MERS, a Blast from the Past

Remember 2010-2011 and the daily revelations about robosigning?  Behind the shortcuts taken by servicers in processing foreclosure documents (sometimes even employing forgery) was their policy of recording mortgages and notes in the name of Mortgage Electronic Registrations Systems, Inc. (MERS) to avoid recording subsequent assignments to individual lenders or servicers when loans were sold or servicing rights transferred.  This practice facilitated sales and transfers and avoided the cost of making assignments but became problematic when those loans fell into default and the chain of title became unclear.  

When robosigning hit the headlines and it appeared that lenders had foreclosed on loans that they technically did not own or had foreclosed in the name of MERS when only the mortgage but not the note had been assigned there, the lawsuits began.  Virtually every month there was a decision in some court or another regarding MERS and ultimately each upheld the right of lenders to assign to the company and the legality of the foreclosures.

It has been quiet for a while but RealtyTrac reports that the lawsuits go on, and two more were recently decided, both on appeal and both in favor of MERS. 

In West Virginia the state's Supreme Court of Appeals reversed a lower court's decision in W. Va. v. Warren McGraw in which Wyoming County claimed that the recording of trust deed assignments in county record books is required by state law "in order to clear title to properties in the Counties."  The higher court ruled that the state's statutes do not require such county level recording.  While MERS was not specifically named in the suit, RealtyTrac said the allegations were focused on the company's operations. 

A second suit in the Ninth Circuit Court of Appeals upheld a district court ruling in Tung Q Lam v. JPMorgan Chase Bank NA et al, a suit brought by a homeowner contesting a foreclosure of his home carried out in the name of MERs after the note was subsequently assigned to others.  The Court said that MERS could assign the deed of trust because it contained authorization for MERS to exercise any or all of the lender's interests.