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Foreclosures in Muskegon County, Michigan have dropped 97% from about 75 per week to about 2 per week after the Michigan Court of Appeals ruled that the Mortgage Electronic Registration System (MERS) could not foreclose by non-judicial process by way of newspaper advertisements. MERS must seek to foreclose by judicial process and, in doing so, must provide documentary evidence that it owns the mortgage note on the subject properties. Nevertheless, Michigan still has one of the highest foreclosure rates in the country, ranking fifth nationwide, as banks continue to steamroll homeowners unrepresented by legal counsel by illegally side-stepping statutory pre-requisites prior to foreclosure.

MERS is a privately owned electronic database and mortgage tracking system. MERS claims it is the self-appointed mortgagee or self-described owner of the mortgage note, regardless of how many times the securitized note was assigned and/or transferred to another party. Courts, however, are not buying this illogical nonsense, holding that MERS lacks standing to bring a foreclosure suit because it does not have an enforceable interest in the note. The plain meaning and common understanding of mortgagee is “[o]ne to whom property is mortgaged,” meaning a “mortgage creditor, or lender.” Black’s Law Dictionary 1104 (9th ed. 2009). In other words, a mortgagee is a party that is entitled to enforce the debt obligation that is secured by a mortgage. Thus, MERS cannot simply disregard black letter law and appoint itself the mortgagee or creditor.

The NY Appellate Division of the 2nd Department in Bank of America v. Silverberg held:

In sum, because MERS was never the lawful holder or assignee of the notes described and identified inthe consolidation agreement, the corrected assignment of mortgage is a nullity, and MERS was without authority to assign the power to foreclose to the plaintiff. Consequently, the plaintiff failed to show that it had standing to foreclose. MERS purportedly holds approximately 60 million mortgage loans (see Michael Powell & Gretchen Morgenson, MERS? It May Have Swallowed Your Loan, New York Times, March 5, 2011), and is involved in the origination of approximately 60% of all mortgage loans in the United States (see Peterson at 1362; Kate Berry,
Foreclosures Turn Up Heat on MERS, Am.[*6] Banker, July 10, 2007, at1).

This Court is mindful of the impact that this decision may have on the mortgage industry in NewYork, and perhaps the nation. Nonetheless, the law must not yield to expediency and the convenienceof lending institutions. Proper procedures must be followed to ensure the reliability of the chain of ownership, to secure the dependable transfer of property, and to assure the enforcement of the rules thatgovern real property.

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