Rhode Island’s Highest Court Affirms MERS’ Ability to Assign Mortgages

By Joe Patry

In Ingram v. MERS, et al., the borrowers’ mortgage named Mortgage Electronic Registration Systems, Inc. as the mortgagee (“MERS”), as a nominee for the original lender and its successors and assigns.  The mortgage indicated that MERS had held legal title to the mortgage and had the authority to foreclose.  In 2010, the borrowers stopped paying their mortgage and MERS assigned the mortgage to Deutsche Bank, who then instituted a non-judicial foreclosure sale on the property.  MERS is named as the mortgagee of record on millions of mortgages recorded around the country and holds the mortgage as an agent of the owner of the promissory note that is secured by the mortgage.

Subsequently, the borrowers filed a lawsuit seeking to overturn the foreclosure and claimed that MERS did not have the authority to assign the mortgage.  The Rhode Island Superior Court dismissed that lawsuit and the borrowers appealed to the Rhode Island Supreme Court, arguing that MERS did not have the authority to execute assignments.  The Rhode Island Supreme Court noted that the mortgage in question had language which explicitly gave MERS the authority to foreclose and thus MERS had the authority to assign that right.  This decision is in line with several other recent state court opinions, including California and Ohio, which also rejected challenges to MERS assignments.