Ruh-Roh!

I am not sophisticated enough in either law or finance to be able to judge this bit of news with any reliability.  I hope someone (Sackerson, you there?) might be able to look at this and enlighten further.

A court in Kansas has ruled that MERS, the mortgage clearing-house(I've never heard of it, but what do I know?), which has been the party filing foreclosures on behalf of bondholders, is in reality a straw-man, without standing to foreclose on anyone's house in Kansas.

It seems that a court has ruled that about half of the mortgage market has been run as a criminal enterprise for years, which would invalidate any potential foreclosure proceedings for about, oh, 60 million mortgages. The court ruled that the electronic transfer system used by the private company MERS — a clearing system for mortgages, similar to a depository, that is used for about half the mortgage market — is fundamentally unreliable, and any mortgage sold and/or transferred through MERS can’t be foreclosed upon, at least not in Kansas.

If this means what it seems to mean, then all those mortgages that were sliced-and-diced into mortgage-backed-securities, insured by credit-default-swaps, are now unenforceable, at least in Kansas.  Would that mean all those holders of MBS's are left holding the bag, in possession of literally worthless paper?

They would want their money back, wouldn't they?  All at once, once the word got out?

I don't know, that's why I'm posing the questions.

Toto, I don't think we're in Kansas anymore...