The more the foreclosure crisis is examined, the more it becomes obvious to the public, and hopefully to the authorities, that many of the big mortgage banks have been breaking the rules for a long time. They may have also been breaking the law, and that is why several state attorneys general have begun to look more closely at one of the methods the big mortgage banks and Fannie Mae and Freddie Mac used to make foreclosures easier for themselves.

What the banks frequently did was to foreclose on a homeowner and claim that the mortgage was owned by MERS. MERS was established in 1995 to keep track of ownership of mortgages. It is a computerized registry of where ownership of mortgages, or "assignments" have been made.

What eventually happened was that assignments of mortgages, and the attendant recording of the assignment with county clerks, would not be done. The fact that MERS was keeping track of the changes in ownership was used by the banks to circumvent state laws about recording assignments. This was much more efficient and inexpensive for the banks, but shortcuts usually are.

As the practice became more common, many foreclosures would be done in the name of MERS. What this meant was that MERS would be filed as the owner of the mortgage. In the minds of the foreclosing banks, this might have meant "you can always check with MERS to see who really owns the mortgage, because we don't have the time or inclination to actually find out."

Why, assuming that this was the attitude, would banks get away with this practice? Probably because the homeowners were genuinely in default, and most people, especially those without a Fort Lauderdale foreclosure defense attorney, would not be able to decipher the bank's paperwork.

Now, though, attention is being turned to the practice. As a result, MERS recently announced to its members that they should no longer process foreclosures in MERS's name. In fact, MERS said they should properly assign a mortgage and record it with the county clerk before beginning a foreclosure.

Source: Reuters "Exclusive: Facing criticism, MERS cuts role in foreclosures" 7/27/2011