Bombshell MERS Admission Collapses 15+ Years of Foreclosure Authority

DISCLAIMER: The following article is for informational and investigative purposes only. It is not intended to be—and should not be construed as—legal advice. Readers are strongly encouraged to consult with qualified legal counsel to evaluate how this information may apply to their specific circumstances.

By William J. Paatalo –  Private Investigator / Expert Witness – July 22, 2025

A stunning new admission from MERSCORP Holdings—the company behind the Mortgage Electronic Registration Systems (MERS)—has just shattered the legal foundation of millions of mortgage assignments, securitized trusts, and foreclosure claims dating back more than a decade.

“(1) The MERS® System is not a mechanism for creating or transferring liens or interests in mortgage loans, and (2) MERS® System membership or a Member’s use of the MERS® System shall not modify or supersede any agreement between or among the Members and/or any other parties having liens or interests in mortgage loans registered on the MERS® System. Actual transfers of liens to or from MERS in the mortgage loans are reflected in the public land records as described in this Rule.”
— MERS Membership Manual, Section 2.8 (2025 Edition)(See: MERS_System_Rules_of_Membership)

This is not a policy revision. It is a declaration of fact. A retroactive disclaimer. A bombshell.

For years, MERS has acted as the so-called “nominee” for lenders, assigning mortgages to servicers and trusts without ever holding the underlying note or lien. Now, MERS has admitted that it never had legal authority to effectuate lien transfers—meaning any assignment recorded in its name was void from the outset.

What Changed? The 2024 Auditor Red Flags

It’s worth pausing to examine a subtle but important twist in the language of Section 2.8. After stating unequivocally that the MERS System is not a mechanism for creating or transferring liens or interests, MERS adds: “Actual transfers of liens to or from MERS in the mortgage loans are reflected in the public land records as described in this Rule.” This phrasing appears to be a legal hedge—an attempt to preserve the idea that if any transfer did occur involving MERS, it had to have been done through traditional means, like public land record filings. But this is circular reasoning: if MERS is not a valid mechanism for transferring liens, then even a recorded assignment by MERS would be void if MERS lacked any actual interest in the loan. The fallback to land records doesn’t save these assignments—it only further proves that MERS should never have executed them in the first place.

While MERS has operated for over two decades with impunity, signs of a reckoning began to emerge in 2024.

A third-party quality assurance report conducted by MetaSource (as documented in the 2024 MERS QA Findings Report – See: Report-MERSQAFindings-2024) exposed systemic noncompliance among MERS Members. The findings included:

• Widespread failure to reconcile MERS system data with public land records.
• Inadequate or nonexistent quality assurance processes.
• Noncompliant documentation that violated state-specific laws.

Perhaps most damning was the revelation that many MERS Members submitted defective assignment samples that misidentified MERS as a nominee or failed to follow the MERS eQA Plan. These revelations likely put MERSCORP in legal jeopardy—forcing a reassessment of its historical role. Thus, the 2025 language in Section 2.8 of the MERS Membership Manual appears not only as an admission—but as a legal self-preservation move.

Importantly, these recent developments confirm what many of us in the investigative and legal communities have argued for over a decade. As referenced in my published abstract, “How Your Mortgage Became a Wall Street Security Without Your Knowledge,” the foundational flaw in the MERS system was always its inability to lawfully transfer the note or lien. And in sworn testimony such as that given by A.J. Loll, who represented MERS in prior litigation, these points were already conceded under oath. Loll acknowledged that MERS does not hold or possess promissory notes, and that MERS assignments do not transfer the debt obligation.

We knew this all along. The difference now is that MERS is finally admitting it—publicly and institutionally.

Legal Fallout: The Chain of Title Disintegrates

If MERS assignments were never valid, then every securitization, foreclosure, or transfer based on those assignments is built on a collapsed chain of title.

• Assignments that claim to transfer both the mortgage and note—but show no evidence of possession or negotiation—are now legally meaningless.
• Entities that relied on MERS to transfer their interest cannot demonstrate lawful acquisition through traditional means.
• Even when boilerplate language claims to transfer the “mortgage together with the note,” it is hollow if MERS never held the debt instrument.

Millions of property titles are now clouded. Thousands of foreclosure judgments, bankruptcies, and trustee sales are subject to challenge.

Title Insurers and Courts Must Heed This

Title insurers who continue to underwrite policies on MERS-assigned properties are now on notice. So are courts who adjudicate based on faulty assignments. No judicial order, bankruptcy plan, or settlement can override the foundational defect: If the lien was never validly transferred, then the party asserting rights under that lien has no standing.

If you:

• Had a mortgage assigned by MERS,
• Are facing foreclosure from a securitized trust,
• Were told a trust is the “holder” of your note based on a MERS assignment,

…you now have powerful new evidence to challenge the legitimacy of that claim. The law is clear: The mortgage follows the note. And MERS—by its own admission—never held the note and never had the authority to transfer the lien. This isn’t just a revelation. It’s a revolution in mortgage litigation. Every attorney, judge, borrower, investor, and title agent must understand the implications of this admission. The house of cards built on fraudulent MERS assignments is finally collapsing under the weight of its own creator’s confession.

If you need help analyzing a MERS-based chain of title, preparing an expert affidavit, or challenging a fraudulent assignment, contact:

William J. Paatalo
Investigator / Expert Witness
BP Investigative Agency, LLC
📞 406-309-1812
✉️ bill.bpia@gmail.com

Your title, your rights, and your property depend on knowing the truth—and now the truth is in writing.