Federal Appeals Court Affirms Ruling for MERS

 Seventh Circuit Court of Appeals Dismissed Law Suit by Macon County, Illinois


CONTACT: Janis Smith
Phone: 703-738-0230
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Reston, Virginia, February 4, 2014—MERSCORP Holdings, Inc. today announced the Seventh Circuit of Appeals rendered a favorable decision in the Macon County recording fee case and affirmed the dismissal of the lawsuit by the district court.

In pdf Macon County v. MERSCORP, Inc. (153 KB) , the county claims that recording fees should have been paid when promissory notes are transferred and by not paying such recording fees, MERSCORP and Mortgage Electronic Registration Systems, Inc. (MERS) were unjustly enriched because MERS deprives the County of revenues it would otherwise receive. Judge Richard A. Posner, writing for the 7th Circuit, pointed out that Illinois law does not require mortgages to be recorded, which was the Court’s ruling in November 2013 in  pdf Union County v. MERSCORP, Inc. (53 KB)  But here, Macon County was not challenging the result in Union County, but claiming rather that MERS was somehow unjustly enriched in violation of Illinois common law. The Court held that there is nothing illegal or inappropriate in the way MERS conducts its business and that “competition is not a tort at common law.” In instances where MERS is designated as the mortgagee, the Court recognized that MERS holds the property interest that secures the promissory note and therefore when promissory notes are sold, these transfers “are not recorded in the county land registries because they are not assignments of mortgages or other property interests.”

Further, Judge Posner said, “No more are MERSCORP and the banking industry required to adopt a system of mortgage protection that generates revenues for a state or local government—as the Eighth Circuit held last month in a case almost identical to this one.” See pdf Brown v. Mortgage Electronic Registration Systems, Inc. (8th Cir. 2013) (132 KB) .

“We have consistently held that the MERS business model complies with the requirements of the recording statues in individual states,” said MERSCORP Holdings Vice President for Corporate Communications, Janis Smith. “Judge Posner’s opinion confirms that MERS behavior was not illegal or inappropriate, and it did not (and could not) result in MERS being unjustly enriched.”

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


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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