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Eighth Circuit Court of Appeals Affirms Dismissal of Minnesota Counties’ Lawsuit

Upholds District Court’s Ruling No Mandatory Recording Requirement Under Minnesota Law

FOR IMMEDIATE RELEASE

CONTACT: Janis Smith
Phone: 703-738-0230
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Reston, Virginia, December 22, 2014—MERSCORP Holdings, Inc. today announced that the U.S. Court of Appeals for the Eighth Circuit affirmed the ruling by the District Court of Minnesota that there is no mandatory recording requirement under Minnesota law and the dismissal of the Complaint. The Eighth Circuit also declined to certify a question to the Minnesota Supreme Court as requested by the Counties because the Minnesota courts have interpreted the Act in numerous instances, and the issue before the Court only requires a straightforward application of this case law.

In pdf The County of Ramsey and the County of Hennepin, v. MERCORP Holdings, Inc., Mortgage Electronic Registration Systems., et al. (75 KB) , the two counties, on behalf of eighty-seven Minnesota counties, filed a class-action suit alleging that the Lenders’ use of MERS and the MERS® System deprived the Counties of recording fees for mortgage assignments by allowing parties to bypass recordation with the Counties causing the loss of statutory recording fees and creating gaps in chains of title.

The Circuit Court held that, “ … because we believe Minnesota case law establishes that Minnesota law imposes no duty to record a mortgage or a mortgage assignment with the county recorder, the district court did not err in its determination that there was no mandatory recording requirement under Minnesota law … .” The Circuit Court cited to a number of Minnesota Court cases interpreting the Recording Act that find that recording is permissive. See e.g.,  pdf Jackson v. MERS (52 KB) . The Court noted that the district court held that the wording “shall be recorded” in the Recording Act does not require recordation of land transfers, but instead informs parties where they should record their instrument if they desire the benefits of recording the security instrument, namely providing notice of the lien and its priority.

Further, the Eighth Circuit held that a county did not and cannot state a claim for unjust enrichment or public nuisance “when there is no duty under state law to record mortgages or subsequent assignments.”

“We did not believe the claims behind this case had merit,” said MERSCORP Holdings Vice President for Corporate Communications, Janis Smith. “The appellate court’s ruling, once again, confirms the legality of MERS and its business.”

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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