Standing in Our Own Sunshine: Reconsidering Standing, Transparency, and Accuracy in Foreclosures

Abstract:     
This Article provides a critical analysis of the involvement of Mortgage Electronic Registration Systems, Inc. (“MERS”) in the mortgage foreclosure process. As an ambiguous pseudo-agent of lenders, MERS currently appears in thousands of foreclosures and bankruptcies, either as the foreclosing entity or as a party seeking to lift an automatic bankruptcy stay. MERS also participates in such actions through assignments of mortgage that purport to assign MERS’s rights to the foreclosing or moving party. Judicial treatment of MERS, however, has not been uniform across jurisdictions. The widespread use of MERS mortgages and the resulting inconsistent judicial treatment has had significant implications for mortgagors and the foreclosure process. In particular, MERS implicates substantial transparency, accuracy, and anti-democratic concerns. This has led some to call for a legislative ban of MERS. However, this path fails to recognize the benefits currently provided by MERS, such as its publicly available, easy to access, online database that reveals what company is servicing a debtor’s loan. This Article argues that strengthening MERS, such as allowing it to electronically store and index actual documents, combined with providing for efficient regulatory oversight of the records’ accuracy, could actually provide a foundation for a more convenient, cost-effective, and accurate alternative national public recording system that addresses current systematic weaknesses.

Number of Pages in PDF File: 60

Keywords: Mortgage Electronic Registration Systems, MERS, Foreclosure, Bankruptcy, Real estate, Housing, Mortgage, Uniform Commercial Code, UCC

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