Defective Paperwork Strips Mortgage Holder of Foreclosure Rights

A Massachusetts federal judge has upheld a bankruptcy court ruling allowing a trustee to treat a mortgage as an unsecured claim, which strips the mortgage holder of foreclosure rights, because of defective mortgage paperwork.

In a Nov. 17 order, District Court Judge Patti Saris affirmed a bankruptcy court order denying the plaintiffs’ request to send a question of law to the Supreme Judicial Court of Massachusetts. The case is Mortgage Electronic Registration Systems Inc. (MERS) v. Warren E. Agin, trustee.

The plaintiffs wanted the state high court’s take on whether the omission of a borrower’s name on an acknowledgement form, which a notary public uses to confirm the identity of the borrower, is a “material defect” that voids the mortgage.

In Massachusetts, deeds or mortgages recorded at a county registry of deeds must have a properly executed acknowledgment form. Read more about MERS…

Do you own a law firm? Would you like to utilize our mortgage auditing services for foreclosure defense cases? Contact MFI-Miami now.

Mortgage Market Was a Giant Criminal Enterprise

This is a potentially gigantic story. It seems that a court has ruled that about half of the mortgage market has been run as a criminal enterprise for years, which would invalidate any potential forelosure proceedings for about, oh, 60 million mortgages. The court ruled that the electronic transfer system used by the private company MERS — a clearing system for mortgages, similar to a depository, that is used for about half the mortgage market — is fundamentally unreliable, and any mortgage sold and/or transferred through MERS can’t be foreclosed upon, at least not in Kansas. Read more about MERS…

Op-Ed: 60 Million Mortgages May Have Fatal Flaws

The latest chapter in the mortgage meltdown is being written in court, as one by one, judges are putting a halt to foreclosures.  The latest was a recent Kansas Supreme Court case. In Landmark National Bank v. Kesler, the court held that a nominee company called MERS had no standing to bring a foreclosure action.

Nor was Kansas the first. In August 2008, Federal Judge for the U.S. Bankruptcy Court for the District of Nevada ruled MERS had no standing. ”Indeed, the evidence is to the contrary, the Note has been sold, and the named nominee no longer has any interest in the Note.”

In September of 2008, A California Judge ruling against MERS concluded, “There is no evidence before the court as to who is the present owner of the Note. The holder of the Note must join in the motion.” Read more about mortgages with flaws…

The Mortgage Machine Backfires

With the mortgage bust approaching Year Three, it is increasingly up to the nation’s courts to examine the dubious practices that guided the mania. A ruling that the Kansas Supreme Court issued last month has done precisely that, and it has significant implications for both the mortgage industry and troubled borrowers.

The opinion spotlights a crucial but obscure cog in the nation’s lending machinery: a privately owned loan tracking service known as the Mortgage Electronic Registration System. This registry, created in 1997 to improve profits and efficiency among lenders, eliminates the need to record changes in property ownership in local land records.

Dotting i’s and crossing t’s can be a costly bore, of course. And eliminating the need to record mortgage assignments helped keep the lending machine humming during the boom.

Now, however, this clever setup is coming under fire. Read more about the Mortgage Electronic Registration System…

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