U.S. District Court in Ohio Rejects RICO Claim and Holds MERS Assignment Is Valid


Reston, Virginia, July 28, 2016 – (RealEstateRama) — MERSCORP Holdings, Inc. today announced that the U. S. District Court for the Southern District of Ohio rejected a claim against Mortgage Electronic Registration Systems, Inc. (MERS) under the Racketeer Influence and Corrupt Organizations Act (RICO), finding the MERS assignment valid and granting summary judgment to MERS.

In pdf Slorp v. Lerner, Sampson, Rothfuss, et al. (4.34 MB) , the plaintiff filed suit to recover his legal fees incurred from contesting a foreclosure initiated by Bank of America N.A., (BANA) where he challenged the validity of the assignment from MERS to BANA because the originator, Countrywide, “did not exist at the time of the assignment.” The District Court originally granted MERS’ motion to dismiss and denied plaintiff’s attempt to amend the complaint to add a RICO claim as “futile.”

The case was appealed to the Sixth Circuit, which affirmed the dismissal of four claims but held that the plaintiff had presented sufficient allegations, if true, to litigate his RICO claim and remanded the case noting the RICO “injuries will vanish if the defendants prove Bank of America was the legitimate mortgagee.”

On remand, Chief Judge Edmund A. Sargus, Jr. found that BANA was the legitimate mortgagee by virtue of the MERS assignment. By the express terms of the mortgage, the plaintiff “agreed that MERS would be the nominee on behalf of Countrywide Bank, and on behalf of Countrywide Bank’s successors and assigns.” The Judge agreed with widespread precedent that “it is legally irrelevant whether the originating lender was out of existence at the time MERS assigned the mortgage” because the mortgage grants MERS the authority to act for successors and assigns of the lender. Additionally, the District Court relied on the MERS corporate resolution, which granted certain authority to the signer to act on behalf of MERS to reject any claim that the signing officer was not authorized to execute the assignment for MERS. The mortgage and corporate resolution together proved the assignment from MERS to BANA was valid, granting BANA standing to foreclose. Since the MERS assignment was valid, plaintiff had no injury and the District Court granted summary judgment.

“This case demonstrates that RICO charges will not prevail when the claim is based on a MERS assignment,” said MERSCORP Holdings Vice President for Corporate Communications, Janis Smith. “MERS has the legal authority to act on behalf of the lender—including the right to execute the assignment—and this authority is granted by plain language in the mortgage document signed at closing by the borrower.”

For descriptions of cases and other materials pertaining to MERS’ business model and role in U.S. housing, please visit www.mersinc.org.


MERSCORP Holdings, Inc. is a privately held corporation that owns and manages the MERS® System and all other MERS® products. Users of the MERS® System include thousands of lenders, servicers, sub-servicers, investors and government institutions. Mortgage Electronic Registration Systems, Inc. (MERS) serves as the mortgagee in the land records for loans registered on the MERS® System, and is a nominee (or agent) for the owner of the promissory note. The MERS® System is a national electronic database that tracks changes in mortgage servicing and beneficial ownership interests in residential mortgage loans on behalf of its members.

CONTACT: Janis Smith
Phone: 703-738-0230
Email: janiss (at) mersinc (dot) org


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