Judge: MERS Invalid

“MERS and its partners made the decision to create and operate under a business model that was designed in large part to avoid the requirements of the traditional mortgage-recording process. The court does not accept the argument that because MERS may be involved with 50 percent of all residential mortgages in the country, that is reason enough for this court to turn a blind eye to the fact that this process does not comply with the law.”

U.S. Bankruptcy Judge Robert E. Grossman


To be technically precise, they lack the ability to legally transfer mortgages. That doesn’t mean they are invalid, but it does eliminate their reason for existence.

Here’s Bloomberg:

Merscorp Inc., operator of the electronic-registration system that contains about half of all U.S. home mortgages, has no right to transfer the mortgages under its membership rules, a judge said.

U.S. Bankruptcy Judge Robert E. Grossman in Central Islip, New York, in a decision he said he knew would have a “significant impact,” wrote that the membership rules of the company’s Mortgage Electronic Registration Systems, or MERS, don’t make it an agent of the banks that own the mortgages.

“MERS’s theory that it can act as a ‘common agent’ for undisclosed principals is not supported by the law,” Grossman wrote in a Feb. 10 opinion. “MERS did not have authority, as ‘nominee’ or agent, to assign the mortgage absent a showing that it was given specific written directions by its principal.”

April Charney, a senior attorney with Legal Aid in Jacksonville, Florida, who has been aggressively criticizing MERS for some time, had the quote of the day, channeling Tom Petty: “ ‘Don’t come around here no more,’ is basically the message to MERS.”

The judge has “deconstructed” MERS and determined that they cannot be both principle and agent =– you have to chose one or the other.

Happy Valentines Day to you!


In re: FERREL L. AGARD, Debtor
Case No. 810-77338-reg

Merscorp Lacks Right to Transfer Mortgages, Judge Says
Bloomberg Feb. 14 2010
Thom Weidlich

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