Thom Weidlich, Bloomberg
Merscorp Inc., operator of the electronic-registration system for about half of all U.S. home mortgages, got a court to set aside a bankruptcy judge’s opinion criticizing its right to transfer the mortgages among members.
U.S. District Judge Joanna Seybert in Central Islip, New York, yesterday vacated part of U.S. Bankruptcy Judge Robert E. Grossman’s February 2011 decision in the bankruptcy of Ferrel L. Agard. Merscorp, based in Reston, Virginia, runs Mortgage Electronic Registrations Systems, or MERS.
“The issue of whether MERS had authority to assign the mortgage was no longer before thebankruptcy court,” Seybert wrote. “There was no longer a live case or controversy.”
Merscorp was created in 1995 to help county officials cope with the growing volume of mortgage transfers, the company has said. It tracks servicing rights and ownership interests inmortgage loans on its electronic registry, allowing participating banks to buy and sell the loans without having to record the transfer with the county. MERS helped Wall Street to quickly bundle mortgages together in securitized trusts.
“I thought it was a poor decision because it was decided only on procedural grounds,” George E. Bassias, a lawyer for Agard in Queens, New York, said of Seybert’s ruling in a phone interview today. “In my opinion she’s wrong on the procedure too.”
Foreclosure Sale
Agard filed for bankruptcy in September 2010, the day before her Westbury, New York, home was to be the subject of a foreclosure sale. The mortgage servicer, Credit Suisse Group AG (CSGN)’s Select Portfolio Servicing, asked Grossman to allow it to continue with the foreclosure. Grossman ruled that Select Portfolio should be allowed to do that.
Grossman then went on to say that Select Portfolio and U.S. Bancorp, which had been assigned the mortgage by MERS, wouldn’t have been given the relief had a state court not already granted a foreclosure judgment.
That was because MERS’s “nominee” status didn’t give it the authority to assign mortgages, Grossman said.

