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You’ve heard the name Mortgage Electronic Registration Systems or “MERS” mentioned in relation to the foreclosure problems in the residential real estate market.

But what is MERS?

It is the company created and owned by all of the big banks to process title to property in the U.S. Approximately 60% of the nation’s residential mortgages are recorded in the name of MERS.

MERS is a shell corporation with no employees, but thousands of officers.

As the treasurer and secretary of MERS admitted in a deposition:

Q Does MERS have any salaried employees?
A No.
Q Does MERS have any employees?
A Did they ever have any? I couldn’t hear you.
Q Does MERS have any employees currently?
A No.
Q In the last five years has MERS had any
employees
?
A No.
Q To whom do the officers of MERS report?
A The Board of Directors.

***

A That’s correct.
Q And in what capacity would they report to you?
A As a corporate officer. I’m the secretary.
Q As a corporate officer of what?
Of MERS.
Q So you are the secretary of MERS, but are not
an employee of MERS?
A That’s correct.

***

How many assistant secretaries have you
appointed pursuant to the April 9, 1998 resolution; how
many assistant secretaries of MERS have you appointed?
A I don’t know that number.
Q Approximately?
A I wouldn’t even begin to be able to tell you
right now.
Q Is it in the thousands?
A Yes.
Q Have you been doing this all around the
country in every state in the country?
A Yes.
Q And all these officers I understand are unpaid
officers of MERS
?
A Yes.
Q And there’s no live person who is an employee
of MERS that they report to, is that correct, who is an
employee?
[Objection]
A There are no employees of MERS.

(page 70, line 1 through page 72, line 8)

In another deposition, a legal assistant at a law firm initiating 4000 to 7000 foreclosures per month in Florida held herself out as “vice president” and “assistant secretary” of MERS. She testified:

Q: The question was you have no job duties as an assistant secretary of MERS, correct?
A: I do not have any job duties other than signing the assignments and mortgage. Does that help?
Q: Yes. Here, I’ll try to rephrase this. Do you attend any board meetings at MERS?
A: No, sir.
Q: Do you attend any meetings at all at MERS?
A: No, sir.
Q: Do you report to the secretary of MERS?
A: No, sir.
Q: Who is the secretary of MERS?
A: I have no idea.

***

Q: Where are the MERS offices located?
A: I can’t remember.
Q: How many offices do they have?
A: I have no idea.
Q: Do you know where their headquarters are?
A: Nope.
Q: Have you ever been there?
A: No.
Q: How many employees do they have?
A: I have no idea.

(pages 11 & 12)

She further testified that her signatures on “these assignments,” which from all indications were and are at least several thousand in number, were in no way attestations that the statements contained therein were accurate or truthful. She further testified that she was the person with the most knowledge about the subject assignment.

For example, she testified:

Q: It says, ‘but effective as of the 19th day of February, 2008.” Do you see that?
A: Yes.
Q: Where did you get that date from?
A: I did not pick that date. That date was put in by the processor that prepared the
assignment.
Q: And who was that?
A: Off the top-of-my-head, I do not know who actually typed this assignment.
Q: Okay. But you are signing on behalf of MERS, and you are stating here that it is effective as of the 19th day of February, 2008, correct?
A: Correct.
Q: At the time you signed this, what reason did you have, as agent for MERS, to make it
effective as of the 19th day of February, 2008?
A: I did not pick that date. And I do not recall this document.
Q: Sitting here today, you have no idea why it is that it says, “effective as of the 19th day of February, 2008.” Is that correct?
A: Looking at this one particular piece of paper, I do not recall or know the answer to that question, no.
Q: Is there some general practice, of which you are aware, that would give us information as to why this particular date was inserted?
A: That information was determined by the people that review the file prior to me.
Q: And what would they base that on, as a general practice?
A: I do not know.
Q: You don’t know? Were, to your knowledge, any physical documents transferred on February 19, 2008?
A: I do not know.
Q: To your knowledge, does the 19th day of February, 2008 have any significance?
A: I do not know.
Q: Ma’am, if you signed this document on behalf of MERS, picking this date, this effective
date – -
A: I did not pick the effective date.
Q: But you ratified it by signing this; didn’t you?
[objection]
Q: Didn’t you attest to the accuracy of that date by signing this document?
[objection]
A: I would say, no.
Q: Did you attest to this document, as a whole, by signing it?
[objection]
A: I do not think that in my capacity of signing these assignments, it was my position to attest. My role was to be given a document that had been reviewed by an attorney, had been reviewed by a title examiner, had instructions from the client, and I was to sign the assignment as secretary on behalf of MERS.
Q: Right. And when you signed it as secretary on behalf of MERS, were you approving and agreeing with the terms contained therein for MERS?
A: I believe I was approving and agreeing to the fact that the mortgage needed to be assigned from MERS to another entity.

(pages 13 and 14)

In other words, assignments of title were never actually created, notarized and recorded, as required by state law. The “vice president” and “assistant secretary” MERS signing sworn statements under penalty perjury was simply making it up and doing what she was told.

In that light, Yves Smith’s report that “no one in the industry transferred the paper” makes perfect sense.

Why MERS?

But why was MERS created in the first place?

