Mortgage Electronic Registration Systems, aka MERS, finds itself in a bit of a pickle. The bank owned entity created to facilitate mass securitization and skip out on billions in local property filing fees, has sent a directive to its membership (See MERS: Foreclosure Processing and CRMS Scheduling).

In short, the memo states:

“In recent months legal challenges have arisen regarding alleged inadequacies and improprieties in the foreclosure process including allegations of insufficient or incorrect supporting documentation and challenges to the legal capacity of parties’ right to foreclose . . . MERS is planning to shortly announce a proposed amendment to Membership Rule 8. The proposed amendment will require Members to not foreclose in MERS’ name. Consistent with the Membership Rules there will be a 90-day comment period on the proposed Rule. During this period we request that Members do not commence foreclosures in MERS’ name.” (emphasis added)

Keep in mind, that MERS has always been a legal fiction, simultaneously principle and agent. The courts are increasingly recognizing this, and finding they do not have any standing to bring foreclosure actions.

Housing Wire sums up the increasing judicial and legal antagonism MERS is facing:

The drumbeat against MERS became louder last fall as robo-signing — the signing of foreclosure affidavits of indebtedness en masse, without proper review — surfaced. The robo-signing scandal caused several large servicers to temporarily halt foreclosures as they reviewed their procedures, and prompted an investigation of lenders and their servicing shops by all 50 attorneys general. A proposed settlement could involve some of the nation’s biggest servicers.

I expect we will continue to see a ongoing reduction in the role of MERS over the next several quarters.

What follows will either be its eventual dissolution, and replacement with a legal entity — or retroactive legislation making its reckless illegality somehow legal. Watch Congress closely for signs they are rolling over for this.

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UPDATE: February 17, 2011, 6:45am
Despite writing critically about Mortgage Electronic Registration Systems for over 2 years, several emailers seem to be uncertain as to my thoughts about the legality of MERS.

Allow me to spell this out for you more specifically: MERS is an abomination, a legal blasphemy that should be destroyed before it unleashes the four horsemen of the apocalypse.

I hope that clarifies this . . .

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Sources:
MERS: Foreclosure Processing and CRMS Scheduling
Announcement Number 2011-01
MERS, February 16, 2011

MERS to members: Don’t foreclose in our name
KERRY CURRY
Housing Wire, February 17th, 2011
http://www.housingwire.com/2011/02/17/mers-to-members-don’t-foreclose-in-our-name

Category: Legal, Real Estate

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

19 Responses to “MERS: Stop Foreclosing in Our Name”

  1. foosion says:

    >>or retroactive legislation making its reckless illegality somehow illegal.>>

    Did you mean to say “somehow legal?”

  2. Petey Wheatstraw says:

    “The courts are increasingly recognizing this, and finding they do not have any standing to bring foreclosure actions.”
    ______________

    The courts, the legislature, and the executive are the sticks surrounding the axe of Fascism. The ties that bind them all together are money and power. There will be no punishment or penalty for them, and no justice for those they have defrauded or otherwise robbed. Anyone expecting a different outcome is not seeing and/or reasoning clearly.

  3. Sechel says:

    What’s laughable is that every challenge to MERS is described by the industry as an outlier. At this point, I reckon, the outliers are getting created in heaps .

  4. doug says:

    Jeez, Petey, I was thinking maybe you were being too pessimistic, then went to huff post and this top headline story in big type:

    GETTING OFF EASY
    Banks Could Escape Serious Punishment For Abusive Mortgage Practices

  5. Petey Wheatstraw says:

    doug,

    Then there’s this:

    http://www.bloomberg.com/news/2011-02-17/ally-s-gmac-wins-ruling-in-maine-case-over-false-foreclosure-documents.html

    Note that a little guy cannot afford the attorneys/legal professionals it would take to fight a corporate person, and class action (the only means by which the little guys can hope to navigate the minefields of procedure and bloated, loophole-ridden code) has been ruled out.

    As I’ve said before, the courts are the most corporatist branch of our government, having already corporatized, industrialized, and made a monopoly of the process of seeking justice by a fair and impartial, governmentally employed, evaluator of the law.

    When you need a specialist (or a team of specialists) to read and opine on the intentionally convoluted laws that ostensibly govern our society, something is way fucked up.

