First Circuit Rules MERS Can Assign Mortgages And Borrowers Can Challenge Standing

In a decision that has sparked a great deal of discussion, the U.S. Court of Appeals for the First Circuit recently decided a borrower has standing to raise certain challenges to the assignment of his or her mortgage from Mortgage Electronic Registration Systems, Inc. (MERS) to a lender. At the same time, the court affirmed the legal validity of the MERS system, putting to rest any questions about the propriety of a MERS loan under Massachusetts law. Culhane v. Aurora Loan Servs. of Neb., No. 12-1285, 2013 U.S. App. LEXIS 3313 (1st Cir. Feb. 15, 2013).

In a matter of first impression, the court held that, under Massachusetts law, a borrower has standing to challenge the assignment of his or her mortgage, even though he or she was not a party, nor a third-party beneficiary, of the assignment. Previously, federal district courts in Massachusetts had ruled borrowers lacked standing to challenge mortgage assignments because a "litigant should not normally be permitted to