On February 14, 2011, the New Hampshire Superior Court upheld the authority of the Mortgage Electronic Registration Systems (“MERS”) to assign its interest in a mortgage. Plaintiffs sought injunctive relief to prevent servicer Aurora Loan Services LLC (“Aurora”) from proceeding with a foreclosure sale of Plaintiffs’ residence, arguing that MERS, as nominee, lacked the authority to assign its interest in the mortgage to Aurora, thereby invalidating Aurora’s ability to foreclose or collect on the mortgage. In denying Plaintiffs’ request for injunctive relief, the Superior Court rejected the plaintiffs’ argument that the use of MERS as nominee in and of itself was either “fraudulent or wrong.” Looking to the mortgage instrument signed by the plaintiffs, the Superior Court then found that the plaintiffs had explicitly granted MERS the authority to assign its interest, and held that MERS’ assignment to Aurora was valid. Decision.
MERS
Bair Speech on the Mortgage Industry
On January 19, FDIC Chairman Bair spoke at the Summit on Residential Mortgage Servicing for the 21st Century where she discussed, among other things: (i) establishing a fixed formula to govern treatment of first and second mortgages when the servicer owns the second mortgage, (ii) requiring banks to foreclose in their own names instead of allowing MERS to foreclose, (iii) establishing a foreclosure claims commission to be funded by servicers to address homeowner complaints from foreclosures with servicing errors, (iv) establishing incentives for loss mitigation in servicing, and (v) possible features of a definition for “qualified residential mortgages” which are exempt from risk retention requirements under the Dodd-Frank Act. FDIC Release.