State of Washington Supreme Court: No Note, No Foreclosure
The State of Washington’s Supreme Court ruled that Mortgage Electronic Registration Systems, Inc. (MERS) is prohibited from using the state’s non-judicial process to foreclose on properties unless they hold the promissory note. The decision came about after the court ruled in favor of two plaintiffs who were foreclosed on by MERS although the company did not hold the promissory note for the property.
“Simply put, if MERS does not hold the note, it is not a lawful beneficiary,” Justice Tom Chambers wrote in the case opinion. (source)
MERS records and tracks the transfer of mortgages electronically, effectively avoiding the cost of recording fees and the inconvenience of recording ownership at the courthouse. But MERS’ involvement in the foreclosure crisis has raised the ire of both homeowners and legislators who were alarmed at the number of homes foreclosed on by the entity without a promissory note. In response, MERS began abstaining from initiating foreclosures on properties for which they didn’t have a note. But that abstention only began a year ago. There are still foreclosure cases making their way through the court system. The Washington Supreme Court’s ruling could impact those foreclosure cases that are the result of MERS now defunct policy.