Massive relief…the little firm called MERS
October 16, 2009 by notebuyingprofits.com
Filed under Exiting, Foreclosure
Leave Dean a comment or question below!
A recent article by a noted Huffington Post writer, Ellen Brown, caught my eye.
“Landmark Decision Promises Massive Relief for Homeowners and Trouble for Banks” she wrote on HuffingtonPost.com, noting that a Kansas Supreme Court decision gave millions of distressed homeowners “the legal wedge they need to avoid foreclosure.”
Read more here.
Over the past week, I’ve been forwarded that article from over a dozen concerned and worried students asking me what the implications on our industry are. Others wrote in telling me “see – we’re in for trouble – the judges are cracking down on us!”
Careful here – don’t fall prey to the same numbskull noodling that Brown engaged in.
Here’s everyone’s gripe about MERS, summed up by CA attorney Timothy McCandless (quoted in the article):
“MERS now brings foreclosure proceedings in its own name — even though it is not the financial party in interest. This is problematic because MERS is not prepared for or equipped to provide responses to consumers’ discovery requests with respect to predatory lending claims and defenses.”
The court’s ruling in Kansas does one thing, and one thing only: it puts the onus on a foreclosing investor to assign the security instrument out of MERS and into their own name for purposes of the foreclosure proceeding. Obviously more of a challenge for notes that are in securities, but that’s only 1/2 of the equation here (approx. 1/2 of all mortgages are in securities).
The following is the key citation from the court: “The mortgage loan becomes ineffectual when the note holder did not also hold the deed of trust.”
So what’s the solution for an investor?
Get an assignment out of MERS to the entity holding the Note at the time of the NOD or the Lis Pendens, and you’re in the clear. This situation with MERS has been raised in numerous courts, notably Florida.
Now, if you’re the master servicer or the Trustee on a security, the question you need to ask yourself is: “to whom do I make this out to as a proxy for the investors on this note?” That’s a topic for another day.
And, fortunately, one you don’t need to worry yourself with.
I have recently canceled my MERS membership. MERS is not a good vehicle for investors, other than to have loans quickly assigned to your entity. I\’ve since taken all my loans out of MERS.
Wow, I had to stop reading the article half way through – what a bunch of BS!
- … if MERS has no standing to foreclose, then nobody has standing to foreclose…
- or calling MERS a \"\’Straw Man\’ Shielding Lenders and Investors from Liability\"
And people like this teach other people about debt and finances?!?
Or this quote from an attorney: \"…consumers and their counsel can no longer turn to the public recording systems to learn the identity of the holder of their note.\"
What a lie! Firstly, consumers and their counsel can look at the bill they\’re paying… or supposed to be paying, and will see the identity of the lender. Secondly, MERS provides several ways to check who is servicing the loan.
I concur…\"much ado about nothing\"…..to think for a second that x million notes would be able to avoid foreclosure…come on…..
I am very interested in this course but dont have the money to purchase notes myself, do you go over any information at all about brokering a note? I am so eager to learn more about this program and have watched most of the videos already, but am a bit scared. I have tried so many home based businesses and have wasted so much time and money on things that just did not work. I have a lot of debt that I want to pay off and would love to finally be able to work for myself. I know I could do it, but I think that I just need to know that I will be able to find the help and support if I needed it. Please help!
Sincerely,
Hannah
how do I get a bank to sell ONE specific note to me at a discount?
I hope there is a method that you know how that works. the note has been non-performing for 6 months or more and is scheduled for foreclosure in March 2010.
Thanks!
What the Kansas law states is that the owner of the deed of trust must bring the action. Since MERS is a clearing house for notes it does not have an ownership interest. The deed of trust and corresponding note was assigned to MERS for benefit of the investor. It only requires a little planning. The investor needs to get an assignment of the deed of trust from MERS and record the assignment prior to sending out a notice of default and recording the Lis Pendens. Otherwise the owner of the property will likely challenge the foreclosure and prevail under Kansas law. It may also make the effort to foreclose on the deed of trust void or voidable. It does not mean that the deed of trust cannot be foreclosed. It is important to hire an attorney that is familar with Kansas laws regarding foreclosure or to familarize yourself with the Kansas foreclosure law prior to requesting the courts to act.