Written by Richard Mario & Jillian Pollock
MERS, or Mortgage Electronic Registration Systems, has emerged as a troublesome legal issue for attorneys, the courts, and lenders. But for a homeowner facing a foreclosure sale, a problem with MERS may slow down or even stop the foreclosure. In a nutshell, a homeowner facing foreclosure should know the following:
What is MERS? MERS stands for Mortgage Electronic Registration Systems. As the name suggests, MERS provides mortgage registration services to mortgage companies. When a home buyer obtains a mortgage loan to purchase a home, the mortgage may be recorded in the MERS system. In addition, MERS may be identified as a nominee in the deed of trust that is recorded in the county records in connection with the mortgage loan.
How can a homeowner determine if a mortgage is a “MERS” mortgage? The easiest way to determine if a mortgage is a “MERS” mortgage is to review the deed of trust that the homeowner signed in connection with the mortgage loan. The deed of trust may identify MERS as the nominee for the lender, usually on the first or second page of the deed of trust. If a homeowner does not have a copy of the deed of trust, then the homeowner should be able to obtain a copy at the county recorder’s office in the county where the property is located. An attorney can help.
Why does MERS matter in a foreclosure action? One of the purposes of MERS was to streamline mortgage registrations for mortgage companies across the United States. However, MERS may have run afoul of state laws.
Oregon is a non-judicial foreclosure state, which means that a foreclosure action can be initiated outside of the courts. Oregon courts, including Oregon’s bankruptcy courts, have ruled that a non-judicial foreclosure sale must be stopped where a MERS mortgage is not in compliance with state law. The bank must then stop the foreclosure and either work something out with the homeowner or start a foreclosure action in the courts. In other cases, the foreclosure sale is postponed until MERS issues are resolved.
Either way, the homeowner gains valuable time to try to work out a solution that does not involve the loss of the home.
