DC Attorney General has issued a statement potentially allowing tens of thousands (and possibly hundrends of thousands) of the District's residents to challenge their foreclosures. Most MERS loans, as well as some other loans where the banks failed to record assignments within 30 days of a "transfer" of the note, are likely not in compliance with the District's real property law, and can therefore be challenged during foreclosure proceedings. AG's statement can be viewed at http://newsroom.dc.gov/show.aspx/agency/occ/section/2/release/20673.
The District's law requires that all transfers of a mortgage (loan security instrument) be recorded in the land records within 30 days of transfer. According to the Attorney General, the MERS system does not satisfy this requirement. This may lead to such consequences as the loan having been rendered unsecured, the current alleged noteholder's inability to enforce the loan by way of foreclosure, etc. The exact consequences remain to be seen shortly, as the DC judges start ruling on these issues in the near future. Of course, we already know where DC's Attorney General stands! Bravo!
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