The Washington Supreme Court ruled Thursday that Mortgage Electronic Registration Systems, Inc. (MERS) can’t foreclose on a property through the state’s non-judicial process unless it holds the promissory note.

In the court opinion, Justice Tom Chambers wrote, “Simply put, if MERS does not hold the note, it is not a lawful beneficiary.”

Since it is not recognized as a beneficiary without the promissory note, MERS could not, in the two cases the court examined, appoint trustees to initiate non-judicial foreclosures.

The opinion stated that only the “actual holder of the promissory note or other instrument evidencing the obligation” could act as a beneficiary and appoint a trustee to foreclosure on a property.

The two plaintiffs named in the cases were foreclosed on by trustees appointed by MERS.

MERS was created in the 1990s to record and track the transfer of mortgages electronically. The system allowed those who bought and sold mortgage-backed securities to avoid the cost of recording fees and the inconvenience going to a county court to record ownership

Aside from tracking ownership, MERS in certain states was also named as a beneficiary of the deeds of trust.

In its statement, MERS said it “ceased commencing foreclosures in its name over a year ago, so this opinion does not impact its current operations. The opinion will, however, create confusion for Washington homeowners while the trial courts consider its effect on pending cases. We remain confident that MERS’ role in the U.S. housing finance system is valid and will withstand legal challenges.”