Friday, August 14, 2009

MERS Scores Big Win As Minnesota High Court Says Sale Of Note Not An “Assignment Of The Mortgage” Which Must Be Recorded Before Initiating Foreclosure

In St. Paul, Minnesota, the Star Tribune reports:
  • Minnesota's Supreme Court on Thursday handed a small victory to the battered mortgage industry. In a 6-1 decision, the court ruled that state law does allow the name of a widely used electronic registry of home mortgages, Mortgage Electronic Registration Systems Inc. (MERS),(1) to be listed as the mortgagee of record in thousands of foreclosures. [...] It decided that Minnesota law does not require the actual name of the note's owner -- the lender -- to be listed in records every time a loan changes hands, and that a "nominee's" name is enough.


  • Justice Alan Page(2) issued a dissenting opinion saying state law clearly requires that "all assignments" of the mortgage must be recorded. "It is apparent with the benefit of hindsight that the ability of lenders to freely and anonymously transfer notes among themselves facilitated, if not created, the financial and banking crisis in which our country currently finds itself," Page wrote. "As a result of our court's holding, namely, that the mortgage transfers between MERS members need not be recorded before a mortgage can be foreclosed by advertisement, neither borrowers nor lenders will ever be able to hold anyone in the chain of transfers accountable. That is not sound public policy."

For more, see Court ruling: Mortgage holders needn't be named (A Minnesota Supreme Court ruling means loan documents will remain hard to trace for those facing foreclosure).

See also, Minnesota Public Radio: High court upholds mortgage lenders' registry.

For the court ruling, see Jackson v. Mortgage Electronic Registration Systems, Inc., Case #A08-397 (August 13, 2009).

(1) The story describes MERS as a tracking system and doesn't own the loans. The registry attracted national attention as foreclosures began sweeping the country and it began representing lenders. MERS tracks some 60 million home loans across the country as they change hands, and during the boom, they were rapidly bundled and sold to bond investors on the secondary mortgage market. It's run by Merscorp Inc., a company based in Reston, Va., owned by an industry group including Countrywide Home Loans, Wells Fargo Bank and Fannie Mae.

(2) In a prior life, Justice Page played defensive end for the Minnesota Vikings of the National Football League and was inducted into the Pro Football Hall of Fame in 1988. EpsilonMissingDocsMtg