Loan Modification

MERS Note Assignments

By L. Jed Berliner, Marlborough & Springfield, MA For

An investigation into a foreclosure defense will include tracing the rights to a mortgage and its underlying promissory note.  MERS is very careful to only execute assignments of mortgages and not of notes.  I’ve never seen it assign a note, and I’m reliably informed that MERS’ bylaws prohibit it from owning rights to a note.

(A promissory note is a payment obligation, and a mortgage creates a lien which secures a note’s payment obligation.)

Sometimes a document will assign a note and a mortgage to MERS, the Mortgage Electronic Registration System.  MERS will then assign out the mortgage only, which leaves the note in limbo.

Well, actually not.  Notes cannot be enforced by an assignee; they can only be enforced by an endorsee, at least in Massachusetts.  (UCC, 3-203(c).) So a note assignment into MERS, without an assignment of the note from MERS to another entity, is a red herring.  The original note assignment into MERS had no enforceable effect.

Related posts:

1. Transferring Rights to a Note
2. Name Missing in Notary Acknowledgment Means Bad Mortgage In Massachusetts
3. Landmark Decision Creates Foreclosure Defense in Kansas

Full post as published by Mortgage Law Network on March 02, 2010 (boomark / email).