Foreclosure abuse rampant across U.S., experts say - Reuters

[FedUp_Queer]

6. This story is basically correct, but fails to articulate the real nefariousness.

The real culprit here is MERS. Short for Mortgage Electronic Registration Systems, it was a strawman the banks set up so that they could create the mortgage backed securities market. Here is the deal.

Typically, as most people know, when a person transfers a property, they have record the mortgage at the county clerk's office. This is the system set up for two reasons. First to put the world on notice of who has a lien (an entitlement to prevent transfer) against a property (the person who has the lien is the "lienor&quot . Second, it's so the owner of the property (the borrower) can always know who actually owns the lien (known as the mortgage). The thing is that the law requires that every time the owner of the lien transfers it to someone else, the new person must "record" the new mortgage (why that is, I won't get into) and pay the clerk a fee to record.

Now, after our genius banks devised the scheme to package Mortgage backed securities together, they realized that every time they sold the packaged mortgages, they would have to record the transfer and pay the fee. The way around this was to set up the strawman MERS. When a person borrowed money, they agreed to have MERS serve as the agent (the precise term they use in the loan documents is "nominee&quot of the bank...and any bank to which any other bank transfers the mortgage. So, at the country clerk's office, the only mortgage was the one naming MERS as the mortgagee (or the owner of the mortgage). The borrower (or anyone else) was supposed to be able to go to MERS's website to find out the actual mortgagee/bank who owned the lien. Now...with MERS as the nominee/agent of most banks simultaneously, the banks could transfer the mortgages as many times as possible without having to record and without having to pay the recording fee. Because MERS served as the nominee/agent of any bank, if MERS held it, any bank held it.

The problem is that there are several studies (like the one in the OP) that show that MERS' record-keeping is extremely poor and that even if a borrower goes to MERS' website to find out who owns the loan, it's exceedingly unreliable.

Finally, the really sketchy part is that MERS "appoints" officials of the banks to act on MERS' behalf to assign mortgages to themselves...this is where the robosigning came in. MERS' (incidentally, which is supposed to be the agent of the banks, not the other way around) appoints John Smith bank official as MERS' official to "assign" mortgages that MERS holds (for bank) to bank when bank wants to foreclose.

The whole thing is designed to skirt the recording requirements. The problem is, these geniuses on Wall Street never considered what would happen if people's homes were underwater or they couldn't pay. So, we have the situation where there is no mechanism to know who actually owns what, who assigned what to whom and where the records are that show this.

**Little factoid. In Michael Moore's "Capitalism A Love Story," he mentions a company from Flint that was foreclosing on loans. That is MERS.