MERS (PART II) – What exactly is MERS? Does anyone, including MERS, know?
Never heard of MERS? That’s fine with the mortgage banking industry—as MERS is starting to overheat and sputter. If its many detractors are correct, this private corporation, with a full-time staff of fewer than 50 employees, could turn out to be a very public problem for the mortgage industry.
Judges, lawmakers, lawyers and housing experts are raising piercing questions about MERS, which stands for Mortgage Electronic Registration Systems, whose private mortgage registry has all but replaced the nation’s public land ownership records. Most questions boil down to this:
How can MERS claim title to those mortgages, and foreclose on homeowners, when it has not invested a dollar in a single loan?
And, more fundamentally: Given the evidence that many banks have cut corners and made colossal foreclosure mistakes, does anyone know who owns what or owes what to whom anymore?The answers have implications for all American homeowners, but particularly the millions struggling to save their homes from foreclosure. How the MERS story plays out could deal another blow to an ailing real estate market, even as the spring buying season gets under way.MERS has distanced itself from the dubious behavior of some of its members, and the company itself has not been accused of wrongdoing. But the legal challenges to MERS, its practices and its records are mounting.Read the entire article here.
Here is where Mortgage Electronic Registration Systems comes in, the company that runs the database set up by banks in the mid-1990s to speed the transfer of mortgages nationwide and track their ownership. To save the costs of recording a mortgage’s transfer from one institution to another, MERS acts as mortgagee in county land records. But it does not own the note underlying a property.Amid the foreclosure crisis, however, critics have contended that the registry actually served to hide the true owner of a mortgage, making it difficult for borrowers to get help in working out their loans.The facts in Mr. Kline’s case seem to indicate another flaw with the MERS registry — that it may not even track mortgages effectively.
Read the entire article here.
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