One of the most commonly asked questions for a homeowner is who owns my mortgage? That question is often answered by solving a riddle within riddle. And sometimes the answer still makes no sense. The reason that question is often difficult to answer is because of a electronic filing system, i.e. MERS, employed by the mortgage industry for the past 15 years that has come under rapid fire recently by many foreclosure defense attorneys.
MERS serves as the mortgagee of record for lenders, investors and their loan servicers in the county land records. MERS claims its process eliminates the need to file assignments in the county land records which, in turn, lowers costs for lenders and consumers by reducing county recording revenues from real estate transfers and, in theory, provides a central source of information and tracking for mortgage loans.
When banks sell mortgages to each other and eventually package them into investment securities they use MERS as an electronic repository to keep track of the owners. MERS claims it has 64-million loans in its database; most likely your mortgage is one of them.
If a bank wants to foreclose it simply turns to MERS for the necessary documentation. Doing so is often much faster and cheaper than retrieving local title records.
But the MERS papers sometimes don’t reflect the true status of the mortgage.
While MERS’ origins were well intended, the subprime mortgage crises has highlighted the system’s shortcomings. Indeed, MERS is often at the center of legal challenges disputing the company’s right to initiate foreclosures.
It turns out that the electronic filing system, i.e. MERS, that the mortgage industry devised to facilitate the selling of mortgages from one financial party to another results in documentation that is often faulty and therefore not legally binding.
And that is why it is often difficult to answer the homeowner’s basic question of who owns their mortgage, and making it that much more difficult for MERS to foreclose on the property that it cannot demonstrate who actually owns it.
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