Loan Owners Must Disclose Their Identity before Foreclosing on Bankrupt Homeowners
Issue: Mortgage Lending
Amicus Brief, filed 20 Aug 2009
Download the full brief (PDF)
CRL’s amicus brief in support of bankrupt homeowners in 18 cases appealed by Mortgage Electronic Registration Systems, Inc. (MERS), in which the Nevada bankruptcy court determined that loan owners must disclose their identity, rather than using MERS’ name, when seeking the bankruptcy court’s permission to foreclose on homeowners who have filed for bankruptcy. MERS is a company created by the mortgage industry to electronically track the ownership of loans, as a way of avoiding the need to report loan ownership changes in official local government records. The existence of MERS makes it difficult for homeowners to know who owns their loan, which can be essential information to borrowers seeking modifications or with legal claims about their loan. The brief argues that MERS, as opposed to the loan owners, lacks the standing and real-party-in-interest status necessary to seek a federal court’s permission to foreclose. It also argues that MERS did not submit sufficient proof in the cases on appeal to entitle it—or anybody else—to deprive homeowners of their fundamental right under bankruptcy laws to stop foreclosure proceedings.