Mortgage Electronic Registration Systems, Inc. (MERS) is an American private company. MERS is a separate and distinct company that serves as a nomination on mortgages after the turn of the century and is owned by parent company MERSCORP Holdings, Inc. , which owns and operates an electronic registry known as MERS System , which is designed to track the rights and holdings of mortgage services in the United States.
Video Mortgage Electronic Registration Systems
Histori
Current Mortgage Electronics Registration System, Inc. is a third generation company of the same name founded on 1/1/1999. The original "MERS" was merely an acronym of Mortgage Electronic Registration Systems, Inc., in 1995. In 1997, Mortgage Electronic Registration Systems, Inc. register "MERS" as a service mark with the United States Patent and Trademark Office (USPTO) for the eRegistry mortgage loan system. Original companies have since joined with other entities created by executives and boards of directors.
Although 1995 Electronic Registration Mortgage Systems, Inc. (version # 1) created the service mark and MERS system, it no longer exists after the change of name to MERSCORP, Inc. on 1/1/1999 and then back to MERSCORP Holdings, Inc. on 2/27/2012 who is the owner and operator of eRegistry but not disclosed in the mortgage.
The laws of real estate and real estate transactions in the US are subject to state regulations and record requirements of the county level. It made it complicated enough for a finance company to develop a seamless market operation based on a mortgage in the early 1980s. This is because every time a financial instrument containing mortgages is sold, various state laws may require the sale of each such mortgage (or a trust deed) recorded in the local district court to defend certain rights (eg, <, rights to deny non-judicially), which triggers the obligation to pay the appropriate recording costs. Thus, the financial industry, eager to trade mortgage backed securities, is needed to find a way around these listing requirements, and this is how the MERS system was born to replace public records with private ones. In 2007, MERSCORP Holdings, Inc. registering about two thirds of all home loans in the US.
Mortgage Electronic Registration Systems, Inc. (version # 3 1999) is the owner of a record (or nominee owner) of security interests arising from a mortgage extended by the lenders, their investors and loan servicers and recorded in the county land records. By using MERS, lenders and other interested stakeholders avoid the need to apply for county land records, which lower costs for lenders and, they claim, by reducing the cost of recording local costs resulting from real estate transfers and providing the main source of information and tracking for mortgage lending. The Role of MERSCORP Holdings, Inc. in facilitating relatively uncontroversial mortgage trading in the early days, but the continued downfall of the subprime mortgage crisis has put the company at the center of some legal challenges that disput the company's right to initiate foreclosures. If this challenge succeeds, the US banking industry can face new needs for capitalization.
The problem of ownership of the MERS system runs off between entities to the point that courts tend to confuse eRegistry systems with candidates because they use the same "MERS" acronym. The MERS system purportedly meets the requirements of "Safe Harbor" in the Uniform Electronic Transaction Transactions (UETA) and E-SIGN (Electronic Signature on Global and National Commerce Act of 2000) adopted by Congress in documents submitted by MERSCORP, Inc. nka MERSCORP Holdings, Inc. with the United States Trademark and Patent Office. However, it is unclear how the MERS system obtained documents from Mortgage Electronic Registration Systems, Inc. (version # 3 1999).
Maps Mortgage Electronic Registration Systems
MERSCORP Holdings, Inc's MERS System
Mortgage Electronic Systems Inc., Inc. started as a project in October 1993 when Fannie Mae, Freddie Mac, and Ginnie Mae produced the White Paper (with help from Covington & Burling's law firm) about the need for an electronic mortgage registration system. The acronym MERS was soon created thereafter. The Mortgage Bankers Association was involved and MERS was founded in October 1995. MERS was awarded a contract for Electronic Data Systems (EDS) to develop and service technology systems, and MERS was officially launched in April 1997.
Mortgage Electronics Registration System, Inc. is intended to serve as a nomination for real estate transactions in a way that is very analogous to how Cede & amp; Co. serves as the owner of the nominator's note (that is, the owner of the "street name") for all securities held by the Trust & Trust; Clearing Company. In the late 1960s and early 1970s, the American securities industry sank on paper because of the physical complexity of trading thousands of stock certificates every day. By "disabling" the physical stock certificates and then replacing them entirely with book entries, DTCC enables the development of the modern computer securities industry.
