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Texas District Court Rules MERS has Constitutional Rights to Notice of Lawsuit

FOR IMMEDIATE RELEASE

CONTACT: Janis Smith
Phone: 703-738-0230
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Reston, Virginia, February 8, 2016—MERSCORP Holdings, Inc. today announced that the Dallas County District Court, 101st Judicial District, issued a final judgment in MERS’ favor recognizing MERS’ right, as beneficiary, to notice of a lawsuit under the United States and Texas Constitutions.

In pdf Mortgage Electronic Registration Systems, Inc. v. Summit Residential Services, Summit Residential Services, LLC (1.24 MB) acquired an interest in the subject property following a foreclosure sale conducted by a homeowner’s association. The property was encumbered by a deed of trust granted to MERS by the borrower in 2002. Shortly after acquiring its interest, Summit filed a lawsuit seeking clear title to the property naming only the original lender identified in the MERS deed of trust. MERS was neither named in or provided notice of the action and Summit was granted judgment in its favor extinguishing the MERS lien.

Upon notification of the April 2014 judgment, MERS initiated its own lawsuit against Summit seeking to reestablish the MERS lien. As record trust deed beneficiary, MERS argued it was a necessary and indispensable party to any lawsuit affecting the real property, and under the due process guarantees afforded by the United States and Texas Constitutions it could not be deprived of its protected property interest without an opportunity to be heard. The court agreed with MERS and a Final Judgment was entered vacating Summit’s judgment and reinstating the MERS deed of trust on the property.

The Final Judgment decreed the MERS deed of trust was not discharged or released by Summit’s earlier lawsuit and that the property is still subject “to any valid, senior lien or encumbrance, including the [MERS] Deed of Trust.”

“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 Vice President for Corporate Communications, Janis Smith. “MERS will vigorously defend its constitutional and statutory right to notice.”

For descriptions of cases and other materials pertaining to MERS’ business model and role in U.S. housing, please visit www.mersinc.org.

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MERSCORP Holdings, Inc. is a privately held corporation that owns and manages the MERS® System and all other MERS® products. It is a member-based organization made up of thousands of lenders, servicers, sub-servicers, investors and government institutions. Mortgage Electronic Registration Systems, Inc. (MERS) serves as the mortgagee in the land records for loans registered on the MERS® System, and is a nominee (or agent) for the owner of the promissory note. The MERS® System is a national electronic database that tracks changes in mortgage servicing and beneficial ownership interests in residential mortgage loans on behalf of its members.

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