Legal Action Against MERS Dropped in Kentucky

The U.S. Court for the Western District of Kentucky, Paducah Division, has ruled in favor of Mortgage Electronic Registration Systems Inc. (MERS) in Christian County Clerk, by and through its County Clerk, Michael Kem; et.al. vs. Mortgage Electronic Registration Systems Inc. (MERS); et. al., dismissing the case with prejudice. The county clerks sued MERS and a group of MERS members, seeking relief under provisions of the Kentucky Recording Statutes. In an opinion written by Chief Judge Joseph H. McKinley Jr., the Court said, “the persons intended to be protected by Kentucky’s land recording system consists of existing lienholders seeking to give notice of their secured status, prospective purchasers and creditors seeking information about prior liens, and owners of property seeking release of liens once debts are paid off.” “This is a significant and precedent-setting decision for MERS. The Court determined that county clerks lack standing to sue or collect damages from MERS,” said Janis Smith, MERSCORP’s vice president of corporate communications. The Court also found that “[t]here is nothing in the plain language of the statute that indicates that the statute was designed to be enforced by a county clerk,” and noted that the General Assembly did not provide a statutory mechanism for the recovery of fees for unfiled assignments by county clerks. The court said that “[h]ad the General Assembly wanted to allow county clerks to file lawsuits regarding recording fees, it certainly knew how to do so.” “Use of the MERS System to register mortgage loans fulfills the purpose of the recording statutes,” said Smith. “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.