A Florida judge has stopped foreclosures performed by a mortgage service provider after determining only mortgage note owners, not assignees or authorized agents, are allowed to foreclose.
Mortgage Electronic Registration Systems said it has been halted from foreclosing, according to an announcement Friday.
As a result of the Aug. 18 ruling in the Sixth Judicial Circuit Court in Pinellas County, MERS asked its members to temporarily cease Florida foreclosure actions in its name, the press release said.
"Our responsibility is to look out for the best interests of our members," said R. K. Arnold, MERS president and chief executive, in the announcement. "That means we want to help them avoid additional costs and delays in Florida foreclosures because of this ruling. So while the appeal is proceeding, we're temporarily suspending foreclosures in the name of MERS in Florida."
Judge Walt Logan erroneously concluded that the company does not have standing to act as a plaintiff in a mortgage foreclosure suit if it is not the owner of the beneficial interest in the note, said MERS, reportedly an assignee on deeds of trust and mortgages recorded in the county land records.
"Florida has adopted the Uniform Commercial Code and the applicable statutes do not require the beneficial owner of the debt to be a party in the foreclosure suit," said Sharon Horstkamp, MERS vice president and corporate counsel, in a written statement. "MERS can have standing when MERS is the holder of the note on behalf of the beneficial owner."
The judge reportedly challenged pleadings filed by local foreclosure attorneys due to a lack of clarity regarding ownership of the promissory note.
"It is an error by Judge Logan to deny MERS the opportunity to amend the complaints in order to eliminate any inconsistent allegations concerning ownership," MERS said in the announcement. "Instead, Judge Logan categorically dismissed the cases with prejudice to MERS based upon his inaccurate conclusion that MERS cannot foreclose unless it actually owns the underlying promissory notes."
The electronic loan registry company advised its members to prepare and execute assignments from MERS to an entity designated by their investor.