Since mortgage-backed securities grew in volume during the 1980s, it became clear that the same mechanisms required for mortgages were placed into the securities. The underlying problem is that a mortgage loan transferred to MBS (Mortgage-Backed Security) should be a "distant bankruptcy" of the originating lender. That is, if the originating lender fails (as happened in the 2007 financial crisis to many lenders), MBS investors are demanding some sort of protection to ensure lenders' creditors can not "dodge" (in the case of bankruptcy, cancellation)) the transfer of loans to MBS as a fake transport vehicle and suck it back into real estate bankruptcy. The easiest way to create such a protection is to simply submit a loan for consideration through three or four entities before achieving SBM. As mentioned above, each conveyance must be recorded with the relevant recorder or land recording. With every loan that requires three or four assignments, and hundreds of mortgage loans go into every MBS, the result is that the recorder is flooded with duties, and the investment banks find themselves choking on the cost of documents and recorders. The MERS system fixes this problem because most of the standard loan documents are changed to MERS names as nominal beneficiaries or mortgage recipients. This allows lenders and investors to transfer mortgages without taking down duties at the local recorder's office and in turn avoids having to pay recording fees.
Ideally, assuming the loan is repaid on time, MERS loans require only two documents to note: an original mortgage or a trust deed named Mortgage Electronic Registration Systems, Inc., and a mortgage reissue or a trust deed to the borrower (thereby incorporating a valid title and fair). If all entities along the way are members of MERSCORP Holdings, Inc., then all transfers between these points are tracked only on the MERS system, and the lending entity will ultimately only record the association as an agent for MERSCORP Holdings, Inc. (Notice how MERS is both (1) the agent for the original lender, and then (2) the final creditor acting as agent for MERSCORP Holdings, Inc., this is the reason why MERS critics often attack him as " two. ") If the borrower fails, the lender will record the assignment on behalf of the Mortgage Electronics Registration System, Inc. to interested parties (ie, investment bank in its capacity as trustee for SBM) and initiate foreclosure. Whereas before the MES system of the last assignment will always be recorded at the time the MBS was created, the MERS system allows the bank to avoid having to record it unless and until (1) the foreclosure becomes necessary or (2) the loan is sold by the MBS trustee to an entity outside the MERS system owned by MERSCORP Holdings, Inc. If the loan is performing to the end, the assignment does not need to be recorded.
The MERS system serves several other purposes. This enables consumers, title companies and other real estate professionals to easily identify the current registered mortgage holders and obtain a release regardless of the mortgage transfer or merger or acquisition of lenders and investors with interest that may make it difficult to track ownership, if managed in a accurate by membership MERSCORP Holdings, Inc. The information contained in the MERS system can help identify possible mortgage scams that involve the identity of potential buyers and occupancy-related issues. A centralized MERS system database can also help detect schemes and property purchases, again if maintained accurately, a general criticism of the MERS system scheme.
Mortgage Identification Number (MIN)
Derived from the MERSCORP Holdings, Inc. system MERS, Mortgage Identification Number (MIN) is an 18-digit unique number used to track mortgage loans throughout its life, from origination to securitization to payment or foreclosure. In general, the first 7 digits uniquely identify the lender, and the remaining 11 digits are used internally by the service provider, usually as a borrowing number.
ServicerID
Through the MERS ServicerID system, homeowners can search their mortgage provider, regardless of whether the mortgage has changed hands since the loan originated. By identifying the lender, homeowners can seek to identify their lender to start negotiations for revised mortgage terms and take actions that can avoid foreclosure.
System MERSCORP Holdings, Inc. MERS eRegistry
The MERS eRegistry system is a system of records that identifies the owner (Controller) and custodian (Location) for registered eNotes. Built by MERSCORP Holdings, Inc. with support from the Mortgage Bankers Association (MBA) and launched in 2004, the MERS eRegistry system allegedly meets the "safe harbor" requirements of E-SIGN and UETA laws. Both Fannie Mae and Freddie Mac require eNotes registration on the eRegistry MERS system before they are eligible to purchase.
MISMO and MERS
In February 2009, the MERSCORP Holdings, Inc. system MERS is selected to manage the daily operations of the Mortgage Industry Standard Maintenance Organization (MISMO), although the MBA will continue full control of MISMO.
2010 foreclosure crisis
Litigation and big legal decisions
The true identity blurriness of related entities "MERS" has caused confusion in the court system and confiscation process.
