Although a New York U.S. Bankruptcy judge has called the entire concept of the MERS (mortgage electronic registration system) foreclosure process “absurd,” California and New Hampshire judges have added their names to the roster of courts that support the MERS system[1]. MERS was designed to help mortgage originators buy and sell loans in bundles quickly. The system helped save money by avoiding transfer and recording fees but, unfortunately, it appears that at least part of the time the transfer process itself went awry. As a result, MERS currently is facing a number of lawsuits dealing with the legality of the process and of MERS actually enacting foreclosures. We reported on the outcome of a New York case and cases in Kansas and Massachusetts last month.
In New York, judge Robert. E. Grossman ruled that “the very foundation” of the MERS business model is “absurd, at best.” Kansas and Massachusetts courts responded in short order, upholding the MERS system. However, the Register of Deeds in South Essex County in Massachusetts recently announced a lawsuit against MERS for $22 million in missed recording revenue due to the deliberate creation of a “for-profit private cyber Registry of Deeds whose only purpose was to avoid paying the same fees as everyone else and keeping the public in the dark as to who was the rightful owner of the mortgage.” The press release calls the entire system “a scheme of epic proportions.”
Do you think that the MERS system should be re-vamped? Can it be allowed to continue to foreclose on properties?
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[1] http://www.totalmortgage.com/blog/mortgage-rates/new-hampshire-california-uphold-mers-property-transfers-foreclosures/10524
Carole, your note refers to Judge Grossman as a state judge. He is a United States Bankruptcy Judge, which is why his views are perhaps more significant than a similar pronouncement by a state judge. If other judges in the United State’s Bankruptcy Courts “jump on his bandwagon” the issues could be troubling becasue many cases dealing with foreclosures are asserted in the context of federal bankruptcy proceedings.
Thanks, David. UPDATE: According to Bloomberg, “Grossman [has] said parties coming to him to seek to lift the automatic ban on legal claims in cases involving MERS will have to show they own both the mortgage and the note.”
St. Petersburg (FL) attorney Matthew Weidner has been hammering MERS for months, claiming MERS has no legal right to foreclose. He also claims foreclosures showing MERS on foreclosure complaints will haunt us for years to come…clouding title and causing legal action.
Other attorneys speculate some “back-room” political/banker agreement will arise, exonerating MERS in exchange for principal reductions…quietly & without fanfare. More principal reductions are taking place right now, but the general public is not hearing about this…and you know why, don’t you?
Mike
But of course…Bank want to screw again and some “crazy” judge would like to stop it and it is “wrong”!!!
This is not to protect us.Escrow Companies need to stop it.Alex.
This is an incredible problem that is throwing all home owners for the last 20 years into a position where we will have to prove the chain of title before we can sell our property. Even when I am done getting a quiet title to my property due to everyones illegal manipulations of my mortage and expending a large amount of money fighting the largest bank in the world. Will it be clear?
I wouldn’t buy a lot of title insurance companies stock at the moment as they are out of their minds to issue policies at this time. The people that have been forclosed upon will be sueing the banks, realators, and the title insurance companies. Every one else will be sueing to straighten out their titles. My advise to everyone is if your mortage went thru MERS. stop making payments as who ever says they have your loan dosen’t.