The district court properly determined that MERS was not a contingently necessary party in Landmark's foreclosure action... The judgment of the district court is affirmed.What it means in short is that in Kansas, MERS cannot bring a foreclosure action upon a homeowner. What it means in long is a little more complicated.
MERS, the Mortgage Electronic Registration System, is a private corporation that keeps track of who owns what parts of all those mortgages that Wall Street sliced and diced over the past decade. Mortgages were issued, mortgage banks securitized them and sold them off, and investors bought the securities that represented the value (and delivered the payments) of those mortgages. It's not unlike stocks being held in "street name," an arrangement that facilitates the "transfer" of millions of shares of stocks every day - in fact, it is only the street name arrangement that makes those transactions possible - with the exception that rather than one person "owning" thousands of individual shares of stocks, potentially thousands of bondholders "own" a tiny sliver of a single mortgage.
Now, if someone does not pay their securitized mortgage, the home goes into foreclosure, right? Not so fast. Only the owner of the mortgage can bring that kind of legal action; only they have "standing." MERS, rather than the hundreds of actual owners, has been acting in their place, bringing foreclosure actions against many of the hundreds of thousands* of homeowners who have heretofore not been able or willing to pay their mortgages. Now MERS can't do it - at least in Kansas - the actual owners must do so. If they cannot (and the reality is that hundreds or thousands of actual owners will never be able to), there is no one with the legal right to force a non-paying mortgage into foreclosure. There is no one who can force half the mortgage holders in America to make their monthly payments.
Karl Denninger, while not agreeing that the case is as simple as I have presented above**, nonetheless reaches the same conclusion: "The real bottom line here is that securitized bondholders may in fact be holding worthless pieces of paper."
Follow that green shoot a while and see where it leads.
* by some estimates, fully half of US mortgages have been securitized under this arrangement.
** Probably rightly, I don't claim to be a lawyer.