On June 30, the U.S. District Court for the Eastern District of Pennsylvania granted, in part, summary judgment to the Montgomery County recorder of deeds in its action against Merscorp Inc. and Mortgage Electronic Registration Systems Inc. (MERS) for MERS’s failure to record mortgage loan assignments.
Merscorp is a subsidiary of Merscorp Holdings Inc., a privately held corporation whose members consist of lenders and others in the mortgage lending industry. The MERS model is one in which lending institutions assign their mortgage loans to MERS (or MERS is named in the original loan documentation), and MERS acts as nominee or agent for the lender and as the mortgagee of record in the public land records. MERS tracks ownership of the relevant loans, and effects transfers between member-parties through bookkeeping entries in its database. The principal purpose of MERS is to permit transfers of mortgage loans without requiring recorded assignments of the underlying mortgages. Upon transfer of a promissory note, the record lienholder, MERS, remains the same, so no changes are required in the land records. Lenders are relieved of the burden on recording assignments, even in the event of multiple transfers of a loan.
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