8 N.Y.3d 90 (N.Y. 2006)
In 1993, several large participants in the real estate mortgage industry created the MERS system to track ownership interests in residential mortgages.1 Mortgage lenders and other entities known as MERS members subscribe to the MERS system and pay annual fees for the electronic processing and tracking of ownership and transfers of mortgages.2 Members contractually agree to appoint MERS to act as their common agent on all mortgages they register in the MERS system.3
The initial MERS mortgage is recorded in the County Clerk’s office with Mortgage Electronic Registration Systems, Inc. named as the lender’s nominee or mortgagee of record on the instrument.4 During the lifetime of the mortgage, the beneficial ownership interest or servicing rights may be transferred among MERS members, but these assignments are not publicly recorded and instead are tracked electronically in MERS’s private system.5 If a MERS member transfers ownership interest or servicing rights in a mortgage loan to a non-MERS member, an assignment from the MERS member to the non-MERS member is recorded in the County Clerk’s office, and the loan is deactivated within the MERS system.6
In April 2001, in response to an informal opinion of the Attorney General which concluded that recording a MERS instrument violates Real Property Law section 316, the Suffolk County Clerk ceased recording the MERS instruments.7 Petitioners MERSCORP, Inc. and Mortgage Electronic Registration Systems, Inc. commenced this hybrid proceeding in the nature of mandamus to compel the Clerk to record and index the instruments and to declare them acceptable for recording and indexing.8
Supreme Court denied in part petitioners’ motion for summary judgment and granted in part the cross motion of respondents the Suffolk County Clerk and the County of Suffolk.9 Supreme Court held that although the Clerk must record and index the MERS mortgage when presented, the Clerk may refuse to record a MERS assignment and discharge.10 The Appellate Division reversed so much of Supreme Court’s ruling as relates to the assignments and discharges.11 This Court granted leave and now considers the appeal.12
Whether the Suffolk County Clerk is compelled to record and index mortgages naming Mortgage Electronic Registration Systems, Inc. as the lender’s nominee or mortgagee of record?13
Sections 291 and 316-a of the Real Property Law impose upon the Suffolk County Clerk the ministerial duty of recording and indexing instruments affecting real property when duly acknowledged.14 The Clerk lacks statutory authority to look beyond an instrument that satisfies the limited requirements of the recording statute.15
Yes. The established facts demonstrate that the initial MERS mortgage is recorded in the County Clerk’s office with Mortgage Electronic Registration Systems, Inc. named as the lender’s nominee or mortgagee of record on the instrument.16 Because the instrument appears to reflect a valid conveyance, the Clerk must accept the MERS mortgage when presented for recording under the statutory mandate.17
The Suffolk County Clerk is compelled to record and index the MERS mortgages.18
Related opinions on this issue
I am constrained to agree with the result reached by the majority opinion.19 However, I write independently to highlight the narrow breadth of this holding and to point out that this issue may be ripe for legislative consideration.20 I concur with the majority that the Clerk’s role is merely ministerial in nature and that since the documents sought to be recorded appear, for the most part, to comply with the recording statutes, MERS is entitled to an order directing the Clerk to accept and record the subject documents.21
I wish to note, however, that to the extent that the County and amici argue that MERS has violated the clear prohibition against separating a lien from its debt and that MERS does not have standing to bring foreclosure actions, those issues remain for another day.22
When presented with a MERS mortgage to record, the Clerk is able to discern from the face of the instrument that MERS has been appointed, as nominee, mortgagee of record.23 As the instrument appears to reflect a valid conveyance under Real Property Law section 290(3), the Clerk is required to record the instrument in MERS name as a nominee for Lender under Real Property Law section 291.24 Given that the identity of the actual lender is ascertainable from the mortgage document itself, the use of a nominee as the equivalent of an agent for the lender is apparent and not unusual, and I concur with the majority that the Clerk is obligated to record MERS mortgages.25
Whether the Suffolk County Clerk is compelled to record and index assignments of mortgage and discharges of mortgage naming Mortgage Electronic Registration Systems, Inc. as the lender’s nominee or mortgagee of record?26
Yes. The established facts establish that beneficial ownership interest or servicing rights may be transferred among MERS members.29 Those assignments are tracked electronically in the private system rather than publicly recorded.30 The MERS discharge states that the mortgage has not been further assigned of record.31 The County Clerk is therefore required to accept the MERS assignments and discharges for recording.32
The Suffolk County Clerk is compelled to record and index the MERS assignments and discharges.33
Related opinions on this issue
I am constrained to agree with the result reached by the majority opinion. However, I write independently to highlight the narrow breadth of this holding and to point out that this issue may be ripe for legislative consideration. Unquestionably there is considerable public value in allowing seamless assignments of mortgages in a secondary market.34
However, whether this benefit will outweigh the negative consequences cannot be ascertained by this Court.35 Thus, as the recording act, which as relevant here has not been substantially amended in the last 50 years, could not have envisioned such a system nor its ancillary impacts, I feel that such a decision is best left in the hands of the Legislature.36
Plainly, the statute requires all assignments of the mortgage to be listed on the certificate of discharge, whether recorded or not.37 The Court need not look to legislative history when the plain meaning of the statute is clear, and surely should not look to legislative history to override the plain meaning of the statute, as the majority now does.38 Real Property Law section 321 was amended in 1951 to ameliorate the situation where assignments are known by the signing party to have existed but such assignments are not in his chain of title because the mortgage has been reassigned to the assignor. This occurred, for example, when a mortgage has been pledged to secure a loan and on repayment has been reassigned to the mortgagee without the assignment ever having been recorded.39
Under the MERS system, by contrast, assignments are made from one lender, to another lender, to another lender, and so on down the line.40 The 1951 amendment is thus inapplicable to the issue under review.41 The statute therefore bars recording the MERS discharges.42