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Article

Abstract

Despite the simple premise of the MERS System, opponents--or those simply trying to invalidate or forestall enforcement of their mortgages--have leveled various challenges to MERS's practices and even its basic business model. Taking an aerial view of the challenges, it is possible to discern a certain pattern as one challenge seemed to morph into the next (often following rejection of the earlier one in the courts). Some borrowers have asserted that MERS lacked legal standing to foreclose because it was a mere nominee and not the owner of the note. Even if MERS's legal standing was upheld, borrowers pointed to the nominee status as an empty formality, arguing that it deprived MERS of the requisite beneficial interest to commence foreclosure or assign the security instrument, even to the holder who had since acquired the beneficial interest. When the lender or note owner commenced foreclosures or sought to enforce the lien instead of MERS, borrowers still challenged the security instrument, arguing that MERS's designation as nominee constituted an impermissible split of the note from the mortgage, rendering both unenforceable. From this distant vantage, all the challenges might be viewed as permutations of the same theme--who has the legal power and interest sufficient to enforce the security given for a loan? The overarching response is that MERS, as nominee or agent for the beneficial owner, has the power to enforce the lien and security interest.

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