Wednesday, June 22, 2011


In deed-of-trust states, MERS holds and owns nothing.

I believe there exists a useful, yet rarely (if ever) made, argument available in non-judicial states (those using primarily deeds of trusts rather than mortgagees as the typical security instrument) since the 2009 Supreme Court of Arkansas decision in Southwest Homes.

The argument is that MERS holds or owns NOTHING under a typical deed of trust, notwithstanding the deed-of-trust language that "MERS holds only legal title to the interests granted by Borrower in this Security Instrument."

While the Southwest Homes case does not explain it, the reason for the argument appears to be that a deed of trust by its very nature is a three-party instrument, whereby the trustee holds "legal title" to the property, the beneficiary holds the so-called "beneficial title," and the homeowner in possession holds "equitable title."

Without going into detail about the fiction of splitting title and about each type of title, suffice it to say that there can be no more than one "legal title" to a single piece of property.  What that means is that when the homeowner as grantor (while retaining "equitable title") conveyed the "legal title" to his property to the trustee under the deed of trust, there was no "legal title" left in any of the remaining interests (which are the homeowner's equitable title and the creditor's beneficial title).

Thus, the language in the deed of trust that "MERS holds only legal title to the interests granted" is a nullity because the "interests granted" involve (1) the grant of the legal title to the trustee and (2) the grant of beneficial title to the creditor (by virtue of the trustee holding the legal title "for the benefit" of the creditor).  There can be no conveyance of the "legal title" to both the trustee and to MERS.  Since the trustee's ownership of the legal title is undisputed, that leaves no legal title to be held by MERS.  Thus, MERS holds absolutely no interest, legal, beneficial, or otherwise under a typical deed of trust from the very beginning (or, in legalese, ab initio).

Thus, MERS' designation as "nominee" and its resulting position under a typical deed of trust is much weaker in non-judicial states than most people (including judges) believe.


  1. I would like to know the names of the attorneys who represented Nancy Groves vs Mers and Mark Disanti vs Mers. These case were in Texas.

  2. Isn't the issue with many properties the note's indorsement in blank? (I am not sure if this is just related to mortgages and not deeds of trust). In those cases, is it true that it doesn't matter about MERS, as the mortgage follows the note because the original "lender" is named in the mortgage with MERS and the original lender indorsed the note without a specific entity. Did the blank indorsement allow the last entity to gain legal rights to enforce by delivery and possession at the time the complaint was filed? In such cases, is MERS just an unneeded party? Or are these cases also affected by MERS because the mortgage must be assigned to the servicer to allow it the right to foreclose?

  3. @Anonymous:
    The name of the Groves attorney is G.P. Matherne. I've spoken to G.P. personally, and he is a really cool guy. Good luck in your endeavors!

  4. G.B.,

    You have no idea how timely this is. Thank you!

    Kickboxer from LivingLies

  5. @Kickboxer

    Haha, no problem. Gook luck in the court of your state!

  6. Thanks to @Attorney Gregory Bryl for the name , That some were looking.

  7. Also, I am going through our particular pooling and servicing agreement and it states: "for mortgage loans registered through the MERS system, MERS will serve as mortgagee of record solely as a nominee in an administrative capacity on behalf of the trustee and will not have any interest in any of the mortgage loans)." It seems to me that this is just like if you were to set up a Wyoming Corporation and wanted to have "nominee" officers, these nominees have no power to actually do anything, they just act as a placeholder to maintain your anonymity in the public records.

  8. Any connections in California? We are whacked out here. Thanks, Stan