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A recent decision by the Utah Court of Appeals deals a blow to Utah homeowners facing foreclosures pursued through the Mortgage Electronic Registration Systems, otherwise known as MERS. MERS was created in the mid-1990s by the Mortgage Bankers Association to serve as a database keeping track of entities that have interests in a particular mortgage note. Such interests were often registered by investment funds that purchased bundles of notes marketed as mortgage backed securities at the height of the real estate bubble. One incentive is that bulk investors could avoid transfer fees for every change in mortgage note ownership, of which there many.

On many property deeds of trust, MERS is recorded as the "beneficiary" of the note and as "nominee" for actual note holders, giving it agent status for the note holders. When homeowners default, MERS pursues foreclosure as the agent for those actual holders of the mortgage notes. Homeowners have challenged this practice on the basis that age old real property law dictates that only an actual owner of a mortgage note can pursue foreclosure. Specifically, they argue that MERS has no financial interest in the notes and MERS cannot prove it is the agent for the pools of actual note holders.

The Court of Appeals sided with lower courts that have dismissed suits brought by homeowners who face foreclosure, on the basis that this legal theory does not hold water and that MERS can foreclose. The ruling does not, however, deal with the other key legal issue in these foreclosure cases. Utah statutes state that the owner of a mortgage note cannot be separated from the deed of trust and the money lender is the beneficiary of the deed of trust, not MERS.

The attorney for the homeowner in the case in question has indicated that he will ask the Court of Appeals to reconsider its decision or he will appeal the decision to the Utah Supreme Court. Either way, homeowners are entitled to a final decision on whether MERS can continue to aggressively pursue foreclosing on their homes as it as consistently done since the Great Recession settled in. Since the foreclosure crisis portion of our current economic doldrums was created by sloppy lending practices to begin with, such certainty only seems fair. Keep you fingers crossed for the little guy.


  1. Gravatar for amgsmith

    It doesn't have to all be bad when it comes to foreclosures. You can make quite a profit from investing in foreclosures, and with the market as low as it is right now, it's the best time to buy foreclosures and sell them late for a great profit.

  2. Gravatar for Bret Hanna

    True, but that only helps those who are in a position to invest. The homeowners who lose their homes are simply turned out into the cold.

  3. Gravatar for Senka

    Massachusetts stood up together on Sunday, demanding answers and justice! MA candidate for US Senate-Marisa DeFranco and her husband had attended the meeting as well. We were pleased to see her extensive knowledge about the issue and her willingness to fight with us:

    Join us in disclosing MERS and banks' lies and their ponzi scheme which they used to rob us blind!

  4. Gravatar for Utah Dad

    This is very unfortunate. I know many people who are close to losing their homes with no idea what they will do next. And I have to agree with Bret Hanna, that foreclosures are a great option, if you have the money to invest.

  5. Gravatar for Lily

    I agree with the previous posters, however, this decade is going to be a strong reminder to make sure you have the funds available to afford a home.

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