MERS survives another round in California, to fight again.

Like a punch drunk fighter staggering through another round in the ring, the Mortgage Electronic Registration System, or "MERS," has survived another court challenge to it's ability to make mortgage assignments on behalf of various lenders.

On May 17, 2012, the Court of Appeals for the State of California decided Herrera v. Federal National Mortgage Association, a case where a homeowner tried to invalidate a foreclosure by arguing MERS had no authority to make various assignments of recorded deeds of trust, and that this failure invalidated the current note holder's attempt to foreclose.

I've shared my thoughts, before, on why the popular attacks on MERS won't gain traction in Maryland's courts, since the Maryland Court of Appeals decision in Anderson v. Burson. But I have found one snippet within the Herrera opinion that is worth a moment of thought (and then you can get back to surfing Youtube videos of "Simon' Cat"--hilarious, by the way), and it is here (and the court's internal reference to" Fontenot" is to a prior case involving similar claims against MERS):

Furthermore, since the assignment of the debt (the promissory note), as opposed to the security (the DOT), commonly is not recorded, the lender could have assigned the note to the beneficiary in an unrecorded document not disclosed to plaintiffs. ... This is why in Fontenot the court rejected the plaintiff's claim to set aside the foreclosure as void based solely on the alleged invalidity of the MERS assignment of the note and DOT. The Fontenot court stated: "plaintiff was required to allege that [the bank] did not receive a valid assignment of the debt in any manner. Plaintiff rests her argument on the documents in the public record, but assignments of debt, as opposed to assignments of the security interest incident to the debt, are commonly not recorded. The lender could readily have assigned the promissory note to [the bank] in an unrecorded document that was not disclosed to plaintiff. 

 And there it is. This is the core of Marylands' Anderson v. Burson analysis. And it highlights the threshold issue in any case involving an attack on the lender's standing to foreclose, transfer servicing rights, file proofs of claim in bankruptcy, etc.--does the entity attempting to enforce any term in the debt or security instrument have rights in the unrecorded note?  And that means phsycial possession with a contractual right to enforce.

And this leads to another thought. Avoid the forensic loan audit scam. There is nothing in the generic 20 page "audit report" you purchase from these charlatans that will undercut the law.  If the entity enforcing the lien instrument has physical possession of the note, and has the contractual right to enforce it's terms, gaps in the chain of assignments just don't matter.  Save your money.

Masssachussetts takes on the Medusa

The Massachussetts Attorney General has cast herself as Perseus, hoping to slay the many headed banking Medusa that allegedly has been foreclosing upon Massachussetts citizens in violation of state recording and foreclosure laws. The December 1, 2010 Complaint alleges that lenders have sued to foreclose while falsely representing themselves as the "holder" of the indebtedness. The Complaint recites examples where the foreclosing lender did not take actual assignment of the mortgage until after the cases were filed, after important orders and affidavits were filed, or even after the foreclosure process was final. This is alleged to be a deceptive and unfair trade practice.

But wait, there's more!

Unlike Maryland, the Commonwealth of Massachussetts requires that every transaction involving real property, including assignments of interests in the recorded liens, must hit the land records. Several lenders are being sued for deceptive and unfair trade practices for keeping MERS related assignments off record.

WWMD (what would Maryland do)?  IHTS (it's hard to say). Read more after the jump.

MERS is engrossing fiction, according to the NY Times.

Well worth reading.  If you haven't been chasing the recent decisions around the Country, here's a good primer on the MERS mess.  With phrases like "engrossing fiction," "cut corners," and "colossal mistakes," you can see where this article is heading.

California weighs in on MERS, not ready to slide into the ocean, just yet

On February 18, 2011, Judge Irion of the California Court of Appeal, in San Diego, issued a reported decision upholding MERS right to initiate foreclosures in California. The Gomes v. Countrywide decision is worth reading. What is remarkable are the reports about the case saying that the decision was issued only one day after oral argument.

This brief was in the can, before counsel stepped to the podium!

With California leading the nation in the volume of foreclosures, this is a real shot in the arm to the foreclosure bar.

imMERSed in a sea of differing opinions.

On February 11, 2011, Judge Karlin of the Kansas bankruptcy court sent more waves through the foreclosure and title community pool (a "title pool?"). The Martinez decision upholds MERS status as the lender's agent, for purposes of establishing standing by the current lienholder.

Compare this to New York bankruptcy Judge Grossman's February 10, 2011 Agard decision, for purposes of assignments that establish standing.

Read for yourself, and you'll be left to ask, "who's steering this boat?" I've talked with several local trustees, and they simply don't know what to do with this patchwork of analysis that is dropping from the various courts. I personally believe that recent state court decisions defining "non-possessory holders" will cut through this issue.