Can a lawyer represent the owner of a mortgage note while also serving as an officer of MERS, the record mortgagee, to sign an assignment and bring the foreclosure in the owner's name?
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This page answers the general question as of 2010. Ezel answers yours: whether it's allowed on your facts, under the current New York Rules of Professional Conduct, with citations.
Plain-English summary
A lawyer represents the current owner and holder of a mortgage note in a residential foreclosure. Because foreclosure actions brought in the name of MERS (the electronic registry that remains mortgagee of record) often founder on standing, the client elected to record a paper assignment from MERS to itself before suing. To do that quickly, MERS, the client, and the lawyer signed an "Agreement for Signing Authority" appointing the lawyer and three of the lawyer's non-lawyer staff as MERS assistant secretaries and vice presidents, authorized to execute assignments and foreclosure documents for loans the client holds in the MERS system. The question is whether wearing both hats is a conflict.
The opinion analyzes Rule 1.7(a)(2), which addresses conflicts between a client and the lawyer's own interests. It concludes there is no significant risk to the lawyer's professional judgment, because the lawyer was selected, engaged, and paid by the client (not by MERS) and holds only limited signing authority for MERS. The opinion also addresses Rule 1.7(a)(1) (differing interests among clients) for completeness, finding it inapplicable because MERS is not a client; and even if it were, the opinion finds no "differing interests" under Rule 1.0(f), because the assignment conveyed no tangible property interest and MERS, as a bare nominee, has no economic stake in the foreclosure's outcome.
The opinion adds two qualifications. First, even if a conflict had arisen, it was cured under Rule 1.7(b) by the client's informed consent, confirmed in writing in the Agreement for Signing Authority. Second, the opinion flags a scenario it does not resolve: if the lawyer were to discover that a MERS error or omission created a viable defense or caused substantial delay, conflicting fiduciary duties between the lawyer's MERS role and the lawyer's role as foreclosure counsel might arise, requiring further analysis under Rule 1.7(a)(2) and (b). On the facts presented, no such conflict existed. The opinion expressly declines to opine on Real Property Law or other statutory questions about the assignment, calling them beyond its jurisdiction.
In practice
Under this opinion, on the facts presented, a foreclosure lawyer's limited signing authority as a MERS officer does not, by itself, create a Rule 1.7 conflict with the represented note owner, because MERS holds no economic interest and the lawyer's loyalty runs to the paying client. The opinion holds that the written informed consent in the signing-authority agreement would cure any conflict that did exist, and it identifies the point at which the analysis would change: a discovered MERS error that gives the borrower a defense or delays the case.
Common questions
Q: Can a foreclosure lawyer also be an officer of MERS for the loans the lawyer's client holds?
A: Yes, on these facts. The opinion concludes that limited signing authority as a MERS officer does not create a significant risk to the lawyer's judgment under Rule 1.7(a)(2), because the lawyer was hired and paid by the note owner and MERS has no economic interest in the outcome.
Q: Is MERS a "client" that creates a differing-interests conflict?
A: No. The opinion states MERS is not a client and, in any event, there are no "differing interests" under Rule 1.0(f), because the assignment conveyed no tangible interest and MERS as nominee has no stake in the result.
Q: What cured any potential conflict here?
A: The client's informed consent, confirmed in writing in the Agreement for Signing Authority, satisfied Rule 1.7(b), according to the opinion.
Q: When would this arrangement become a problem?
A: The opinion identifies the scenario where the lawyer discovers a MERS error or omission that gives the borrower a viable defense or causes substantial delay; conflicting fiduciary duties could then arise, requiring fresh analysis under Rule 1.7(a)(2) and (b).
Background and rules framework
The opinion interprets New York Rule 1.7, which corresponds to Model Rule 1.7 (concurrent conflicts of interest). Rule 1.7(a)(2) bars representation where a reasonable lawyer would conclude there is a significant risk that the lawyer's professional judgment will be adversely affected by the lawyer's own financial, business, property, or other personal interests; Rule 1.7(a)(1) addresses representing differing interests; and Rule 1.7(b) permits a client to consent in writing to a consentable conflict. Rule 1.0(f) defines "differing interests." The opinion applies these provisions to a lawyer holding a corporate office in a non-client entity.
Citations and references
Rules of Professional Conduct:
- MR 1.7 (conflicts of interest: current clients)
- NY Rule 1.7(a)(1), (a)(2), (b) (differing interests; personal-interest conflict; consent)
- NY Rule 1.0(f) (definition of "differing interests")
Cases:
- Merscorp, Inc. v. Romaine, 8 N.Y.3d 90 (2006), upholding recording of MERS-named mortgages
- LaSalle Bank National Association v. Lamy, 12 Misc.3d 1191(A) (N.Y. Sup. Ct. Suffolk Cty. 2006), on MERS standing to foreclose
See also
- NY State Bar Op. 868: Concurrent representation of corporation and sole owner
- NY State Bar Op. 849: Conflicts analysis of concurrent representation of a bank and vendor
- NY State Bar Op. 867: Simultaneous representation of lender and seller
Source
- Landing page: https://nysba.org/ethics-opinion-847/
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