Mortgage Electronic Systems Registration, Inc. v. Lisa Marie Chong, et al. (United States District Court, District Nevada)
On December 4, 2009, Judge Dawson found that "MERS did not provide proof that it was an agent or nominee for the current beneficial interest holders in record, has failed to fulfill his burden establishing that it was a real party in interest in standing up." He issued his decision in 5 of 18 cases (In re Chong, In re Pilatich, In re Cortes, In re Medina and In re O'Dell) about the appeal but refused to state that "MERS will not be able to establish himself as a genuinely interested party has identified the record holder or provided sufficient evidence from the source of his authority. "
Cervantes v. Countrywide Home Loans Inc. (United States District Court, District of Arizona)
On September 24, 2009, the US District Court for the District of Arizona, at Cervantes v. All-country Home Loans, Inc., et al. , rejecting all federal and state law claims made by three borrowers in complaints filed against a group of defendants belonging to MERS. The Court discusses whether MERS is the right beneficiary but only in the context of whether its involvement is a fraud offense to the borrower. The court found only the use of MERS instead of general legal fraud on the borrower, found that "Plaintiffs have failed to accuse what effect, if any, list the MERS system as a 'fake' beneficiary on the deed of trust for their obligations as borrowers."
The US Court of Appeal for the Ninth Circuit affirmed a court ruling supporting MERS in its published opinion filed on September 7, 2011. The court ruled that a borrower had no basis to challenge the establishment of an entity such as MERS. It also, however, draws attention to the legal reference book notes that the borrower still has the drug by demanding that the sale of a guardian be set aside.
Mortgage Electronics Registration System, Inc. v. Revoredo, et al. (Third District District Court Florida)
Both District Courts 3 appeal in Miami and the District 2 Court of Appeal in Lakeland state that MERS can close. Senior Justice Alan R. Schwartz noted the decision was partly based on changes in finance and technology over time. "The problem arises from the difficulty of trying to spoon innovative modern investment instruments into the category of nomenclatures and laws that are essentially derived from medieval British land law," Schwartz wrote.
The related Florida case is BONY Mellon v. Pino. After the homeowner, Pino, had determined that the bank's documents were damaged, BONY moved to cancel his own lawsuit, possibly intending to repair the document and then start a second lawsuit for foreclosure, Florida being the state of the law seizure. Pino challenged the bank's right to cancel its own lawsuit in such a way. When the case approached the hearing in Florida's supreme court, the parties settled. A few days later the bank recorded a notice on the state recorder that Pino is now the owner of his house that is free and clear. In other words, the bank relinquishes its claims, perhaps worth thousands of dollars, to Pino's house, because bank lawyers believe they are likely to lose at the state supreme court, and thus set a precedent that could cost them a lot of money. Avoiding precedents is more valuable than the lost money lent to Pino. Regardless of the actions of the bank, the court decided to hear the matter to decide on the merit of the bank "refuse-fix-demand again" approach. (Brittany Davis, Miami Herald blog, May 10, 2012)
Jewelean Jackson, et al. v. Mortgage Electronic Systems Inc., Inc. (Minnesota Supreme Court)
On August 14, 2009, the Minnesota Supreme Court ruled that MERS may close under state law as mortgagee.
A class action lawsuit filed by the homeowner in Delaware to detain MERS responsible for fraudulent charges on foreclosures submitted by MERS.
Homeowners argue in court that their home can not be taken over because the MERS act of trust is against the law. In other cases, the state appellate court states that MERS is allowed to close mortgage lien when the holders of bonds and mortgages.
Landmark Nat'l Bank v. Kesler (Kansas Supreme Court)
On August 28, 2009, the Kansas Supreme Court at Landmark National Bank v. Kesler , 2009 Kan. LEXIS 834 (August 28, 2009), issued a decision involving MERS that focuses on the finalities of the assessment. MERS involvement with the case arises from the fact that the company does not receive notification of foreclosure measures even though MERS is the owner of the mortgage on junior liens. In the opinion, the court noted that "[e] ven if MERS is technically entitled to notice and service in foreclosure action - an issue we have not decided at the moment - we are not compelled to conclude that a trial court abuses its policy in refusing a motion to vacate a default decision and ask jers MERS.... "This case does not affect the MERS attitude to seize and the company is entitled to receive notices of legal action when MERS is a mortgagee. The Court concluded that the MERS did not openly record the title chain with a list of relevant deeds in areas throughout Kansas. The judges ruled that the mortgage contract consists of two documents: a trust deed (which secures the property as collateral) and a promissory note (which imposes the borrower to the lender), and specifies that "if the mortgage loan somehow separates the interests of the notes and the deed of trust... with a trust deed that lies with some independent entity... the mortgage can become unworkable. "
On April 30, 2010, the Kansas appeals court at MERS, Inc. v. Graham , 44 Kan. App. 2d 547, 2010 WL 1873567, at ** 4 - ** 5, interpret Kesler to mean that the actual Mers no standing to foreclose a mortgage in Kansas where not mentioned in promissory notes Mers, Mers act semata- eye as a "nominee" for the lender, and there is no evidence that the promissory note was given to the Mers Mers or that have an interest in the promissory note.
