As Chino foreclosure defense attorneys, we're always interested in foreclosure lawsuits seeking to invalidate the use of the Mortgage Electronic Registration System, or MERS. MERS is a corporate entity created in the 1990s to allow banks to buy and sell mortgages as often as they like without complying with the requirement to register sales with the county land office (or pay the attached fees). As the foreclosure crisis has progressed, many homeowners have found that when their mortgages go into MERS, they often emerge with a broken or unclear chain of ownership. So I was interested to read that the Michigan Supreme Court will soon consider an appeal in Residential Funding Co. v. Saurman, in which the Michigan Court of Appeals ruled that MERS does not meet Michigan's legal requirements to foreclose by advertisement.
The case was consolidated from two cases brought by Gerald Saurman and Corey Messner. Both took out mortgages from Homecoming Financial. Homecoming was listed as the holder of the notes, but the mortgagee named in their paperwork was MERS as a nominee for Homecoming. Both defaulted, and MERS began non-judicial foreclosures. Both defended their foreclosures by arguing that MERS may not foreclose by advertisement under Michigan law. That law says, in relevant part, that a party may foreclose by advertisement if it owns either the debt or an interest in the debt, or is the loan servicer. Thus, the question was whether MERS owned an interest in the debt --whether it had an interest in the notes. It did not. The court drew a distinction between Michigan law and laws of other states that had been found to support MERS foreclosures.
This is the case that's the subject of the Michigan Supreme Court appeal. The case is expected to affect a large number of Michigan foreclosures, since the majority of home loans are processed by MERS. The majority in the Court of Appeals decision noted that MERS may still initiate a judicial foreclosure. However, the case also created a dissent, from which MERS and other appellants may draw. The dissent argued that MERS did own an interest in the debt, through the security interests of both mortgages. Judge Wilder wrote that under those contracts, Homecoming gave MERS the right to take any action required of Homecoming, including canceling the debt upon full payment. Thus, he said, MERS had an interest in the note through its obligations to Homecoming.
Our Fullerton foreclosure defense lawyers look forward to seeing what the Michigan Supreme Court decides from these arguments. The issue is local to Michigan -- and presumably any other state that requires ownership interest for foreclosures -- but there, it's very important to the ability of MERS to quickly foreclose on the no doubt large number of homeowners who are behind on their payments. This doesn't take away the ability of MERS to start a judicial foreclosure, or for the true lender to foreclose by advertisement, but the lenders no doubt prefer a quicker and more convenient process. However, as Escondido foreclosure defense attorneys, we're not sure foreclosure should be so convenient that borrowers' rights fall by the wayside. The judicial process may take more time, but it ensures that a live human judge can exercise his or her judgment in any case where the foreclosure is disputed.
If you're behind on your mortgage payments and your loan servicer has repeatedly declined to help, you should call Howard Law, P.C. instead. For a consultation, call us toll-free at 1-800-872-5925 or send us an email.