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.
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 . . .
MERS: Foreclosure Processing and CRMS Scheduling
Announcement Number 2011-01
MERS, February 16, 2011
MERS to members: Don’t foreclose in our name
Housing Wire, February 17th, 2011