If your loan was like most in the last 10 years, the original mortgagee nominated MERS as the lender's stand in. MERS was designed to avoid having to record transactions relating to your property once you signed the mortgage. Once you stop paying on the mortgage loan, the entity that now owns your loan (according to the MERS system) has to get it assigned to them in order to foreclose. So the foreclosing lender creates an assignment from MERS to itself, so the record supports that it is the proper party to foreclose. Your question should be, where is the promissory note, and who has the right to collect on it. You need counsel familiar with this area of the law.
Mortgage Electronic Registration Systems, Inc. (MERS) is an American privately held company that operates an electronic registry designed to track servicing rights and ownership of mortgage loans in the United States. MERS is owned by holding company MERSCORP, Inc.
The real estate law and real estate transactions in the US are subject to state regulations and county level recordation requirements, since the time of the establishment of the US as an independent country. That made it quite cumbersome for financial companies to develop a smooth operation of a market based on US mortgages in the early 1980s. This is because every time a financial instrument containing mortgages is sold, various state laws may require that the sale of each such mortgage (or deed of trust) be recorded in the local county courts in order to preserve certain rights (e.g., the right to foreclose non-judicially), which triggers an obligation to pay corresponding recording fees. So, the financial industry, eager to trade in mortgage-back securities, needed to find a way around these recordation requirements, and this is how MERS was born to replace public recordation with a private one.. By 2007, MERS registered some two-thirds of all the home loans in the US.
The company asserts to be the owner (or the owner's nominee) of the security interest indicated by the mortgages transferred by lenders, investors and their loan servicers in the county land records. MERS maintains that its process eliminates the need to file assignments in the county land records which lowers costs for lenders and consumers by reducing county recording fee expenses resulting from real estate transfers and provides a central source of information and tracking for mortgage loans. The company's role in facilitating mortgage trading was relatively uncontroversial in its early days a decade ago but continued fallout from the subprime mortgage crisis has put MERS at the center of several legal challenges disputing the company's right to initiate foreclosures. Should these challenges succeed, the US banking industry could face a renewed need for capitalization.
As always, individual cases may and will vary.