Putative Class Action Against MERS Survives Dismissal: Pennsylvania Recording Statute Held to Be Mandatory

A federal district court in Pennsylvania has ruled that a putative class action against MERSCORP, Inc. and Mortgage Electronic Registration Systems, Inc. (MERS) for failure to record mortgage assignments survives Rule 12(b)(6) dismissal. See, Montgomery County, Pennsylvania, Recorder of Deeds v. MERSCORP, Inc., et al., Case No. 11-cv6968 (E.D. Pa., October 19, 2012).

The action was brought by Montgomery County Recorder of Deeds Nancy J. Becker, who, like many county recorders throughout the country, alleged in a complaint that MERS created a private system for tracking conveyances of land that bypasses the statutory recording system set forth in state law. Becker purported to state claims for willful violation of the state recording statute, civil conspiracy, unjust enrichment, and declaratory and injunctive relief. 

Chief Judge Joyner of the Eastern District of Pennsylvania issued a decision holding that (1) Pennsylvania’s mortgage recording statute is mandatory, and (2) while not specifically pled, Becker’s claim survives as a quiet title action (as well as one for unjust enrichment). The court’s finding that the recordation of mortgage assignments is mandatory is a relatively uncommon conclusion among the courts that have addressed the question in similar cases in other states. A putative class action on substantially the same grounds is currently pending against MERS in Geauga County, Ohio, where similar legal issues are expected to be litigated with respect to Ohio law. For more, read the full story

Banking Industry, Federal Class Action Law, Mortgage Lending Industry