Friday, April 24, 2009


Speaking of the New York Times. That paper has an excellent explanation of MERS. MERS, or Mortgage Electronic Registration Systems, holds the mortgages for 60 million homes according to the article. Usually MERS calls itself the "nominee" of the true mortgage holder. If you went to lawschool and don't know what a "nominee" is, well you're in company with everybody else. The status of a nominee is not necessarily addressed in the statutes or case law of most states.

The true effect of MERS is to obscure ownership of the mortgage, hide problems with sloppy and imprudent securitization, and indirectly make it virtually impossible to work out a loan modification in time to prevent foreclosure.

What the lenders should have done if they wanted/needed a thjrd party to hold mortgages through multiple assignments is to have put together a committee attached to an organization for uniform state laws and created a model uniform law for Mortgage nominees. It's still not too late to do so. The law should spell out the rights and duties of Mortgage nominees and include provisions for transparency and consumer protection as well as lender convenience.

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