Home Mortgage Alabama Court Affirms Enforceability of MERS Mortgage

Alabama Court Affirms Enforceability of MERS Mortgage

Reston, VA – August 31, 2011 – (RealEstateRama) — In Freddie Mac v. Brooks, the U.S. District Court for Alabama’s Eastern Division dismissed with prejudice the borrowers’ counterclaim against Mortgage Electronic Registration Systems, Inc. (MERS) and MERSCORP in response to Freddie Mac’s eviction action.

In this case, Freddie Mac had initially filed an eviction action against the borrowers after the completed foreclosure sale. The borrowers responded by filing a counterclaim against MERS, MERSCORP and Freddie Mac, claiming wrongful foreclosure and alleging that the mortgage was invalid and unenforceable because MERS was not the lender and its role as the mortgagee split the note from the mortgage.

In their motion to dismiss, MERS and MERSCORP cited to the Alabama appellate court decision in Crum v. LaSalle Bank and the U.S. District Court for the Southern District of Alabama in Mortensen v. MERS, arguing that “it is a matter of settled law in Alabama and elsewhere that an agreement between the borrower and lender to designate MERS to serve as the mortgagee as nominee for the lender does not invalidate the mortgage security instrument by ‘splitting’ it from the note,” and that “long before the existence of MERS courts consistently held that a mortgage or deed of trust may designate a person to serve as mortgagee or beneficiary of record other than the obligee or beneficial owner of the debt secured thereby.”

Senior U.S. District Judge W. Harold Albittron agreed with MERS and MERSCORP, dismissing all claims against MERS and MERSCORP with prejudice.

“The Court’s ruling is consistent with many other courts’ rejection of the argument that the note and the mortgage are separated just because MERS is the mortgagee,” said Janis Smith, MERSCORP’s Vice President for Corporate Communications. “When MERS is the mortgagee, the mortgage is enforceable and secures the repayment of the debt. The borrower and the lender agreed to designate MERS as the mortgagee as nominee for the lender, and this does not invalidate the mortgage security instrument.”

Janis L. Smith
Phone: 703-738-0230
Email: janiss (at) mersinc (dot) org

Karmela Lejarde
Phone: 703-761-1274
Email: karmelal (at) mersinc (dot) org