Michigan High Court Says Yes To Electronic Database Foreclosures

A ruling by the Michigan Supreme Court Wednesday overturned an lower court's decision that suspended thousands of foreclosures in the state. The new decision allows Mortgage Electronic Registration Systems (MERS), a third-party record-holding agency that acts on behalf of lenders to foreclose on homes.

"The Supreme Court's decision affirms MERS business model and will allow the Michigan real estate industry to get back to business as usual," said Bill Beckmann, president and CEO of Merscorp, the parent company of MERS in a story reported by DSNews, a mortgage industry news site.

MERS is an privately held company that runs a database tracking the ownership of mortgage loans. It claims to own titles to nearly half the country's mortgages, The New York Times reports.

Critics say the speed and ease of a MERS transaction make it hard to determine who owns a property, making contesting foreclosures far more difficult.

In April, the Michigan Court of Appeals, responding to a suit by homeowners in Kent and Jackson Counties, decided that MERS could not legally initiate homes repossessions, MLive reports.

The Court said MERS could not foreclose on homeowners because the agency had not made any loans.

Mark Brewer, Chairman of the Michigan Democratic Party, called the 4-3 Supreme Court ruling a "pro-special interest, pro-big bank decision" that reflected the $450,000 worth of campaign donations the Michigan Association of Realtors contributed to friendly candidates in 2010.

"These Republican Justices repeatedly side with the special interests who fill their campaign coffers during election season," Brewer said in a release. "Siding with big banks over the victims of illegal foreclosure is inexcusable."

Although the state's Supreme Court is officially non-partisan, justices are widely considered to take sides along party lines.

The three dissenting justices wanted to keep the case alive and hear more argument, MLive reports.

A report released Thursday by the Center for Responsible lending found 3.6 million households nationwide are at "immediate, serious risk" of losing their homes.

In Michigan, where real estate prices were already low before the market collapsed, lower-income borrowers are most likely to lose their homes to foreclosure, the report found.

Comments

[drbob601]

03:45 AM on 11/24/2011

""The Supreme Court's decision affirms MERS business model and will allow the Michigan real estate industry to get back to business as usual," said Bill Beckmann, president and CEO of Merscorp."

Back to business as usual for the bankers, too. Looks like the FIRE industry is going to attempt to cover up this huge mess in their usual (and thus far successful) manner: spreading influence money. They'll have to work on a state-by-state basis, since the individual state courts are mixed on the question of the relationship between MERS and noteholders.

Personally, I think the Michigan High Court is on the wrong side here, but, hey, it is what it is (or, more precisely, what THEY SAY it is).

[Jeffrey M Davis]

08:43 PM on 11/22/2011

Michigan law clearly states that only someone with a tangible interest in the property can foreclose. MERS has no tangible interest: it loses nothing if a homeowner stops paying his mortgage, and gains nothing when he does pay. This is one of the most politically-driven acts by a court known for asking business what it wants, holding a mock trial, and then ruling in business' favor.

[Hotspot]

11:49 PM on 11/19/2011

The Michigan Supreme Court is all rightwing.

[Alex Turnbull]

06:45 AM on 11/18/2011

Our country is terribly broken and I don't see any fix possible. WHERE IS GOD!!

[james in denver]

09:12 PM on 11/17/2011

I absolutely disagree with the Michigan Supreme Court decision.

MERS has no standing, as they are only acting as intermediaries in the exchange and registration of real property between the "note holder" (mortgage company, or investor the loan was sold to ) and county clerks of court in the recorders office.

MERS does not assume the "note", nor do they register with the ONLY official keeper of records, county recorder's offices.

Clearly, they have no standing.

[SophieSmith19]

03:54 PM on 11/17/2011

Ahh all of this again and again. I doubt the numbers are more than 3.6 million.
http://www.righttocancel.com/blog/category/stop-foreclosure/

[DarrylP]

03:26 PM on 11/17/2011

Occupy reason #354...This story illustrates exactly the sort of things Occupy is protesting. MERS simultaneously claims it owns the mortgages and does not own the mortgages, depending on which is advantageous at that moment. MERS' own bylaws state that MERS only registers the transactions, it is not a party to them. Yet, for this purpose, the court found the opposite.

This court action, solely along party lines and representing mega-business over the citizen, is precisely what Occupy is all about.