MIAMI–(BUSINESS WIRE)–On March 14, in a unanimous 3-0 decision, Florida’s Third Circuit Court of Appeals concurred with the Pinellas County Circuit Court of Appeals and found that MERS can foreclose as the holder of the promissory note and does not need to be the owner.
The judges called MERS a “modern innovative instrument of commerce,” and concluded that “no substantive rights, obligations or defenses are affected by the use of the MERS device, [and] there is no reason why mere form should overcome the salutary substance of permitting the use of this commercially effective means of business.”
“We are of course satisfied with the outcome of the case, but we are especially pleased that the judges noted the value that MERS brings to commerce and the community,” said R.K. Arnold, President & CEO of MERS. “Now that we have the ruling from both Florida courts, we are moving forward and focusing on continuing to meet the needs of homebuyers by lowering the cost of purchasing a home.”
MERS was also victorious in a similar case filed in the Second Circuit Court of Appeals in Pinellas County. The ruling, which was handed down on February 21, stated that “[t]he holder of a note has standing to seek enforcement of the note.” It also stated that “standing is broader than just actual ownership of the beneficial interest in the note,” and that “[t]he Florida real party in interest rule permits an action to be prosecuted in the name of someone other than, but acting for, the real party in interest.”
In September 2005, the company asked its members to halt foreclosures in the name of MERS in the state of Florida. Although MERS has not reversed this policy, the company will review it in light of the new rulings and in conjunction with its members.
MERS is an industry utility that operates the MERS® System, an electronic loan registry that eliminates the need for assignments when trading mortgage loans. Borrowers name MERS as mortgagee for the lender on deeds of trust and mortgages that are recorded in the county land records. Lenders then register the loans on the MERS® System and electronically track changes in servicing and beneficial ownership rights over the life of the loan.
The company’s vision is to one day eliminate all paper from the mortgage lending process. To date, it has launched several products in support of this vision, including MERS® Commercial for the CMBS marketplace, and the MERS® eRegistry, the system of record that identifies the owner (Controller) and custodian (Location) for registered eNotes, providing greater liquidity, transferability and security for lenders.
To learn more about MERS, visit us at www.mersinc.org.