In March of this year, Oregon foreclosed home sales plummeted in response to a federal judge questioning the legality of foreclosures through the Mortgage Electronic Registration System (MERS). Not too long after, Judge Owen Panner, also a federal judge, blocked a foreclosure due to recording issues related to MERS and struggling homeowners everywhere wondered if their own homes might also be saved due to a similar technicality. Now, another judge has blocked the eviction of a former homeowner from her home by the purchaser of her foreclosed home, saying that the property was never properly transferred to the bank which ultimately tried to seize the home[1]. The ruling not only kept this woman in her home, but clouded the status of many recent foreclosure sales in the state.
Although this situation sounds like a godsend to homeowners facing foreclosure, in reality, it could prolong the distress of Oregon’s real estate market and create a limbo situation for homeowners, lenders and home buyers throughout the state[2]. Many title companies are already requiring additional paperwork – as they should – for MERS foreclosures, and some refuse to insure MERS-foreclosed houses that were seized via a non-judicial foreclosure. While any lender has the option of taking a foreclosure case to court and getting a judge’s decision, most prefer not to because it is a much longer, much more expensive process. Most people agree that allowing these questionable foreclosures to continue would be irresponsible and wrong. However, ruling on individual cases without making any broader rulings threatens the entire real estate recovery, such as it is. What do you think should be done about the MERS mess? Do you think it will go away on its own?
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[1] http://www.totalmortgage.com/blog/mortgage-rates/another-anti-mers-ruling-causes-oregon-foreclosure-sale-to-be-voided/12721
[2]http://www.oregonlive.com/finance/index.ssf/2011/07/what_oregons_foreclosure_mess_means_and_when_itll.html
Okay, think this one all the way through.
If there is no clear title at foreclosure, there is no clear title at sale or at the end of the mortgage obligation. That means neither a buyer nor seller of real estate shalt thou be and it also means that if you have MERS in your title history, you are buying nothing.
Until every piece of property which has MERS in the title history has its title quieted, the real estate market can not recover.
The chaos shall really start when you have a piece of property which has been foreclosed upon, sold, then foreclosed upon yet again and sold yet again. The property still belongs to the last person with clear title before the title was clouded which in the above case is three owners in the past.
If you are a real estate agent, expect to have your happy self in a lawsuit. You have a fiduciary duty to someone to make sure there is a clear title to deliver.