MERS Note Assignments

02 Mar MERS Note Assignments

An investigation into a foreclosure defense will include tracing the rights to a mortgage and its underlying promissory note. MERS is very careful to only execute assignments of mortgages and not of notes. I’ve never seen it assign a note, and I’m reliably informed that MERS’ bylaws prohibitit from owning rights to a note.

(A promissory note is a payment obligation, and a mortgage creates a lien which secures a note’s payment obligation.)

Sometimes a document will assign a note and a mortgage to MERS, the Mortgage Electronic Registration System. MERS will then assign out the mortgage only, which leaves the note in limbo.

Well, actually not. Notes cannot be enforced by an assignee; they can only be enforced by anendorsee, at least in Massachusetts. (UCC, 3-203(c).) So a note assignment into MERS, without an assignment of the note from MERS to another entity, is a red herring. The original note assignment into MERS had no enforceable effect.

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L. Jed Berliner practices exclusively in consumer bankruptcy, foreclosure defense, and related consumer protection litigation such as credit card defenses and suing debt collectors. He established his Springfield, MA practice in 1988. Attorney Berliner is a regular and active contributor to the Bankruptcy Law Network, the Bankruptcy Roundtable, and the National Association of Consumer Bankruptcy Attorneys, three specialized consumer bankruptcy forums on the Internet, and is an informal mentor to regional practitioners. He is recognized by his peers as an expert in consumer bankruptcy issues. He thoroughly enjoys being rated "excellent" in his client surveys.

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