Bankruptcy

MERS Can?t Transfer Mortgages

By Nathalie Martin

MERS, which holds roughly half of all U.S. home loans, has no right to transfer mortgages, according to a Bankruptcy Court in Islip, New York.  This could significantly affect the foreclosure process nationwide.  MERS, which stands for Mortgage Electronic Registration Systems, tracks more than 60 million mortgages, and has filed thousands of foreclosure actions on behalf of lenders. While MERS was designed to speed up legal recordkeeping of mortgages and sales of mortgage loans through securitizations, critics including borrowers' lawyers and advocacy groups contend it has no right to pursue foreclosures because it does not own the mortgage loans.

What will be the impact of this decision? Essentially that in future cases involving MERS, at least in cases in which the court agrees with this case, parties seeking to pursue their foreclosure rights must show they own both the note and the mortgage.  See In re Agard, U.S. Bankruptcy Court, Eastern District of New York, No. 10-77338.

Full post as published by Credit Slips on February 15, 2011 (boomark / email).