Foreclosure Relief (MERS)

  • MERS is part of a foreclosure scheme by bankers.
  • MERS has destabilized our existing land title system.
  • MERS creates “clouded title” and puts property ownership at issue.

What is MERS?

The “MERS” acronym refers to Mortgage Electronic Registration Systems Inc. as well as its parent company MERSCORP Holdings, Inc. which are collectively known in the mortgage industry as “MERS.”  The mortgage bankers that created, MERS are the same mortgage bankers that have profited from the explosive increase in subprime lending and the resulting foreclosure crisis.  Mortgage Electronic Registration Systems Inc. and MERSCORP Holdings Inc. are part of a successful scheme by these mortgage bankers to drive as many homeowners as possible into foreclosure.

What does MERS do?

The MERS scheme includes a MERS mortgage or deed of trust that names MERS as a beneficiary even though they have no beneficial interest.  Based on this fictional naming of MERS as beneficiary, the actual beneficiaries will then sell your loan multiple times without recording the sales as ASSIGNMENTS with the local county recorder as required by statute.  The owners of MERS claim the right to avoid recording ASSIGNMENTS between actual beneficiaries because they claim that MERS remains “beneficiary of record” due to being named so on your mortgage.

The MERS scheme also includes the MERS computer which MERS’ public relations describe as “a database designed to track the ownership of mortgages” although that is not what the MERS computer actually does.  The MERS computer tracks servicing rights for the benefit of the servicers that own MERS, the most important of these rights being the right to foreclose.  The bankers that own MERS use this intentionally deceptive language to disguise the fact that they are servicers, not beneficiaries, and the only rights they are tracking are their own rights of foreclosure.

Who Owns MERS?

The owners of MERS are the traditional lenders in mortgage banking, namely CitiMortgage, Wells Fargo, Bank of America, and Chase.[1]  We continue to (mistakenly) call these bankers “lenders” even though they long ago switched their business model from lending to become originators acting more like brokers that flip borrowers’ loans into securitized trusts for a fee.  MERS was created in 1995 just as these “lenders” were becoming servicers with the right to foreclose.

This business model switch by the servicers that own MERS has led to millions of mortgages and deeds of trust with “pretender lenders” and “straw-man” lenders (brokers pretending to be lenders) with no financial investment in borrowers’ loans.  These “pretender-lenders” and “straw man” lenders threw out traditional underwriting standards of risk and reward because their new scheme enabled them to pass the risk of a loan on to borrowers and investors while they kept the reward for themselves through, origination fees, servicing fees and foreclosure rights.

Mers’ Role in Unfair Lending Practices and the Downfall of the Housing Market

How Does MERS Make Money?

The bankers that own MERS have intentionally profited from the foreclosure crisis and predatory subprime loans which were designed to fail.  These bankers talked borrowers into accepting risky terms and borrowing more than they could reasonably payback while they kept the true facts of these subprime loans hidden from borrowers and investors.  Sub-prime loans are loans designed to fail, but failure was exactly what the “pretender-lender” wanted.

The servicers that own MERS are not beneficiaries, and they actually have an opposite interest from the beneficiary that owns your loan.  Servicers only own servicing rights which means they benefit from penalties, late fees, and foreclosure and not by timely repayment.  This conflict of interest remains hidden from most borrowers until they miss a payment and wonder why their “lender” is trying so hard to foreclose. [link to servicer page]

MERS Clouds Title

A Quiet Title is an action to establish title against any “adverse claims” or financial interest in a borrower’s property.  A Quiet Title has been traditionally used to remove outdated claims from the county records or to settle claims between family members so that owners can have clear title enabling them to sell or refinance.  A borrower seeking to the quiet title must name the original lender and any later beneficiaries or purchasers of the debt on their property as defendants.  If MERS is not named in a Quiet Title action and provided NOTICE of that action, MERS may use the fact that they are erroneously named as “beneficiary” on a borrower’s mortgage or Deed of Trust to claim the rights of a beneficiary to sue borrowers in federal court.  This is the case with Mortgage Electronic Registration Systems, Inc., et al. v. Daniel Robinson et. al where MERS sued the Robinsons after they obtained a Quiet Title without NOTICE to MERS.

You can read more on our Quiet Title page.

Speak with a Lawyer Who Knows How to Handle MERS Issues

Susan Murphy is a foreclosure attorney working in Los Angeles and representing borrowers throughout the state of California. Contact Advocate Legal online or call today at 000-000-0000 to set up a free 15-minute initial consultation with Attorney Susan Murphy. Our office, conveniently located in the Miracle Mile District in Los Angeles, is open 9 a.m. to 6 p.m., Monday through Friday. Our team is proud to represent individuals and families facing unfair lender practices in communities throughout Southern California.

