Mortgage Servicing Fraud
occurs post loan origination when mortgage servicers use false statements and book-keeping entries, fabricated assignments, forged signatures and utter counterfeit intangible Notes to take a homeowner's property and equity.
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Jill

I am about to close and have heard alot about the problems with MERS, so I asked the lender about MERS and I am wondering if they are being completely honest with me?

Hi _____, MERS is only used as protection for fraud, it's to prevent mainly multiple purchase loans being done at the same time. It does not affect title or the loan itself in any shape or form. The borrower(s) will hold title as they decide with escrow.  I believe your concern lies in the pooling of mortgages that are then sold as mortgage-backed securities to investors; the only two investors today in mortgage-backed securities are fannie mae & freddie mac – both are controlled and regulated by the U.S. government.  The title of the property will not be affected by MERS or the investors.

 

As far as what loans the bank keeps and which they sell its impossible to say, we can have the loan for a month, three months, or a year and be sold, and when sold in a month if it is sold to say Bank A , it does not guarantee that they'll keep the loan. We are a portfolio lender, so the loan committee decides on which loan(s) they want to keep and which loans they want to sell – we have no control over this whatsoever. 

 

Every lender you deal with will sell their loans – this is normal business practice in order to keep the markets liquid.  This is why the borrower signs a form in which he acknowledges that the loan could be sold
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Bill
Jill wrote:

I am about to close and have heard alot about the problems with MERS, so I asked the lender about MERS and I am wondering if they are being completely honest with me?

Hi _____, MERS is only used as protection for fraud, it's to prevent mainly multiple purchase loans being done at the same time. It does not affect title or the loan itself in any shape or form. The borrower(s) will hold title as they decide with escrow.  I believe your concern lies in the pooling of mortgages that are then sold as mortgage-backed securities to investors; the only two investors today in mortgage-backed securities are fannie mae & freddie mac – both are controlled and regulated by the U.S. government.  The title of the property will not be affected by MERS or the investors.

 

As far as what loans the bank keeps and which they sell its impossible to say, we can have the loan for a month, three months, or a year and be sold, and when sold in a month if it is sold to say Bank A , it does not guarantee that they'll keep the loan. We are a portfolio lender, so the loan committee decides on which loan(s) they want to keep and which loans they want to sell – we have no control over this whatsoever. 

 

Every lender you deal with will sell their loans – this is normal business practice in order to keep the markets liquid.  This is why the borrower signs a form in which he acknowledges that the loan could be sold

Of course this is a LIE.  The reason the banks use MERS is to avoid fees they are required to pay with each sale of the note.  They also found that there are more sinister uses such as fraudulently assigning notes, hiding who the current owner of a note is, ect.....There are huge legal questions just now being answered.  

I'm not sure you will be able to avoid a MERS mortgage other than deciding to go with another lender.  Even IF you do not execute a MOM mortgage, it appears the bank can later assign the mortgage to MERS.  

The real problems often stem from the predatory sericers.  You will NOT be able to pick who your servicer is going to be.  

I really think the ONLY way to avoid any potential problems is to use a small local bank that does NOT sell it's loans or servicing.  This again would NOT guarantee a future sale of your note or servicing won't happen, but it's a pretty good start.

You really just need to keep track of everything, pay your mortgage as required, and address problems immediately when they arise.  Millions of homeowners NEVER have a problem with their mortgage.  
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Floyd

Several large lenders, including JPMorgan Chase, have ceased using MERS for new loans.

 

If you waited until the eve of closing to inquire as to whether MERS was to me involved in your mortgage security instrument, then you probably already have a serious problem, unless you are merely re-financing.  Most real estate purchase and sale agreements contain a financing contingency and well as a contemplated closing date.

 

The wording of the financing contingency often requires the borrower to apply for financing and to notify the seller by some date certain if acceptable financing cannot be found.  When this date passes, usually the buyer/borrower is fully liable and can lose the earnest money deposit if the buyer fails to go forward with the purchase on the contemplated closing date shown in the purchase agreement.

 

Leaving aside whether an MERS mortgage poses any special perils to you, even supposing that it did, if you have passed the date specified in the financing contingency and the closing date is already approaching, then you are already over a barrel.

 

You are unlikely to be able to arrange alternative financing in time and refusing to go forward with the transaction is very likely to result in the loss of the earnest money deposit.  The lender is very unlikely to deviate from its business practice of closing with an MERS instrument if that is what it is doing.  Even if they did refrain from using a MOM instrument, they could always still assign the loan to MERS after the closing so only getting them to agree to write in a non-assignability clause, which they will NEVER DO, would preclude a later assignment.

If the financing contingency has not passed, the surest way to avoid MERS is to use a lender that doesn't involve MERS in the transaction.  This will cost you a new application fee, renewed effort preparing the application, etc.  It is certainly true that if enough borrower refused to do business with MERS lenders, then these lenders would abandon MERS.

 

IF it was important to you for your mortgage NOT to be assigned to MERS, then you probably needed to obtain written representations from the lender at application that the loan would NOT be subject to assignment to MERS or at least to use a lender KNOWN not to use MERS. 

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