MERS, the banks and the mainstream financial press all say that it was simply to save fees by digitizing mortgage electronic.

But as Ellen Brown notes, there is in reality a very different reason that the big banks created MERS:

The rating agencies required that the conduit be “bankruptcy remote,” which meant it could hold title to nothing ….

Indeed, the secretary and treasurer of MERS admitted this in a deposition, stating:

As a requirement for mortgages that were securing loans or promissory notes that were sold to securitize trust, the rating agencies would only allow mortgages MERS — well let me step back. They required that a bankruptcy remote single purpose entity be created in order for transactions holding loans secured by MERS, by mortgages MERS served as mortgagee to be in those pools and receive a rating, an investment grade rating without any changes to the credit enhancement. They required that to be a bankruptcy remote single purpose subsidiary of MERS, of Merscorp.

(page 32, lines 9-20)

Indeed, many commercial mortgages may be held by MERS as well, and for the same reason.

And as a a forthcoming article in the Real Property, Trust and Estate Law Journal notes, saving fees was another motivation for the giant banks in running mortgages through MERS, but in a way which is shadier than routine cost-cutting efforts.

Karl Denninger summarizes the article (indicated with indented quotes), with commentary:

A few good cites will set the table for those willing to dig into what’s really not that hard to understand…

In the mid-1990s mortgage bankers decided they did not want to pay recording fees for assigning mortgages anymore. This decision was driven by securitization—a process of pooling many mortgages into a trust and selling income from the trust to investors on Wall Street. Securitization, also sometimes called structured finance, usually required several successive mortgage assignments to different companies. To avoid paying county recording fees, mortgage bankers formed a plan to create one shell company that would pretend to own all the mortgages in the country—that way, the mortgage bankers would never have to record assignments since the same company would always “own” all the mortgages.

What do you call an artifice designed to evade the payment of taxes – which these fees are?

They incorporated the shell company in Delaware and called it Mortgage Electronic Registration Systems, Inc.

Even though not a single state legislature or appellate court had authorized this change in the real property recording, investors interested in subprime and exotic mortgage backed securities were still willing to buy mortgages recorded through this new proxy system.14

What do you call selling something to someone that claims an ownership right as an inherent part of the bargain – indeed, it’s the only consideration that is offered in exchange for money, yet the state legislatures have not ratified this as proper, and in fact the county and state legislatures say it is not?

Because the new system cut out payment of county recording fees it was significantly cheaper for intermediary mortgage companies and the investment banks that packaged mortgage securities. Acting on the impulse to maximize profits by avoiding payment of fees to county governments much of the national residential mortgage market shifted to the new proxy recording system in only a few years. Now about 60% of the nation’s residential mortgages are recorded in the name of MERS, Inc. rather than the bank, trust, or company that actually has a meaningful economic interest in the repayment of the debt.

***

Astonishingly, MERS “vice presidents” are simply paralegals, customer service representatives, and foreclosure attorneys employed by other companies. MERS even sells its corporate seal to non-employees on its internet web page for $25.00 each. Ironically, MERS, Inc.—a company that pretends to own 60% of the nation’s residential mortgages—does not have any of its own employees but still purports to have “thousands” of assistant secretaries and vice presidents.

AP notes that banks hired hair stylists, Walmart floor workers and people who had worked on assembly lines as foreclosure “experts”. Some of these folks testified in deposition that they hardly knew what a mortgage or an “affidavit” is, and admitted that they knew they were lying when they signed the foreclosure affidavits and that they agreed with the defense lawyers’ accusations about document fraud. While I have not yet seen any evidence that the folks signing on behalf of MERS were of this caliber, nothing would surprise me at this point.

But It Can All Be Fixed, Right?

Diana Olick notes:

A source of mine pointed me to a recent conference call Citigroup had with investors/clients. It featured Adam Levitin, a Georgetown University Law professor who specializes in, among many other financial regulatory issues, mortgage finance. Levitin says the documentation problems involved in the mortgage mess have the potential “to cloud title on not just foreclosed mortgages but on performing mortgages.”

***

With the chain of documentation now in question, and trustee ownership in question, here is one legal scenario, according to Prof. Levitin:

The mortgage is still owed, but there’s going to be a problem figuring out who actually holds the mortgage, and they would be the ones bringing the foreclosure. You have a trust that has been getting payments from borrowers for years that it has no right to receive. So you might see borrowers suing the trusts saying give me my money back, you’re stealing my money. You’re going to then have trusts that don’t have any assets that have been issuing securities that say they’re backed by a whole bunch of assets, and you’re going to have investors suing the trustees for failing to inspect the collateral files, which the trustees say they’re going to do, and you’re going to have trustees suing the securitization sponsors for violating their representations and warrantees about what they were transferring.

***

Josh Rosner, of Graham-Fisher, put the following out in a note today, claiming violations of pooling and servicing agreements on mortgages could dwarf the Lehman weekend:

Nearly all Pooling and Servicing Agreements require that “On the Closing Date, the Purchaser will assign to the Trustee pursuant to the Pooling and Servicing Agreement all of its right, title and interest in and to the Mortgage Loans and its rights under this Agreement (to the extent set forth in Section 15), and the Trustee shall succeed to such right, title and interest in and to the Mortgage Loans and the Purchaser’s rights under this Agreement (to the extent set forth in Section 15)”. Also, an Assignment of Mortgage must accompany each note and this almost never happens.We believe nearly every single loan transferred was transferred to the Trust in “blank” name. That is to say the actual loans were apparently not, as of either the cut-off or closing dates, assigned to the Trust as required by the PSA.

