Barry Ritholtz: MERS Stop Foreclosing in Our Name

02-17-2011 • Ritholtz.com

Mortgage Electronic Registration Systems, aka MERS, finds itself in a bit of a pickle. The bank owned entity created to facilitate mass securitization and skip out on billions in local property filing fees, has sent a directive to its membership (See MERS: Foreclosure Processing and CRMS Scheduling). In short, the memo states: “In recent months legal challenges have arisen regarding alleged inadequacies and improprieties in the foreclosure process including allegations of insufficient or incorrect supporting documentation and challenges to the legal capacity of parties’ right to foreclose . . . MERS is planning to shortly announce a proposed amendment to Membership Rule 8. The proposed amendment will require Members to not foreclose in MERS’ name. Consistent with the Membership Rules there will be a 90-day comment period on the proposed Rule. During this period we request that Members do not commence foreclosures in MERS’ name.” (emphasis added) Keep in mind, that MERS has always been a legal fiction, simultaneously principle and agent. The courts are increasingly recognizing this, and finding they do not have any standing to bring foreclosure actions.