Editor: David Reiss
Brooklyn Law School

September 13, 2013

Arkansas Court Denies MERS’ Motion to Set a Decree of Foreclosure

By Ebube Okoli

The Arkansas court in MERS v. Southwest Homes of Arkansas, 301 S.W.3d 1 (2009) denied MERS’ motion to set a decree of foreclosure, therein affirming the decision from the lower court. As the record beneficiary of the deed of trust, MERS received no foreclosure notice. The court in their finding, applied Arkansas law, and found that the lender was the deed of trust beneficiary not MERS, since MERS did not receive payment of the debt.

MERS alleged that the lower court erred in ordering foreclosure because as the holder of legal title it was a necessary party that was never served. However, In affirming the lower court decision, the court disregarded the written terms of the mortgage contract that selected MERS as the deed of trust beneficiary entitled to notice.

The court went on further to hold that under the recorded deed of trust in this case, James C. East, as trustee under the deed of trust, held legal title. Moreover, as the court reasoned, MERS was at most the mere agent of the lender Pulaski Mortgage Company, Inc., and it held no property interest and was not a necessary party.

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