Rather than continue to fight for the “put-back” of individual loans the investors may be able to sue for and argue that the “true sale” was never achieved.

Quite the can of worms. Anyone who says that the banks will fix all this in a few months is seriously delusional.

Citi’s conference call is even more dramatic when you remember that CitiMortgage is one of the main owners of MERS. Here’s more from Citi:

MERS (Mortgage Electronic Registration Systems) functions as a centralized electronic registry of mortgages and tracks ownership of mortgages. MERS allows mortgage ownership to change hands efficiently and relatively quickly since it is electronic and allows all parties to forgo making a filing in local land records. Indeed, MERS was designed to function as a substitute for local land records.

Although MERS was designed to enhance efficiency in the mortgage assignment process, Levitin argued it may not conform with the law. “Slowly but surely” courts are issuing decisions which “cast validity on the MERS process.” Although ~60% of mortgages list MERS as the “nominee” which owns the mortgage, a handful of recent court cases have ruled that MERS has no standing in foreclosure actions either because (1) physical paperwork must be transferred when a mortgage is assigned by one party to another or (2) MERS has no true economic interest in the mortgage in question since it collects no payments from the borrowers.

Foreclosures Gone Wild – Understanding the Legal Issues Surrounding the Recent Foreclosure Freezes and Inve…

Finally, the above-described Real Property, Trust and Estate Law Journal article also comments on the illegality of MERS (the indented quotes are from the article; the rest is Denninger’s commentary):

Worse, MERS may have literally “split the baby” and rendered millions of mortgages unsecured:

Typically, the same person holds both the note and the deed of trust. In the event that the note and the deed of trust are split, the note, as a practical matter becomes unsecured. Restatement (Third) of Property (Mortgages) § 5.4. Comment. The practical effect of splitting the deed of trust from the promissory note is to make it impossible for the holder of the note to foreclose, unless the holder of the deed of trust is the agent of the holder of the note. Id. Without the agency relationship, the person holding only the note lacks the power to foreclose in the event of default. The person holding only the deed of trust will never experience default because only the holder of the note is entitled to payment of the underlying obligation. Id. The mortgage loan became ineffectual when the note holder did not also hold the deed of trust.

That’s an actual holding of the Missouri Court of Appeals.

It gets worse.

If the growing line of cases asserting that MERS is neither a mortgagee nor a deed of trust beneficiary is correct, then courts must soon confront profound questions about the very enforceability of MERS’ security agreements. … There is a compelling legal argument that loans originated through the MERS system fail to create enforceable liens.

…..

The mortgage industry has premised its proxy recording strategy on this separation despite the U.S. Supreme Court’s holding that “the note and the mortgage are inseparable.” If today’s courts take the Carpenter decision at its word, then what do we make of a document purporting to create a mortgage entirely independent of an obligation to pay? If the Supreme court is right that a “mortgage can have no separate existence” from a promissory note, then a security agreement that purports to grant a mortgage independent of the promissory note attempts to convey something that cannot exist.

While this argument will surely strike a discordant note with the mortgage bankers that invested billions of dollars in loans originated with this simple flaw, the position is consistent with a long and hitherto uncontroversial line of cases. Many courts have held that a document attempting to convey an interest in realty fails to convey that interest when an eligible grantee is not named. Courts all around the country have long held: “there must be, in every grant, a grantor, a grantee and a thing granted, and a deed wanting in either essential is absolutely void.”

Now consider this – assignments of the Grantee in blank are thus invalid too. Oh, yeah, they went there.

Nonetheless, in Chauncey, the trial court, intermediate appellate court and New York’s highest court all agreed that the attempt to convey an “in blank” mortgage failed. The Court of Appeals explained, “No mortgagee or obligee was named in [the security agreement], and no right to maintain an action thereon, or to enforce the same, was given therein to the plaintiff or any other person. It was, per se, of no more legal force than a simple piece of blank paper.”

Double Oops.

And then, in a very nice throwback to something I wrote we get this:

In a stunning betrayal of the policies that ground the ancient statute of frauds principal commanding that we commit transfers of land interests to writing, mortgage bankers wrote millions of mortgage loans that did not specify who the actual mortgagee was. For over a hundred years, our courts have held that “legal title to real property may not be established by parole”….

Then there’s the little problem with REMICs that don’t actually have title because MERS claims to (well, sometimes)

And, all rights to a mortgage loan must be deposited into the trust for it to achieve tax exempt status under federal REMIC law—which does not contemplate the use of a proxy mortgagee. Yet, despite claiming sole ownership of mortgages sold to investors, in documents regularly recorded with county officials these same institutions maintain that MERS is the sole owner of the mortgage. The chain of financial institutions linking originators to securitization depositors collectively want to have their lien and sell it too.

That should go over well with the IRS.

