Mass. Bankruptcy Judge Voids Foreclosure of MERS Mortgage – Judge Tells Lenders You Can’t Have Your MERS Cake & Eat It Too

Mass. Bankruptcy Judge Voids Foreclosure Of MERS Mortgage

Judge Tells Lenders You Can’t Have Your MERS Cake & Eat It Too

The sophisticated financial minds who wrought the MERS regime sought to simplify the process of repeatedly transferring mortgage loans by obviating the need and expense of recording mortgage assignments with each transfer. No doubt they failed to consider the possibility of a collapse of the residential real estate market, the ensuing flood of foreclosures and the intervention of state and federal courts.

–Judge Melvin S. Hoffman, U.S. Bankruptcy Court Judge for Massachusetts, In Re. Schwartz, Aug. 22, 2011

Impact: Are Foreclosures Of MERS Mortgages Now Open To Challenge?

I’m not sure what’s going to happen with Ms. Schwartz’s home. She’s been living in it since 2006 probably mortgage/rent free! Certainly, MERS could (and should have) started a second foreclosure and done it the right way. I’m perplexed why Deutsche and MERS kept fighting this case in court. As for the broader implications, it’s still unclear as to the effect on past and current foreclosures. One this is for certain, the ruling is yet another example of the legal fallout from the deficiencies in the MERS system.

Lastly, while I don’t claim to be a mortgage securitization expert, if the mortgage was not assigned/transferred properly and if it is MERS that holds legal title, then there is a mortgage backed security investor somewhere who THINKS he owns this mortgage but, in fact, does not. Even if MERS wanted to transfer the mortgage to the relevant trust or foreclose, sell the property and transfer cash, they may not be able to for legal and tax reasons. Now multiply by a million. So how many mortgage backed securities are missing how many mortgages? Are there mortgage backed securities out there that don’t actually own ANY mortgages? If someone sells a “mortgage backed” security that doesn’t legally own the mortgages in question, hasn’t that someone committed fraud? And furthermore, how the hell do we clean this up?

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One Response to “Mass. Bankruptcy Judge Voids Foreclosure of MERS Mortgage – Judge Tells Lenders You Can’t Have Your MERS Cake & Eat It Too”
  1. Beth A. says:

    My loan was a MERS loan but still a giant steaming pile o’….fraud. Anyway, about a week ago I decided to pull out the stack of documents received from Chase in response to my QWR letter a while back. Sometimes when we sit down during quiet hours and re-review data, we catch things we didn’t see the first time. In my case, I noticed in response to the question requesting data on all assignments. Check it out: The Chase response indicated that I should check with the local registrar’s office for information about assignments filed.

    SAY WHAT? Hmmm, could that not be contrued as a blatant admission that they don’t even have a clue?!

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