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Court affirms MERS role in chain of title is valid

foreclosure home

MERS, once blamed for the entire housing crash, is now being affirmed by judges – could more courts and more states rule in favor of MERS as the tides turn?

foreclosure home

MERS cases continue on, tides are turning

In 2011, Mortgage Electronic Registration Systems Inc. (MERS) became the subject of and onslaught of lawsuits from counties across the nation as District Attorneys allege the company never owned the loans they were facilitating foreclosures for, and in most cases, judges agree, and their authority to facilitate has been denied in several counties.

Dallas County alleged the mortgage-tracking system violates Texas laws and shorted the county anywhere from $58 million to over $100 million in uncollected filing fees due to the MERS system, dating back to 1997, and other counties have tried their hand at suing the company as well, even after it has ceased operations.

Since then, Kentucky and Hawaii have both sided with MERS, signaling a turn in the tide as more judges are favoring the company.

Michigan Appeals court finds MERS role valid

One study claimed that MERS destroyed the chain of title and was one of the most substantial causes of the housing crash, but more judges disagree and are ruling that their role was valid.

A Michigan Appeals court has ruled in favor of MERS, finding their role to be valid, affirming a lower court decision to dismiss a wrongful foreclosure complaint which cited Michigan Compiled Law §600.3201(1), concluding “that the foreclosure in this case satisfied the [four-part] requirements…” of the law. The court ruled that a record chain of title existed prior to the foreclosure because MERS recorded its assignment to the mortgage servicer (PHH Mortgage) several months before the sheriff’s sale.

Their ruling noted that the foreclosing lender, PHH, could indeed foreclose because MERS satisfies the Michigan statutory requirement of having “an interest in the indebtedness secured by the mortgage or the servicing agent of the mortgage,” and, because it was MERS’ assignee, PHH also satisfied the requirements.

“Pursuant to our Supreme Court’s decision in Residential Funding Co. v. Saurman…PHH’s ‘ownership of legal title to a security lien whose existence is wholly contingent on the satisfaction of the indebtedness’ is an interest in the indebtedness secured by the mortgage,” they wrote. “Therefore, PHH was authorized to foreclose.”

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