Nevada Supreme Court to Hear Case to Determine Legality of MERS Foreclosures
Nevada’s real estate market was devastated by the bursting real estate bubble and the subsequent foreclosure crisis. Home prices in many areas of Nevada are down by 50-60% or more since the market peaked in 2006. Until recently, Nevada has consistently had one of the highest rates of foreclosure in the country.
Now, the Nevada State Supreme Court is set to hear a case that may consider whether or not the Mortgage Electronic Registration System (MERS) has the right to foreclose on a property in its own name. If the State Supreme Court rules that mortgages assigned by MERS cannot establish ownership, homeowners could challenge any foreclosure done in MERS’ name. Other courts across the country are split on this issue.
MERS holds more than half of mortgages across the United States, and a similar number in Nevada. MERS has been at the center of much controversy over the past couple of years, and was recently the focus of a scathing piece in Harper’s Magazine (Stop Payment! A Homeowner’s Revolt Against the Banks), as well as an investigative report on 60 Minutes.
The housing market in Nevada is so bad, that according to Corelogic’s 3rd Quarter Negative Equity Report, as of November, 58.3% of homes with mortgages in Nevada are underwater, while 4.8% have near negative equity. Total home equity in Nevada among homeowners with mortgages is less than -$10.3 billion, making the average loan-to-value ratio in the state 110.2%. Nevada is the only state that has a net negative home equity.
As a result of this disaster, Nevada has been one of the most aggressive states in fighting mortgage abuses. In October, Nevada passed a tough anti-foreclosure law that makes it a felony for a lender, servicer or trustee to make false representations or claims over a title. In the wake of this law, foreclosures in Nevada plummeted.
Nevada Attorney General Catherine Cortez Masto has been very aggressive in fighting foreclosure fraud and robo-signing. Notably, she is pursuing criminal charges against robo-signers, has teamed with California Attorney General Kamala Harris in a joint investigation into mortgage abuses, and recently announced a suit against Lender Processing Services for consumer fraud in their foreclosure practices in Nevada.
This case could have a massive impact to say the least. I will be following this one closely and will report back with updates.