MERS issue

[Josh Sterling]

We have a REO property under contract that is supposed to close in less than 2 weeks. Last week we got a title commitment from the title company stating that the title was clear. Today we found out that there is a problem regarding MERS (Mortgage Electronis Registration System) and that the forclosure is invalid. They said that they would have to complete the forclosure again which could take 2-6 months.

Shouldn't the seller have known about this ahead of time? We now have quite a bit of money commited to this property due to inspections and the cost of transfering funds.

Even if the new re-forclosure process takes 2-6 months, can we get a long term contract extension so we can still purchase this property when it eventually comes back on the market, without having to re-submit offers and compete with other buyers?

Just doesn't seem right to me that we can have a property where they tell us we have a title commitment, we spend a bunch of money on due diligence, and then they can't go through with the deal and we are stuck with the loss.

Thanks in advance for any responses.
SR