D.C. Attorney General Peter Nickles weighed in last week on the national foreclosure notice crisis, potentially unleashing thousands of challenges from District homeowners against the foreclosure notices they have received.
Through an enforcement statement, Nickles clarified the role of the Mortgage Electronic Registration System (MERS) in D.C. mortgages and foreclosures. While MERS is a legal way to track mortgage transfers throughout the U.S., D.C. requires that noteholders commit public filings with the District's Recorder of Deeds.
What initially appeared to be sloppy record keeping among some lenders has been revealed in many cases to be procedures for recording loans that fail to meet legal muster.
Challenges to foreclosure notices have revealed that many mortgage companies list MERS, and not a mortgage company, as the holder on the note. In D.C., mortgage companies that bundled and transferred securitized loans may have failed to file with the District's Recorder of Deeds.
In the District, every mortgage transfer must be recorded with the District's Recorder of Deeds. If the foreclosure challenges that have marked this crisis throughout the nation are any indication, many lenders will have failed to file properly in D.C.
But Nickels has called on homeowners to investigate the foreclosure notices they have received and alert the office of the AG. Deceptive foreclosure notification practices, he said, may prompt him to take action to stop foreclosure proceedings and seek restitution on behalf of District homeowners.
With the rules enforcement -- which prevents banks from foreclosing on homes when their recordkeeping is improper -- he has given homeowners who know to check their notices a powerful tool to defend themselves. The Service Employees International Union has launched a tool, www.wheresthenote.com, to help homeowners track down who in fact owns the note to their home.
In states where foreclosures require judicial review, banks have suspended foreclosures. Bank of America -- the nation's largest bank -- has issued a moratorium on all foreclosures.