Court of Appeals Sides with MERS in Kentucky Recording Fee Suit

A three-judge panel of the U.S. Court of Appeals for the Sixth Circuit affirmed a U.S. District Court dismissal of a case against ""MERSCORP Holdings, Inc."":http://www.mersinc.org/ (MERS) and 15 of its members.

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County clerks representing Christian and Washington County in Kentucky filed suit against MERS, alleging the defendants established MERS to allow members to avoid recording mortgage assignments and to evade paying recording fees to county clerks.

According to the opinion, the District Court for the Western District of Kentucky decided the clerks have no private right of [COLUMN_BREAK]

action against the defendants for their alleged violation of a state statute that requires mortgage assignments to be filed for recording with the county clerk's office.

The court of appeals affirmed the district court's decision, stating, ""As long as the parties involved in the sale are MERS members [as are most large financial institutions], MERS remains the mortgagee of record (thereby avoiding recording and other transfer fees that are otherwise associated with the sale) and continues to act as an agent for the new owner of the promissory note.""

Writing on behalf of the panel, Circuit Judge Helene N. White wrote, ""It is undisputed that the Kentucky recording statutes…do not expressly provide the Clerks with a cause of action…Clerks are not within the class of persons the Kentucky legislature intended to protect under the recording statutes.""

In a statement, Jason Lobo, director for corporate communications at MERS, said, ""The statutes' intent is to assure that liens are discharged when an underlying loan is paid off, to give subsequent purchasers and lenders notice of recorded liens and to allow creditors to give notice of their secured interest in the property. MERS' business model is consistent with these purposes.""

MERS has won similar recording fee cases in Florida, Iowa, Missouri, Arkansas, and Illinois.