MERS Wins Victory in Illinois Court Over Authority to Act as Mortgagee

An Illinois court ruled on Tuesday that mortgages naming Mortgage Electronic Registration Systems, Inc. (MERS) as the mortgagee are valid an enforceable, according to an announcement from MERSCORP Holdings, Inc.

In the case of CitiMortgage, Inc. v. Schak, Judge Mitchell L. Hoffman on the Circuit Court of the 19th Judicial Circuit Court for Lake County, Illinois, rejected a borrower’s claim that a mortgage naming MERS as the mortgagee was invalid because MERS is not licensed under the Illinois Residential Mortgage License Act. Hoffman’s ruling was that MERS not being licensed under the ACT was not sufficient grounds for declaring the mortgage void and unenforceable.

MERS was named as the mortgagee on the mortgage at the time it was originated. The borrowers had filed a motion to vacate the summary judgment and the order that approved the sale of the foreclosed property.

The judge used as legal precedent the Seventh Circuit Court of Appeals ruling in Union County, Illinois V. MERSCORP, Inc. from January 2013 that the requirements of the Illinois Residential Mortgage Act, which was passed in 1987, do not apply to MERS because it “does not engage in the acts of brokering, funding, originating, servicing, or purchasing residential mortgage loans.”

“We are pleased that this Court recognizes that MERS has not done anything contrary to what is required by Illinois law and that mortgages naming MERS as the mortgagee are valid and enforceable,” MERSCORP Holdings Vice President for Corporate Communications Janis Smith said.

MERS has won victories in courts in several states in the last year over borrowers facing foreclosure who challenged the company’s authority to act as mortgagee, including Massachusetts, Rhode Island, Ohio, New Hampshire, Montana, Idaho, Arkansas, and Texas.

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