MERS Dissected

The most recent edition of the Cardozo Law Review includes an in-depth analysis of MERS and the legal challenges to its foreclosures, including an interesting parallel to 15th-century mortgage abuses and the protections that evolved as a result.

Modern foreclosure law developed as a response to the traditionally harsh consequences borrowers faced if they failed to pay their loans on time.81 In fourteenth and fifteenth century England, a borrower who failed to repay his mortgage loan on the exact due date—known as “law day”—lost all interest in his property.82 This occurred even if the borrower could not physically locate the lender.83 English courts of equity began to sympathize with borrowers who wanted a reasonable amount of time to pay their debts without losing all rights to their property.84 The courts began prohibiting lenders from taking possession of mortgaged property until the borrowers had a “reasonable time” to repay the loans. In response to lenders’ uncertainty concerning the exact meaning of a “reasonable time,” the equity courts created the remedy of foreclosure. Upon petition by the lender, the court would establish a reasonable time frame for the borrower to pay, after which all equitable rights of the borrower to reclaim his property were extinguished.

Read the full note: The Case Against Allowing Mortgage Electronic Registration Systems, Inc. (MERS) to Initiate Foreclosure Proceedings