Communities around the country have elected and hired county recorders to act as their custodian of property rights. Those recorders who agree the MERS system poses a threat to real property records have an obligation arising from their office to reclaim and restore faith in land title records. While some individual county recorders may reasonably feel reluctant to take on a powerful national system backed by some of the nation’s largest financial institutions, this is precisely what they were hired to do. If county recorders do not protect county real property records, who will? A pathway to reclaiming authority over real property records could involve joining with other recorders to raise a unified voice. State and national county recorder trade associations could have a significant impact on pending cases by submitting amicus curiae briefs. Courts are likely to respect county recorders’ expertise in maintaining and preserving transparent records, both because of recorders’ experience but also because of their democratic mandate. Even more to the point, county recorders should consider appealing to the courts directly to stop financial institutions from recording false documents. In lawsuits to recover unpaid recording fees counties could hire private counsel on contingent fee agreements that would place no financial burden county taxpayers.

Yep.

It is time to take this edifice and throw it in the trashcan, after forcing its members to fix all the titles they have damaged – at their expense – and record true and correct assignment information.

Oh wait – that’s a problem isn’t it….. what if the assignments never actually happened, and the REMICs hold an empty box? Why that could get messy….. Hmmmm….

Indeed, as a prominent economist said recently: “At the root of the crisis we find the largest financial swindle in world history”, where “counterfeit” mortgages were “laundered” by the banks.

MERS was a large part of that laundering process.

Update: JP Morgan – one of the founders and largest owners of MERS – is bailing out.

Category: Foreclosures

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

51 Responses to “What Is MERS and What Role Does It Have in the Foreclosure Mess? (Hint: It Holds 60% of All Mortgages, But Has ZERO Employees)”

  1. MooPoint says:

    This will all get worked out by retroactively changing the law to make what the banks did fraudulently and illegally into something perfectly fine. All participants get immunity, and the banks will then have the power to foreclose on anyone they want, whenever they want regardless of all precedent, laws, facts, due process, or common sense. Pension funds and individual investors in MBS’s will remain screwed.

    If you have enough money and power as these people do, market forces, or the law itself is no more a threat than a cynical comment posted to a financial blog.

  2. Sechel says:

    Funniest piece on the foreclosure mess I’ve ever heard. Abbot and Costello have nothing on this!

  3. louiswi says:

    I’ve heard about the fabled “shit storm” since I was a child. Now after seven decades, I actually get to see one. Wow!!

  4. Transor Z says:

    Barry, the other day you asked us lawyers whether we had any knowledge of foreclosure craziness. Here was my response: http://www.ritholtz.com/blog/2010/10/examples-massive-foreclosure-errors/comment-page-1/

    Transor Z Says:
    October 15th, 2010 at 9:12 am

    I count 45 civil cases in Suffolk County, Massachusetts in which MERS is listed as “Other interested party” and 7 in which MERS is a defendant.

    ——————
    That’s just superior court, not land court or district court. And that’s only Boston proper.

  5. JMelville says:

    Imagine and mining and minerals company trying to evade county recording fees for lease transactions. This is all beyond my imagination. Is Goldman the invisible hand?

  6. obsvr-1 says:

    Indeed, as a prominent economist said recently: “At the root of the crisis we find the largest financial swindle in world history”, where “counterfeit” mortgages were “laundered” by the banks.

    When the banksters play with dynamite they put the institution at risk of blowing up … this time they played with fissionable material and it appears that the chain reaction has started.

    If we do not see criminal prosecution from this mess then we are truly doomed.

  7. Jojo says:

    And yet, despite probably 2 months of Foreclosuregate and MERS horror stories, the market just keeps going up, doesn’t give a damm, doesn’t think any of this is a problem.

    Then their are the predictions of further gains, like this today. No one cares about this mortgage problem.
    ————–
    Why the Dow Usually Rallies After Midterm Elections
    The Dow has risen following 19 of the last 22 midterm elections

    By Ben Baden
    Posted: October 25, 2010

    Democrats and Republicans may both have something to celebrate in the months following the midterm elections: A stock market rally. From 1922 to 2006, the average gain of the Dow Jones Industrial Average over the 90 trading days following midterms (roughly November until mid-March) was 8.5 percent, according to a new study authored by Brian Gendreau, market strategist for Financial Network. That’s almost 5 percent higher than the Dow’s gains in non-election years.

    Looking further out, the year following the midterms or the president’s third year in office is usually the best year for the Dow, according to an older study by Gendreau. From 1871 to 2005, the average return of the S&P Composite Stock Index during the third year of a president’s term was 10.1 percent. During the fourth year in office the index was up 7.5 percent, on average–a marked improvement over average returns in the first year (3 percent), and the second (2.7 percent).

    http://money.usnews.com/money/personal-finance/mutual-funds/articles/2010/10/25/why-the-dow-usually-rallies-after-midterm-elections.html

  8. Seems to be if the MERS issues get too big the simple solution the banks will seek is to get a law to make it all kosher. And they will get it.

  9. JerseyCynic says:

    NOW I get why they nicknamed the Federal Reserve Bank Building in Boston “The Washboard Building”

    http://www.waymarking.com/waymarks/WM9EW6_Federal_Reserve_Bank_Building_Boston_MA

    It’s where they launder all the money!

