Time for a MERS "Fix-It" Bill?
American Bankruptcy Institute
ABI Journal -- Legislative Highlights (pdf)
[...]
Lawyers have recently filed lawsuits, claiming that banks owe states billions for mortgage recording fees they avoided by using MERS [Mortgage Electronic Registration Systems]. If courts rule against MERS, the damage could be catastrophic, with some estimates in the $60 billion to $120 billion range in damages and penalties from unpaid recording fees. Many states impose penalties between $5,000 and $10,000 each time a recording fee is unpaid.
Critics also say that sloppiness at MERS has botched chain of title for many mortgages. They say that MERS lacks standing to bring foreclosure actions, and the faulty chain of title casts doubts on whether anyone has clear enough ownership to foreclose on a defaulting borrower.
It is speculated that Congress may attempt to prevent any MERS meltdown from occurring by enacting a federal law that would limit MERS exposure on the state law recording-fee issue, and perhaps retroactively approve mortgage transfers conducted through the MERS private database. [per a CNBC report ]
No clear 'Chain of Title? --
NO Problem!
Afterall what's a little 'missing paperwork' among {cough} friends?
They were going to get around to it, some day -- you know how it is ...
Well perhaps, "They WEREN'T going to get around to it, some day" ?
MERS? It May Have Swallowed Your Loan
by Michael Powell and Gretchen Morgenson, The New York Times -- Mar 06, 2011
[...]
The bankers who midwifed its birth hired Covington & Burling, a prominent Washington law firm, to research their proposal. Covington produced a memo that offered assurances that MERS could operate legally nationwide. No one, however, conducted a state-by-state study of real estate laws.
"They didn't do the deep homework," said an official involved in those discussions who spoke on condition of anonymity because he has clients involved with MERS. "So as far as anyone can tell their real theory was: ‘If we can get everyone on board, no judge will want to upend something that is reasonable and sensible and would screw up 70 percent of loans.' "
[...]
MERS's legal troubles, however, aren't going away. In August, the Ohio secretary of state referred to federal prosecutors in Cleveland accusations that notaries deputized by MERS were signing hundreds of documents without any personal knowledge of them. The attorney general of Massachusetts is examining a complaint by a county registrar that MERS owes the state tens of millions of dollars in unpaid fees.
Sounds like the "precursor" of Too Big to Fail ... or is that the "proximate cause" to TBTF ? I always get those ideas mixed up.
As long as the Lawyers and Tax Collectors can figure it out, I guess ... someday.
Essex Register: MERS May Owe Mass. $200M
by Colleen M. Sullivan, Banker & Tradesman Staff Writer -- Feb 25, 2011
South Essex Register of Deeds John O'Brien has accused the Mortgage Electronic Registration Service (MERS) of defrauding taxpayers "out of $22,299,450 in Southern Essex County alone," and said the firm may owe more than $200 million to registries of deeds across the commonwealth. [MA]
No wonder local State Governments have such a Revenue Problem.
NC Reg. Of Deeds Jeff Thigpen Wants To Take On Mortgage Giants, Seeks MERS Investigation
stopforeclosurefraud.com -- March 03, 2011
Greensboro, NC -- March 2, 2011
[...] NC Attorney General and Secretary of State as to whether the Mortgage Electronic Registration Service (MERS) owes Guilford County fees estimated at $1.3 million in lost revenue from mortgage assignments.
[...]
“As Register of Deeds, I have two primary responsibilities in land records: a sworn duty to protect the chain of title and a fiduciary responsibility to collect recording fees. Quite frankly, MERS has undermined both. Through their own “private for-profit” Register of Deeds mortgage tracking office, MERS has created a dangerous centralization of power whose sole purpose is to protect and serve the interests of major banking conglomerates and undermine public recording offices,” said Thigpen.
“For me, the question is clear. Do we want land records in America to be governed by major banking conglomerates on Wall Street or the people and laws of the United States of America?”
Great Points. Great Question.
Where are the Regulators of this Financial Fiasco?
With Home-ownership being such a crucial part of the American Dream -- you'd think that Federal Regulators (and maybe the DOJ) would step up their game a bit, and start Protecting the Interests of the American People, for a change.
It's not like we are complaining about this record-level foreclosure flood, without cause.
Who will stand up and speak up for the People? ... Anyone?
[...]
Elected officials have heard from our constituents being ignored and abused in the bureaucratic nightmare of the foreclosure process: documents repeatedly lost, inconsistent advice, hours trapped on the phone, common sense turned on its head to reject fair modifications in favor of foreclosure. We have heard from our mayors about the terrible collateral cost to communities from foreclosure. We have seen the big loan servicers drag their feet in the Obama administration’s well-intentioned mortgage modification program. Now we learn that these companies have been playing fast and loose in their foreclosure process, carrying out foreclosures in the cheapest manner possible, often outsourcing the process to a "foreclosure mill" document processing company.
Trapped in the bureaucracy nightmare, real families suffer when the big banks and their servicers force foreclosures. The emotional toll on children packing up their rooms and on parents struggling to find a temporary roof is a deep one. We owe these families a fair chance to stay in their homes, an answer to the question of why the bank would sell their homes to someone else for less than the family would be willing and able to pay [...]
by Sen. Sheldon Whitehouse (D-R.I.) - 10/13/10
A foreclosure nightmare (Sen. Sheldon Whitehouse) –
The Hill’s Congress Blog
Great Points. Great Questions.
That's one stand-up guy, Sheldon Whitehouse ... Any more out there "willing to stand up and fight for the American People and the American Dream"?
To stand up for old-fashioned Accountability and plain-old Justice ... of the Keating Five variety, the norm from another era?
Without Real Consequences for Bad Behavior -- ultimately Nothing will Really Change, now will it?
The last decade, has certainly taught us THAT Lesson, if nothing else.
Given their track record, why should MERS Get-out-of-Jail, while Hard-working, play-by-rules Americans, just Get-the-Street?