Michigan MERS Ruling Eliminates Foreclosure By Advertisement
May 17th, 2011
Foreclosures serviced by the Mortgage Electronic Registration Systems, Inc (MERS) system in Michigan must go through the judicial foreclosure process thanks to a ruling in the state court of appeals that MERS does not own any interest in the debt and therefore cannot post notice of default in lieu of taking the process through the justice system[1]. As a result, closings throughout the state are being canceled. The ruling could potentially void “thousands of foreclosure actions in the state, including properties that have already been sold to new buyers.” MERS responded to the ruling with a statement saying simply that “title companies should not have any concerns about closing loans with MERS as the mortgagee.”
At least some homeowners have already been notified that their ownership may be in question. They have reacted quickly, filing a lawsuit in federal court in Detroit this week against MERS seeking more than $100 million in damages[2]. Even if the original owners do not contest the foreclosure sale of the properties with questionable foreclosures on their record, the current owners will likely have trouble getting certification of clear title when they try to sell the property, saidCurtis Hertel Jr., a Michigan county register of deeds. “[Banks] created this shadow registry [MERS] and, on top of that, let this shadow registry act as the bank,” he said, adding that he believes this is “just another example of banks doing things improperly” and that “we have victims on all different levels.”
For now, judicial foreclosure actions by MERS are not in question. However, any foreclosure that MERS conducted by publishing notice of foreclosure in a local paper or by posting notice on the property of itself is now in question.
Do you think that this ruling will ultimately help or hurt homeowners? What should be done with MERS?
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[1] http://www.dsnews.com/articles/mers-ruling-in-michigan-leaves-title-companies-hesitant-on-reo-sales-2011-05-16
[2] http://www.battlecreekenquirer.com/article/20110513/NEWS01/305130009/Michigan-appeals-court-ruling-could-erase-thousands-foreclosures?odyssey=tab|topnews|text|Frontpage
May 17th, 2011 at 8:18 AM
MERS was a key player in the Ponzi scheme
to defraud investors. It allowed the originators
to sell the same mortgage Notes to different investors multiple times. Without MERS this would not have been possible because the owner
of the Note could easily verify that it was the
only owner of the mortgage.
My questimate is that for each mortgage deed, Wall Street sold ten counterfeit copies
of the corresponding Note. So for example on
a $200K loan, the mortgage deed would be recorded once in the County official records with MERS named as the mortgagee. Then the $200k
note would be sold ten times to ten different
gullible investors, who each thought MERS was
holding the mortgage deed for them. Thus on a
$200k Note, they took in $2 million. They would
place about 20% of that with the servicer so payments could be made to the investors for a few years. As long as new investors could be
brought in, they could keep the escrow accounts
replenished. The problem occurred in 2008 when
the investors caught on to the scam and stopped
buying these suspect Notes on the secondary market because they discovered they were counterfeits. The rest is history.
May 17th, 2011 at 8:26 AM
Just more MUD for homeowners to wade through!
Principal reduction-to 110% of “current” market value loan modifications at 5.5%int for all loans-current and delinquent-issued between 2003 and 2008. That’s the answer to help all homeowners and the economy. Let the banks pay the piper for a change!!!
May 17th, 2011 at 9:41 AM
SINCE MY WIFE AND I BOUGHT OUR HOME JUNE 2000 WE HAVE BEN THROUGH SEVERAL PREDATORY LENDING WITH THREE BANKS THAT WE DID REFINANCING WITH NAMELY CONSECO FINANCE COMPANY NOW GREEN TREE FINANCING COMPANY MORTGAGE LINE BANKING WHO WE REFINANCE WITH THEN BECAUSE THEY ROBBED US SEVERAL 100S OF DOLLORS WE TALK TO THEM AQBOUT IT THEY QUICKLY SOLD THE LOAN OUT TO CHASE BANK WITHOUT OUR KNOWLEDGE CHASE SHOULD BE RESPONSIBLE FOR THE RIPPED OFF AMOUNT THAT MORTGAGE LINE TOOK FROM US.
May 17th, 2011 at 9:53 AM
All this did was screw me out of a house that was supposed to be closed on 6/8/11. The house was thru sheriff sale over a year and a half ago. BUt because of this,FANNIE who holds the title will not proceed until this is done by the supreme court. So they say it could be 2 months to 2 years before they do anythng. DO these people think they will get the houses back? Attornys will do class action, collect 10 mill for themselve and divide 10 more between 100,000 people.
May 17th, 2011 at 1:08 PM
Do You Know Who Owns Your House?
With all the contraversy over improper paperwork involving foreclosures in the last few years, the answer may not be clear cut.
The obvious problem is that this ruling will drastically slow any current and future foreclosures. But what about recent sales? Can previous homeowners sue to get their house back?
What about the banks who have sold these homes? Will transactions have to be unwound and what will be the consequences? This is especially troubling since the bulk of sales in many areas are REOs or in some stage of the foreclosure process. While this court ruling applies only to Michigan, MERS and nonjudicial foreclosures are widespread in other states as well. Could this ruling be picked up by plaintiffs in other states with similar results?
With judicial foreclosures taking sometimes years, this will almost certainly extend the downturn in the housing market for years.
May 17th, 2011 at 2:53 PM
I think attoney’s are the second layer of scum in all this, just under Wall Street. The bottom line is this — the people didn’t pay the payment, so now they have to move and lose any interest they have in the property. Call it anything you want, point fingers at everybody. The payments were not made, so the people have to go. The only people who have been wronged are the peole who were sold the neg-am loan. 99% probably were not told the whole truth about the loan, I believe. It’s a great loan, but not one a person would use to purchase a house. The attorneys should all lose their license for life if they parted in selling, “we are going to sue because your house was transfered by MERS. We might be able to get your house for free, if not we are asking for half your mortgage to be forgiven. selling hope like that is what makes them the second layer of scum ont he pond.
Good Night Gracy
May 17th, 2011 at 2:57 PM
that’s it
May 18th, 2011 at 6:08 AM
You are right there are no clean hands here, but at the end of the day the the creation of MERS by the banks is one of the biggest frauds ever perpetrated against American Homeowners. We’re talking about over 50 million mortgages that Legally speaking don’t exist. Title companies are equally at fault for signing off on them, which explains MERS short response addressed to the title companies in the article. Now, if done right Homeowners can actually clear their title while leaving the lender to collect the note value from the title company. This could put a moratorium on mortgages never mind foreclosures which is what MERS is really nervous about. It may be time to file a claim for the full value of the note. kapish?