The Magic of the Mortgage Electronic Registration System: It Is and It Isn't

Abstract

This essay critically examines MERS' structure which incorporates principles of dubious legality such as a theory of common agency as well as a duality of roles held by MERS. The article examines many recent decisions in state, federal and bankruptcy courts in order to identify current trends regarding MERS-related jurisprudence. The essay also provides an in-depth discussion of the historical issue of severing a promissory note and a mortgage, and how that can prove to be fatal in some cases but not others (depending especially on the forum). The article concludes with a proposal for the creation of a federal data clearinghouse akin to the EDGAR system for publicly held companies, to document ownership and transfers of mortgages and promissory notes in a secondary market.

Keywords: MERS, foreclosure, mortgage, deed of trust, title, land, lien, securitization, mortgage electronic registration system, recording, priority, standing, promissory note, nominee

JEL Classification: K11, D18, G18, G21, G28