    I KNEW IT!!!

  10. RR111 says:

    Barry – You hit it out of the ballpark with this one. Finally, someone that understands the situation. And, even a mention of MERS Commercial Unit on top of all of that.

  11. cheese says:

    According to Chris Whalen……..

    In 1946 the states attorney generals’ got together and decided they were going to impose the Uniform Commercial Code on the mortgage note. In other words, the evidence of the borrowing that the investor would hold, but not on mortgage itself, which is a state document.

    http://kingworldnews.com/kingworldnews/Broadcast/Entries/2010/10/23_Premier_Release_-_Chris_Whalen.html

  12. RR111 says:

    *Edit: I now see that it was a gues author.

  13. GregP says:

    The Scribd document from Citi has been removed from Washington’s Blog due to “copyright infringement”.
    However, at this moment you can still use BP to access the Scribd document, log in to Scribd, and save the pdf if desired.

  14. radioman says:

    Wow. My kids bring home papers for me to sign. For them it’s just a parental duty to sign the paper so they can give it back to the teacher. I’ve spent years lecturing them that my signature with date are supposed to attest to something. And now we see how the real world works…or actually no longer works…

  15. dankatzman says:

    Fantastic Post!

    If the litigation forces MERS into bankruptcy, will it be up to a bankruptcy court to sort out the mess? Does this mean that all MERS mortgages get revalued to their actual market value as part of the Chapter 7 resolution? Or, if MERS doesn’t have legal title and it goes away, do all mortgages revert to the initial lender?

  16. hammerandtong2001 says:

    So no one knows who holds the note. And there are, oh, about 4 million of these cases nationwide. That’s great.

    And to boot, there’s a few hundred $billion in unpaid county filing fees that have been unpaid for what? — A decade or two?

    Call me when this gets figured out. I’ll be at the bar.

    .

  17. Tarkus says:

    They must have made a typo calling it MERS when they meant MESS.

    The Swedish option is looking better….

  18. wunsacon says:

    I’m trying to image the conversation as this idea was introduced years ago after hours in the offices of J.T. Marlin:

    “And here’s the real trick: No one’s holding the bag. No one! So, when the SHTF, this is another hurdle for those understaffed prosecutors to overcome in order to establish culpability. See? Is that genius or what?”

  19. ssp67047 says:

    The grand fleecing continues

  20. VennData says:

    So are all the good folks who constructed this conduit member of the World Side Chamber of Commerce who say with disdain that our Commander-in-Chief is “anti-business.” I wonder what the Chamber of Commerce is “anti,” anti-people?

    No wonder they hate the idea of a consumer protection agency.

    Thanks bailing these guys out, Bush.

  21. bergsten says:

    Meanwhile, over in happy Bank of Americaland, I get a late notice about something I paid. I call the payee, and the ask that I have BofA give them a reference number so that they can trace the payment.

    You cannot get a person at BofA. You have to “chat.”

    So I gave it a try.

    Here’s exactly what happened (unedited):

    Welcome to an online chat session at Bank of America. Please hold while we connect you to the next available Bank of America Online Banking Specialist. Your chat may be monitored and recorded for quality purposes. Your current wait time is approximately 0 minutes.
    Thank you for your patience.

    Thank you for choosing Bank of America. You are now being connected to a Bank of America Online Banking Specialist.

    Vanessa: Hello! My name is Vanessa. Thank you for being a valued Bank of America customer.
    Vanessa: May I please have your full name as it appears on the account and the last four digits of the account number in question?
    You: Xxxxx X Xxxxxxxx 0000
    Vanessa: Hi, Xxxxx.
    Vanessa: Thank you very much for verifying this information with me.
    Vanessa: How are you doing?
    You: Debit transaction on 09/30 payable to xxxxxxxx HOA in the amount of $260 was not received by the payee. They are asking for a reference or check number so that they can track where the payment went. Can you please help?
    Vanessa: I do understand your concern regarding the payment,.
    Vanessa: I will surely check this for you.
    Vanessa: Please give me a moment, while I research your account details.
    Vanessa: May I please have the last four digits of the checking account number in question?
    You: 0000
    Vanessa: Thank you for the information.
    Vanessa: Please give me a moment, while I research your account details.
    Vanessa: Let me transfer this chat to the concerned department.

    Please wait while I transfer the chat to the best suited Bank of America Specialist

    You are now chatting with ‘Justin’. How can I help you today?
    Justin: Hello. You have been transferred to General Bill Pay Web Chat. I can review your conversation above.
    To access your Bill Pay profile, please provide me the e-mail address associated with your Bill Pay profile.
    You: xxx@xxxxxxxx.com
    Justin: Thank you. It will be a moment while I review your Bill Pay profile.
    Justin: Unfortunately, the last representative should have transferred you to our Bill Pay Research department. Instead, you were transferred to the department that handles General Questions. One moment while I obtain a representative to assist you.
    Please wait while I transfer the chat to the best suited Bank of America agent

    And, that was that (I guess there wasn’t a “best suited” BofA agent). I gave up after 30 minutes or so.

    Tried again and it says the system is not available. Probably end-of-shift in Bangalore.

    They can’t get ANYTHING right, ever. I despair of ever getting anything resolved.