MERSCORP, Inc., RESPA Litigation (United United States Court of Appeals for the Fifth Circuit)
In 2008, the United States Court of Appeals for the Fifth Circuit rejected the multi-district class action lawsuit against MERS. The plaintiffs allege that the small fee charged by the mortgage lender, which is then paid to MERS, violates the provisions of the Real Estate Settlement Procedure Act (RESPA). The plaintiffs also argue that MERS unfairly receives business referrals from mortgage lenders. However, the Panel of Judges held that "In return for such fees, MERS performs services as a permanent mortgage holder in public land records..." The Plaintiff 's complaint has been rejected by the court of appeal due to the failure to declare a claim under RESPA.
District of Columbia Enforcement Statement Attorney General
On October 27, 2010, DC Attorney General Peter Nickels issued a statement concluding that "the foreclosures may not begin against the homeowner D.C. unless the current security interests of the noteholder are well supported by the public submission with the District Recorders." So in Nickel's view, subsequent mortgage transfers on MERS records will not be counted unless they are also recorded in D.C.
Gomes v. Countrywide Home Loan (California Court of Appeal for the Fourth Appeal District, First Division)
On February 18, 2011, the California Court of Appeals for the Fourth Appeals District confirmed the support of a demurrator without a leave of absence to amend. In the opinion of Judge Joan Irion, the court ruled in favor of Mers in two ways: (1) California's non-judicial seizure law does not expressly or implicitly allow the lawsuit only to determine whether the party initiating the seizure is authorized to do so; and (2) even if they do so, the plaintiff approves the use of the MERS to start a foreclosure when he signs a trust deed. Gomes is expressly quoted for and relied upon the highest state court decision of 2010 in Lu v. Hawaiian Gardens Casino, Inc. , which explains that certain conservative methods of legal analysis (first articulated by Judge Frank K. Richardson in 1979 and adopted by the majority of courts in the 1988 opinion by Chief Justice Malcolm M. Lucas) applies to all California statute, not just California Insurance Codes. So, if the California Legislature has not clearly written the cause of the act into the law, it does not exist. The California Supreme Court denied Gomes 'petition for review on May 18, 2011 lawyer. Gomes' subsequently filed a written request from certiorari in the US Supreme Court where he attempted to challenge the mer on a vaguely articulated process because Federal constitutional reasons were not previously raised in court the lower one. However, he failed to challenge the constitutionality of California rules to discover the implicit cause of the action, which would likely fail anyway, as the federal rule to find the implicit cause of the action was virtually identical. The High Court rejected the petition on October 11, 2011.
In rereard (US Bankruptcy Court, Eastern District of New York)
On February 10, 2011, the US Bankruptcy Court for the Eastern District of New York is considered a motion for assistance from bankruptcy brought by the US Bank as the trustee of securitization. The US bank claims the right to foreclose the debtor's mortgage partly because of the mortgage assignment from MERS. The court found itself constrained by Rooker-Feldman's doctrine to effect the previous court's decision on seizure, but went on to consider several MERS arguments advancing on its legal status and authority, noting that the argument had delayed deciding dozens of additional cases until they were clarified. The court found that MERS had no power as an agent to assign mortgages under its rules, membership agreements, or mortgage provisions themselves. The court also found that MERS has no power as a mortgage over records to assign mortgages: "The MERS position that it can be a mortgage and the agent of the credit craftsman does not make sense, at best."
The court observed,
MERS and its partners make the decision to create and operate under a business model designed largely to avoid the requirements of the traditional mortgage recording process. The Court does not accept the argument that since the MERS may be involved with 50% of all mortgage housing in the country, that is sufficient reason for this Court to turn a blind eye to the fact that this process is incompatible with the law.
