Appeals Court Clarifies MERS Role in Foreclosures

NY Appellate Division: MERS Does NOT Have The Right to Foreclose on a Mortgage or Assign That Right to Anyone Else in Default

Dees Illustration

Foreclosure Fraud

The ubiquitous Mortgage Electronic Registration Systems, nominal holder of millions of mortgages, does not have the right to foreclose on a mortgage in default or assign that right to anyone else if it does not hold the underlying promissory note, the Appellate Division, Second Department, ruled Friday. “This Court is mindful of the impact that this decision may have on the mortgage industry in New York, and perhaps the nation,” Justice John M. Leventhal wrote for a unanimous panel in Bank of New York v. Silverberg, 17464/08. “Nonetheless, the law must not yield to expediency and the convenience of lending institutions. Proper procedures must be followed to ensure the reliability of the chain of ownership, to secure the dependable transfer of property, and to assure the enforcement of the rules that govern real property.” The opinion noted that MERS is involved in about 60 percent of the mortgages originated in the United States.

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Trouble for MERS Keeps Mounting

Greg Hunter
USA Watchdog

In Guilford County, North Carolina, the Register of Deeds, Jeff Thigpen, is questioning if his county was cheated out of more than a million dollars real estate fees because banks did not file proper chain of ownership documents with his office.

Instead, the banks used a Virginia based company called MERS. It bypassed the local Register of Deeds office, not just in Guilford but all counties across the U.S.

MERS stands for Mortgage Electronic Registration Systems. It manages a centralized electronic property data base that is a critical tool in securitization, or bundling, of mortgages into securities (mortgage-backed securities). About 60 % of all mortgages, or 65 million U.S. homes, are tracked in MERS. Yesterday, the Greensboro News and record reported Thigpen said,

“As register of deeds I have two primary responsibilities in land records,” Thigpen wrote in the release. “A sworn duty to protect the chain of title and a fiduciary responsibility to collect recording fees. Quite frankly, MERS has undermined both. Through their own ‘private-for-profit’ Register of Deeds mortgage tracking office, MERS has created a dangerous centralization of power whose sole purpose is to protect and serve the interests of major banking conglomerates and undermine public recording officers.” (Click here to read the complete News and Record article.)

MERS was established by big banks, and many contend it is nothing more than an electronic shell company with no employees. (Click here to find out more about MERS.) Financial institutions such as Wells Fargo, Bank of America, JP Morgan, Citi and others all use MERS. Mr. Thigpen alleges MERS may have made false statements since 2005 to avoid fees in his county that he says add up to more than $1.3 million. To get an idea of how much of a problem this is for MERS and the banks, consider this probably happens in every single county in America!

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