    I weep for anybody who has a mortgage with this bunch.

  22. RW says:

    It would appear that MERS was mainly a way to give a database standing as a (limited liability) person.

  23. sue806 says:

    Here’s a common sense and logical approach, all foreclosures are indeed halted until:
    1- It is determined whether negative equity exist or not, because if there is NO negative equity the homeowner had the option to sell the property maybe earning a profit and it is what they agreed to, capitalism. If the chain of title is broken and there is equity involved, the homeowner will lose his home because he didn’t pay the mortgage as agreed but the investor pays a fine equal to the “savings” in unrecorded filing fees (to the states/counties) correcting the chain of title. The homeowner is not financially compensated since he/she was not financially harmed, injured or affected, THE REASON FOR THE LAW.
    2- But if there is negative equity, a uniform fair and reasonable modification must be offered that addresses the negative equity, EVERY negative equity homeowner must be offered the same modification with the same perks/rewards and penalties, there are no exceptions for differences in income, assets, ratio’s, hardships or type of loan, THE IMPLIED TERMS OF THE AGREED TO LOAN CHANGED when the homeowner’s option of selling the property was taken away and the investor will take an automatic loss because of the negative equity. This is not a new concept but one that over 25% of negative equity homeowners have received already to avoid the investor’s financial loss with negative equity foreclosures. Insisting on one modification program for every negative equity homeowner is fair and playing by the rules (FAIR AND HONEST DEALINGS). The necessity of having one program eliminates the fraudulent, deceptive and unfair business practices being utilized to enhance the financial industry profits with the disparity in loan modifications issued or denied based on factors outside of the negative equity itself. The investor will still be responsible for the fine equaling the savings in unrecorded filings fees to correct the chain of title. Again, the homeowner is not compensated for the broken chain of title but is INCENTIZED with a negative equity modification to remain a negative equity homeowner when it is financially in their best interest to default based on the precedent set by the financial industry themselves in changing the rules and standard operating procedures of foreclosing to modifying.
    3- If the chain of title was broken and the home was resold after a foreclosure occurred due to a true error of – the homeowner didn’t owe bank #1 the mortgage payment or there wasn’t a mortgage on the property or the homeowner was paying his mortgage or if the homeowner was paying a lower modified payment that was agreed to or the homeowner can prove payments were made and were either returned or credited to another account, the investor/bank pays a fine equal to UP TO two times the current value of the home to the original owner that was foreclosed on. The award must be applied to the unrecorded filing fees correcting the title, any outstanding mortgages and deficiency amount including tax liabilities resulting from the foreclosure with the balance going to the original owner as compensation, they were financially harmed, the reason for the law.
    4- If the chain of title was broken and a foreclosure occurred from NOT PAYING but the homeowner was still in residence, they have the option of accepting the ImNotLeaving Streamlined Uniform Modification System or vacating the property within a reasonable length of time, 60 days max without fear of any deficiency judgment or tax consequences, if the home was left in good condition. (They weren’t financially harmed because of the broken chain of title but they were financially harmed from negative equity and a modification was offered to compensate them for the negative equity, they choice to accept or decline)
    I have sent the ImNotLeaving Uniform Modification System proposal/solution to the government and financial industry addressing negative equity and the chain of title issues hoping to avoid this “dilemma” but was advised that while I raised some interesting points, they will decide whether it is the best solution for them at this time. For a copy of my proposal please feel free to email me at Sue806@aol.com

  24. Herb2 says:

    Mark to myth accounting make vaporware mortgage records seem like a natural. Even Buffet got on board.

    “Berkshire responded in May that those investments — especially in Kraft (NYSE:KFT – News) and U.S. Bancorp (NYSE:USB – News) — were long-term holdings with the potential to appreciate, and that the firm therefore did not see the need to recognize losses on them.”

  25. philipat says:

    In fact, GS just increased its rating on Shiti to “Conviction buy”. Which I can understand depending on the definition of “Conviction”!!

    Maybe Goldman, as usual, know something we don’t know? Perhaps a broad “Get out of jail free” card issued by Paulson?

  26. Tarkus says:

    RW Says:
    October 25th, 2010 at 8:15 pm

    It would appear that MERS was mainly a way to give a database standing as a (limited liability) person.

    ————————————————————-

    That would give a fully packed hard-drive nation-status…

    Are any but a very few politicians (who don’t get much media time) speaking up about this? It IS election time, after all…

  27. From the mortgagor side, I can put my house title in a trust (or a corporation) and within that trust add and remove people without recording a new deed. MERS is basically the same thing on the mortgagee (note/deed of trust) side.

    sue806, fyi and just to be a nitpicker you are using chain of title incorrectly. The title is who owns the property, this is about who owns the note. Just from the outside looking in it appears some of the MERS questions can be avoided by assigning the mortgage from MERS to the bank who owns it before starting foreclosure proceedings.

  28. ToNYC says:

    “But what is MERS?

    It is the company created and owned by all of the big banks to process title to property in the U.S. ”

    It could be the Central Bank of Title and create title out of thin air with the dual mandate of promoting bank ownership of all Potterville properties and upholding the value of all such REO property.