Residential Funding v. Saurman (Michigan Supreme Court)
In April 2011, in Residential Funding v. Saurman , the Michigan Court of Appeal decided two joint cases stating that MERS has no position to illegally deny pursuant to MCL 600.3204 (1) (d) because it actually has no interest in debt. The Michigan Supreme Court overturned the decision in an order of 16 November 2011, finding that MERS is the owner of interest in the mortgage because "[MERS '] contractual obligations as a mortgage depend on whether the mortgagor fulfills his obligation to repay his mortgage-backed debt." However, that the status of MERS as "the owner of interest in debt" is not the same as the ownership interest in the letter. "
On 16 November 2011, the Michigan Supreme Court, understanding the urgency and potential fallout of this issue, issued a peremptory order, in lieu of appeals, and overturned the Court of Appeal's decision. (Resolution Funding Co, LLC v Saurman, 2011 WL 5588929 (Mich., Nov. 1, 2011) The Court agrees with the opinion of the Court of Appeals that does not agree, "based on MCL 600.3204 (1) (d), Mortgage Electronic Registration System (MERS)) 'the owner... of an interest in the debt secured by the mortgage in question in each of these consolidated cases' because the [MERS] contractual obligation as a mortgagee depends on whether the mortgage meets the obligation to pay its mortgage backed by the mortgage. " "The court clarified that" the status of MERS as 'the owner of interest in debt' is not the same as the ownership interest in the record. Conversely, as a mortgage record holder, MERS has a security lien on the property, a sustainable existence that depends on debt satisfaction. "Interest in this debt... Official MERS for foreclosure by advertisement under MCL 600.3204 (1) (d)." (Emphasis added).
The court interprets MCL 600.3204 (1) as inclusive rather than exclusive. The courts prosecute people with "debt interest" including mortgage records (such as MERS) and are the categories of parties entitled to seize advertising, along with those who "have debts" and those who "serve as" mortgage agents. "
Calvo v. HSBC (California Court of Appeals, Second District, Division Eight)
On September 12, 2011, the California Court of Appeals for the Second District said a complaint (alleged violation of Section 2932.5 of the California Code that requires the recipient of the mortgage to record an assignment before using force to sell the real property) is irrelevant as it applies only to mortgages,.
Robinson v. Countrywide (California Court of Appeal, Fourth District)
On September 12, the Fourth District Court cited May's decision at Gomes v. Countrywide , states that "the legal scheme... does not provide preemptive prejudices that challenge the position of the plaintiff's claim for compensation for the commencement of wrongful seizure and for the release of the declaration pursuant to the plaintiff's interpretation of section 2924, subdivision (a) state the cause of the action as a legal matter. "
Bain vs Metropolitan Mortgage Group , Inc. (The Supreme Court of Washington)
In March 2012, Kristin Bain from Tukwila, WA filed a lawsuit against MERS (and a subsidiary) for foreclosure in his home without revealing the true owner of his mortgage.
In August 2012, the Supreme Court of Washington ruled with Bain, saying that MERS is not a legitimate recipient of the deed and has no right to appoint guardians. The decree states: "The ordinary reading of the law makes us conclude that only the true holder of a promissory note or other instrument proves the obligation to become a beneficiary with the authority to appoint a trustee to proceed with the non-judicial seizure of the real property. MERS does not hold the letter, it is not a legitimate recipient.
Electronic signatures and notarization
Since the MERS system is electronic, it depends on electronic storage and transmission of legal documents. Regarding the issue of electronic signature notification and signature honor signed by cross-country, the US House of Representatives passed a bill to legalize these measures, and in 2010 the US Senate passed the law without debate. However, President Barack Obama publicly opposed the law on October 7, 2010. As a result, the bill was dead, and state legislation governs whether electronic signatures can be notarized or whether a signed signature in one country should be accepted in another.
Controversy
Mortgage Electronic Systems Inc., Inc. has generated much debate, controversy, and criticism among litigators and academics in "some of the most widely reviewed legal review articles over the past few years." Dustin A. Zacks, for example, criticized Mortgage Electronic Registration Systems, Inc. for taking an inconsistent position directly in various courts across the country. Zacks' article found favor with the Bain Court which quotes him for the proposition that "MERS officers often issue duties without verifying the underlying information, which has resulted in false or fraudulent transfers." Professor Christopher Peterson also argues that MERS is dishonest in claiming as a mortgage and a prospective lender or trustee. Peterson likens this conjecture to be similar to the two-faced Roman god Janus, while Zacks compares Mortgage Electronic Registration Systems, Inc. with "a creature more akin to a much-tentacled squid." Peterson's article on the MERS, which also criticizes MERS for its allegedly dangerous effects on the integrity and transparency of public recordings, has been cited by many anti-MERS parties and in adverse and beneficial decisions for MERS.
Other academics have criticized Mortgage Electronic Registration Systems, Inc. arguing that the nominal ownership of millions of home loans poses a catastrophic risk to the supposed mortgage investor Mortgage Electronic Registration Systems, Inc. once declared bankruptcy. Such a bankruptcy could mean that the mortgage would "go into the real estate of the company's bankruptcy and become available to meet the demands of creditors." A law professor even suggested removing the MERS system completely, replacing it with an entirely new national recording system.
References
External links
- mersinc.org, the company's official website
- MERS ServicerID
Source of the article : Wikipedia
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