Sixth Circuit Court of Appeals Affirms Dismissal of Kentucky Recording Fee Suit

Christian and Washington County Clerks Fail in Appeal Seeking Damages from MERS

Reston, Virginia – February 18, 2013 – (RealEstateRama) — MERSCORP Holdings, Inc. today announced that a three-judge panel of the U.S. Court of Appeals for the Sixth Circuit ruled in favor of MERSCORP Holdings, Inc. and Mortgage Electronic Registration Systems, Inc. (collectively, MERS) and a number of MERS members by affirming a U.S. District Court dismissal of a recording fee suit filed jointly by Christian and Washington County Clerks in Kentucky.

“It is undisputed that the Kentucky recording statutes…do not expressly provide the Clerks with a cause of action,” Circuit Judge Helene N. White wrote on behalf of the panel. “Clerks are not within the class of persons the Kentucky legislature intended to protect under the recording statutes.” Judge White was joined by Circuit Judge Raymond M. Kethledge and District Judge Thomas L. Ludington, sitting by designation.

Almost exactly a year ago Chief Judge Joseph H. McKinley, Jr. of the U.S. District Court for the Western District of Kentucky, Paducah Division dismissed the case with prejudice.

“There is nothing in the plain language of the statute that indicates that the statute was designed to be enforced by a county clerk,” Judge McKinley held. “Had the General Assembly wanted to allow county clerks to file lawsuits regarding recording fees, it certainly knew how to do so.”

“We have consistently held that the use of the MERS® System to register mortgage loans fulfills the purpose of the recording statutes,” MERSCORP Holdings’ Director for Corporate Communications Jason Lobo said. “The statutes’ intent is to assure that liens are discharged when an underlying loan is paid off, to give subsequent purchasers and lenders notice of recorded liens and to allow creditors to give notice of their secured interest in the property. MERS’ business model is consistent with these purposes.”

MERS has prevailed in similar recording fee cases in Florida, Iowa, Missouri, Arkansas and Illinois.

For descriptions of cases and other materials pertaining to MERS’ business model and role in U.S. housing, please visit www.mersinc.org.

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MERSCORP Holdings, Inc. is a privately held corporation that owns and manages the MERS® System and all other MERS® products. It is a member-based organization made up of thousands of lenders, servicers, sub-servicers, investors and government institutions. Mortgage Electronic Registration Systems, Inc. (MERS) serves as the mortgagee in the land records for loans registered on the MERS® System, and is a nominee (or agent) for the owner of the promissory note. The MERS® System is a national electronic database that tracks changes in mortgage servicing and beneficial ownership interests in residential mortgage loans on behalf of its members.

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