MERS–Something borrowed

In all likelihood, title searches and your current record research are turning up more mentions of Mortgage Electronic Registration Systems, Inc. (MERS) as the nominee for lenders. However, although the actual lender may have changed, a named lender may not be the institution currently holding the loan. MERS is making more headlines these days as the foreclosure mess and stories of robosigning move to the forefront, but it has been around for much longer than just the past couple of years. MERS and the approach it takes to managing mortgages affects more than those unfortunate people in foreclosure (sometimes wrongfully so); it can also affect those who are current with their payments and simply want to sell their real estate. Before explaining MERS, let me tell you a parallel real life story to illustrate this latter dilemma from an earlier era of national financial turmoil.

Between signing the agreement and getting to the closing table to buy my first house in 1980, interest rates skyrocketed from 8% to beyond 14%, but I bit the bullet and took on the larger payments with the local savings and loan I had been patronizing for years. When rates settled around 6% I refinanced, reducing the terms from 30 years down to 15. All went well until my bank, along with a slew of other small institutions, was seized by the Resolution Trust Corporation (RTC) just about the time I had refinanced once again to take advantage of another 2% drop in interest rates. The RTC liquidated the assets (loans due) of the closed institutions over a period of time, farming them out to numerous other lenders regulated under the Federal Deposit Insurance Corporation.

My account was transferred multiple times in under two years; more than once I sent in my payment just days before receiving a letter announcing a new lender owned my mortgage. But all went well ­ until it came time to sell my house. The RTC still had its finger in the pie, and somehow was demanding a document sealed by my original lender (which RTC had closed) certifying that the first refinanced loan was satisfied (it was paid off with the second refinance just as RTC was picking up the reins) before RTC would allow transfer of title. Catch 22? Part of the problem was lack of public recordation in the seizure process. It took months for my attorney to solve this. Ouch, but I finally sold my house.

Read on.

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