Title Examination Standards
Chapter 1, App.
Chapter 24. Mortgages and Other Liens
§24.12. Mortgage Held By Nominee Or Agent

1. A. An examiner shall consider the lien of a mortgage held or record by a nominee or agent assigned or released if the assignment or release:

   1. is executed by the nominee or agent, where the beneficial owner or principal is not identified or record; or 2. is executed by the nominee or agent in the name of the beneficial owner or principal, where the beneficial owner or principal is identified of record; or 3. is executed by the beneficial owner or principal, where the beneficial owner or principal is identified of record, even if the lien of the mortgage is vested of record in the nominee or agent; or 4. is executed by either the beneficial owner or the nominee, as nominee, if the lien of the mortgage is vested in both the beneficial owner and the nominee; or 5. is executed by either the principal or the agent, as agent, if the lien of the mortgage is vested of record in both the principal and the agent.

2. B. If the mortgage lien is granted to a person or entity "as nominee" or "as agent," the lien of the mortgage is vested or vested in such person or entity. If the identity of the beneficial owner or principal is not disclosed or record, then the examiner need not inquire as to the identity of the beneficial owner or principal. In such situations, the examiner may rely on the instruments executed by the nominee or agent as record holder of the mortgage lien.

   Comment 1: In its consideration of this standard, the Committee has taken notice of the evolving nature of lending practices concerning the wide distribution of interests in the debt represented by mortgage notes and derivative interests created only from various parts of the debt represented by such notes. While the Committee is aware of the old adage that the lien follows the debt, the Committee is also aware that lenders are becoming more apt to designate one party to hold record title to the lien of the mortgage in order to facilitate commerce in these multiple and/or derivative interests in the debt. However, the Committee is also cognizant of the importance placed on the ability of the public to rely on the public record with respect to conveyances of and encumbrances upon real estate. Therefore, in adopting the foregoing standard, the Committee has been diligent in its efforts to balance the facilitation of commerce with the requirement that certain transactions must be fully memorialized in the public record.

Standard 24.12

The Title Examination Standards Committee recommended adding a new Standard 24.12 to give examiners guidance in the situation where mortgages or other instruments are granted to or assigned to nominees or agents, including but not necessarily limited to transactions involving the Mortgage Electronic Registration Systems, Inc. ("MERS"). The Real Property Law Section approved, November 16, 2006, and the House of Delegates adopted the proposal November 17, 2006.