Is Your Loan Held by MERS?:Possible Salvation

Those of you who follow this site regularly know that I don't normally encourage litigation unless there has been some egregious behavior on someone's part. However, in today's posting, I am going to make an exception because this information is so important. Although most people don't know it, there is a system out there that acts in behalf of mortgage lending institutions and holds the mortgages. Named the MORTGAGE ELECTRONIC REGISTRATION SYSTEM, or MERS, it allows mortgages to change hands from bank to bank without any recordation of these changes in the mortgage to ever be made. It sounds like a great idea, until you stop and realize that it almost never appears to actually have the mortgages under its own name and is only in essence holding them for some bank. "So what", you ask? Well, here's what! A recent California court case has held that this convenient electronic device the banks created effectively prevents the underlying banks to prove their ownership of titles and thus, also precludes their being able to foreclose on said properties! How does that sound?
So how does this relate to you and your mortgage if you are facing foreclosure? Well, MERS has over 62 million mortgages currently held in its name--loans that it never had anything to do with making!
The California case, decided on May 20, 2010, is called In re Walker. In it the court held that MERS couldn't foreclose because it wasn't the lender, held no lien rights and was just a 'nominee', someone standing in for the lender. Because of that the real lender, Citibank, couldn't foreclose because MERS had the loan on its books.But since MERS had no proof whatever that it didn't own the actual mortgage note (the legal proof of the debt), it had no interest in those same notes to pass to Citibank to lat Citi foreclose. If you don't own the legal proof of the debt, the promissory note, you can't pass on the right to foreclose under that note.
In case some of you out there are thinking this is just another example of California craziness, the judge cited as precedent cases from the appellate courts of Kansas, New York, and Ohio.
MERS has been the target of these problems in many earlier cases as well. But these earlier cases usually found fault with MERS because MERS was unable to actually produce the legal evidence of the debt, the promissory note, to prove it had the right to foreclose. Same principle: no note, no foreclosure right.
If you live in Florida, you may be interested in hearing about an attorney with Legal Aid who has been helping homeowners avoid foreclosure since 2004 using this same argument about the missing promissory note. April Charney says over five years later she still has a number of homeowners living in their homes because of her efforts fighting 'no note' foreclosures. She's now taking this to the next level by helping many of these same homeowners to take action in court to regain full title to their homes through what are called "quiet title" lawsuits. In case you have similar problems and don't live in Florida, Charney says she's trained many attorneys across the country to use these methods to help their homeowning clients avoid foreclosure.
For more info, you may wish to contact Charney. She's based in the Jacksonville Area Legal Aid office, and can be found online at their website: www.jaxlegalaid.org . Separately, you could also contact Ellen Brown, the author of a very detailed article from which much of my info has come, for YES MAGAZINE. Additionally, you may wish to check out the tale of Richard Davet, who stalled the Bank of America and related institutions for over ten years in his fight to avoid foreclosure. Though finally losing, his action proves that, at a minimum, one can use the courts legitimately to delay the bank's takeover of a home, and, at a maximum in some cases, stop the foreclosure cold.
Good Luck!

More Helpful Info

The FHA has announced that it will introduce a program of FHA-insured mortgages beginning September 7 to slow foreclosures further. Available to homeowners who have loans that are not currently FHA-insured, these should help further stem the REO tide. Basically, they will be made available to homeowners who are still current on their mortgage payments, but whose home value is less than the mortgage still owed. One further condition is that the existing lender has to agree to write of 10% of the current principal balance. Check with your lenders or directly with the FHA for more info. Good luck!

Good News in NC,SC,Ohio,RI and Oregon

The Obama administration has approved the state housing agencies in these five state using Federal funding to help further their own foreclosure avoidance programs at state level. Total Federal funding to be used in the programs is about $600 million. Check with your local housing agency if you live in any of these states and are facing possible foreclosure. Good luck!