How can MERS breaking the chain of title prevent foreclosure?

Mortgage loans have been packaged as securities, which are sold to investors and used as assets by banks and other financial institutions.  During this process, your mortgage loan may be bought and sold several times, which could have resulted in a breaking in the chain of title.  That essentially means that the clear handoff of ownership of a home (and in this case a mortgage) is unclear. If you are involved in a potential foreclosure, you need to understand the rules for MERS and chain of title.

Consider these facts about the role of an organization known as MERS: 

• A company called Mortgage Electronic Registration Systems, Inc. (MERS) has been at the center of some of the controversy in the mortgage market and in foreclosures of late.  MERS is owned and was created by some of the largest mortgage lenders in the country, including Freddie Mac and Fannie Mae.  MERS was designed to simplify the securitization of mortgage loans, allowing them to change hands without recording each individual transfer.

• As a result, MERS offered anonymity that essentially hurt mortgage lenders in court.  For a lender to foreclosure, the chain of title must be clear, and MERS breaks the change of title, keeping a lender for foreclosing.

• If MERS is involved in your loan, you may have standing to prevent foreclosure on your home.  

You should consult with an attorney to see how legal precedent might help you in your foreclosure case.