Alone in ownership limbo?


A recent decision from the Law Court that may have major practical ramifications is Bank of America v. Greenleaf, 2014 ME 89.  A motion to reconsider was filed and denied.

Basically, the Court found that a bank lacked standing to foreclose on a mortgage assigned to it through MERS, the Mortgage Electronic Registration Systems, Inc.  The gist of the decision is that the Court reads Maine statute to provide that to foreclose, if a mortgage includes language used in lots of mortgages, an assignment through MERS isn’t going to work. 

This raises two issues.  First, assuming standing to foreclose can get fixed by getting an assignment from the original lender, what happens if that original lender doesn’t exist anymore?  Second, what happens to the title of this in-limbo property?  How do you ever sell property that has a MERS assignment in its chain of title?  Are you going to be able to get title insurance for such property?

Good questions.

I’m not sure how the other jurisdictions that require judicial foreclosures deal with this.  It appears that in most, the right to foreclose is upheld.  See,  listing a slew of decisions that it says reject the standing argument elsewhere.  One commentator has said:  “With Greenleaf, Maine becomes perhaps the only jurisdiction to hold that MERS can’t assign a mortgage. Maine had already been in the minority by holding that MERS lacks standing to foreclose directly.”