I have noticed a trend on foreclosures in my area....

8 Replies

I have checked public notices and over 50 percent of the listings were financed by

mortgage electronic registration systems.  Weren't they being sued for something?

Maybe it's a coincidence but I find it so strange so many foreclosure houses were financed by them.

MERS did not finance any mortgages. The lenders were using MERS as a way to track mortgage assignments without using the county recorder. 

@Steve Babiak  

  which created all sorts of issues with foreclosure sales and the legality of same..

I am no expert on the matter but maybe I can provide a little information.  

MERS (now MERSCORP Holdings Inc) is a private company used by lenders as a nominee for registration of the mortgage.  By recording MERS as owner of the mortgage, the lender is able to sell the mortgage and change the owner in the registration without recording it at the county land records.  This is more efficient and cheaper for the lender which is why so many mortgages were recorded this way.

This also allowed the mortgages to be split up and packaged for sale in other financial instruments.  There have been several law suits brought by the mess that followed but the system is still widely used.

Originally posted by @Jay Hinrichs :

@Steve Babiak  

  which created all sorts of issues with foreclosure sales and the legality of same..

Actually it didn't. There were numerous allegations it did but, once everyone learned who/what MERS is and was, the lawsuits challenging MERS went to NIL.

Originally posted by @Steve Babiak :

@Ron Scribner - it is my understanding that a few county recorders filed lawsuits against MERS. 

http://www.bloomberg.com/news/articles/2014-07-01/...

No argument...MANY did. Many consumers, states AG, consumer watch dog groups. Many many people did but as the structure and concept of MERS became known, the lawsuits dried up and those that remained, primarily ruled in favor of MERS.

@Ron S.  - the link I posted is one where MERS lost (at least for the time being).

Originally posted by @Steve Babiak :

@Ron Scribner - the link I posted is one where MERS lost (at least for the time being).

No argument with your link Steve. That is for recording fees though. My argument was the foreclosure sale legality claim. I'm right there with the state that they should pay the recording fees although...i think there is a bigger argument. Fannie and Freddie are governmental entities now so, they have some exemptions. While yes, Fannie and Freddie are not governmental entities by charter, they are in receivership and controlled by U.S. Treasury so...who knows. I think this one will be appealed.

Join the Largest Real Estate Investing Community

Basic membership is free, forever.

By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions.