In answering a certified question, the Washington Supreme Court
determined that MERS is not a "beneficiary" within
the meaning of Washington's Deed of Trust Act because MERS does
not hold the promissory notes securing its customers' deeds of
trust. As a result, MERS lacks the power to appoint a trustee to
proceed with a non-judicial foreclosure. The court reached its
conclusion based on the plain language of the statute, which
defines a "'beneficiary' as 'the holder of the
instrument or document evidencing the obligations secured by the
deed of trust, excluding persons holding the same as security for a
different obligation.'" The court found the definition of
"holder" in the Uniform Commercial Code persuasive, which
would require the beneficiary to "actually possess the
promissory note or be the payee."
In reaching its conclusion, the court rejected several arguments
made by MERS. First, the court rejected MERS' argument that the
language in the statute that provides "unless the context
clearly requires otherwise," dictated a different conclusion.
The court also rejected the argument that MERS was a beneficiary
because it held the deed of trust as the agent of the lenders.
Finally, the court rejected MERS' public policy arguments
noting that "[t]he legislature . . . is in the best position
to assess policy considerations" and the court's decision
did not prevent the parties from proceeding with judicial
While the court declined to answer the certified question as to
the legal effect of MERS acting as an unlawful beneficiary, the
court did note that MERS could not simply assign its legal interest
in the deed of trust to the lender or holder. The court also
concluded that a homeowner may have a cause of action under
Washington's Consumer Protection Act against MERS when MERS
acts as an unlawful beneficiary under the Washington Deed of Trust
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The Consumer Financial Protection Bureau announced that it had settled enforcement actions against four insurance companies in connection with alleged improper payments between the insurance companies and mortgage lenders.