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MERS Wins Complete Dismissal of Texas Counties’ Recording Fee Suit

Dallas, Brazoria and Harris Counties Lose Appeal in Fifth Circuit

FOR IMMEDIATE RELEASE

CONTACT: Janis Smith
Phone: 703-738-0230
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Reston, Virginia, July 6, 2015—MERSCORP Holdings, Inc. today announced that the United States Court of Appeals for the Fifth Circuit recently affirmed a ruling from the U.S. District Court for the Northern District of Texas in favor of Mortgage Electronic Registration Systems, Inc. (MERS) and its co-defendant, dismissing all of the claims filed by Dallas, Brazoria and Harris Counties, Texas.

In  pdf Dallas County, Texas, et al. v MERSCORP, Inc., et al. (446 KB) , the counties alleged that Defendants failed to record deed of trust assignments in violation of Texas statutes and also claimed fraudulent misrepresentation and unjust enrichment.

The Counties argued that MERS must record assignments every time the promissory note is transferred or negotiated and that naming MERS as the beneficiary on a security instrument was a false representation. The Court, when examining whether such duty exists, held that there is no duty to record under Texas Local Government Code Section 192.700 and that statute is not “an affirmative mandate to the public that deed-of-trust beneficiaries must record assignments of either the deed of trust or the related promissory note.”

The Court recognizes because there is no duty to record either assignments of the deed of trust or the related promissory note, the county has not suffered any injury because “Dallas County was not entitled to a fee in the first place, it could not have suffered a financial injury.”

Further, the court reasoned that designating MERS as the “beneficiary” of the deeds of trust was not a false representation. The Court stated that “As a matter of basic contract law, MERS is a beneficiary.” The Court continued, “Thus, in Texas, it is not inconsistent for the deed of trust to label MERS both as a ‘nominee’ and as a ‘beneficiary.’” The ruling finds that there are no false representations made by presenting deeds of trust that designate MERS as the beneficiary.

“We’re pleased the Fifth Circuit recognized in its unanimous, well-reasoned opinion that MERS has been in full compliance with the law, that the statement ‘MERS is a beneficiary’ is not a false representation and as a matter of contract law, is true, and that the Counties have not suffered a financial injury because of MERS,” said MERSCORP Holdings Vice President for Corporate Communications, Janis Smith.

This decision joins the dismissals of similar lawsuits brought by county recorders throughout the country in MinnesotaNorth Carolina, Rhode Island, Michigan, Oklahoma, Iowa, Florida, Arkansas, Illinois, Missouri, Massachusetts, West Virginia and Kentucky.

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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