Ongoing MERS Lawsuits May Hurt Current RMBS

Palm Coast, FL – March 28, 2011 – Ratings agency DBRS says a lack of consistency when it comes to court rulings on the legal standing of the Mortgage Electronic Registration Systems, or MERS, could negatively impact RMBS deals by causing further delays in the foreclosure process.

For this reason, the agency is watching MERS cases closely to determine what sort of pattern emerges.

DBRS said it has found a lack of consistency among courts who have addressed MERS’ legal standing in situations where a foreclosure is filed on a servicer’s property that is assigned to MERS.

An Eastern District of New York case recently limited a servicer’s ability to foreclose on loans assigned by MERS, DBRS points out.

The ratings agency is concerned the New York "court’s decision creates uncertainty regarding MERS owner status, and its ability to validly assign mortgage interests, and consequently, may encourage borrowers to raise technical challenges on foreclosures on MERS related loans."

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