Requiem for MERS (and the Banks That Created the Frankenstein Monster)

[Tommy The Cat]

It is now widely recognized that MERS...

 

Mortgage Electronic Registration Systems

 

Wikipedia ...facilitated fraud by lenders, servicers, foreclosers and securitizers. Even on the most charitable interpretation it is very difficult to believe that MERS was not fraudulent by design. Let me first concisely summarize the two main problems, and then move on to the most recent developments that put the final nails in MERS's coffin. I'll conclude with my argument that there really was some "not so intelligent" design behind all of this. But it is coming back to bite the hand that feeds. The big banks will not survive the monster they created.

 

Whenever those who are critical of MERS and the banksters post blogs about the multiple frauds, we are attacked by commentators -- presumably industry hacks -- who try to obfuscate the issues. But recent court cases as well as testimonies before elected representatives confirm our two main claims. First, many or most foreclosures that are taking place are illegal because those doing the foreclosing do not have legal standing. And, second, the practices that created the foreclosure problems also mean that the mortgage backed securities are actually unsecured debt. That means banks must take them back, so they are toast. It all comes back to MERS's business model: it destroyed the chain of title.

 

Much of the rest of the fraud and scandal we are witnessing follows on from that because the banks want to foreclose the properties before the securities holders put back the fraudulent securities. The problem is that the destruction of the clear chain of title makes it impossible to foreclose, so the banks used robo-signers to forge documents in the hope they could paper over their home thefts. But homeowners, courts, legislators, securities investors, and title insurers have caught on to the scam. In addition to the forgeries, MERS and bank officials and lawyers are committing perjury in court in the hope that they can confuse the issues sufficiently that they can complete the home thefts.

 

However, improper foreclosures produce houses that cannot be sold legally -- so the can is just kicked down the road to the next crisis, which will reveal that those who have purchased foreclosed homes have no legal title to them. And so their debts will also be unsecured. MERS has created a disaster that will not be resolved for at least a decade, perhaps a generation. Given the scale of foreclosures (projected at 13 million by 2012), future home purchasers face a pretty good chance that if they are buying pre-owned housing, their title to the property is dubious.

 

 

[hairmetal4ever]

My main question is, assuming this is all true (which I don't), WHY would they intentionally create an organization that would blur the chain of title and ultimately destroy them? What benefit could they possibly get from that?

[hairmetal4ever]

Having trouble proving legal standing to foreclose does NOT mean they actually don't have legal standing, it's two seperate issues. The court cases are NOT based on the actual fact that they don't have standing, rather, the difficulty in actually proving it.

 

Not that it makes a difference legally, but there's a big difference between taking a home you have no right to, versus taking a home that you technically DO have a right to, but can't prove. One is intentional fraud, the other is bad recordkeeping.

 

Just like some of these CA's. People often dispute off collections they probably do owe, since the CA can't prove it's theirs. Doesn't mean it's not, but due to legal technicalities, they have to delete from the credit report.

 

That said, do we REALLY want to destroy the wealth and security of every homeowner in the country just to prove a damn point?

Edited February 14, 2011 by hairmetal4ever

[Tommy The Cat]

My main question is, assuming this is all true (which I don't), WHY would they intentionally create an organization that would blur the chain of title and ultimately destroy them? What benefit could they possibly get from that?

The fundamental MERS model is to reduce costs by eliminating the necessary assignments of interest at each stage, and the public recordings that make it all transparent and virtually fraud-proof. Don't confuse the facts of the MERS software design with its ultimate results.

[cedski]

I'm not going to state a position one way or the other on MERS.

 

Here is what I will say. At one point in time several counties in several states during the boom where so far behind in recording that it took 2-3 months to get recordings done. If lenders required the recording be completed prior to funding a loan those borrowers would be stuck in limbo till it was completed OR the lender would have to carry the loan on their books till it was recorded and could then be sold. In the second case it costs the consumer a lot more money because the lender is not going to absorb the carrying costs for the loan with out passing it on to the consumer. This is especially true when it comes to warehouse lenders.

 

20/20 hindsight is just that. I will bet that anyone who is out there bashing the MERS system at some point in time probably benifited from it.