| MERS Proposed Changes to Foreclosure Initiation |
| Wednesday, 30 November 2005 | |
|
Safeguard recently received the following update from Pierce and Associates an Illinois foreclosure law firm regarding proposed changes to Mortgage Electronic Registration System's (MERS) foreclosure procedures. This is due to recent Florida litigation concerning whether MERS has standing to bring a foreclosure action. Subject: Important information concerning foreclosures in the
name of Mers in Illinois
http://www.atty-pierce.com/mersdocument.pdf There are substantial monetary penalties that can be accessed against the Servicer and the foreclosure firm, if the MERS rules are not followed in commencing a foreclosure. In Illinois there appear to be two options. First Option - The foreclosure can be brought in the name of MERS, if the designated MERS officer at the Servicer's office is holding the original Mortgage Note and the Note is assigned in blank. The foreclosure firm would need specific proof that the designated MERS signing officer is actually holding and has in his/her possession the original Note, at commencement of the foreclosure proceeding. The foreclosure firm would require a copy of the Note, both front and back, showing an assignment in blank, and a certification that the Mers signing officer has actual possession of the original Note. Mere access to the Note held by a custodian or otherwise would not be insuffieient. Our office does not recommend the First Option. Second Option - At referral, an assignment is prepared by the servicer or outsource company, properly executed and notarized by the Mers designated signing officer, and delivered to the foreclosure firm at referral of the foreclosure proceeding. A faxed copy of the Assignment or scanned and emailed copy of the Assignment would be sufficient. The foreclosure will then be prosecuted in the name of the Servicer. Our office recommends the Second Option. As most know, in Illinois, the Sale Bid can be assigned to whomever the Servicer directs, ie, HUD, VA, Investor, or left in the name of the Servicer. Mers would never take title and would never be a party to the action. This is the safest and easiest method to resolve the problem in our opinion. In Illinois, neither state statute nor Judge demands, require that we actually record the assignment to the foreclosing party, ie the Servicer. This being the case, we would not have to actually record the Assignment from Mers to the Servicer, when we are doing our foreclosure. Consequently, if the loan were to reinstate, we would return the unrecorded Assignment from Mers to the Servicer or destroy it. This would allow for ease of re-boarding the loan as a Mers loan on reinstatement. Given the above, we suggest you modify your procedures at this time for Mers loans, so as to send a properly executed Assignmant of the loan from Mers to the Servicer, at file referral. Under no circumstances will our office commencement a foreclosure after January 19, 2006 in the name of Mers under Option One above, without the required information stated above. Likewise, no foreclosures will be commenced after January 19, 2006 under Option Two, without the necessary Assignment sent at referral as stated and described above. We suggest that procedures are put in place at this time so as to avoid any delays in commencing foreclosures on or after January 19,2006. Please contact the undersigned if you should have any questions. Jill D. Rein, Esq. |
