Alabama Supreme Court Affirms MERS’ Authority to Assign Mortgages

The Alabama Supreme Court affirmed a lower court ruling that upheld Fannie Mae's ejectment action judgment against defaulting borrowers whose homes were lost to foreclosure, ""MERSCORP Holdings, Inc."":http://www.mersinc.org/ announced in a release.

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In the case _Federal National Mortgage Association v. Steele_, the borrowers sought to set aside Fannie Mae's judgment, arguing that the foreclosure was invalid because Mortgage Electronic Registration Systems, Inc. (MERS) was not authorized to assign the mortgage to the servicer, who also conveyed title to the property to Fannie Mae after the foreclosure sale.

A five-justice panel recognized the ability of MERS to assign mortgages as the nominee of the lender and its successors and assigns.

The court sided with the lower court ruling without opinion, contending that MERS as the original mortgagee and MERS' execution of the assignment of the mortgage to the servicer does not cause the judgment in favor of Fannie Mae to be void.

The borrowers also argued the court lacked jurisdiction to enter judgment in favor of Fannie Mae due to the effect of securitizing the mortgage. The court determined that the borrowers ""offered no evidence of such securitization"" and were not able to show any provision that would ""prevent such a transaction.""

""In any event, even if the mortgage was securitized, the [borrowers] have not shown that this alleged securitization would void the foreclosure sale,"" Circuit Court Judge Eugene Verin wrote in the lower court ruling.

MERS was not one of the parties in the lawsuit.