MERS Tells Servicers to Stop Foreclosing in Their Name - FDL

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MERS Tells Servicers to Stop Foreclosing in Their Name
By: David Dayen Thursday February 17, 2011 7:04 am

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Since MERS is owned by the big banks, this has the effect of MERS telling itself to stop existing. But it’s quite significant. In a memo to its members (the member banks who own it), MERS announces that their name should essentially be taken out of all foreclosure operations. Over the past several months, the inclusion of MERS in foreclosure documents, despite not having a material stake in the loan, has generated multiple lawsuits, many of which showed that MERS cannot foreclose, including a recent case in bankruptcy court in New York. That may have been the tipping point. Here’s the relevant language in the release:

1. MERS is planning to shortly announce a proposed amendment to Membership Rule 8. The proposed amendment will require Members to not foreclose in MERS’ name. Consistent with the Membership Rules there will be a 90-day comment period on the proposed Rule. During this period we request that Members do not commence foreclosures in MERS’ name. If a Member determines that it will commence a foreclosure in MERS’ name during this 90-day period, two weeks advance notice must be given to MERS to permit verification of the appointment and current status of the Certifying Officer proposed to participate in the foreclosure. No foreclosure may be processed in MERS’ name without first obtaining this verification. We encourage Members to bring foreclosures only in the name of the holder of the note, in the name of the trustee or the servicer of record acting on behalf of the trustee.

2. MERS Members shall have a MERS Certifying Officer (also known as MERS Signing Officer) execute assignments out of MERS’ name before initiating foreclosure proceedings. Assignments out of MERS’ name should be recorded in the county land records, even if the state law does not require such a recording (see MERS Membership Rule 8).

You may recall that the MERS “Certifying Officer” is really just an employee at one of the member banks who MERS magically turns into a certifying officer whenever asked. They have over 20,000 certifying officers despite having a skeleton staff, and none of those certifying officers get any compensation or benefits from MERS. The memo details a new method for appointing a certifying officer to pull off these assignments out of MERS’ name, and promises new safeguards on that policy. They also tell members in the memo to “ensure the accuracy of the information” in the foreclosure documentation they use (good luck with that), and to conduct a review of its employees who have been designated as certifying officers, ensuring that they have the proper training to carry out responsibilities.

This essentially gets MERS out of the foreclosure business. It has been ruled that they lack standing to foreclose one too many times. So there’s this attempt to after-the-fact get MERS out of the process by assigning mortgages out of MERS’ name – and paying the recording fee – to essentially allow for a quick exit.

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More: http://news.firedoglake.com/2011/02/17/mers-tells-servicers-to-stop-foreclosing-in-their-name/

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