  6. Moss says:

    Headline should have read ‘Banks May Continue to Escape Serious Punishment For Abusive Mortgage Practices’. Either the Fed or the corrupt Congress will do something to protect them. The reality is that they are in complete control of all the levers. I think it is realistic to say that all the TBTF banks are effectively GSE’s.

  7. ashpelham2 says:

    Of course they don’t want foreclosure in their name: no one wants to be labeled the bad guy. When the Smiths and their 2.5 children, family dog, and parakeet have to get kicked to the curb, no one wants to be the bad guy named for doing it. Oh what a dilemma greed has brought us. And THAT’S the Big Picture.

  8. rktbrkr says:

    So another defacto 90 day foreclosure freeze for the big banks that control 2/3 of the mortgage market. Lots of logs piling up in the foreclosure river, be interesting to see what happens when the dam breaks.

    Chase looks pretty smart quitting the MERS club.

    What can they do in 90 days? Lobby to have illegal activity made legal I guess.

  9. Petey Wheatstraw says:

    Okay . . . there might be three slightly different versions of the same comment showing up here, shortly, or there might not. I seem to have done something illegal. If all three comments eventually do show up, y’all have my pre-apology.

  10. Petey Wheatstraw says:

    Four versions. Make that four. Just tried again. F it.

  11. curbyourrisk says:

    Despite writing critically about Mortgage Electronic Registration Systems for over 2 years, several emailers seem to be uncertain as to my thoughts about the legality of MERS.

    Allow me to spell this out for you more specifically: MERS is an abomination, a legal blasphemy that should be destroyed before it unleashes the four horsemen of the apocalypse.

    I hope that clarifies this . . .

    TWO BIG THUMBS UP TO YOU BARRY!!!!!!!!!

    Now, only if I cold find someone to bail me out of my OVER-PRICED, underwater Nassau county house. yeah, maybe Santa Clause and the Easter bunny could get into a bidding war.

  12. Greg0658 says:

    Petey – the Watson Wordpolice App doesn’t like most of the ‘isms .. don’t you know that by now ? and it seems to differentiate ‘isms by whom – and then needs to be approved by human hands who can think beyond the book – also it doesn’t point out its been sitting in cue waiting for the Sell button

  13. Transor Z says:

    MERS started out as a registration service that provided a unique tracking number that would follow mortgages as they were sold from bank to bank. That’s it. Please re-read the first sentence if it isn’t clear.

    So MERS becoming what it is today is a little like what would happen if you used that Excel spreadsheet you created to track your household finances as the General Ledger for Coca Cola and all of its divisions worldwide.

  14. beaufou says:

    ashpelham2, MERS is not a genuine entity, it is an instrument used by bankers to deal in residential mortgages without compliance with the real property recording laws.
    MERS doesn’t give a shit about being the bad guy, it doesn’t really exist in the first place.
    Now, foreclosing in MERS’s name opens another can of worms, how many illegal transactions and broken chains of title are we talking about?

  15. alnval says:

    Thank you, thank you for the clarity regarding your view of MERS. That will not, of course, prevent those with an unremitting skeptical bent from asking, “Are you sure that’s what you meant to say?”

  16. SCTTD says:

    So which locality do you figure will be the first to sue to collect the filing fees the illegally formed MERS allowed banks to escape?

    Wonder if this somehow relates the the 11% unemployment stress test the Fed wants banks to undertake…

  17. Sechel says:

    Some states/municipalities have mortgage recording taxes. These get paid when a mortgage is taken out or refinanced. I’ve noticed that often lenders assign mortgages and then do a modification instead of a refinance which saves the borrower on the recording tax. If this is facilitated via MERS then states and localiies are being cheated out of tax revenue. Has anything been written on this?

  18. Greg0658 says:

    Sechel – I do believe this blog handled that question about 6 months ago .. wash rinse repeat .. I’d have to spend time or ask Watson .. but I think “cheated out of tax revenue” was in there

  19. [...] MERS: Stop Foreclosing in Our Name by Barry Ritholtz – “Allow me to spell this out for you more specifically: MERS is an abomination, a legal blasphemy that should be destroyed before it unleashes the four horsemen of the apocalypse.” [...]