Skip to comments.Mortgage registrar cannot transfer mortgages-court
Posted on 02/14/2011 4:47:02 PM PST by Kartographer
A company that tracks roughly half of all U.S. home loans has no right to transfer mortgages, a ruling that could significantly affect the foreclosure process nationwide, a federal bankruptcy judge concluded.
Merscorp Inc, a private company known as MERS and owned by large banks and mortgage processors, cannot act as an agent of the banks that own mortgages, wrote Judge Robert Grossman of the U.S. bankruptcy court in Central Islip, New York, located on Long Island.
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.
(Excerpt) Read more at reuters.com ...
Foreclosures are one thing. I wonder what will happen when people realize that “paying off the note” under the MERS system is also invalid. The whole residential real estate market could freeze up.
Then again most people don’t pay attention so maybe not.
MERS was, of course, created by banks for the purpose of juggling mortgages or pieces of mortgages. If MERS had actually bothered to put through timely and proper local paperwork as a follow up to every transaction, I think they would be worthy of much less derision. But local property ownership recording systems aren’t going to take kindly to someone claiming to have invented an alternative system that their records know nothing of. Anyhow, if MERS is locally recorded as owning a piece of real estate, then logically it is theirs, not any bank’s.
The Dominoes are about to fall. Will it be a thud or a scream of rage?
“But he said “MERS did not have authority, as ‘nominee’ or agent, to assign the mortgage absent a showing that it was given specific written directions by its principal. This court finds that MERS’s theory that it can act as a ‘common agent’ for undisclosed principals is not support(ed) by the law.”
“He said that in future cases involving MERS, parties seeking in bankruptcy proceedings to avoid the ban on legal claims must show they own both the note and the mortgage.”
Whether or not one party can act as agent for another party, and to what extent that party can act is spelled out in the contracts between the parties and is usually found binding UNLESS THE LAW SAYS IN SOME SPECIFIC CIRCUMSTANCE IT IS NOT and is usually NOT prohibited just because one party gives another party wide latitude to act as their agent without incident by incident instructions.
I think the judge might be acting, wrongly, on how poorly MERS has done things, as opposed to the true legality of whether or not it had authority for its actions according to its contracts with banks and mortgage lenders.
Been waiting for folks to pick up on this. Well said. After paying 300K for a 100 K house there is no deed at the end of the rainbow. Yep home owners are going to really like that.
Karl Denninger explains it much better than I can:
I have a loan with Chase and called them for the MERS number and they said they didn’t use that. Anybody else confirm that?
Ummm...whoa. What percentage of titles are mixed up in MERS? This could get hideous.
“Welcome to my personal hell, I need to relocate to Silicon Valley or San Diego (to be determined) for a business opportunity and my personal mortgage mess makes my house more or less unsalable. The problem isnt terribly complicated but resolving the problem is more or less impossible when the only customer service I can get in contact with is a bunch of angry ghetto skanks. (There is something worse than an Indian call center - it is called a Baltimore call center.)
Basically, I have two mortgage servicers trying to collect from me, I know which one is legimate, but neither I or they can persuade Laquisha to escalate us to somebody with the authority to fix the problem.”
Hire an attorney and bring a quiet title action against one or both lenders based on the locally recorded owner of record of the note and the mortgage. That’ll bring ‘em out of the woodwork and if not, you could end up with a clean title without even having to pay the mortgage back. Try to find a lawyer that specializes in this.
In many states, there is NO position of “nominee” for real estate titles.
Let me explain a minute where the term “nominee” comes from. It does NOT come from the world of real estate.
When you hold stock in an account at your broker, your stock is held “in street name” with your broker as the “nominee” for you, and your broker has an internal record of how many shares of X (US Steel as an example) you own, Mr. Smith owns, etc. They’re all held “in street name” by your broker as nominee for you.
MERS tried to apply the same kind of idea that made selling stocks and bonds easy-peasy-lemon-squeezy on the street. Well, trouble is, there is no such thing as “nominee” in many states’ real estate title law. There is no such noun, no such position, no such thing.
So MERS calling themselves nominee on a mortgage or note is like calling themselves “Martian with a pink tutu.” It is an amusing non-sequitur in the real estate transfer.
Now, calling themselves an “agent” might work in some states. Calling themselves an “attorney in fact” might work in others. But in this state (eg, Wyoming), where is no such thing as “nominee” in real estate law. Go ahead, read the statutes and case law. No such term exists.
This is not to be taken seriously. Bankruptcy judges are like a justice of the peace. They are horribly inferior and their decisions are meaningless. Mortgages are sold and transferred everyday and will be tomorrow. Let us seek out real news.
