The recent consent decree between federal agencies and mortgage lenders/servicers to settle shoddy foreclosure practices ended up affirming the legitimacy of MERS. Article VI of the bank settlement and separate settlement with MERS itself required remedial measures to shape up and end sloppy practices. Yet, the system itself was not radically changed.

However, state judges and federal bankruptcy judges may not be swayed by this de facto ruling of legitimacy. We would not be surprised to see more judicial rulings that call into question key aspects of the MERS business model.

For a reminder, we need only look to California, where a recent ruling from the Southern District U.S. Bankruptcy Court "essentially discredited MERS ability to establish foreclosing authority, saying even if MERS was the beneficiary at the time of foreclosure, the Reston, Va.-based firm had no authority apart from a nominal role based on the deed of trust," notes Housing Wire.

This ruling stands in contrast to another California ruling from the Court of Appeals of the 4th Appellate District, which found basically that that the language in a deed of trust indeed "gives MERS the authority to initiate a foreclosure."

We're seeing similar at-odds rulings across the country. This will be difficult for banks to keep up with, as they try to pick up the pace on foreclosures.

For more:
- here's the article

Related Articles:
The Feds weigh in on MERS
MERS stokes local controversies
Banks to take losses due to MERS
Did MERS just capitulate?