Connect with us

Hi, what are you looking for?

The American GeniusThe American Genius

Mortgage

Under investigation, MERS bows out of facilitating foreclosures

Home foreclosure in Colorado, photo by Peter Shankbone.

MERS backing out of foreclosures

Mortgage Electronic Registration Systems (MERS) has recently come under fire, with several courts disputing their authority in the foreclosure process and two new states launching investigations into their role of improper foreclosures.

According to Reuters.com, the company “forbade members to file any more foreclosure actions in MERS’s name” and “required mortgage servicers to obtain mortgage assignments and record them with county clerks before beginning foreclosures.”

New rules at MERS

MERS spokeswoman Janice Smith told Reuters that the new rules simply formalize a trend MERS was already moving toward given that several large banks have already ended foreclosure filings in MERS name.

Smith also noted that the company’s original purpose was to track changes in servicers and mortgage ownership, not to facilitate foreclosures which she claims does not generate income for the company.

MERS owns half of all U.S. mortgages

AGBeat reported last week that MERS was finding itself under fire. With only 50 full time employees, according to Reuters, MERS claims to own about half of all mortgages in the United States, roughly 60 million loans, and is involved in about 60% of new mortgages issued.

Advertisement. Scroll to continue reading.

What is MERS?

MERS was established by Fannie Mae and Freddie Mac just over 15 years ago in conjunction with several major banks as a means to expedite the loan recording process as it used to be done through individual county clerk offices which was slow. “The founders went ahead even though no state laws authorized them to bypass the required filing with clerks,” according to Reuters.

Testimony unveils inner workings of MERS

Testimony was uncovered from 2009 where MERS employees noted they “did little but maintain the computer database” and that “For a $25 fee, employees of any of the 3,000 loan servicers that belonged to MERS could get themselves designated as a MERS “vice president” or “assistant secretary,” authorized to sign official documents on behalf of MERS.”

Federal regulators claim MERS engaged in unsound practices

This spring, federal regulators included MERS along with 14 lenders as “engaged in unsafe or unsound practices” in transferring mortgages, requiring them to reform even though they still claim no wrongdoing.

Reuters said, “In practice, when servicers needed to create mortgage assignments to replace missing ones for foreclosure cases, their own employees, signing as MERS officials, printed out newminted documents and signed their names to them. MERS has served in effect as an instant teller machine for mortgage assignments. Servicers simply have their own employees sign the needed documents as MERS officials.”

Courts claim MERS can’t transfer power to foreclose

Courts for years have upheld MERS assignments despite homeowners’ challenges of their documentation. Now, several states are noting that MERS doesn’t own the note, therefore, it has no power to transfer to servicers the right to foreclose.

Advertisement. Scroll to continue reading.

New MERS rules

The new rule excludes them from the foreclosure process which could curb future lawsuits aimed at MERS, however, does not halt current investigations and lawsuits.

The American Genius is news, insights, tools, and inspiration for business owners and professionals. AG condenses information on technology, business, social media, startups, economics and more, so you don’t have to.

14 Comments

14 Comments

  1. Rich Cederberg

    July 29, 2011 at 12:12 am

    What a horrible abuse of power that was going on, right up there with the robo signer scandal.

  2. Kathleen Cosner

    July 29, 2011 at 1:08 pm

    I seriously cannot believe it took them this long to implement changes! One f/c class I took in 2006 suggested if MERS was invovled that was a way to fight the f/c. There were obvious problems way back then, and they thought they could steamroll through the courts til now? Please.

Leave a Reply

Your email address will not be published.

The
American Genius
news neatly in your inbox

Subscribe to our mailing list for news sent straight to your email inbox.

Advertisement

KEEP READING!

Real Estate Technology

(TECH NEWS) It turns out that Internet of Things, like smart bulbs in homes, are not secure and give up your info - here...

Real Estate Marketing

(MARKETING) Your fancy, self-animating website might be making people violently ill, even if it is insanely beautiful. Sorry...

Real Estate Marketing

(MARKETING) Conduit is a CRM that does more than CRM, it analyzes your networking data to help you see how to improve your relationships.

Real Estate Corporate

(REAL ESTATE) Zillow has long been a data powerhouse, but a lawsuit about a $150M listing offers a look into listings claims.

The American Genius is a strong news voice in the entrepreneur and tech world, offering meaningful, concise insight into emerging technologies, the digital economy, best practices, and a shifting business culture. We refuse to publish fluff, and our readers rely on us for inspiring action. Copyright © 2005-2022, The American Genius, LLC.