MERS’ Role in Unfair Lending Practices and the Downfall of the Housing Market

MERS is a shell corporation created by the mortgage banking institutions that used to be lenders and are now servicers – the “pretender-lenders.”  The owners of MERS don’t care if you repay your loan, in fact they would rather you don’t because then they’ll make more money.  The bankers that own MERS have engaged in countless unfair and lending practices, and thus, have played a role in several elements of the downfall of the housing market:

  • Securitization. Securitization is the process by which mortgage debt is turned into stock to be sold on the “secondary” market to investors that become the beneficiaries of your mortgage.  Because of the multiple sales required for securitization, the servicers sought to avoid the cost of recording these sales which was why they created MERS.  The servicers that own MERS name MERS as “beneficiary” on your mortgage and claim MERS is “beneficiary of record” to avoid the multiple recorded assignments that occur with securitization and more importantly the county recording fees. This system claims to replace the county recording system, but the lack of transparency and oversight has resulted in millions of failed securitizations and thousands of lawsuits by borrowers flooding the court system. 
  • Robo-signing. When a borrower defaults and it comes time to foreclose the servicers that own MERS must now re-create a chain of title and they do this by robo-signing millions of recorded documents. These robo-signed documents are recorded after-the-fact representing sales that actually happened years before making them inherently fraudulent and VOID.  This practice is called robo-signing because the bank employees that sign these documents have no idea what they are signing and simply sign robotically like robots.
  • Creaming the Debt. Servicers make money based on the principal balance of the loan pool they service on behalf of a beneficiary and if a borrower defaults the missed payments, along with penalties and fees, are added to that principle balance.  Servicers are reluctant to modify more loans because they make so much more money from foreclosure because of advances and fees.  Advances occur when a borrower defaults and the servicers must advance interest and principal payments to the beneficiary but once the foreclosure begins these advances stop. The modification also cuts into the servicers fees because the servicer might have to forgive their fees in order to make a modification feasible. Servicers make more money in foreclosure because they get to “cream the debt” which means the servicer gets paid first before the beneficiary and all their fees are included.  “Creaming the debt” is when the loan servicer gets paid “off the top” for all their advances as well as costs and penalties at the foreclosure sale.

MERS Lawsuit

The California permissive joinder statute (Rule 20) is similar to the federal statute, which allows plaintiffs to join in one action if they assert a right to relief that arises out of “the same transaction, occurrence or series of occurrences” and there is “a question of law or fact common to all plaintiffs” that arises in the action.

The MERS scheme begins with a MERS mortgage where MERS appears on a borrower’s mortgage as “beneficiary” and “nominee.”  In the same paragraph, MERS is named as a separate corporation which is what MERS actually is. The owners of MERS are the lender/ servicers and do this so that they can claim the rights of the beneficiary.[2]  This is what we attack with our MERS mass-joinder.

In reality, MERS is a separate corporation claiming two distinct set of rights, that of a beneficiary and a nominee.  As MERS has foreclosed on borrowers across the country some courts have granted them the rights of a beneficiary and some have restricted their rights to that of a nominee, but either way, MERS is able to successfully foreclose.[3]  That is why our MERS lawsuit does not attack MERS’s right to foreclosure.

The insidious crime that is being committed by recording a MERS mortgage with the county recorder is the destabilization of title for every person that has a MERS mortgage.  This recording of a false document with the county recorder is a violation of the California penal code and a violation of federal RICO statutes.  These illegal MERS mortgages were originated by a Delaware shell company and now makeup 60% of mortgages in this country.

Because the county-by-county recording system goes by a grantor-grantee index a fake grantee instantly clouds title by creating a fake beneficiary in your chain of title.  A fake beneficiary in your chain of title may not seem that important until you realize the extra rights that a beneficiary has, such as the right to sue you in federal court. [Mortgage Electronic Registration Systems, Inc., et al. v. Daniel Robinson et. al (link to Robinson’s complaint].  This is why we attack MERS’s standing as a beneficiary.

Our MERS mass-joinder cases succeed because the MERS mortgage is common for everyone.  Our mass-joinder cases succeed because we attack the MERS business model as a group, but clear title one mortgage at a time.  Our mass-joinder lawsuits against MERS work because of our legal right to clear title.

Some mass joinder cases attempt to sue the originators of mortgage loans like Wells Fargo, Chase, Citibank, or Bank of America based on predatory lending practices.  Some attempt to sue the last tier servicers like Ocwen, Nationstar, SLS, or Greentree for current abuses of their position as servicer to [trick borrowers] into default and foreclosure.  These cases are usually dismissed for improper joinder because they don’t arise from common action.

To learn more about our successful approach to mass-joinder call us.

[1] The Board of directors of MERSCORP Holdings Inc. includes Bank of America, Wells Fargo, CitiMortgage, and Chase.

[2] Owners of MERS – link to MERS website board of directors

[3] Fontenot