Fight over who has legal right to foreclose makes mess worse

By Stephanie Armour, USA TODAY.

When Randy Persten’s mortgage was foreclosed in 2008, he looked at the paperwork and found a mystery. A company he’d never heard of — called Mortgage Electronic Registration Systems, or MERS — was bringing the foreclosure action against him. …

By having MERS hold mortgage liens for the owners, MERS eliminated the need for servicers to file paper documents reporting a lien holder change each time a mortgage was sold. MERS gives loans identification numbers, which are used to track changes in loans’ servicers and owners.

“Without MERS the current mortgage crisis would be even worse,” MERS said in a statement.

But critics, like North Carolina bankruptcy lawyer O. Max Gardner, say the MERS database isn’t always up to date, leading to uncertainty about the lien holder’s identity. “Sometimes MERS members enter the information, and sometimes they don’t.”