Delaware v. Mers Fact Sheet


What is MERS: In 1995, banks and others in the mortgage lending industry created the
Mortgage Electronic Registration System (“MERS”) – a national registry to track ownership and
servicing rights for residential mortgages. This system is designed to facilitate mortgage
securitizations and circumvent the traditional county Recorders of Deeds offices. The rapid rise
in popularity of mortgage backed securities and their subsequent decline in value is a major
cause of the housing crisis that sent America’s economy into the largest collapse since the Great

Foreclosure crisis in Delaware: Delaware is experiencing a record rate of foreclosures. The
foreclosure rate tripled from 2008 to 2009, rising from 2,000 homes annually to 6,000. A record
6,457 homes were foreclosed on in 2010.

Who owns/uses MERS: There are more than 5,500 members representing the most significant
players in the mortgage industry, including: mortgage lenders and servicers (Bank of America,
CitiMortgage, Inc., GMAC Residential Funding Corporation, and Wells Fargo Bank, N.A.);
government-sponsored entities (e.g., Fannie Mae and Freddie Mac); insurance and title
companies and the Mortgage Bankers Association.

MERS in Delaware: MERS purports to hold more than 30% of Delaware mortgages. Since
January 1, 2008, MERS has filed more than 1,600 foreclosure actions in its own name against
Delaware homeowners. Additionally, thousands of other homeowners whose mortgages have
been tracked in the MERS system were foreclosed on by entities whose right to the property was
unclear because of the unreliability of MERS’ records. Thousands more Delaware homeowners
currently hold mortgages with MERS listed as the owner, but with no way to actually determine
the true owner.

What is Attorney General Biden alleging: MERS violated Delaware’s Deceptive Trade
Practices Act by creating an unregulated shadowy registry that is unreliable and inaccurate and
blocks homeowners from learning which entity truly owns their mortgage. The complaint
highlights three major deficiencies:

• MERS obscures important information from borrowers and what is available to
borrowers is frequently inaccurate.

• MERS acts without authority

• MERS is a “front” organization that does not enforce its own rules

How the mortgage industry works: A mortgage loan taken out by a homeowner is really two
documents – the first is a promissory note requiring the borrower to repay the holder of the note.

The second document (the mortgage instrument) allows the holder to foreclose on the property if
the loan is not repaid. The person or entity holding the note receives the money from the
borrower’s monthly mortgage payments.

How securitization works: Banks that make the mortgage loans to homeowners sell the
mortgage notes to other financial institutions. Several times over, the loans are bundled into
investments known as mortgage-backed securities and the notes are sold to large investment
groups, such as pension funds.

Where MERS comes in: As the notes are sold in the securitization process, someone has to
service the loans and hold legal title to the mortgage instrument. Servicers do all the work
involved with a mortgage loan on the lender side – physically collecting and distributing
payments, answering borrowers’ questions, etc. MERS acts as passive place-holder on the
County Recorder of Deeds public registry. Additionally, MERS can also file foreclosure actions
on behalf of the note-holders in foreclosure proceedings. MERS allows its members to sell
mortgages many times over without recording the transactions at the local Recorders of Deeds
offices, thereby avoiding fees, eliminating any official paper trail and creating significant
confusion that has led to improper foreclosures.

What the lawsuit seeks: The suit asks the Court of Chancery to impose various sanctions on
MERS, including requiring it to audit its records to ensure accuracy, stop foreclosing on homes
without divulging the true owner of the mortgage, and correct records filed with county Recorder
of Deeds that do not list the entity that owns the mortgage. The suit seeks a civil penalty against
MERS of up to $10,000 for each willful violation of the Deceptive Trade Practices Act, as well
as restitution to borrowers who were harmed by these violations. The exact amount will be
determined during trial.

PDF copy below…



Delaware v. Mers Fact Sheet

One Response to “Delaware v. Mers Fact Sheet”
  1. Jim Bethea says:

    MERS has many members but only 29 shareholders that own the whole bag of tricks ~~ In their bi-laws it clearly states that the only shareholder must come from the mortgage/banking industry ~ If any of these shareholders wants to sell their share, then it has to be sold back to the other shareholders ~ No one outside of their corporation of bankers/mortgage cartel can purchase any of these shares………..

    The really cool thing about this cartel of crooks is that if one makes a mistake, they can simply transfer it to another primary shareholder and escape any court decision as to holdings …………..

    I wouldn’t put too much faith in the Sec of State of DE because in 2004 one of my secretaries discovered the fact that on some of our clients files, the person that was alleging to be the VP was also a notary on other documents for other of our clients ~~ I went back through several files and I found this to be rampant ~~[VP one day and switch to the other that was notary yesterday and make them VP today ~~~~~~~~~

    Long story short ~ I made copies and sent them to the Sec of State [since this is the place where you receivie your notary authorization] and his response was – “this seem to be a matter for the DE Atty Gen’s Office ~~ Did the same letter and also attached my 1st letter to the Sec of State and mailed it to DE Atty Gen’s Office ~ they sent a reply that said I needed to contact the Sec of State ~~~ WOW was a cover up ???

    The next bad dealings I had with the DE Sec of States Office was when I was trying to acquire some discovery of the corporate owners and minutes of the meeting etc ~~~ Well DE is where all of these corrupt cartels are listed as private corporations ~~ i.e.= Fed Reserve, IRS, CIA, FDIC etc ~~ So I paid $20.00 for each of these files that I never received??? The Sec of State site will take your money for this research for $20 each and after you have given them your online payment; they will then say that this information is not available ~~~ And you can forget getting your money back ~~~

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