The Meaning of MERS
By Abigail Caplovitz Field | July 21, 2011
The Meaning of MERS
People have learned a lot about MERS, but in general we haven’t really focused on what it all means. In short, it means that the mortgage industry decided that it was above the law.
MERS was set up thoughtlessly, without regard to its basic legality, and designed with only two objectives: lowering the mortgage industry’s costs and maximizing its convenience. As a result, MERS has none of the advantages of the centuries-old system it was intend to replace, and largely has. MERS is not accurate, not transparent, and not accountable to the public. To let MERS continue simply allows it to continue wreaking havoc on property records and the legal morass it’s created to continue tangling foreclosure and bankruptcy cases nationwide.
The Ultimate Answer: Legislate MERS Out of Existence
At this point legislatures from the states to Congress need to confront the deep reality of what MERS truly is. MERS must be legislated out of existence, and the costs for its existence to date—including the costs of accurately updating our land records nationwide–must be borne by all the players that benefited from MERS. Despite the broad claims of the MERS website, the beneficiaries are generally two groups: mortgage securitizers (yes that includes all the big Wall Street players and TBTF banks) and mortgage servicers (who again include the TBTF banks.)
In replacing MERS, legislatures should consider modernizing and standardizing land records. The mortgage industry’s frustration with the pre-MERS era is legitimate. But what is not legitimate was the industry’s unilateral decision to create a self-serving system that was indifferent to law and the public’s interest.
Think all that sounds over the top and extreme? Let’s recap what we know about MERS.
MERS is a company whose product is a massive electronic database called Mortgage Electronic Registration Systems. MERS Inc. has no employees, but some 20,000 “Certifying officers”. Certifying officers have included employees of mortgage servicers, law firms, and subcontractors. At least, people signing in MERS’s name have included such people. Whether any of them is really an officer of MERS with any authority is very doubtful. Doubtful because there’s solid evidence that Bill Hultman, who designated all these people as signing officers, lacked authority to do so.
2 Comments
Lisa Epstein on July 22, 2011 at 10:48 am.
Questions to ponder:
If the sole tracking database for trillions of dollars in negotiable instruments is garbage data, how many financial institutions are claiming the same value on their books? (I suspect that the bank servicers are claiming the value and also have pledged the eroding value into MBS bonds.) What happens when the truth is revealed that no one and no database has reliable information on who owns what mortgages/notes, which ones are still active or satisfied or liquidated or modified or are performing or non-performing? Who is validating the claims for Freddie/Fannie/Lender Insurance/PMI to assure the legal party is the beneficiary of these funds and that they are paid out under valid circumstances (and not due to a manufactured fraudclosure)? How long until property transfer is totally frozen due to unauthenticated fraudulent documents completely gums up the works?
…Not to mention the impact on our communities filled with vacant allegedly-bank-owned homes and millions of jobless, homeless, financially depleted, and otherwise dispossessed families across America.
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