Adam Brown | Bloomberg Law In 2008, a decade-long housing bubble fueled by the growth of mortgage securitization finally burst, and the United States fell into a deep recession. Tightening credit markets, plummeting home values, and increased unemployment led to a massive increase in residential foreclosures, particularly among subprime borrowers. Although current foreclosure activity is down at least 14 percent from a year ago, with one in every 579 units subject to a filing, the foreclosure pipeline remains full.1 An estimated 14 million distressed properties (1.5 million already in the foreclosure process and another 3.5 million with delinquent mortgages) must be absorbed by the housing market before foreclosure rates can return to historical norms.2 The abundance of foreclosure actions have given courts from virtually every state an opportunity to weigh in on various aspects of the business model developed by Mortgage Electronic Registration Systems, Inc., and its parent company MERSCORP, Inc. (collectively, MERS). Originally established to track mortgage loan assignments electronically, MERS has become one of the most recognizable faces of the foreclosure crisis despite the fact that courts, academics, and regulators continue to struggle to define its role in the foreclosure process. MERS has had some favorable court rulings in the past year. Nevertheless, its litigation record is far from perfect, and significant questions remain in many states regarding the proper scope of MERS's authority. This article will (1) provide a brief background regarding the MERS model, (2) examine some of the significant 2011 rulings that exemplify the types of problems courts continue to encounter in trying to understand MERS and defining the boundaries of its rights and authority, and (3) discuss a new wave of lawsuits being filed against MERS by various counties and states.
MERS and Its Role in the Mortgage Lending Process
Significant Decisions from 2011
Recent Complaints against MERS
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