What is M.E.R.S. and how do foreclosure attorneys use it?

In an effort to speed up the legal record keeping pertaining to mortgages and the numerous sales of mortgage loans, a private company called Mortgage Electronic Registration Systems (MERS) came up with a solution to save time in processing these transactions. MERS attorneys may be facing several legal battles when homeowners challenge their authority to foreclose on a property when they didn’t actually lend money to the borrower. If the courts decide to rule against MERS authority, many foreclosure cases may be halted indefinitely.

MERS Goals and the Ensuing Legal Battles

MERS was founded in Virginia in 1995 and their primary goal was to have an electronic registry that would track any repeated sales or the sale of mortgage loans as the numbers continued to escalate. MERS claims that this process eliminates the need to file assignments in county land records, thus lowering the cost to lenders and consumers. MERS has foreclosed on thousands of properties around the country claiming they are legally entitled to initiate such action when the lender chooses to make MERS the holder of the promissory note. This has led to a huge battle in courts throughout the nation leading to the largest entanglement in the housing industry. There are class action lawsuits against MERS currently pending in Arizona, California, Delaware and Nevada. The State Supreme Courts in Arkansas, Kansas and Maine have successfully ruled against MERS in several cases.

How a Foreclosure Attorney Can Challenge MERS

Attorneys that specialize in foreclosure law may be able to help a homeowner save their property by challenging the legality of whether MERS has the authority to initiate foreclosure proceedings. In the case of Landmark National Bank v. Kesler, the Kansas Supreme Court held that since MERS was not the original holder of the promissory note and the record did not contain evidence that the original holder authorized MERS to transfer the note, MERS has no claim, thus invalidating their right to foreclose.