Bulletin: IN2012005

Date:
November 20, 2012
To:
All Indiana Issuing Offices
RE:
Foreclosures and MERS

Dear Associates:

In Citimortgage, Inc. v. Barabas, No. 48S04-1204-CC-00213, decided on October 4, 2012, the Indiana Supreme Court vacated the Court of Appeals opinion in a case involving the status of MERS. The Court preserved the lien rights of a senior mortgagee, Citimortgage, even though Citimortgage did not record its assignment until after the real estate had been sold at the sheriff’s sale in a foreclosure action filed by a junior mortgagee. The Court held that MERS, as the nominee of Citimortgage in the recorded mortgage, was the agent of Citimortgage and was entitled to notice of the foreclosure. Because MERS was not given notice of the foreclosure, the Supreme Court held the foreclosure judgment was void as to Citimortgage’s interest.

As a result of this case, a plaintiff in a foreclosure action must name MERS as a defendant when MERS appears as a nominee of a lender of record. To insure a purchaser at foreclosure sale or a conveyance subsequent to foreclosure, you must verify that MERS as well as the lender identified in the recorded mortgage has been named as a defendant and that both have been properly served. If your search discloses a mortgage where MERS is nominee, make certain to show MERS as nominee for _______ [insert underlying lender] in Schedule B.

Additionally, because the Supreme Court has recognized MERS as agent of the lender identified in the mortgage document and any of the lender’s assignees, it is acceptable to rely on an assignment executed by MERS and not the lender of the record.

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THIS BULLETIN IS FURNISHED TO INFORM YOU OF CURRENT DEVELOPMENTS. AS A REMINDER, YOU ARE CHARGED WITH KNOWLEDGE OF THE CONTENT ON VIRTUAL UNDERWRITER  AS IT EXISTS FROM TIME TO TIME AS IT APPLIES TO YOU, AS WELL AS ANY OTHER INSTRUCTIONS. OUR UNDERWRITING AGREEMENTS DO NOT AUTHORIZE OUR ISSUING AGENTS TO ENGAGE IN SETTLEMENTS OR CLOSINGS ON BEHALF OF STEWART TITLE GUARANTY COMPANY. THIS BULLETIN IS NOT INTENDED TO DIRECT YOUR ESCROW OR SETTLEMENT PRACTICES OR TO CHANGE PROVISIONS OF APPLICABLE UNDERWRITING AGREEMENTS. CONFIDENTIAL, PROPRIETARY, OR NONPUBLIC PERSONAL INFORMATION SHOULD NEVER BE SHARED OR DISSEMINATED EXCEPT AS ALLOWED BY LAW. IF APPLICABLE STATE LAW OR REGULATION IMPOSES ADDITIONAL REQUIREMENTS, YOU SHOULD CONTINUE TO COMPLY WITH THOSE REQUIREMENTS.

References

Bulletins Replaced:
IN2011004 Foreclosures and MERS
Related Bulletins:
None
Underwriting Manual:
None
Exceptions Manual:
None
Forms:
None