Home foreclosure in Colorado, photo by Peter Shankbone.
MERS backing out of foreclosures
Mortgage Electronic Registration Systems (MERS) has recently come under fire, with several courts disputing their authority in the foreclosure process and two new states launching investigations into their role of improper foreclosures.
According to Reuters.com, the company “forbade members to file any more foreclosure actions in MERS’s name” and “required mortgage servicers to obtain mortgage assignments and record them with county clerks before beginning foreclosures.”
New rules at MERS
MERS spokeswoman Janice Smith told Reuters that the new rules simply formalize a trend MERS was already moving toward given that several large banks have already ended foreclosure filings in MERS name.
Smith also noted that the company’s original purpose was to track changes in servicers and mortgage ownership, not to facilitate foreclosures which she claims does not generate income for the company.
MERS owns half of all U.S. mortgages
AGBeat reported last week that MERS was finding itself under fire. With only 50 full time employees, according to Reuters, MERS claims to own about half of all mortgages in the United States, roughly 60 million loans, and is involved in about 60% of new mortgages issued.
What is MERS?
MERS was established by Fannie Mae and Freddie Mac just over 15 years ago in conjunction with several major banks as a means to expedite the loan recording process as it used to be done through individual county clerk offices which was slow. “The founders went ahead even though no state laws authorized them to bypass the required filing with clerks,” according to Reuters.
Testimony unveils inner workings of MERS
Testimony was uncovered from 2009 where MERS employees noted they “did little but maintain the computer database” and that “For a $25 fee, employees of any of the 3,000 loan servicers that belonged to MERS could get themselves designated as a MERS “vice president” or “assistant secretary,” authorized to sign official documents on behalf of MERS.”
Federal regulators claim MERS engaged in unsound practices
This spring, federal regulators included MERS along with 14 lenders as “engaged in unsafe or unsound practices” in transferring mortgages, requiring them to reform even though they still claim no wrongdoing.
Reuters said, “In practice, when servicers needed to create mortgage assignments to replace missing ones for foreclosure cases, their own employees, signing as MERS officials, printed out newminted documents and signed their names to them. MERS has served in effect as an instant teller machine for mortgage assignments. Servicers simply have their own employees sign the needed documents as MERS officials.”
Courts claim MERS can’t transfer power to foreclose
Courts for years have upheld MERS assignments despite homeowners’ challenges of their documentation. Now, several states are noting that MERS doesn’t own the note, therefore, it has no power to transfer to servicers the right to foreclose.
New MERS rules
The new rule excludes them from the foreclosure process which could curb future lawsuits aimed at MERS, however, does not halt current investigations and lawsuits.
Rich Cederberg
July 29, 2011 at 12:12 am
What a horrible abuse of power that was going on, right up there with the robo signer scandal.
Kathleen Cosner
July 29, 2011 at 1:08 pm
I seriously cannot believe it took them this long to implement changes! One f/c class I took in 2006 suggested if MERS was invovled that was a way to fight the f/c. There were obvious problems way back then, and they thought they could steamroll through the courts til now? Please.
The truth
July 15, 2023 at 10:05 am
No note means they cant securitize the mortgage. When they can’t securitize the mortgage, they can’t sell mortgage back securities. This means that all of the mortgage back securities have been selling for the past 15 years or worthless, therefore, the mortgage companies have to pay back all their investors for the worthless piece of paper that been selling. There’s not enough money in all the banks to pay them back. That would be stupid to print money just for that I couldn’t imagine going to buy a loaf of bread for $300. They really messed up when they let Wall Street in on the mortgage industry. The war that was fought after the revolutionary war the one that was named, the Civil War was fought over, having mortgages brought to the United States from Europe. It was never over slavery. Every District Court in the United States is in on it the banks have the judges retirement funds. Tied up in this huge scam. They’re not even real courts anymore. This is the fall of the western civilization. We should’ve never let the banks become what they are. They should have just been the intermediary for us, accessing our funds from the treasury. That’s the way it should be, and then stepped in the United States corporation in 1871 started by the king of England.