Rhode Island Supreme Court Supports MERS’ Role as Mortgagee

A Rhode Island Supreme Court ruling determined ""Mortgage Electronic Registration Systems, Inc."":http://www.mersinc.org/ (MERS), as mortgagee, had the authority to proceed with a foreclosure on behalf of another entity, MERS announced in a release.

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In _Bucci v. Lehman Brothers Bank, FSB et al_, a five-justice panel ruled MERS' role as mortgagee is consistent with Rhode Island law, MERS stated.

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According to court documents, Lehman Brothers, the lender, granted the mortgage to MERS as nominee. After the plaintiffs stopped making payments, MERS initiated foreclosure proceedings. The day before the foreclosure sale, the plaintiffs then sought a declaratory judgment and injunctive relief.

The plaintiffs attempted to argue that the language of the mortgage did not authorize MERS to foreclose. However, the trial justice denied the plaintiffs' request.

The state Supreme Court also found ""none of the statutes that plaintiffs rely upon prohibit MERS from foreclosing on the Bucci mortgage,"" Justice Francis X. Flaherty wrote.

Flaherty explained MERS was enforcing the mortgage on behalf of the owner of the note, a party that is, without question, entitled to enforce the obligation the mortgage secures.

""Therefore, we see no reason why MERS, as an agent of the owner of the note, cannot foreclose on behalf of that entity,"" he wrote.

As of July 2011, MERS no longer forecloses in its name, and mortgages are now assigned to a member lender before initiating foreclosure proceedings.