New York appeals court invalidates MERS foreclosure

A New York appellate court dismissed a foreclosure action this week, saying Mortgage Electronic Registration Systems failed to properly assign the mortgage and didn't hold the actual promissory note.

MERS maintains the ruling does not "undermine" its operations, according to a spokesperson.

The case — Bank of New York v. Silverberg — involves a mortgage originally tied to Countrywide Financial.

The homeowners facing foreclosure filed suit to block a Bank of New York foreclosure action by claiming MERS improperly assigned their mortgage to the bank since the mortgage registry didn't receive the note from Countrywide.

Despite the lack of transfer, at the time of the assignment to Bank of New York, MERS was listed on the mortgage agreement as Countrywide's nominee.

This week, a New York Supreme Court analyzed the case, holding that MERS had no legal standing to foreclose or the ability to transfer that right because the mortgage registry "was never the lawful holder or assignee of the notes."

In reaching this conclusion, the court clearly distinguishes the Silverberg case from New York's MERS v. Coakley decision, which ruled in favor of MERS.

Read on.