An Arizona federal judge dismissed 72 lawsuits against MERS (Mortgage Electronic Registration Systems Inc.), which tracks ownership, possession and servicing rights of home loans and mortgages. Many attorneys looking to take advantage of desperate homeowners charge large up-front fees with the promise of going after MERS to gain leverage for a loan modification.
Attorneys claim that having MERS on the mortgages or deeds of trust leaves them unsecured because ownership of the note and mortgage has been separated. A closely related argument is that MERS is unable to deliver the original note because they are just a clearing house for the true owners of the note. U.S. District Judge James Teilborg rejected these very arguments raised by plaintiffs’ attorneys in numerous cases in the federal court, stating: "This court does not find legal support for the proposition that the MERS system of securitization is so inherently defective so as to render every MERS deed of trust completely unenforceable and unassignable."
The court dismissed 72 cases against MERS, including six class actions. This powerful ruling is more proof that these attorneys were bilking their clients for legal fees based upon an unsupportable legal argument. Another attorney that raised similar claims against MERS was fined $50,000 for filing frivolous litigation.
Judge Teilborg found that contrary to the plaintiffs' allegations, MERS' role as a beneficiary and its assignments of mortgages were proper, and MERS and its appointed trustees do have the power to foreclose. In addition, he ruled that the plaintiffs lacked standing to challenge the assignments.
Homeowners should be leery of any solicitation from attorneys or otherwise which promises to find errors in the loan documentation or the foreclosure process. Please search for Consumer Warnings on our website for the latest in scams and frauds being perpetrated by loan mod companies, trustee postponement services, loan auditors and attorneys alike.