COEUR d'ALENE - For Cynthia Griffin, the court victory is a small step in what has been a long fight.

Nevertheless, for the first time in months, the stress of not knowing if she and husband Matthew Griffin will lose their home is gone.

"It's a real relief right now," she said. "It makes me feel better that I don't have something like that looming over my head. But it's not a solution."

That burden was erased thanks to a First District judge ruling this week that the lending company which claimed it owned the mortgage on the home didn't follow the proper steps to obtain it, so didn't have the legal right to foreclose on the Coeur d'Alene couple's East Summit Drive house.

A small, but important step for the husband and wife.

But the Griffins' attorneys, Jeff Crandall and Regina McCrea, think the order could affect thousands of Idaho homeowners who have already foreclosed or are in the process of doing so.

They said the same steps that Texas-based Residential Credit Services Inc. skipped when it acquired the mortgage from the former lender and now bankrupted American Home Mortgage are being done by other lenders across the state.

"It could be a fairly significant issue," Crandall said. "It does call into question foreclosures that are pending and those that have already been completed."

The suit stems from MERS, or the Mortgage Electronic Registration Systems, Inc.

MERS, created by the mortgage banking industry, is a privately held company which operates an electronic registry for servicing rights and mortgage loan ownership.

It was created, according to its website, to streamline the mortgage process by using electronic commerce to eliminate paper.

The problem, at least according to First District Judge Benjamin Simpson's Tuesday ruling, is that electronic filing of MERS didn't register the lien transfer in the Kootenai County records department. Since documenting ownership at the county level is required by state law, RCS wasn't the legal owner of the mortgage and couldn't foreclose.

"It's crazy," Cynthia Griffin said. "I think people should check their mortgages and see who really owns it."

It started in 2007 after the couple refinanced their home on an adjustable rate. They tried to sell the home, but the market went south and they tried to rework the mortgage again. After years of back and forth they were near a solution with AHM, court documents state, but then, unbeknownst to the couple, the lender went under.

The couple tried to negotiate the same mortgage agreement with the new company, RSC, on the three-story home the Griffins built around 2001, but couldn't make headway, Cynthia Griffin said.

The couple heard the only way the company would talk to them is if they stopped making payments, which they did. In 2010 RSC still wouldn't reach an agreement with the couple, the court complaint states, and it was later that the couple's attorneys found that skipped step and challenged RSC as the legal owners of the mortgage.

MERS has come under the microscope since the financial fallout of 2008. It has been the focal point of court cases, including a 2010 ruling by Washington, D.C., Attorney General Peter Nickels that stated a foreclosure couldn't happen unless the "current noteholder is properly supported by public filings with the District's Recorder of Deeds."

RSC's legal department did not return messages from The Press.

Simpson's order to stay the foreclosure was entered as part of a quiet title action brought by the homeowners against RSC. That suit, filed in March, seeks to have the mortgage lien invalidated and removed from the title records since it was illegitimately transferred.

Crandall and McCrea said the order bodes well for the rest of the case since it's challenging on the same set of facts.

And in their research for the case, the attorneys estimated around 50 percent of mortgages have been filed with MERS in the state, so the effects could be far-reaching in Idaho. They called the electronic process a step the banking world skipped in order to avoid paying filing fees at the county records department.

"It's what led to the financial collapse," Crandall said of the lack of oversight in the sub-prime mortgage loan world.

Several Coeur d'Alene area banks declined comment or did not return messages from The Press.

MERS representatives could not be reached Friday. Beneficiaries of MERS, according to its Web page, include mortgage originators, servicers, warehouse lenders, wholesale lenders and retail lenders, among others.

In the meantime, the Griffins are relieved to have their home.

They know there's a long way to the finish line. But the goal, when it's all said and done, is just to reach a solution on the mortgage that both sides can live with.

"It's not a solution," Cynthia Griffin said. "What we're looking for is a solution to what we started a couple of years ago (with AHM). That's it. We want to try to figure out a solution and go on with our lives."