Originally published in Washington Bankers' Issues & Answers - November/December 2012.

In August, the Washington State Supreme Court weighed in on the role of Mortgage Electronic Registration Systems, Inc. (“MERS”) in Washington’s non-judicial foreclosure process, holding that MERS does not meet the definition of “beneficiary” in Washington’s Deed of Trust Act (“DTA”) RCW 61.24.005(2), because it does not hold promissory notes evidencing residential mortgage loans. Bain v. Metro. Mortg. Group, Inc., et al., 175 Wn.2d 83, 285 P.3d 34 (2012). (In addition to MERS, Bain may have ramifications for servicers or agents initiating non-judicial foreclosures in Washington.) The result is that lenders must remain in the driver’s seat with regard to non-judicial foreclosures or risk invalidating efforts to realize upon real-property collateral.

Kristin Bain and Kevin Selkowitz purchased homes financed with loans secured by deeds of trust naming MERS as the beneficiary as nominee for the original lender and its successors and assigns. In both instances, the homeowners fell behind in paying their mortgages. MERS, in its capacity as beneficiary under the deeds of trust, assigned the deed of trust in one case and appointed a successor trustee that initiated non-judicial foreclosure under the Washington DTA in the other. Bain and Selkowitz each brought a lawsuit in federal court seeking injunctions to halt foreclosure for damages against MERS under Washington’s Consumer Protection Act (“CPA”) and for other relief.

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