Judge Finds MERS Has No Right To Transfer Mortgages, Finds Entire MERS Process Illegal
There was a time when news, especially very bad news, moved stocks. The last time that occurred was in the middle of 2009, before most robots had any idea just how massive the chairsatan's schizoid break with reality was. Now, that the appropriate sociopathology is fully priced in, bad news tends to have an even more profound upside impact on stocks than good news, as it guarantees that the Zimbabwe stock market will be upon us far sooner than if the economy were to have to go through another inter-QE episode. Which is why the just released news out of US Bankruptcy Judge Robert Grossman of Central Islip, New York, that MERS lacks rights to transfer mortgages will likely send the entire S&P circuit breaker up.
“Merscorp Inc., operator of the electronic-registration system that contains about half of all U.S. home mortgages, has no right to transfer the mortgages under its membership rules, a judge said...U.S. Bankruptcy Judge Robert E. Grossman in Central Islip, New York, in a decision he said he knew would have a “significant impact,” wrote that the membership rules of the company’s Mortgage Electronic Registration Systems, or MERS, don’t make it an agent of the banks that own the mortgages..."
“MERS’s theory that it can act as a ‘common agent’ for undisclosed principals is not supported by the law,” Grossman wrote in a Feb. 10 opinion. “MERS did not have authority, as ‘nominee’ or agent, to assign the mortgage absent a showing that it was given specific written directions by its principal.”
“MERS and its partners made the decision to create and operate under a business model that was designed in large part to avoid the requirements of the traditional mortgage-recording process,” Grossman wrote. “The court does not accept the argument that because MERS may be involved with 50 percent of all residential mortgages in the country, that is reason enough for this court to turn a blind eye to the fact that this process does not comply with the law.
“An adverse ruling regarding MERS’s authority to assign mortgages or act on behalf of its member/lenders could have a significant impact on MERS and upon the lenders which do business with MERS throughout the United States,” Grossman wrote. “It is up to the legislative branch, if it chooses, to amend the current statutes to confer upon MERS the requisite authority to assign mortgages under its current business practices.”
“Without more, this court finds that MERS’s ‘nominee’ status and the rights bestowed upon MERS within the mortgage itself, are insufficient to empower MERS to effectuate a valid assignment of mortgage,” the judge wrote. “MERS’s position that it can be both the mortgagee and an agent of the mortgagee is absurd, at best.”
And with MERS now found to be a fraud, we expect MERS Commercial authority to be likewise eliminated. Which means that the entire US mortgage market, both residential and commercial, is a lie, and built on fraudulent foundations, and that every single MERS-mediated transaction will likely have to be unwound.
In reality what will happen, is that the Banker lobby will have to purchase a few more Appelate Judges, and in the worst case, a SCOTUS dude here and there, appeal the ruling to death, and end up victorious. After all, it is only taxpayer money.