Lawmaker Questions Power to Foreclose "MERS"


Lawmaker Questions Power to Foreclose “MERS”

Lawmaker Questions Power to Foreclose “MERS”

  • NOVEMBER 1, 2010, 7:53 P.M. ET

Lawmaker Questions Power to Foreclose


A Virginia lawmaker asked the state’s attorney general to launch an investigation of Mortgage Electronic Registration Systems, the middleman firm in millions of court filings that helps keep the mortgage-securitization machine moving.

Robert G. Marshall, a Republican member of the Virginia House of Delegates, requested that Virginia Attorney General Ken Cuccinelli determine whether the Reston, Va., company violates state law because it doesn’t pay a fee every time a loan changes hands. Opinions differ as to whether MERS must pay local fees every time it sells an interest in a loan.

“There are too many people getting foreclosed on not properly,” said Mr. Marshall, who represents two counties near Washington, adding that he is drafting a Virginia law that would require lenders to pay county fees before being allowed to proceed with foreclosures. “The disdain with which the conditions of law have been treated by those who want to make money too fast is very troubling to me.”

Brian J. Gottstein, a spokesman for Mr. Cuccinelli, said the attorney general is required to produce an opinion on the matter but declined to comment “on any particular industry participant right now.”

R.K. Arnold, MERS’s chief executive, said the company’s activities are legal in all 50 states and have held up under previous scrutiny.

The challenge is the latest sign lawmakers and lawyers for borrowers are taking aim at MERS as the foreclosure mess drags on. Created 13 years ago by Fannie Mae, Freddie Mac and several large U.S. banks as an electronic registry of land records, the company’s name is listed as the agent for mortgage lenders on documents for 65 million home loans. But that same streamlining has made MERS a target of critics who say the company might not have the legal right that it claims to foreclose on borrowers.

In a state-court lawsuit filed in Georgia last week seeking class-action status, lawyer David Ates says MERS isn’t a secured creditor, meaning it lacks the power to foreclose on behalf of lenders, mortgage servicers or other parties.

Mr. Ates said he is seeking to have all Georgia foreclosures by the company “be declared invalid and the title be returned to the debtor.”

Mr. Arnold said the company’s role in foreclosing on a mortgage is unquestionable because every time a loan is registered with MERS, the borrower must sign a document saying the company assumes all rights and responsibilities on behalf of the creditor or lender.

“The legal concept is as sound as any concept in America: You made a loan to a homeowner,” Mr. Arnold said in an interview. “They granted you a mortgage, and that’s recorded in the land records, and the company that has the mortgage and can foreclose is MERS.”

Mr. Arnold added: “We can foreclose in all 50 states, and we will continue to do that.”

Tom Kelly, a spokesman for J.P. Morgan Chase, said last month that the New York bank hasn’t used the MERS record-keeping system since at least 2008 to foreclose in the bank’s name because “some local courts wouldn’t accept MERS.” J.P. Morgan still uses MERS for mortgages originated by other banks or brokers.

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5 Responses to “Lawmaker Questions Power to Foreclose “MERS””

  1. I believe if you check the records, you will find after the USA filed for Bankruptcy in 1933, You can’t foreclose on homes, and farms.

    It was the way it was, because of giving up the gold, they were supposed to pay all bills that a person had, and I remember a school teacher bringing it up in the 5th grade, but when it should be taught it isn’t. Because someone doesn’t want you to know what your rights are!

  2. MERS Defense Flaw

    On July 21, 2010 MERS registered with the California Secretary of State.
    MERS registration in California is not retroactive until its complete for the following reasons:
    1. As a result of MERS intentional failure from obtaining a certificate of qualification from the California Secretary of State as a “Beneficiary”, including filing returns and paying taxes, MERS is not allowed the right to defend a lawsuit when named as or defending its actions in a “Beneficiary” capacity, pursuant to California Revenue & Taxation Code Section §§ 23301, 23301.6, 23304.1.

    “A suspended corporation is not allowed to exercise the powers and privileges of a corporation in good standing, including the right to sue or defend a lawsuit while its taxes remain unpaid”
    PERFORMANCE PLASTERING v. RICHMOND AM. HOMES, 153 Cal.App.4th 659 (2007) 63 Cal.Rptr.3d 537

    2. MERS must first produce a Certificate of Relief from Voidability for the time prior to July 21, 2010, California Revenue & Tax Code 23305.1 and file with this Superior Court Clerk receipt of payment to the California Secretary of State for taxes and penalties, California Corporations Code §2203(c).

    “UMML qualified to transact intrastate business, but failed to pay the necessary fees, penalties and taxes. The trial court correctly dismissed the complaint without prejudice.”
    United Medical Management Ltd. v. Gatto, 49 Cal. App. 4th 1732 – Cal: Court of Appeals, 2nd Appellate

    3. MERS will very likely cite one of these two cases:
    United Medical Management Ltd. v. Gatto 49 Cal.App.4th 1732 (1996),
    or an unpublished case as of 10/18/2010 Perlas v. Mortgage Elec. Registration Systems, Inc., 2010 WL 3079262 * 7

    Both of which are based upon this case:
    “A nonqualified corporation subject to a misdemeanor prosecution and on conviction to a heavy fine for doing business without complying with the law, is permitted to qualify, be restored to full legal competency and have its prior transactions given full effect.” (Tucker v. Cave Springs Min. Corp. (1934) 139 Cal. App. 213, 217 [33 P.2d 871].

    So demand the filing of receipts and that Certificat of Relief from Voidability!

    Get more flaws at

  3. Keith says:

    I believe if you check the records, you will find after the USA filed for Bankruptcy in 1933, You can’t foreclose on homes, and farms.


    Your the only person I’ve read on this site who understands the law
    or in this case public policy. It goes with HJR-192 and the bankruptcy.
    This is because all the gold and silver was taken out of money in the US and the “Trading with the Enemies Act” was established. All commerce
    done outside of acceptance is fraud. When you pay a bill with debt notes you actually paying bail. The fact this isn’t widely known shows how corrupt this system really is, it is suppressed.

  4. Ron Moss says:

    Where does Virginia put it’s Criminals? or do they just tar and feather them?


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