Texas Court Affirms MERS’ Role as Mortgagee

The U.S. District Court for the Eastern District of Texas in Malikyar v. BAC Home Loans found in favor of the defendants and affirmed Mortgage Electronic Registration Systems, Inc.’s (MERS) role as mortgagee and its ability to assign its interest under a deed of trust.

 “As a mortgagee, MERS could authorize BAC to service the loan and foreclose, regardless of whether MERS was the true owner of the Note,” wrote Magistrate Judge Amos Mazzant in his Oct. 28 report and recommendation. According to Judge Mazzant, because MERS had the power of sale under the deed of trust, BAC received that power by assignment from MERS. The judge also confirmed that MERS fits the definition of mortgagee under the Texas Property Code and that the plaintiff’s deed of trust identified MERS as the beneficiary and nominee of the original lender and its successors and assigns. He also found no merit in the argument that the note and deed of trust were split by MERS’ involvement with the plaintiff’s mortgage loan.

On Nov. 18, U.S. District Judge Michael Schneider adopted Judge Mazzant’s findings and dismissed the case with prejudice.

“The district court’s ruling clarifies that MERS’ business model is compliant with the Texas Property Code,” said Janis Smith, MERSCORP’s Vice President of Corporate Communications. “The decision also acknowledges that borrowers are aware of, and agree to language at closing that gives MERS the authority to act on behalf of the lender and its successors and assigns, as have numerous other cases in Texas and around the country.”

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