Judge tells lenders to take a hike

The NY Times reports on a judge in Brooklyn that rejects foreclosures. If the lender comes in with faulty paperwork, he gives them the boot.

One commentator, by the name of oldtymelemonade on about a day ago made the comment, "That's not the way the law works as to paperwork. I'm all for keeping people in their homes, and these banks can go to hell. But the reason more judges don't do this is because this isn't how the law works... it doesn't matter if you have the paperwork. It should but it doesn't, not anymore, because of MERS. MERS legally operates in all 50 states. Also see their own website.

What the article is alluding to, but doesn't mention, is the use of nominees or servicers that act as agents on behalf of the holders of the notes.

MERS acts as the mortgagee of record on all mortgages that are registered with MERSCorp, Inc. The MERS System provides easy access to the correct loan servicer for loan payoffs and minimizes errors in the public records because of missing assignments. (Paperwork, etc.)

Here's why homeowners in 99.9% of the country where this judge doesn't operate are still fucked:

Fannie Mae, Freddie Mac, FHA and VA have approved MERS to be the Original Mortgagee of Record (MOM) by being named in the mortgage or deed of trust as the beneficiary. To accommodate this, such agencies published authorized changes to their Uniform Security Instrument for each state.

For example, the following or similar language may appear in the mortgage or deed of trust: "Mortgage Electronic Registration Systems, Inc. ("MERS"), solely as nominee for Lender, as hereinafter defined, and Lender's successors and assigns. MERS is organized and existing under the laws of the state of Delaware, and has an address and telephone number of P.O. Box 2026, Flint, MI 48501-2026, tel. (888) 679-MERS. _ _ _ _ _ _ _ _ ("Lender") is organized and existing under the laws of _ _ _ _ _ _ _ _ , and has an address of _ _ _ _ _ _ _ _."

Once the mortgage, deed of trust, or assignment names MERS, any future transfer of the loan or servicing from one MERS Member to another MERS Member will be tracked electronically on the MERS System, and will not be shown in the local real property records.

MERS does not obtain title to or possession of the promissory note unless necessary under state law at the time of foreclosure.

Foreclosures

When MERS is the mortgagee of record, a foreclosure can be brought in the name of MERS in all states under the current state foreclosure procedures. This is a requirement regardless of whether MERS is the mortgagee or the loan servicer is the mortgagee.

Where necessary under state law to foreclose, MERS will secure possession or endorsement of the note.

Judicial Foreclosures

A judicial foreclosure can be initiated in the name of MERS, if MERS is the mortgagee of record. In most cases, by assigning the foreclosure judgment or foreclosure sale bid, title can pass directly to the true beneficial owner, which is typically a secondary mortgage market investor. In a handful of states, MERS can take title at the conclusion of the foreclosure sale and then execute a subsequent deed to the true beneficial owner.

Non-judicial Foreclosures

If the deed of trust or mortgage is assigned to MERS, you should be satisfied that state law allows an agent, such as MERS, to proceed with foreclosure (including the naming of a substitute trustee, where applicable). Since MERS is not the beneficial owner, it derives its authority to act from an agency agreement with the beneficial owner. That agreement with the beneficial owner allows MERS to conduct foreclosures on behalf of the beneficial owner. In some cases, MERS will purchase at foreclosure on behalf of the beneficial owner and then convey to that beneficial owner."

To read the full article on the NY Times, click here.
The read more commentary on the article, click here.

Fore more information on foreclosures in Portland, including the counties of Multnomah, Washington, Clackamas and Clark County in Washington State go to PortlandForeclosure.com