because MERS held the record legal interest in the mortgage when it executed the assignment, the assignment conveyed legal interest in the mortgage to the foreclosing entity. The Appeals Court went on to rule that the foreclosing entity (assignee of the mortgage) had the legal right to foreclose on the property because a foreclosing entity was not legally required to hold the mortgage note at the time the foreclosure was initiated.
Moreover, the Appeals Court ruled that the lower court was not in error with its judgment that the borrower lacked standing to challenge MERS' assignment of the mortgage.
"MERS has legal authority to execute mortgage assignments,” MERSCORP Holdings VP for Corporate Communications, Janis Smith said. "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. The latest such decision [3] occurred in the U.S. Ninth Circuit Court of Appeals in late March.