From the MERS website new section:
MERS Response to J.P. Morgan Chase Statement
JP Morgan Chase is a valued member of MERS. They currently have their correspondent loans registered on the MERS® System. They do not, nor have they ever, registered their retail loans on the MERS System. As members of MERS and for loans registered on the MERS System, banks have the option of foreclosing in their own name, or MERS foreclosing for them. JPMC has chosen to foreclose in their own name, which is a common decision that is allowed under the structure of MERS.”
I take that to mean if you used a mortgage brokerage company or your loan was sold to Chase by the company that originated the loan then MERS would have a record of it.
If your loan was originated with Chase then MERS won’t have it in their system.
Funny as much as MERS has been in the news for the past year that the above info is the only “news” listed on their news section of the website.
I'm mad as hell and I'm not going to ta.... errr... uhhh... Who's winning American Idol and Dancing with the Stars between Viagra and Soma commercials this week?
Lacquisha???? Oh, I have talked to somebody by that name at Chase!!!!
We agreed to stand down for sixty days to give the genuine agent (who has been nothing but helpful) an opportunity to settle it for themselves. But yes, that is the next step. A title action could take four to six months - so if they can sort it out amongst themselves that is fine with me given the retainers lawyers were demanding.
Many here on FR would call you a dead beat and that you need to pay who ever and you should just know who that is.
I would love to know if the said individuals feel an obligation to pay the bogus copier toner invoices IDC Servco spews out of every fax machine in North America.
So I wonder why the ABA Journal took it serious enough to post the same story? You would think that the ABA would know at least as much as you and had discount the situation as a non-story.
". . . parties seeking in bankruptcy proceedings to avoid the ban on legal claims must show they own both the note and the mortgage."
I have found the total lack of professionalism at Chase “customer services” to be appalling.
So... Does this cover CitiMortgage and Nationstar? If so, what’s that mean for me? I am not in foreclosure, or even late. My mortgage just got sold a couple months ago.
Worse, our mortgage was initiated by Washington Mutual. Because they went belly up, it is supposedly administered by Chase but the note is held by the FDIC!!!
Although we are not far from paying it off and are paid six months in advance, now we literally do not know if we should be paying on this note at all. I'd really like to know what to do.
At some point, title insurance companies stop insuring titles because the risk of loss is too great. Either we have clear titles or we don’t...
That has already started to happen.
And your basis for making this assessment is ...?
If it’s been transfered through MERS it has a good chance to apply.
“I have found the total lack of professionalism at Chase customer services to be appalling.”
Just another symptom of cost-cutting by corporations; I can’t believe the number of work-related calls I get from people with horrible accents or terrible speech. In the past this would have precluded them from customer service work; they probably earn 1/2 of what the professional Americans they displaced used to earn.
That is what I have been wondering abut for a long time. How can a person be sure that he will ever have a clear title or be able to resell a house once the debt is paid off.
What a mess. The longer it gets fixed, if even possible, the harder the crash. Something needs to be done so the mortgages in default go through some kind of process. My heart lies with those who have paid their debts.
Without reading the case filings I cannot be sure but I think you miss the point. From the article the Judge is saying MERS cannot be the ârecordâ holder AND service the debt. Seems like he is saying that the whole concept of MERS is flawed (which we all knew). If that is what he said the house of cards is really going to collapse. It is how ever Reuters.
I think Karl Denninger explains fairly well here:
I had the luxury of choosing my mortgage company and I went with a local savings bank that holds all their mortgages just because of your type of problem. Of course, my credit rating was 800+ so I wasn’t looking to go through a national mortgage company either.
You might look into what is called a Quiet Title action. It should cost a few hours of lawyer time, and will resolve the title issues regarding your home. You'll still have the mortgage debt, but at least the property will have an unencumbered title.
BTW The “you are a deadbeat” crowd here on FR needs to understand the differences between moral and legal behavior.
They understand it. What they want is that no matter their legal rights they want moral behavior from the ‘deadbeats’ and neither moral nor legal behavior from the ‘banksters’.
“This court finds that MERS’s theory that it can act as a ‘common agent’ for undisclosed principals is not support(ed) by the law.” He said that in future cases involving MERS, parties seeking in bankruptcy proceedings to avoid the ban on legal claims must show they own both the note and the mortgage.”
The big banks have to follow the same laws the rest of us peons do? What’s the world coming to?
I’m confused. How is it that when I pay off my mortgage, I won’t own my home? What am I missing here?
Say that to one's face in their Courtroom. I dare you.
Because the institution you paid may or may not actually own the 'note' on your home. In fact they may not even know where your original Title Deed is at all. So you could pay your mortage off and then your mortgage company can't give you a clear, unencumbered Title Deed.
Without that you can't sell it. Ever. And if you can't sell it, you don't really own it.
Would not be so quick to say that.
Bankruptcy Judges are defered to by Federal Judges who do not want this stuff clogging their dockets.
The fact is that this judge can now strip mers claims. this will be noticed by other judges across the nation.
Federal Bankruptcy Judges trump state court judges.