Rhode Island Supreme Court justices in a ruling on Friday held that naming Mortgage Electronic Registration Systems Inc. as the promissory mortgage note-owner, or mortgagee, is consistent with Rhode Island law.
The five-justice panel decided MERS has both the contractual and the statutory authority to support its role as mortgagee in Rhode Island.
“The fact that MERS acts in a nominee capacity for the lender and the lender's successors,” they argued, does not diminish its role as the mortgagee, hence there is no need to create a new legal term or call MERS “nominee-mortgagee."
This decision may have a market impact that extends beyond Rhode Island.
With this decision the Rhode Island Supreme Court affirms
The Supreme Court agreed with Flaherty’s definition of MERS as the mortgagee and reasoning that the plaintiff had “explicitly granted the statutory power of sale and the right to foreclose to MERS."
Therefore justices Maureen McKenna Goldberg, Gilbert V. Indeglia, William P. Robinson III and Chief Justice Paul A. Suttell joined in his opinion that MERS had the "contractual authority” to exercise the right to foreclose.
The justices recognized that in the "modern world of lending" the mortgagee and the note-holder no longer are the same entity all the time, said MERSCORP's director for corporate communications Jason Lobo.
Capping on months of strong rulings in MERS' favor in Rhode Island, he added, the justices argue that since the mortgage statute does not preclude an entity like MERS from acting as the nominee on behalf of the note-owner, or as an agent of the owner, MERS can “foreclose on behalf of that entity."
