NEW YORK – June 17, 2011 – A New York appellate court last week ruled that a Reston-based company that electronically tracks and transfers millions of mortgages did not have the right to foreclosure on a property or assign a mortgage it doesn’t actually own. The decision came only days after an appeals court in California took a different view, ruling that the firm indeed has the power to act on behalf of lenders.
The two cases, like dozens of others already decided or playing out in courtrooms across the country, highlight a protracted legal wrestling match that could determine the validity of foreclosures already in the pipeline and shape the mortgage market for years to come.
The cases also underscore the uncertainty that continues to surround Mortgage Electronic Registration Systems (MERS), which has allowed the financial industry to transfer and reassign millions of mortgages quickly and cheaply since the 1990s. The company also has acted as a proxy for banks in many foreclosure proceedings.