Judge Finds MERS Has No Right To Transfer Mortgages, Finds Entire MERS Process Illegal

Tyler Durden's picture

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.

From Bloomberg:

“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.



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Judge Judy Scheinlok's picture





waylon153's picture

What a joke!  This story broke on Bloomberg 1.5 hours ago and now you can't even find unless already you know it exists and specifically search for it.  None of the other major news services are carrying it.


The implications of this legal decision are profound and yet these "journalists" fail to see its importance?  The wheels of the entire mortgage system are falling off and no one seems to notice?  WTF? Damn, is it just me or is the world getting f*&kin' crazier by the minute?

TruthInSunshine's picture

I propose everyone on Zero Hedge refer to 'analysts' and 'journalists' as 'anal-cysts' and 'journal-cysts,' at all times going forward.

It reflects a far more accurate version of the Amerikan Reality we all find ourselves suffering through, today.

Thank you for your cooperation.

Metropolis_Minx's picture

+100. 'Anal cysts'...Damn it, you made me crack a smile, on Zero Hedge, no less.

waterhorse's picture

Very funny!  Thank you for the laugh.  I'm in a QT against MERS and the pretender-lenders and a good laugh is quite the stress reliever.

system failure's picture

You would think that section of carpet would be tripping everyone up by now with all the shit they have swept under that mofo.

Agent P's picture

However, "Viagra Sales Climb as Men Plan Valentine's Day Romance: Chart of the Day" has been on BB TOP most of the afternoon.

downrodeo's picture

but you're not really surprised are you?

By now, you understand that The implications of this legal decision are profound, and thus, you may conclude that None of the other major news services are carrying it.


If I sell widgets and run a newspaper, and widgets are found to cause cancer, do I print the story on page one?


Bob's picture

Corporate media ftw!

In Fed We Trust's picture

Yet another reason why the president should declare the 'mortgage" itself as illegal.

If you live in a house, it is now yours, free and clear!

Now go get off you ass and campaign for Ron Paul.

Ron will put an end to the fed. But ne needs to do much more, like declare eveyones mortgage paid if full.

That's a good presential plateform to run from. It's almost like buying votes.

We re getting a new system either way you look at it. Might else well go all in for the people and take back what has been swindled away over the last 100 years.

Next people that decide to grow food in their yard will be paid with the new currency....

Many ways you can run with this. Just takes one man like Ron, he needs to be more confrontiona, in your face, like Ventura.

I think one bill like your house is yours, dude, otta fix the system.


JLee2027's picture

Property rights are reserved to the States, not the Federal Government. Obama, can whine and stamp his feet all he wants but he's powerless here.

I agree with you, though, the states need to act in unison.

TeMpTeK's picture

The Banks basically turned debt note instruments which were backed by real property and turned them into unsecured debt equivalent to credit card debt.. The real property has been severed from the note.. Chain of title broken.... The american people through Fannie and Freddie were sold Mortgage backed securities that are in fact NOT backed by any real property.... Its official now.. THE US Dollar is Toast.. America is Toast.....But at least My buddy will get his home free and clear after not paying his mortgage for the last 8 months.. There really is a Santa Claus afterall.

chet's picture


(Until Congress gives MERS retroactive authority to transfer mortgages.)

Ragnarok's picture

They don't even have to, because if you don't enforce a law does it really exist?

Yikes's picture

Your statement makes we want to puke because we all know the answer.

Ragnarok's picture

Rally-on my friend, rally-on.

system failure's picture

They should have a adopt a banker program and bankers should invite the americans they have stripped everthing from to live with them. Bankers should have to work and take care of everything I need.

Metropolis_Minx's picture

Although I think we have the same idea...I prefer the other R-word.
ReVoLuTiOn, my friend. ReVoLuTiOn.

Michael's picture

Head for the Hollywood Hills.

Milestones's picture

United States Constitution Article I Section 9 (3) Attainder -ex post facto law. No bill of attainder or ex post facto law ( after the fact) shall be passed.  

