MERS Statement on Washington Supreme Court Ruling

August 21, 2012

On Aug. 16, the Washington Supreme Court ruled that if Mortgage Electronic Registration Systems, Inc. (MERS) is not the promissory note-holder, then it is not considered to be the beneficiary for purposes of non-judicial foreclosures in Washington.

Janis L. Smith, vice president for corporate communications of MERSCORP Holdings, said the court did not find that deeds of trust that name MERS as beneficiary are invalid and states that there is nothing in theopinion that prevents the parties from proceeding with judicial foreclosures.

“Nor does it prohibit MERS from acting as mortgagee in the land records or a lenders’ use of the MERS System to track changes in mortgage servicing and ownership of the promissory note,” she added. “As we have maintained consistently, MERS is an agent of lenders and their successors and assigns.

The opinion written by Justice Tom Chambers stated: “nothing in this opinion should be construed to suggest an agent cannot represent the holder of a note. Washington law, and the deed of trust act itself, approves of the use of agents.”

The opinion also states: “MERS notes, correctly, that we have [the Court has] held ‘an agency relationship results from … consent by one person that another shall act on his behalf …’”

MERS ceased commencing foreclosures in its name over a year ago, so this opinion does not impact its current operations. According to Smith, the opinion, however, will create confusion for Washington homeowners while the trial courts consider its effect on pending cases.

“We remain confident that MERS’ role in the U.S. housing finance system is valid and will withstand legal challenge,” Smith said.


Contact ALTA at 202-296-3671 or communications@alta.org.