in Kulturkampf

MSM Misses MERS Mortgage Mess

Remember just yesterday we were talking about Americans fighting foreclosure — and winning — because the banks were so sloppy with vital paperwork? Both Matt Taibbi and Barry Ritzholtz are on a major new related story this morning, and once again the MSM is out to lunch:
A landmark ruling in a recent Kansas Supreme Court case may have given millions of distressed homeowners the legal wedge they need to avoid foreclosure. In Landmark National Bank v. Kesler, 2009 Kan. LEXIS 834, the Kansas Supreme Court held that a nominee company called MERS has no right or standing to bring an action for foreclosure. MERS is an acronym for Mortgage Electronic Registration Systems, a private company that registers mortgages electronically and tracks changes in ownership. The significance of the holding is that if MERS has no standing to foreclose, then nobody has standing to foreclose – on 60 million mortgages. That is the number of American mortgages currently reported to be held by MERS. Over half of all new U.S. residential mortgage loans are registered with MERS and recorded in its name. Holdings of the Kansas Supreme Court are not binding on the rest of the country, but they are dicta of which other courts take note; and the reasoning behind the decision is sound.

Basically, in order to make the fancy mortgage-backed securities at the heart of the financial crisis, the industry created a straw-man to hold mortgage debt and foreclose on defaulting borrowers. Now a state supreme court has ruled the straw man has no legal standing to foreclose on anybody.

In other words, a court has recognized the modern mortgage industry is a gigantic criminal enterprise. And it took an obscure blogger to break the story.

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