MERS publishes new foreclosure guidelines
[Update 1: Adds comment from MERS] Mortgage Electronic Registration Systems, the electronic mortgage registry system at the center of debate over the foreclosure crisis, is further distancing itself from the foreclosure process by publishing new guidelines for members. Parent company Merscorp Inc. issued new foreclosure guidelines on its website, advising members not to foreclose nor initiate legal proceedings in a bankruptcy in the name of MERS. As HousingWire reported, MERS first told members not to foreclose in its name in February. MERS advised members then to bring foreclosures "only in the name of the holder of the note, in the name of the trustee or the servicer of record acting on behalf of the trustee." Now, before a member begins a foreclosure proceeding, an "assignment of the security instrument from MERS must be executed by the member's MERS signing officer and sent for recording," at the county clerk's office, according to a new set of transitional procedures. The changes come after months of legal wrangling in local and appellate courts across the country over MERS' role as a party to foreclosure. There are about 32 million U.S. mortgages, or 60% of all American homes, tied up in MERS. The drumbeat against MERS intensified last fall as robo-signing — the signing of foreclosure affidavits of indebtedness en masse, without proper review — surfaced. The robo-signing scandal caused several large servicers to temporarily halt foreclosures as they reviewed their procedures. Earlier this year, Freddie Mac advised servicers not to foreclose in the MERS name. MERS responded to inquiries about the change saying it's important to note "foreclosure wasn't central to our core business purpose and there were no benefits to us – MERS never got paid anything for foreclosures done in its name." Company spokesperson Janis Smith added, "As a common agent, or nominee, for MERS members, MERS is the mortgagee of record on the loan and does have the authority to act on behalf of the owner of the loan. Foreclosures in MERS name are legally possible, and some members wanted to do it, but in recent years most MERS members were already assigning loans out of MERS and foreclosing in their own names." Write to Kerri Panchuk.