State's high court: Mortgage registry can't foreclose | Business & Technology | The Seattle Times:
"In a unanimous opinion, the Washington Supreme Court said that Mortgage Electronic Registration Systems (MERS) can't begin a foreclosure itself because it doesn't hold the note the homeowner signed with the lender. The ruling means banks or other noteholders will have to initiate foreclosures themselves instead of relying on MERS."
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Here in Illinois there is an appellate court case saying that MERS does have standing to foreclose. I think this is nuts. MERS is just a scam the banks cooked up to cheat counties out of the recording fees every time they re-sell a note and mortgage. Now they want to use this phony organization as a quick way to foreclose, instead of having to prove that there is a real bank that really own the original note. Thanks to Fred Pilot for this link.
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MERS wasn't just about avoiding recording fees. MERS was also always about concealing the identity of the actual mortgagee AND preventing the homeowners from even being able to verify that such entity had any authority to foreclose.
MERS clearly does not hold the debt - and this is the source of much of the legal wrangling about bifurcation of the note and security instrument. There is another problem in that many states have laws to the effect that a transfer of the lien without the debt is a nullity/void. This is a problem for mortgagees operating through MERS because MERS never held the debt. The mortgagee will transfer the security interest from MERS to itself without reference to any debt that would appear to violate the "transfer of a lien without the debt is a nullity" rule. On the other hand to get around that rule, the mortgagee will file an assignment purporting to transfer the lien AND note from MERS to the mortgagee which is also not possible for two reasons: i) MERS never held any debt, and ii) the mortgagee knows the identity of the party that does hold the debt (presumably itself). Thus the assignment is not possible and is fraudulent on its face.
When consumers bring up this flaw, the mortgage servicers (who are usually running the whole show in the lawsuit) claim that the consumers cannot challenge the assignments because they were not party to them. This is not applicable when the assignments are void on their face.
To give some idea of just how asinine some of the courts are, consider the following language from a recent MERS court case in which the homeowner challenged the alleged mortgagee and the attorney for the servicer filed a no-evidence motion for summary judgment:
With respect to the Note the court held:
"In the context of a no-evidence motion for summary judgment, Wells Fargo was not required to present proof that it was the holder. Rather, the Plaintiffs had the burden of proving this alleged defect in the foreclosure sale proceedings, i.e., that Wells Fargo was not the holder. "
In other words, the homeowner is forced to prove a "not" based upon evidence held (if at all) only by the servicer. The security instrument only authorized the "holder of the Note entitled to receive payment" to invoke the non-judicial foreclosure sale. So the servicer initiates the foreclosure process without authority to do so, the homeowner challenges, and the homeowner is forced to establish that the servicer has no authority - usually not possible by the nature of who holds the evidence. Contrast this with a judicial foreclosure state where the servicer would have to come forward with proof it has the authority to foreclose before it can do so. If you look at Florida and see the massive number of cases where the servicers have NO authority to foreclose (but homeowners often are more in the mood to walk away than defend) you can bet the non-judicial process is not just an invitation to fraud but rather a license for fraud without repercussions.
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