  29. Another comment and a question:

    I was thinking last week that the “hostage value” of worthless second mortgages (highly underwater, non-performing) went up because of foreclosure-gate because the banks will put a higher emphasis on short selling.

  30. PB says:

    bloomberg professional story link for the citi note: {NSN LA5Y1I6S972D }

  31. rktbrkr says:

    Is MERS regulated?

    It’s my impression that they’ve set up a shadow real property recording system that provides questionable titles – and not just to foreclosed properties.

    Chase quit MERS a couple years ago, I think we’re starting to see why.

  32. Snickers says:

    “Capitalism has defeated communism. It is now well on its way to defeating democracy.”
    – David Korten

    Communism lost legitimacy when it became possible for ordinary people to inform themselves about conditions outside their societies. It was information technologies such as the fax machine, the audio cassette tape and the video tape recorder, not would-be heroes such as Ronald Reagan, that destroyed that system’s legitimacy.

    Democracy is losing legitimacy because the rule of law is being flouted.

    What hard-working, play-by-the-rules American can accept that a few assholes at AIG FP in London could bank fat cash bonuses by underwriting a flood of funny paper while being supposedly regulated by the fucking US Office of Thrift Supervision?

    Americans were told to take responsibility for their financial future, while being enticed (entrapped might be a better word) into the housing Ponzi scheme via 100%+ LTV mortgages which amounted to betting on unlimited asset appreciation at a leverage ratio of infinity.

    But putting the world’s largest asset class into play in this utterly reckless manner (hey, it’s OPM and I’ll be gone, you’ll be gone, and we’re banking those bonuses dude) was not enough. For the sake of a few fucking basis points these criminally corrupt organizations felt it was their right to subvert the very basis of real property ownership in the US, which is rooted in many hundreds of years of English and American law.

    It’s a lot easier to get the toothpaste out of the tube than to put it back in.

    Cheers BR, keep hammering on this.

  33. rktbrkr says:

    Aside from the very questionable legality of MERS operating practices there is the issue of the accuracy of MERS records. If they aren’t regulated there are no outside audits or examinations. This could be The Producers on atomic steroids.

    MERS deserves the mother of all forensic audits -it’s just a question of jurisdiction. Who had the under for mortgagegate blowing over in a couple weeks?

  34. Snickers says:

    Not that I don’t realize this post was not written by BR. Rather it’s from Washington’s Blog, and an excellent post it is.

  35. mote says:

    American Götterdämmerung

    Prelude:

    “This Administration will constantly strive to promote an ownership society in America. We want more people owning their own home. It is in our national interest that more people own their own home. After all, if you own your own home, you have a vital stake in the future of our country.”

    - President George W. Bush, December 16, 2003

    But this “vital stake in the future of our country” won’t be recorded with your clerk of court.

    Finale:

    From MERS’ website:

    “Welcome to MERS!”

    “MERS is an innovative process that simplifies the way mortgage ownership and servicing rights are originated, sold and tracked. Created by the real estate finance industry, MERS eliminates the need to prepare and record assignments when trading residential and commercial mortgage loans.”

  36. Joe Friday says:

    BINYAMIN APPELBAUM:

    “The attorney general in Florida has released a series of depositions with employees of law firms in Florida who say that they were involved in FORGING SIGNATURES on foreclosure documents, filing documents that THEY KNEW WERE INCOMPLETE or that said things that THEY DIDN’T KNOW TO BE TRUE, that they were basically involved in this robo-signing process and this, you know, fast, fast, fast foreclosure process.”

    PBS NEWSHOUR
    http://www.pbs.org/newshour/bb/business/july-dec10/foreclosure_10-25.html

  37. farmera1 says:

    Everyone take a deep breath. Bernanke is on top of this thing, he is looking into it to see if there has been any improper foreclosures.

    “Ben Bernanke, the chairman of the Federal Reserve, said regulators from the Fed and other agencies are “looking intensively” to see if “improper foreclosures” are occurring. Preliminary findings from the investigation could come in a month, Mr. Bernanke said in a speech Monday.”

    http://www.csmonitor.com/Business/2010/1025/Bernanke-Fed-is-probing-flawed-foreclosure-process-and-its-risks-for-economy

  38. Bridget says:

    I think that a real estate attorney might blow quite a few holes in all of this, beginning with the premise that an assignment has to be recorded to be effective. It does not, at least not in all states. Nor does MERS purport to be the the holder or assignee of notes and mortgages, but performs a tracking function, maintaining records of who the assignees are. Maybe MERS hasn’t performed that function particularly well, but that’s what it does.

    And the owner’s title is not affected by mislaid notes and defective assignments of liens and mortgages. The owner’s title could be affected if mislaid notes and defective assignments that are not correctly cured result in an unjustified foreclosure, but that is likely to prove to be a tiny minority of the cases.

  39. RR111 says:

    This is from a bankruptcy judge in Nevada, Judge Linda Reigle, in reference to MERS (in 2009),”Simply being a beneficiary or having an assignment of a deed of trust is not enough to foreclose on the property. For there to be a valid assignment for purposes of a foreclosure both the note and deed of trust must be assigned. A mortgage loan consists of a promissory note and a security instrument, typically a mortgage or a deed of trust.When the note is split from the deed of trust, ‘the note becomes, as a practicable matter, unsecured.’ A person holding only a note lacks the power to foreclose because it lacks the security, a person holding only a deed of trust suffers no default because only the holder of the note is entitled to payment on it. Where the mortgagee has transferred only the mortgage, the transaction is a NULLITY and his ‘assignee,’ having received no interest in the underlying debt or obligation, has a worthless piece of paper.” (Emphasis is mine).

