Editor: David Reiss
Brooklyn Law School

February 9, 2013

Arkansas Supreme Court Holds that MERS is Not a Necessary Party in Foreclosure Proceedings

By Gloria Liu

In MERS, Inc. v. Southwest Homes of Arkansas, 301 S.W.3d 1 (AK S. Ct, 2009), the Supreme Court held that MERS was not a real party in interest and need not be named or served in a foreclosure action by a second mortgage holder. The case arose from a foreclosure on a mortgage granted in a one-acre lot that also had a prior deed of trust. To secure the first mortgage, the borrowers entered into a deed of trust. The lender on that deed of trust was Pulaski Mortgage, the trustee was James C. East, and the borrowers were the Lindseys. MERS was listed on the deed of trust as the “Beneficiary” acting “solely as nominee for Lender,” and “Lender’s successors and assigns.” To secure a second promissory note, the owners of the mortgage granted the mortgage to Southwest Homes. Both mortgages were recorded. Southwest later entered into foreclosure closings and did not serve MERS. The Court found that MERS was at most the mere agent of the lender Pulaski Mortgage Company, Inc., and as such it held no property interest and was not a necessary party.

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