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JPMorgan Chase drops MERS as foreclosure agent, still uses system

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JPMorgan Chase CEO Jamie Dimon assured investors Wednesday the bank no longer allows Mortgage Electronic Registration System (MERS) to foreclose on mortgage notes it owns because some states will not allow it, but the bank still uses the system. He made mention of the subject during a Q&A dialogue in a teleconference about the firm's quarterly earnings. According to company, JPMorgan Chase stopped foreclosing in MERS' name in 2007 and 2008. Original reports on the subject said JPMorgan has stopped "using" MERS, but Thomas Kelly, a spokesman for the bank, said that's not true. "If you're asking if we've stopped using MERS, the answer is no because many of the mortgages we service are registered on MERS," said Kelly. A statement on the MERS website offers further clarifications. "JPM has chosen to foreclose in their own name, which is a common decision that is allowed under the structure of MERS." The statement also clarified:
JP Morgan Chase is a valued member of MERS. They currently have their correspondent loans registered on the MERS System. They do not, nor have they ever, registered their retail loans on the MERS System. As members of MERS and for loans registered on the MERS System, banks have the option of foreclosing in their own name, or MERS foreclosing for them.
The MERS System is an electronic tracking and holding system designed to streamline the mortgages process. Each mortgage loan in the system is assigned an 18-digit Mortgage Identification Number which allows lenders to track individual mortgages. Through the system, MERS holds legal title to a mortgage as the loan owner's agent. That owner can grant MERS the holder of the note with the right to enforce foreclosure if the loan goes into default. Since 1997, more than 65 million home loans have been registered in the system. But some states no longer allow the system to be used. The Kansas Supreme Court ruled in 2009 that mortgage proceedings through MERS eliminates transparency because a homeowner no longer knows which lender owns the mortgage. Many of the correspondent loans JPMorgan purchases are already registered on MERS as are some of the loans it services for investors. However, the bank takes the title out of the MERS name before beginning to foreclose on a property. Write to Christine Ricciardi.

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