A New York appeals court has thrown out another MERS foreclosure proceeding, this one on a delinquent $479,000 mortgage with no note in evidence not just in MERS, but anywhere. “They’ve had three years to find it [the note],” said the homeowner’s lawyer, “and they haven’t.” The trustee for the trust allegedly containing the mortgage, the Bank of New York (BONY), could not produce the note and, according to the courts, since MERS “couldn’t give BONY the authority to foreclose because it didn’t possess the underlying note,” the homeowners will not face foreclosure. “A transfer of the mortgage without the debt is a nullity, and no interest is acquired by it,” the court ruled.
While this might appear at first to be a big deal, even the homeowners’ lawyer believes that the situation may be unusual enough that it will not impact most homeowners because BONY actually admitted that it did not have the note. However, other analysts are not willing to say that the judges making rulings like this one are not opening up the door to potentially massive lawsuits if the MERS model is ultimately deemed invalid. “We know that MERS is a problem; we don’t know exactly what that’s going to mean,” explained Adam Levitin, a professor of law at Georgetown University. However, judges ruling against MERS are standing firm, saying that “the law must not yield to expediency and the convenience of lending institutions,” in the words of Justice John M. Leventhal. “Proper procedures must be followed to ensure the reliability of the chain of ownership,” he added.
Do you think that the MERS mess will blow over, or is it here to stay?
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