Sunday, February 13, 2011

Agard Case: MERS Assignment Arguments Crash and Burn

Last week there was a bankruptcy court decision in New York, In Re Agard, where Judge Robert Gossman completely evicerates MERS's arguments for authority to assign mortgages. Why is this important? MERS, or Morgage Electronic Registration Systems, is the "nominee" of most mortgages that pass through the securitization system -- in other words, most mortgages. Until a year or so ago, foreclosures would be filed under MERS's name, but a series of court decisions cast doubt on MERS's authority to foreclose, so the recent practice has been to assign the mortgage to a different entity. In Agard, Judge Grossman repeated the rule that to foreclose a mortgage, the plaintiff must show ownership of the note and the mortgage, and when not the original party, mus be able show a trail of assignment. Historically, MERS has not concerned itself with the note, and that's been a big cause of the current foreclosure mess. For a more detailed writeup on the Agard case, check out this link at the Foreclosureblues blog.

By the way, I was going to link the MERS Wikipedia entry above for a brief explanation of MERS; however this is one of rare cases where Wikipedia fails as an objective and current source. Right now, it looks like Wikipedia's MERS entry has been taken over by MERS loyalists who cite the cases that have gone in favor of MERS, but not those that have gone the other way.

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