Last October, this blog predicted a win for MERS (Mortgage Electronic Registration System) and yesterday, the Minnesota Supreme Court continued this blog’s “undefeated” record in the risky world of making predictions on the outcomes of pending cases.
In short, in a 6-1 decision (Page, J., dissenting), the Minnesota Supreme Court held that “transfers of the underlying indebtedness do not have to be recorded to foreclosure a mortgage by advertisement under Minn. Stat. §§ 580.02 and 580.04 (2006).” Put another way, the MERS system, by which mortgage lenders can buy and sell debt repeatedly but have a single designee, such as MERS, be responsible for the foreclosure process (without having to record each and every transfer as part of the state’s real property county recording systems).
A commenter on this blog, clearly hoping for a decision going the other way but also not expecting it had this to say a few weeks ago:
MERS “paperless” system violates the basic prohibition that a mortgage lien can not be separated from the debt it secures. While the Minnesota Supreme Court has been pondering this MERS case for the past ten months at least two other State Supreme Courts, Kansas and Arkansas, have issued decisions that did approve of the MERS “paperless system” and MERS acting as a “nominee”.
Sadly I do not think the Minnesota Supreme Court will apply the long-standing laws of commerce to the facts because MERS has recorded hundreds of thousands of mortgages in Minnesota and millions of mortgages nationwide. The validity of each of these mortgages would be called into question if the correct decision was rendered. Our Supreme Court is not only slow in deciding cases argued before it, but rarely, if ever, issues a decision that might upset the apple cart even though the MERS apple cart is carrying rotten apples.
(In my view, the “long-standing laws of commerce” have been upheld by the Minnesota Supreme Court, not violated.)