The spin straight out of the gate seems to be that the Culhane opinion handed down earlier this week is good for MERS, but a thorough reading of the case points in a different direction. Boot Camp graduate Jamie Ranney provides this conflicting analysis:
I think Judge Young makes it clear in Culhane that all MERS foreclosures conducted in MA are prima facie invalid and therefore were unlawful. There have certainly been hundreds of these. I doubt MERS would trumpet this part of Judge Young’s decision as a “victory” for them.I do not read Judge Young’s decision as a ringing endorsement of MERS although I’m sure that MERS will try and spin it that way. The end result of his opinion – a purported MERS victory is limited to the facts of that case – there are a number of key factors that appear not to have ever been argued by the borrower that may have changed Judge Young’s opinion – but in the end, he is presented with what he is presented with and I think for the most part his opinion is well-reasoned and sound.
It bears mentioning – as I often do to deaf ears – that virtually every MERS assignment of mortgage before mid-2010 purports to assign the borrower’s note as well. Some still do. Given Judge Young’s opinion – which is backed up by numerous other opinions and by MERS itself in their own rules – MERS can’t assign any interests in notes. All of these assignments therefore are void. An assignment can’t be “partially” valid. Foreclosures that took place based on such MERS assignments are defective and the titles are therefore clouded. It also bears noting that the standard Fannie-Freddie MERS mortgage requires – in Para. 20 – for the note and mortgage to be transferred together. Since MERS cannot transfer notes, MERS mortgages are void from execution because the notes were immediately sold off without the mortgage.
Many of MERS’s so-called “victories” have been, unfortunately, improperly pled or argued before the courts. Many have been argued by pro-se litigants who are trying to defend their homes because they cannot afford lawyers. Most foreclosures– and this is the biggest problem for MERS – went undefended.It is clear however, that the most important players – the judges – are starting to take a closer look at the mess that has been created in the ownership of real property in this country. The attitude used to be: “Well, they (the borrowers) didn’t pay, so they’re out.” Now it’s more like: “Whether they paid or not is not the question – the question is who can lawfully foreclose on them and take their house? Let’s take a closer look at this.” As the scrutiny – which the banks hate – mounts, so do the defects in the MERS model that the banks have pushed down the courts throats for the last 3 years or so.
MERS – and the MERS apologists like REBA and the MBA – remind me of a young Kevin Bacon in “Animal House” – attempting (as a young ROTC student) to calm a stampeding mob by screaming – in a shrieking, hysterical and wholly-unconvincing voice – “REMAIN CALM! ALL IS WELL!” Ultimately, Kevin Bacon – probably like MERS at the end of the day – is trampled flat by the mob.
The reality however is that MERS is dying already. The incompetence and negligence of their ridiculous “MERS signing officer” program combined with the stunning an wholly unjustified hubris associated with their creation –without any judicial or legislative approval – of an “off-record” system of tracking notes and mortgages in this country behind an Oz-like curtain of secrecy – will ultimately be their undoing. The lawsuits will continue to mount and they will go bankrupt – just like most of their big-bank backers.
BOA is at 5 bucks.
MERS – and their backers – seem to think they can manage this fiasco. So did big tobacco. The parallels are striking. Big tobacco won early and often. Then the tide shifted. The same will happen here whether they want to deny it or not.
The current MERS-related litigation caseload – borne mostly by sole practitioners like me – will ultimately make it into MUCH bigger plaintiff’s firms and on a nationwide scale – and then the rubber will meet the road. There isn’t enough money in the world for MERS – or their big-bank shareholders – to survive the litigation costs alone.
Tell me you can’t see a jury – somewhere – ordering punitive damages in the 10’s of millions of dollars for unlawfully foreclosing on someone’s home when MERS KNEW – and are forced to admit – that they didn’t own the debt associated with the loan. I have no problem seeing that scenario.For further analysis, check out Professor Adam Levitin’s “The Wikipedia of Land Registration Systems” on the Credit Slips blog, which leads off with the assertion that “Judge Young breaks out a fresh can of whoop-ass on MERS, which wasn’t even a litigant.” Apparently we’re not alone in failing to see the decision as the “boon to MERS” that Banker & Tradesman calls it.