Loan Modification

Despite this being treated as a pretty routine event in the JP Morgan earnings call, trust me, it isn?t. The withdrawal of JP Morgan from the use of MERS as the face in foreclosures is a tacit admission that the past practice of using MERS as the stand -in for the trust is problematic.

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...most if not all notes (which are the borrower IOU in a mortgage) were endorsed in blank, which creates near insurmountable problems in foreclosure, worse even for the RMBS ownership of them as de facto mere unsecured paper.

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The trigger may have been the publication of a simply devastating analysis at the end of September, ?Two Faces: Demystifying the Mortgage Electronic Registration System?s Land Title Theory? by Christopher L. Peterson. Even though I have read the critical MERS unfavorable opinions, this is the first time I am aware of that someone has looked at the operation of MERS from a broader legal perspective. It finds fundamental flaws in virtually every aspect of its operation. To give a partial list: the language used by MERS in its registry at local courthouses is contradictory (it claims to be both the owner of the mortgage and as well as a nominee; legally, a single party can?t play two roles simultaneously), rendering it unenforcable; MERS has employees of servicers and law firms become ?MERS vice presidents? or secretaries when fit none of the criteria that fit those roles, and also have clear conflicts of interest given that they are also full time employees of other organizations; MERS record keeping has the hallmarks of being poorly controlled ... And most important, every state supreme court that has looked at the role of MERS has ruled against it.