MERS: A Twenty First Century Creation Navigating An Eighteenth Century Legal System
One need not be an expert in banking or real estate to have become acutely aware of the 2008 financial crisis and the housing bubble that largely precipitated it. High unemployment, low economic growth, and record government deficits are daily reminders of the lingering effects of this cataclysmic series of economic events. Perhaps in no area more than real estate is the fallout still clearly visible. Home ownership rates are down, delinquency rates are up, and a mass of foreclosures weighs like an albatross on both the financial industry and the United States economy. One entity, the Mortgage Electronic Registration System (MERS) is emblematic of this problem. MERS was forged out of the environment which ultimately led to the housing bubble, helped sustain and strengthen this bubble, is a lead contributor to the ongoing foreclosure crisis, and is a primary impediment to its swift resolution. MERS, and more precisely judicial treatment of MERS, will have a profound impact on not just resolving the broken foreclosure process, but also upon the real estate market going forward, and in turn, economic recovery.
In the last decade, MERS has swiftly come to dominate the residential mortgage industry, supplanting centuries of legal tradition. MERS is not inherently malevolent, and it is certainly true that the law must evolve and adapt to technological and social changes. However, MERS has created unintended consequences, many of which are confounding the legal system and impeding the swift resolution of the foreclosure crisis plaguing the nation. Only after a comprehensive legal solution to MERS is achieved will the real estate market and the overall economy properly heal.
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