The MERS Mess: A Pandora's Box of Legal Issues
Right now, we don't know whether or not foreclosures that occurred where MERS held the mortgage are ultimately going to be recognized as legally valid. It's too new a crisis to know.
However, it's not too new for lawyers and legal scholars to start pondering the legal issues that the MERS mess brings us. Here are just a few:
- Richard Kessler has published his list, "10 Headaches for MERS" on JDSupra. From Kessler, crazy things to think about, including MERS' three distinct corporate entities and the quagmire they present: he asks, "how many assignments were executed by a functionary under a delegation of authority from a corporation which was defunct on the date the assignment was excuted?"
- Over at Credit Slips, Iowa law professor (and fellow Harvard Law alum) Katie Porter asks if MERS is simply too big to fail (admittedly, not the first time we've seen this defense argument) and suggests MERS is just a cog in the wheel of the larger US mortgage industry, where systems were implemented for overall lending and servicing efficiencies that may have bypassed "traditional legal doctrines."
- Another law professor, Christopher L. Peterson, who is also associate dean at the University of Utah's Quinney College of Law, is writing on the MERS complexities and already provides an abstact of his article, “Two Faces: Demystifying the Mortgage Electronic System's Land Title Theory,” which will appear in the Real Property, Trust and Estate Law Journal. In the article, Professor Peterson promises to discuss "...(1) the consequences on land title records of recording mortgages in the name of a purported mortgagee that is not actually mortgagee as a matter of law; (2) whether a security agreement that fails to name an actual mortgagee can successfully convey a property interest; and (3) whether county governments may be entitled to reimbursement of recording fees avoided through the use of false statements associated with the MERS system."