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. 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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