On September 25, 2014, after years of litigation on the role, authority, and legal standing of Mortgage Electronic Registration Systems, Inc. (MERS) to act on behalf of the mortgagee, the Rhode Island Supreme Court issued 10 orders, each dismissing Plaintiffs' appeals from a Rhode Island Superior Court judgment in favor of MERS without further briefing and argument and relying extensively on prior 2013 and 2014 decisions. The Court's summary disposition of these 10 appeals, which were before the Court at a conference in session, sends a strong message that MERS litigation in Rhode Island is coming to an end.
The Court's orders recited and rejected three main undercurrent arguments by Plaintiffs. First, Plaintiffs contended Rhode Island law precludes MERS from acting in a nominee capacity for the lender. Second, Plaintiffs contended that MERS lacked the authority to assign their mortgages, and the subsequent foreclosures were void for the same reason. Third, Plaintiffs claimed that the MERS assignments were void because they were signed by persons without authority to do so, and that an affidavit from a corporate officer of the mortgage servicer presented in support of the summary judgment motion was inadmissible. Each of these arguments and the Court's reasons for summary dismissal are detailed below.
MERS Status As a Nominee Is Recognized Under Rhode Island Law
The Plaintiffs challenged MERS' role as mortgagee, contending Rhode Island law precluded MERS from acting in a nominee capacity and exercising the power of sale on behalf of the lender. The Rhode Island Supreme Court, relying on Bucci v. Lehman Brothers Bank FSB, 68 A.3d 1069, 1085-89 (R.I. 2013) and Ingram v. Mortgage Electronic Registration Systems, Inc., 94 A.3d 523, 528 (R.I. 2014) summarily rejected this argument and affirmed MERS' authority to exercise the power of sale. Specifically, the Court relied on Bucci, finding that Rhode Island law permits MERS, as the holder of legal title to the mortgage and as agent of the lender, to exercise the statutory power of sale and right to foreclosure pursuant to the terms of the mortgage. Bucci, 68 A.3d at 1081. See also, Ingram, 94 A.3d at 528.
MERS Has the Right to Assign
Several of Plaintiffs also argued that MERS could not assign their mortgage(s) because MERS did not have the authority to enforce the obligation secured by the mortgage, and that as a result, the assignments and subsequent foreclosures were void. The Court summarily rejected this argument by stating: "It is well settled that MERS may serve as mortgagee without holding the promissory note and has the authority under the terms of the mortgage in the case to assign it." The Court repeatedly relied on Mruk v. Mortgage Electronic Registration Systems, Inc., 82 A.3d 527 (R.I. 2013), and Ingram as conclusive legal authority of these principals. In relying on Mruk, which expanded the holding in Bucci, the Court held that when the mortgage expressly grants the power of sale to MERS and its successors and assigns, MERS may assign a mortgage, including the power of sale contained therein, stating that "as a basic legal principle" an assignee possesses all the rights and remedies possessed by or available to the assignor. Mruk, 82 A.3d at 538.
Mortgagors Lack Standing to Challenge MERS Assignments That Are Effective to Pass Legal Title
In another set of arguments, Plaintiffs claimed that the MERS assignments were void because they were signed by persons without authority to do so, and that an affidavit presented in support of the summary judgment motion was inadmissible. The Court, relying on Mruk and Moura v. Mortgage Electronic Registration Systems, Inc., 90 A.3d 852 (R.I. 2014), found Plaintiffs did not produce any evidence showing the assignments were ineffective and stated that an affidavit—based on personal knowledge, affirmatively showing the affiant of the servicer is competent to testify, and which states that the loan documents are held by the servicer—is presumptively sufficient to support a motion for summary judgment.
The Court's dismissal of these appeals and the repeated statement that Bucci, Mruk, Moura and Ingram are settled cases (even though all of these cases are less than two years old), is a good indication that we may be seeing the beginning of the end of litigation against MERS in Rhode Island.
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