Home / News / Foreclosure / MERS Bows Out of Foreclosure and Bankruptcy Proceedings
Print This Post Print This Post

MERS Bows Out of Foreclosure and Bankruptcy Proceedings

""Mortgage Electronic Registration Systems, Inc."":http://www.mersinc.org (MERS) is withdrawing from the foreclosure business.

The organization has issued ""a policy update"":http://www.mersinc.org/files/filedownload.aspx?id=734&table=ProductFile to its members stating that no foreclosure proceeding may be initiated in the name of MERS and no legal proceedings in a bankruptcy may be filed in the name of MERS.

Before a lender or investor starts a foreclosure or files a bankruptcy motion, they must execute an assignment of the security instrument from MERS to themselves as the mortgagee and record the transfer with the applicable county clerk or public land records office, MERS said.

Amid an onslaught of court filings and foreclosure-related investigations, MERS proposed a rule change in early


March that would ban its members from using MERS as the foreclosing agent.

The policy change was officially adopted last week and carries an effective date of July 22, 2011.

Fannie Mae, Freddie Mac, several large servicers, and a number of foreclosure attorneys representing lenders have stopped foreclosing in the name of MERS already.

MERS was developed by the mortgage industry to keep track of the servicing rights and note ownership for home loans.

It was designed as a paperless property registry to facilitate the transfer of mortgages. The system is also used by communities to identify parties responsible for vacant properties.

MERS' ongoing court appearances around the country have become a ‘win some, lose some' state of affairs.

Rulings in such states as New York, Kansas, and Michigan came out against the electronic mortgage registry, while judges in California, Minnesota, and Massachusetts ruled in favor of MERS and its role in the foreclosure process.

Attorneys general in Massachusetts and Delaware have reportedly launched their own independent investigations of MERS to determine if the registry has violated state foreclosure and real property statutes.

About Author: Carrie Bay

Carrie Bay is a freelance writer for DS News and its sister publication MReport. She served as online editor for DSNews.com from 2008 through 2011. Prior to joining DS News and the Five Star organization, she managed public relations, marketing, and media relations initiatives for several B2B companies in the financial services, technology, and telecommunications industries. She also wrote for retail and nonprofit organizations upon graduating from Texas A&M University with degrees in journalism and English.

Check Also

Overall Performance of Servicing Portfolios Declined in December

Latest estimates from the MBA find that 115,000 homeowners are now in forbearance plans nationwide, as mortgage servicers have provided relief to approximately 8.1 million borrowers since March 2020.