For many Michigan homeowners facing foreclosure, a Michigan Court of Appeals' ruling has made it more difficult for the Mortgage Electronic Registration System (MERS) to take their homes.
For lenders, MERS provides a valuable service. MERS takes mortgages held by lenders throughout the mortgage industry and groups them into mortgage-backed security products.
Using its position in the industry, MERS forecloses on homeowners by "foreclosure by advertising." Meaning, after a homeowner becomes 90 days past due on payments, the lender can publish notice of the sale of the home in the paper. Notification does not require that the lender go to court to file a lawsuit or otherwise prove they are the rightful owner of the debt.
The ruling by the court of appeals states that Michigan law requires that the foreclosing party actually be the party that holds the mortgage. And, since MERS is not the rightful holder of these mortgages, they do not have the authority to foreclose on these homes. Therefore, the many foreclosure proceedings involving MERS will stop.
The effects of the ruling may go beyond mortgages currently in the foreclosure process and reach homes in Michigan that MERS previously foreclosed upon and have subsequently been sold, as ownership of these properties may now be called into doubt.
If you are facing a foreclosure of have been foreclosed upon in recent years by MERS, speak with an experienced attorney about how this ruling could affect you.