No, obviously MERS mortgages have their legal problems, what I mean is what the DC attorney general is doing is pure politics. And now it appears to be accepted as fact on the internet.
But to me, all this hoopla about MERS “violating the law” because the true assignee of the mortgage is hidden, ergo, there is some sort of fraud or violation of recording statutes really misses the point.
I can buy a property from you, and get delivery of a grant deed. Once I do that, I own the property whether I choose to record it or not. If I choose not to record the grant deed, I am taking a huge and stupid risk, as the seller can sell it to someone else who when they do record will generally defeat my right to ownership, or if intervening judgment or tax liens get recorded before I record it, my property will be subject to the prior seller’s liabilities. By not recording the grant deed, I am not “violating the law”, but I am responsible for the legal consequences of my decision not to record it. Those legal consequences depend on the circumstances that create an issue because of my non-recordation of my interest.
With MERS mortgages which are recorded, where MERS is this “nominee” for some other beneficial holder who is relying on MERS’ electronic system of transfers in lieu of recording an actual assignment of the mortgage, I don’t think the issue is illegality so much as it is the potential legal problems with not having the assignment of record. Clearly, this is the lesson on MERS mortgages demonstrated by the Kansas Supreme Court in Landmark National Bank v. Kesler in which it was held that MERS as nominee for a junior mortgage was not entitled to notice of a senior lien’s foreclosure under the Kansas system, since the true owner of the mortgage had not recorded its assignment.
So I agree that the concept of trying to create a private system of assignments just to save on recording fees and servicing costs is a failed experiment and not a system worth defending. I would think that any counsel for a lender holding an unrecorded assignment with MERS as nominee would be advising to get it out of the MERS system and have the assignment recorded pronto. Who wants to be a MERS guinea pig at this point?
But all this internet hysteria about MERS mortgages being invalidated on a mass scale, recording statutes being the equivalent of consumer protection statutes, the lack of recordation being a massive fraud, and the poor recorders not getting fees for assignments they did not record, results in a lot of internet hits for the sites that try to one up each other on the sensationalism, but for the most part is a bunch of hogwash.
