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The role of the Mortgage Electronic Registration System (MERS) throughout the foreclosure furor is interesting-mostly because there is no legal basis for its role. It was created out of whole cloth by the investment bankers who brought us the Mortgage Backed Securities fiasco, without any basis in law. Reuters explains what MERS is:
"The growing furor in the United States over improper foreclosure documents is focusing intense attention on MERS, a mortgage-record service company that tracks more than 60 million mortgages. Mortgage Electronic Registration Systems [MERS] has filed thousands of foreclosure actions around the country on behalf of lenders. Its right to do that is under challenge. Several courts around the country recently have ruled that MERS lacks the right to file such cases.
"MERS, based in Reston, Virginia, is a private company owned by leading banks and mortgage processors. They founded it in 1995 to speed up legal record-keeping of mortgages and sales of mortgage loans through securitizations. Its main purpose was to be an electronic registry that would keep track of repeated sales of mortgage loans as the number of new mortgages and refinancings boomed [without having to comply with the laws requiring a notarized document of transfer of title signed by the new and old owners-that's the problem]
"Homeowners' lawyers and advocacy groups contend that MERS has no right to initiate the actions because it doesn't own the mortgage loans. Lending laws specify that only the actual owner of the loan can file a foreclosure action. Lawyers also have alleged that MERS bypassed laws requiring mortgages and refinancings to be recorded in county recorders offices."
This is not a trivial issue, because mortgage title companies are on the hook for millions. When a foreclosed home is transferred, they have certified the titles, many of which are now subject to fraudulent conveyance. The Financial Times says they've uncovered fraud in Well Fargo filings the sole big bank that claims they don't have any problems.
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