Legal Analysts Say MERS Will Likely Prevail
June 18th, 2011
Although the Mortgage Electronic Registration System (MERS) has taken a beating lately and some states courts have even declared MERS foreclosures illegal and reversed them, legal analysts tend to agree that MERS is likely to be “completely dismantled”[1]. After all, said attorneys from K&L Gates in a new report, “although a few courts may identify perceived deficiencies with the use of MERS in certain contexts, the majority of courts…continue accept and uphold MERS’ role as a legitimate cog in the mortgage lending industry.” Experts believe that because MERS case outcomes are very case-specific, it is unlikely that the system will ultimately break down and even sympathetic judges are not always ruling against MERS at this time. However, attorneys, judges and courts are investigating the MERS structure and process through these cases to determine how well MERS has worked in the past and what problems can be expected – and solved – moving forward.
Do you agree with K&L’s report that MERS is probably here to stay?
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[1] http://www.housingwire.com/2011/06/17/legal-analysts-say-mers-is-down-but-not-completely-out
June 18th, 2011 at 12:12 PM
Without seeing the actual report hard to comment. However, it is generally black letter law that the mortgage is mere incident to the note. A mortgage without a note is worthless. The MERS scheme is to sever the note from the mortgage. MERS does not hold the note, does not claim to hold the note.
It is also black letter law that the mortgage follows the note. Therefore Assignments to MERS of mortgages without assigning the note is a nullity.
Assignments from MERS suffer the same problem. MERS doesn’t hold the note according to MERS. Suppose the following: Mortgage is to MERS as Nominee for Lender A. Lender A transfers the note to Lender B. Under black letter law, the mortgage follows the note and the mortgage now belongs to Lender B - not MERS.
MERS subsequently assigns the mortgage to FNMA. What did MERS assign? The mortgage followed the note to Lender B as a matter of law. MERS has NOTHING to assign. FNMA received nothing from MERS.
FNMA files suit. They attach the note and mortgage and the assignment to the complaint. Motion to dismiss follows because the note is clearly assigned to Lender B (a lender still in business), and the plaintiff is FNMA. (This is a real case BTW). FNMA has no right to bring suit. It doesn’t hold the mortgage because of the previous transfer of the note to Lender B.
Moreover, suppose the borrower has a new job, and can reinstate, and wants to reinstate. Who should them borrower settle the case with? Lender B or FNMA?
Would love to see how the report explains this away.
June 18th, 2011 at 2:40 PM
You have got to be kidding me. Why do you not reveal why MERS is a “legitimate Cog”? A few companies got together, including Fanie and Freddie and decided they didn’t want to pay county recorders and wait for the legitimate system elected and ordained by the people to record who holds title and rights to what property? Not to mention that one of the real problems is the separation of the note from the mortgage. That bubble is still about to burst. Sorry, but the reality is MERS is illeagle and millions of mortgages/titles were and are compromised by that system.
June 18th, 2011 at 3:11 PM
MERS is not being managed properly and if they are not following the proper legal procedures they should be shut down or fined…go out and run 15 over the speed limit in a speed zone an you will get fined.
June 18th, 2011 at 6:10 PM
It is this very rationale that is going to get Realtors and Brokers sued in state court on wrongful foreclosure actions in addition to those seeking quiet title on properties. There are no property recordation statutes anywhere that give credence to MERS and its operations. Just because ALTA is one of the MERS members does not make right here. MERS for all intents and purposes is a computer. Its Board of Directors basically run MERSCORP, it’s parent.
I tend to agree with your first post via Carpenter v. Longan, an 1872 U.S. Supreme Court case. MERS severs the note to speed it through the securitization process on Wall Street. This is the reason it was created. The banks, Fannie and Freddie and all of the other supporters are not doing well financially because of it and the DOJ investigations are just beginning … so are the quiet title lawsuits. I write them for attorneys, I should know. MERS has caused breaks in the chain of title to nearly 70-million mortgages. I do not see how you could endorse them here. You obviously do not care as long as it’s not your title that’s convoluted and screwed up with multiple clouds, robosigned fraudulent documents and breaches of contract and fiduciary duty issues. Your Realtors would do well to pay attention here … and the title companies … when they start getting sued and their errors and omissions carriers dump them because they don’t want to pay claims for their negligence, then it will be too late because the tidal wave of litigation will take off like Chernobyl and you will all be victims of your own endorsement.
June 18th, 2011 at 6:28 PM
AT THIS TIME AM TRYING TO STAY IN MY HOUSE NOW
June 18th, 2011 at 8:11 PM
The purpose of MERS is to convert Real Property into Personal Property and back again, at whim.
MERS members are not required to register changes of ownership.
The title is gone. You are buying nothing. A loan mod just means you are paying a little less for the same nothing.
MERS is a limited hangout designed to obfuscate the real issue which is engineered finance. The crime is hidden behind the curtain
Don’t be distracted by the curtain. Look behind the curtain. If you really want to find out what is going on, start to investigate the patented business models. It spells out the entire crime. They don’t try to hide it. It’s right under your nose at the USPTO.
Take as long as you wish to tour the rabbit hole but always remember, it’s about your title. You ain’t got one.
It’s about your title, you ain’t got one.