MERS & The Mortgage Machine
An article from the NY Times was emailed to me from a friend entitled “Fair Game – The Mortgage Machine Backfires” talking about a court decision in Kansas. Knowing my background in Mortgage banking, he thought I would find the article interesting. He was right – now the question I pose – how many of you know what MERS is? Coming from a Savings & Loan setting where we either sold or held our loans in portfolio, I had to research it myself.
According to MERSINC.org – MERS (Mortgage Electronic Registration System) is an innovative process (created in 1997) that simplifies the way mortgage ownership and servicing rights are originated, sold and tracked. Created by the real estate finance industry, MERS eliminates the need to prepare and record assignments when trading residential and commercial mortgage loans.
A ONE Billion dollar savings was thrown out over the last decade with over 60 million loans registered with MERS. Questions are being raised with foreclosures being filed by MERES, which didn’t own the note or the mortgage being basically an electronic phone book for mortgages. Christopher L. Peterson, a law professor at the University of Utah said. “If courts are willing to say MERS doesn’t have any ownership interest in mortgage loans, that may eventually call into question the priority of liens recorded in MERS’s name, and there are millions and millions of them.” In other words, banks holding second mortgages could find themselves in the same pair of unlucky shoes that Sovereign Bank found itself wearing in Kansas.
Click on the Title of the NY Times above to read the entire article, it is interesting reading and I am sure – it is not the last we will hear about this subject.
What remains to be seen, is how the courts will handle the fallout of thousands and thousands of Notes that have been lost or destroyed. How will those notes be replaced so that a homeowner’s rights to access their equity, or sell their home, or will their home to their successors be remedied?
I haven’t yet seen that addressed. If the note has been destroyed or lost, then it needs to expediently replaced in order to sustain a homeowner’s rights. What now?
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