Attorney general enters the debate over MERS; efforts may help bankrupt homeowners

The Boston Globe recently reported that Massachusetts Attorney General Martha Coakley is not backing off her invetigation into the practices of the Mortgage Electronic Registration System known as MERS.

Recently, a Massachusetts bankruptcy judge found no fault in the use of MERS to record mortages in dummy names at the registry of deeds statewide and through the nation.

Coakley, as well as many Massachusetts bankruptcy and real estate lawyers, is skeptical of the companies practices, which affects up to 60 percent of mortgages and refinancings. MERS holds legal title to particular mortgages, and records the documents at the registries. Once recorded, swapping and selling of mortgages goes on behind the scenes, sight unseen. The frantic selling and re-selling of mortgages is often listed as one factor in the housing crisis.

According to the Globe, John L. O’Brien, register of deeds for the Southern Essex District Registry of Deeds in Salem, called his office a “crime scene’’ after releasing an audit alleging that hundreds of mortgage-related documents were invalid or fraudulent.

Last year, O’ Brien asked Coakley to investigate MERS, saying that the company owes Essex County more than $22 million because it failed to record mortgage transfers locally, thus bypassing a $75 fee per transaction.

Bankruptcy judge Melvin Hoffman, however, ruled in June that the use of MERS to hide the names of actual mortgage holders was legal under present state law.

Resolution of these issues could be coming to loggerheads soon, affecting all Massachusetts homeowners in a foreclosure or bankruptcy situation.

 

By Doug Beaton

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