Mortgage Crisis and MERS

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The Mortgage Crisis, countless courts and other appellants in the United States continually lambast the Mortgage Electronic Registration System, Inc. or the MERS for the last few months. MERS is currently under fire for several concerns on the rise in the number of foreclosures in 2010 and even early this year. MERS has been attributed to huge percent of foreclosures since 2007 until the present year. The unfortunate thing here is that the foreclosures issued by MERS were heavily contested as void. Although given that a particular person was not able to pay back for the mortgages, many appellants have contested that MERS has no right to issue a foreclosure. Moreover, many financial analysts have found problems with how the system of MERS works and how it contributes to the continuing crisis in the real estate industry.

It is said that even the transferring of records to MERS itself was already a violation of the laws underlying the real estate industry. According to one of the commissioners of the Bristol County Board of Commissioners, Commissioner John Mitchell, that banks and other mortgage loaning companies have missed out one particular thing that companies should do and that is to register the records of the mortgagors and mortgagees to the public. MERS has clearly broken this law as the company has somehow made a private registry of records rather than registering the records to the public registry. With this particular law broken, it has then branched out to several complications in the real estate industry.

One complication that has been spurred by this lawbreaking is the significantly increasing foreclosure rates in the US. One of the steps during a foreclosure process is by passing the foreclosure document to the court for scrutiny and approval. Since the records of the mortgagees and mortgagors are concealed within the confines of MERS, there would be nothing that a mortgagee could do. Usually, when the government looks into the records of mortgagees in the brink of foreclosure, there could still be settlements, resolutions, and restraining orders. By this, mortgagees can still have a chance of keeping their homes. However, as the MERS acts as a private registry, sufficient information can then be set aside as the records are bought and sold as it is registered in MERS. Eventually this may lead to an inevitable foreclosure.

Another complication is that mortgagees and mortgagors have already been experiencing confusion with regards to what banks or mortgage loaning companies mortgagees are tied up to. Basically, this particular method of registering the records to MERS is very painstaking as the records would be bought and sold to different investors. The banks and loaning companies register the records to MERS so that they won’t be paying for the registration fees implemented by the county. MERS then keeps the records or sells. With this, the records of the ownership of mortgage plans and other important details may drastically change to the point that it may be hard to determine who has the actual right to be the mortgagor. Mortgagees are then surprised that as they receive a foreclosure statement, it would then be under MERS, when supposed to be, the mortgagor itself should issue it.

Lastly, this particular lawbreaking has economically affected the real estate industry itself, the counties and other institutions tied up with MERS. For the banks and loan companies, this system has significantly decreased their registration fees but the thing here is that they have broken the law. According to the Bristol County Board of Commissioners, MERS owes the different states in the US millions of dollars for bypassing the requirements of registering the records to the county public registries. Added to that, the increasing foreclosures under MERS have somehow negatively affected the purchasing stimuli for potential buyers due to the fact that a lot of foreclosures are going on and that MERS is one way or another involved in what could be considered an anomaly in the real estate industry.