Interesting excerpt here (http://www.nakedcapitalism.com/2012/01/mers-the-law-and-the-state.html) on the implosion of the mortgage structure in the US. Any US colleagues with a mortgage on MERS care to comment...?
MERS, the law, and the State
Posted: 16 Jan 2012 05:18 PM PST
By lambert strether.
" Trotter told me that the “true horror” of MERS [1818 Library Street, Suite 300 Reston, VA 20190, 1-800-646-6377] was what it could do to homeowners who were current on their mortgage payments: The “good” homeowners who still had a job and weren’t facing foreclosure. If there was no legal record of which bank owned their debt [see below if you haven't been following NC on MERS], and the MERS-mortgaged homeowners had been making payments, then who exactly was the homeowner paying? The checks, clearly, were going out every month, cashed by a bank that claimed to own the note. But without the legal record to certify the owner of the note, it followed that the bank could not legally issue the homeowner a clear title to the home. In effect, a homeowner with MERS on his mortgage could spend thirty years paying a lender that wasn’t the owner of the note. …. “[Y]ou’d always be looking over your shoulder,” said Trotter. “Some other lender could come and say ‘No, we owned that note. You paid the wrong guy.” “WIth MERS”, he said, “nobody owns anything. You’re only paying rent.”
That’s not a bug. It’s a feature. At least for a rentier, although not necessarily for Trotter.
Second, Ketcham offers a lucid and succinct explanation of how this MERS feature came to be implemented:
[Mortgage Electronic Registration Systems] was created in 1995 as a privately held venture of the major mortgage-finance operators… Its stated purpose was to manage a confidential electronic registry for tracking of the sale of mortgage loans between lenders… No longer would the traffickers in mortgages have to document their transactions with county clerks, nor would they have to pay the many and varied courthouse fees… This centralized database facilitated the buying and selling of mortgage debt at great speed and greatly reduced cost. … Without the efficiencies [dread word] of MERS there probably would never have been a mortgage bubble.
After the housing market collapsed, however, MERS found itself under attack in courts across the country. MERS had single-handedly [oh?] unraveled centuries of precedent in property titling and mortgage recordation, and judges in state appellate and Federal bankruptcy courts in more than a dozen jurisdictions — the primary venues where real estate cases are decided — determined that the company did not have the right to foreclose on the mortgages it held. … “There is no evidence of record that establishes that MERS either held the promissory note or was given the authority [to] assign the note,” the Kansas court held. … “It appears that every MERS mortgage,” a New York State Supreme Court judge recently told me, “is defective, a piece of crap.”
“What’s happened,” said Christopher Peterson, a law professor at the University of Utah who has written extensively about MERS, “is that, almost overnight, we’ve switched from democracy in real-property recording to oligarchy in real-property recording.” The county clerks who established the ownership of land, who oversaw the records, were democratically elected stewards of those records, said Peterson. Now a corporation headquartered outside Washington, DC oversaw the records. “There was no court case behind this, no state from Congress or the state legislatures” , Peterson told me. “It was accomplished in a private corporate decision. The banks just did it.“"
Dr Jon Cloke
Lecturer/Research Associate
Geography Department
Loughborough University
Loughborough LE11 3TU
Office: 01509 228193
Mob: 07984 813681
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