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Mortgage Foreclosure: The MERS factor.

Posted By Cliff Tuttle | April 24, 2009

Posted by Cliff Tuttle

Most people don’t notice when they sign a mortgage naming MERS (Mortgage Electronic Registration Systems) as the “nominee” of the lender. The purpose of MERS is to make it unnecessary to prepare, execute and record subsequent assignments of mortgages on public records. Instead, the assignments are supposed to be kept track of electronically in the data banks of MERS. A good summary of the MERS story is contained in an April 24 article in the New York Times.

But what is a “nominee” under the law? MERS doesn’t own the mortgage. It was simply named, for convenience, in place of the true owner. So then, why is MERS so often the named Plaintiff in mortgage foreclosures?

Lawyers defending mortgage foreclosures around the country have argued that MERS cannot be the Plaintiff in a foreclosure for the exact reason that it is not the owner of the mortgage. Moreover, the role of the role of a nominee for the owner is not defined in MERS mortgages, nor has it been specified by statute or case law. They argue that the mortgage foreclosure cannot occur so long as the mortgage is titled in the name of the nominee. MERS must assign record title to the true owner, who can then foreclose.

These are not mere technicalities. Lenders who join MERS created this conundrum. The statutes and rules of court that create the special remedy of mortgage foreclosure also require strict compliance with the statute and rules. That means that the Plaintiff must have a legal right to make a claim. If the true Plaintiff wants to make a claim under a statute, it must have its documents in order.



CLIFF TUTTLE has been a Pennsylvania lawyer for over 45 years and (inter alia) is a real estate litigator and legal writer. The posts in this blog are intended to provide general information about legal topics of interest to lawyers and consumers with a Pittsburgh and Western Pennsylvania focus. However, this information does not constitute legal advice and there is no lawyer-client relationship created when you read this blog. You are encouraged to leave comments but be aware that posted comments can be read by others. If you wish to contact me in privacy, please use the Contact Form located immediately below this message. I will reply promptly and in strict confidence.

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