Robert Rinehart asked:




September and October of 2010 have ushered in a new era of home loan modification and loan reduction possibilities for homeowners. Major revelations in the mortgage industry have rocked the financial landscape of America. In only two months, widespread instances of improper and even fraudulent foreclosure paperwork filings have come to light. Major lenders have suspended foreclosure proceedings in twenty-three states and Attorneys General in all fifty states have announced investigations into improper foreclosure practices.

This is only the tip of the iceberg, though. The biggest revelation of all, the “MERS” loan registration charade, has yet to get much publicity. The MERS charade promises to be the biggest-ever opportunity for homeowners to successfully negotiate with their lender to lower their principal balance and get lower payments and regain lost equity. Once you understand the MERS Charade, you’ll understand why.

MERS, or the “Mortgage Electronic Registration System” is a database used by lenders to track the sale of mortgages in the secondary mortgage market. Realizing they were going to pay possibly billions of dollars tracking multiple sales of mortgages (called an “assignment”), the lenders developed MERS to track mortgage sales and avoid having to file assignments at the county recorder’s office each time a loan was sold. With over sixty million loans being sold, some more than one time, this represents a huge cost savings and dramatic gain in efficiency. The only problem is that it’s illegal!

You see, the law states that maintaining a proper chain of ownership for loans secured by real property is a vital and important necessity. But MERS completely bypasses this requirement. Lenders thought they could appoint MERS as their “nominee” and if a homeowner defaulted on their loan, MERS would be the foreclosing authority. This is the MERS charade. But here’s where the charade breaks down. Because MERS is only the nominee, MERS doesn’t actually own the loan! And, legally, only the actual owner of the loan can foreclose. It’s as simple as that.

What does this mean for the homeowner? Well, because the originating lender doesn’t own the loan and MERS doesn’t own the loan, neither of them can foreclose! And, the loans have been sliced and diced so much that it’s impossible to piece the actual ownership of the loan together. This means that if you default, no one can foreclose on you. Your loan is no longer secured by your home and it cannot be taken away from you through a foreclosure.

The lenders have realized their mistake and are now capitulating to homeowner negotiations for loan reductions. They have no other choice. Faced with having to write off 100% of the loan vs. getting a new loan with a much lower loan balance, lenders are taking what they can. They’ll give you a loan reduction without putting up much resistance or forcing you to jump through excessive hoops.

All you have to do is find out whether your loan was registered in MERS, which you can do by clicking the following link and reviewing the list of participating lenders, most of which are happy to give you a bank loan modification resulting in a nice loan reduction.

Alvin