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1.3.2.4 Mortgage Electronic Registration System (MERS)

The Mortgage Electronic Registration System (MERS) is an electronic registry and clearinghouse established to track ownership and servicing rights in mortgages. For many home loans, MERS, as “nominee” for the lender, is the mortgage holder of record or the beneficiary on a deed of trust. MERS typically has no legal or beneficial interest in the promissory note. Prior to 2012, mortgage servicers often initiated foreclosure proceedings in MERS’ name and served documents on borrowers stating that MERS was foreclosing on their homes. Since then, MERS has directed servicers to cease these practices.27 However, servicers, their contractors, and foreclosure law firms continue to process assignments of mortgages and deeds of trust in MERS’ name. These assignments should not be construed as shortcuts for transfer of negotiable notes according to the controlling UCC standards. Courts continue to disagree over the impact of use of MERS as a placeholder name in transfers of mortgages and notes.28

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