Sorry, wrong number!! No can do.       Milestones

fuu's picture

Ask Ohio how that little gem of a rule works out.

mynhair's picture

Hell, ask GM bondholders.

Ragnarok's picture

I thought we came to the conclusion months ago that the law no longer applies to Wall-Street.  Did I miss something?

Misean's picture

No. The judges just haven't got the memo yet.

Dr. No's picture

Precisely.  With Algos the predominant movers, "people" news does not impact how the algos price stocks.  Algos simply buy and sell on price and volume.  Once the Algos loose stability and the direction turns down, the pointers will shift to negative and Algos will go short.  It is beyond the influnce of people and or day-to-day news.  I realize it is unstable system, but I am unwilling to bet against it at this time.

RECISION's picture

As long as you don't take any of it seriously - it's all quite funny really.

Theatre of the absurd...

Max Hunter's picture

No... But every once in a while, we  like to jump up and down on good news even though the score is 42-0 and we just hit the 2 minute warning in the 4th quarter.. But hey, we just held them to a field goal attempt..  But.. they will probably fake the field goal and run it it.. LOL

viahj's picture

more like they will throw the coach's challenge flag and dispute the spot and then the refs will re-spot the ball, re-measure for the first down and voila! ... first and 10, their drive continues.

In Fed We Trust's picture

Precisely. Ben BerNanke has been wrong about everything NOT because he is stupid!

He, and the fed have been swindling us for many years, and yet their biggest heist is just around the corner. Ben is an actor, and well versed economist.

His like Kevin Spacey in Usual Suspects. Mastmind criminal.

Ron Paul needs to tie Ben to a lie dector test if this shit is so important. It ain't goin happen.

As they race us of a cliff, they are have parachutes, and suitcases of cash, and will descent, unlike your desecnt, to the Cayman Islands,

and Glenn Beck will there scratching his head, blaming it budgets issues, the debt, the wars etc.

Criminal Negliegence is what Ben is guilty of if he is plan stupid. But he is actual plotting the death of the dollar. This is the mission, and it is predmedatative, and planned for years. >NWO

But Ben and Co wont be holding dollars. They will be holdings gold/oil and the mortgage to your house.

Have fun with that.



Ancona's picture

Well see. this will get buried and the MSM will never dare to entertain the idea of putting it before the public.

Bob's picture

I've got four oz of silver to bet that Ratigan runs it tomorrow.

unwashedmass's picture


hope this guy doesn't ride in any small planes any time soon...

oops, forgot, the bankers are now favoring hit and runs a la andrew maguire.

jus_lite_reading's picture

Another one of Bernank's GREEN SHOOTS. This is good for BofA and the "markets"

gwar5's picture

Wow that's a set back for them though, for sure. So far they're not winning these battles.

But you're right, TD, once upon a time such a thing would cause a major move the markets.

NOTW777's picture

excellent. always thot they simply dreamed up their own conveyance system w/o legal basis

NOTW777's picture

now, do the same thing to obamacare and finreg

Yikes's picture

All rational people: "Ouch! That's going to hurt."

Ben "POMO" Bernanke:  "Hmm no, not really."

Piranhanoia's picture

The only way yet to put money back in the people of this nations hands.

HamyWanger's picture

More doom news for pathetic permabears.

In the mean time, socks are reaching new highs.

I bet $1,000 that this story will be buried : just like the silver "manipulation" lawsuit, the "Fraudclosure" thing...

The global economy is recovering, and the attempts of permadoomers to deny it is frightening.

TruthInSunshine's picture

"... socks are reaching new highs..."

Gold, silver, wheat, copper, cotton, tungsten...and underwear, too!

LFMayor's picture

WBZ, is that Fatty Arbuckle: Woman Beater (on the right)?

downrodeo's picture

if you tilt your head to the side, he looks a bit like bill clinton...

duncecap rack's picture

I'll say socks are reaching new highs. You've got them pulled right up over your eyes. You can't see a fucking thing.