The curious MERS cases of originators "out of business" or "bankrupt"

Helping Homeowners Fight MERS Foreclosure Problems

If your home is tied to a MERS foreclosure, things can get confusing. Many homeowners we helped didn’t realize that Mortgage Electronic Registration Systems (MERS) may appeared on their loan even though it never owned or funded their mortgage. At Living Lies, we help homeowners uncover the truth about who really owns their loan and challenge invalid mortgage transfers or false MERS assignments that lead to wrongful foreclosures. Our experienced foreclosure defense attorneys will investigate your loan records, expose paperwork errors, and protect your rights when MERS is used to take your home.

The Case That Exposes the MERS Illusion

MERSCORP’s own membership rules make one fact unavoidable: terminated members cannot hold or transfer liens. Once an originator goes out of business, their membership is terminated, and MERS loses any authority to act on their behalf.

• The terminated member is responsible for releasing liens upon termination.

• If they fail, MERS is authorized to act — but only with respect to liens it actually holds.

• In practice, MERS often has no idea what liens belong to terminated members, because its system depends entirely on self-reporting by members.

This case revealed that after Dreambuilder’s termination, MERS could not identify which liens it supposedly held. That speaks volumes: MERS doesn’t track ownership. It only parrots whatever its members enter into the database.

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What MERS Really Is (and Isn’t)

• Not a Trust or Agency: MERS has no employees verifying accuracy of data. It cannot confirm ownership of anything.

• Not Government-Backed: Despite being dressed up with “rules,” those are merely private contracts between MERS and its members—not laws or regulations.

• Not a Source of Truth: County land records remain the only legally recognized record of chain of title.

In short: MERS is a shell platform for data entry and fabricated transfers, not a system of legal ownership.

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Why This Matters in Foreclosure

Any document executed by MERS after the originator’s closure or bankruptcy is:

• False – because no actual transaction occurred.

• Fabricated – created to give the appearance of validity.

• Void, not voidable – there is no surviving entity to ratify the transfer.

Foreclosure mills often try to gloss over this fatal flaw by claiming MERS represents a “successor.” But:

• There is no successor if the alleged obligation was never sold for value.

• There is no successor if the “sale” took place after the originator went out of business or filed bankruptcy.

• Bankruptcy kills any claim unless the obligation was purchased directly from the U.S. Trustee or FDIC as receiver.

No such transactions exist in the securitization era.

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How to Challenge These Fabrications

1. Discovery Tools

   • Use QWRs (Qualified Written Requests) and DVLs (Debt Validation Letters) to force disclosure of real transactions.

   • If ignored, escalate with FDCPA/RESPA claims.

2. Court Strategy

   • Object when opposing counsel relies on unsupported “facts.”

   • Move to strike arguments based on documents not backed by admissible evidence.

   • Highlight that MERS cannot create successors or validate assignments post-termination.

3. Presumption of Validity

   • False documents carry presumptions of authenticity unless challenged.

   • Once you show their lack of credibility, the foreclosure mill must prove ownership with actual evidence.

   • They fight this so hard because no such evidence exists.

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The Fatal Flaw in Foreclosures

The bottom line:

• Most post-closure MERS assignments are void.

• If there is no real creditor and no loan account receivable, foreclosure claims collapse when properly challenged.

• The failure of foreclosure defense attorneys is often not attacking the premise: that the documents reflect real, corroborated transactions.

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📞 Need Help With Your Case?
Our foreclosure defense attorneys provide litigation support to homeowners and attorneys challenging fraudulent MERS assignments and foreclosure claims. Call 844.583.5339 or submit a free case statement for a complimentary review.

⚖️ Disclaimer: Foreclosure defense is complex. There is no guarantee of a favorable outcome. Success depends on preparation, persistence, and challenging false presumptions.

Tags: foreclosure defense
Posted in Corruption, foreclosure defenses |