MERS and MERSCorp: What is it? NY Court Misses the Point

Disclaimer: This article is for educational purposes only. It is not legal advice. Consult with a licensed attorney before acting on anything discussed here.

Why This Case Matters

The case of DreamBuilder Investors v. MERSCORP Holdings, Inc. offers important clues for how to:

• Sue MERS directly, and

• Demand discovery from MERS (as either a party or a non-party).

Like many securitization-related cases, the most important evidence comes not from what’s in the contract, but from what is missing.

What MERS Really Is (and Isn’t)

• MERS is not a lender. It never funds loans and never receives payments from homeowners.

• MERS is not a lienholder. Despite how it is presented in documents, MERS is only a placeholder.

• MERS is optional. Even if the MERS–Member contract uses exclusivity language, its role is cosmetic, not functional.

In fact, MERS itself says on its own website that it is not in the transaction cycle.

What Counts as a “Transaction”

A key error in foreclosure cases is treating documents as if they were transactions.

Example: If I draft a deed transferring the Bronx Zoo to you, it’s meaningless unless (a) I actually own the Bronx Zoo, and (b) payment or a gift can be shown.

The same principle applies to mortgage assignments. Under the law of every jurisdiction:

• An assignment of mortgage that does not also transfer the underlying obligation is a legal nullity.

• Only the owner of the loan account receivable — if one exists — has the right to enforce payment.

How the MERS Scheme Works

1. Originators sign adhesion contracts with MERS.

2. MERS is “appointed” as an agent, even though the originator itself never funded the loan.

3. Documents are created naming MERS in the chain of title, giving the illusion of a transaction.

4. In reality, neither MERS nor the originator has any legal interest in the loan account.

This is why so many assignments and endorsements in foreclosure cases are fabricated, robo-signed, or abandoned. They memorialize transactions that never happened.

The Missing Element

For any valid conveyance of mortgage rights, there must be:

• A transfer of the underlying obligation, and

• A payment of value by the grantee.

Neither occurs in securitization cases. Instead, what exists is a virtual loan account created by Wall Street — not an actual unpaid receivable on the books of any creditor.

Practical Implications for Defense

• Challenge “Payment Histories.” These are typically generated by servicers or FINTECH vendors (like Black Knight), not by an actual creditor. They do not show a true accounting ledger.

• Focus discovery on the money trail. Ask for evidence of payment for the underlying obligation, not just assignments of mortgage.

• Attack MERS authority. If the originator never owned the obligation, it could not delegate enforcement rights to MERS or anyone else.

Key Takeaway

MERS is nothing more than a name used to fill gaps in the paper chain. It never lent money, never received payments, and never owned any debt.

Foreclosure cases that rely on MERS assignments or its “officers” are built on a legal fiction. The real missing piece is the underlying obligation—and without proof of that transfer, the foreclosure claim collapses.

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Posted in Fabrication of documents, foreclosure defenses |