March 15, 2011
A federal bankruptcy judge in New York ruled last month that MERS is not empowered to effectuate valid mortgage assignments. The judge rejected MERS's position that it can be both the mortgagee and an agent of the mortgagee. According to the judge, MERS's membership rules don't create "an agency or nominee relationship" and don't clearly grant MERS authority to take any action with respect to mortgages, including transferring them. According to New York state law, any transfer in which the interests concern real property has to be in writing, which MERS does not do.
See Bloomberg news article for additional information.