MERS, that strange little company that has played a significant roll in eliminating lender responsibility, accountability and transparency pulled back the curtain some more (after Fannie clipped its wings in April, story here):
Effective July 22, 2011:
• No foreclosure proceeding may be initiated, and no Proof of Claim or Motion for Relief from Stay (Legal Proceedings) in a bankruptcy may be filed, in the name of Mortgage Electronic Registration Systems, Inc. (MERS)
• The Certifying Officer must execute the assignment of the Security Instrument from MERS before initiating foreclosure proceedings or filing Legal Proceedings and promptly send the assignment of the Security Instrument for recording in the applicable public land records
MERS Policy Bulletin 2011-5 (here).
MERS remember was supposed to merely track the ownership of a mortgage and its servicer to eliminate the requirement of multiple assignments every time a mortgage was bought and sold. It was allegedly never invented to be a dodge of the financial service industry so the industry says. Of course MERS morphed itself at the behest of its members of the industry and began to pretend to take actions in its name and hide the real entity behind the curtain a la the Wizard of Oz (says the courts, story here and here).
It also appears that the Certifying Officer of MERS (a lender representative with credentials granted him or her by MERS with a click of a mouse) must now record an assignment in deed records before the foreclosure begins it appears. The assignment would purport to transfer the right to foreclose from MERS to the current owner of the note. In judicial foreclosure states this may already be happening, but in non-judicial foreclosures MERS was skipping this step unless it was sued. Of course, whether the assignment by the CO of MERS is any good or not is another question — does MERS have the authority to transfer or assign anything? The right to foreclose is based on the ownership of a promissory note for which there has been a default. MERS never collects money from borrowers, it is not authorized to collect money, it does not ever own, possess or hold the promissory note — so how can it give something to someone it never owned? Can it transfer the right to foreclose without transferring the right to collect the money? Some courts say MERS can, some no. Recent cases say yes, story here. (MERS says: “This year alone courts in Georgia, California, Michigan, Kansas, New York and New Hampshire have upheld the MERS business model recognizing MERS as a mortgagee.” MERS release here.) Regardless, it is a nice to see MERS pulling back the curtain, although I think it would gladly help to foreclose on Dorothy and her little dog too.
Filed under: National Foreclosure News