“The Wikipedia of Land Registration Systems”

Pretty amazing opinion in Culhane v Aurora Loan Services of Nebraska byJudge Young of the US District Court for the District of Massachusetts. Judge Young breaks out a fresh can of whoop-ass on MERS, which wasn’t even a litigant. How are these choice lines: “MERS is the Wikipedia of Land Registration Systems.” Now I like Wikipedia, but property title isn’t do-it-yourself. Or this gem: “a MERS certifying officer is more akin to an Admiral in the Georgia navy or a Kentucky Colonel with benefits than he is to any genuine financial officer.” Well, at least he didn’t call them an “Admiral in the Great Navy of the State of Nebraska”. You gotta love a landlocked navy.

That said, for all of his misgivings about MERS supplying “the thinnest possible veneer of formality and legality to the wholesale marketing of home mortgages to large institutional investors,” Judge Young still says that it’s kosher, if unseemly.

The issue here was whether there could be a foreclosure by a naked mortgagee–that is a mortgagee who is not the noteholder. (That’s the issue before the Supreme Judicial Court of Massachusetts currently in Eaton v. Fannie Mae.) Judge Young say no: the note and mortgage need to be reunited before foreclosure; a naked mortgagee can’t foreclose. In this case, however, Judge Young found that the mortgage and note were reunited before the foreclosure was brought.

I think Judge Young is right on the law, and wrong on the facts here. I don’t know how this case was lawyered, but it seems to me that there are two factual problems that indicate that the mortgage and note were not in fact reunited prior to foreclosure. Here’s Judge Young’s explanation of how the reunification happened:

You can check out what happened here…