Posted Jul 27, 2011 11:36 pm CDT
Calling for an end to a controversial practice, the Virginia-based company that owns Mortgage Electronic Registration Systems (MERS) has announced a change in its rules that apparently would require mortgage loan services to follow longstanding property law principles.
They are no longer to file foreclosure actions in the name of MERS, a subsidiary of Merscorp Inc. of Reston, Va., and are to obtain and record mortgage assignments with county clerks before suing, Reuters reports.
As detailed in earlier ABAJournal.com posts, MERS was intended to make it easier and less expensive for lenders and servicers to transfer mortgages, by keeping property records electronically in one central location and avoiding the need to pay county filing fees with each new assignment.
However, critics have contended that the practice can make it difficult for those outside the mortgage industry to determine loan ownership and rights. Their objections have been fueled by claims of widespread “robo-signing” of mortgage-related documents, including some foreclosure filings and supporting material.
The use of MERS records has been challenged in a number of cases, and a California appeals court recently ruled that Wells Fargo would have to prove ownership of a resident’s mortgage in a traditional manner before proceeding with a foreclosure, KGET reports.
ABAJournal.com: “WaPo Explains the ABCs of MERS, Which Struggling Homeowners Are Leveraging in Loan Negotiations”
ABAJournal.com: “New Question About MERS Mortgage System: Does It Owe Money for Unpaid Fees?”
ABAJournal.com: “Next ‘Huge Issue’ in Foreclosures: Faked Lawyer Signatures”
ABAJournal.com: “Lawmakers Call for Robo-Signing Probe After AP Reports Practice Is Still Widespread re Mortgage Docs”