  40. beaufou says:

    I want to see the housing reports when everyone is sick of overpaying for their houses while their wages are going down and their taxes going up.
    I want to see what local governments are going to do when what they used to collect from home-owners turns into a tax break for banks.
    I want to see what are banks going to do when they can shove their inventory of over-priced foreclosed “homes” where the sun won’t shine for over a decade.
    I don’t know if I should laugh or cry when I hear about inflation being the remedy for the economy’s ills, with poverty rising 15% each year.
    I don’t understand how a man can stand in congress and pretend over 40 million people are not living on food stamps, how they can sneak their way out of not confronting 17-18% unemployment.

    I just don’t fucking get it.

    PS: personally, I’m quite fine, I have a ton of options.

  41. JustinTheSkeptic says:

    You guys are wasting why too much time on all this – you’ll work your asses off trying to figure out the direction of the next market move, and then Big Ben will just come in and bingo it goes the way he wants it. Welcome to our Command Economy, Bernanke style.

  42. rktbrkr says:

    For lack of a nail a shoe was lost…Some over the top foreclosing leads to the discovery of endemic foreclosure fraud by the banking industry and finally a bright light is shining on MERS.I’m sure at least some of the states will go after the unpaid mortgage recording fees especially in these hard times for state & local govs.

  43. rktbrkr says:

    Bernanke promises a quick investigation of mortgagegate, you bet it will be quick! The Fed is controlled by the big banks and the big banks own MERS. The Fed cannot be an objective investigator in this situation.

  44. rktbrkr says:

    (Bill) Black points out the glaringly obvious, that the Fed should not be in charge of any investigation into mortgage fraud, due to its “massive” conflict of interest, to the tune of $1.5 trillion in MBS/agencies held on the Fed’s books, which would be immediately null and voided if rampant MBS fraud is indeed uncovered. Which is precisely why the entitlement of the Fed as supreme regulator (as inspired by the financial generosity of the Wall Street lobby) as part of Frank-Dodd was the one single most destructive decision ever made, and equivalent in many ways with electing America’s very own tyrannical despot, whose only interest is making the multi billionaires, into trillionaires, and leaving everyone else in the cold through the eliminating of the savings class and the destruction of the reserve currency.

    http://www.msnbc.msn.com/id/21134540/vp/39836703#39836703

  45. Lugnut says:

    Jojo Says:

    “And yet, despite probably 2 months of Foreclosuregate and MERS horror stories, the market just keeps going up, doesn’t give a damm, doesn’t think any of this is a problem.”

    Mr. Market is presuming the banks will be able to put wall paper over the giant holes in the sheetrock, and make it all go away. Argue with the hive mind at your peril.

    So basically, when the lawsuits start flying, the sacrifical lamb that will be the end target of the indictments is a SQL Server Database sitting in a back room COLO somewhere in mid-town . Only in America.

    I’m starting to understand the stock market more, and it scares me just a bit.

  46. Bob is still unemployed says:

    Q: Why are the answers given during the deposition so different than the answers given to the press?

    A: If they prevaricate while under oath at the deposition, jail time is usually involved.

  47. Virginia says:

    Has it occurred to anyone to ask, “Where did all the money go?” … MERS charged $3.95 for each mortgage (65 million)… they now charge $6.95 (increased I guess due to inflation)… and each time the mortgage is moved around that’s another $3.95 – $6.95… do the math – where’s the money???

  48. MinnItMan says:

    Very little of what is said about MERS, the law of assignments, recording statutes is either accurate or true. And that which is accurate or true is rarely helpful.

    Generally, assignments are effective between the parties whether recorded or not. There are a very few exceptions – maybe North Carolina.

    Recording fees, by definition, are not taxes. They are “fees,” subject to constitutional limitations regarding the administrative cost of the service provided. If there is an additional transfer tax (uncommon for assignments – and I am unaware of any state that requires this, but it is possible – that is an issue, because it may affect the validity of the transfer. But, this is not the case for MN, WI, IL, MO, IA, or several other states with which I have passing familiarity.

    Corporate officers do not need to be employees. In fact, given the number of single person corporate entities, if you excluded the 5000 largest corporations in the US, I would venture to say the number of corporate officers easily exceeds the number management employees in the remaining corporate entities (perhaps the LLC has changed this as it typically requires only 1 designated officer). Before LLCs, if you had an S corp law and a single employee corporation – usually the owner, and an exceedingly common situation – you needed multiple officers. E.G. Mary’s Cleaning Service, Inc., where Mary was the only employee, would require a president, secretary and treasurer.

    In short, fan as I am of this site, like virtually every other site commenting on MERS, is full of bad or bad regurgitated information. MERS was created in consultation with various real estate bars, not [primarily] the banking bar, and was one of the very few things that worked as intended. In fact, in addition to the intended purpose, the MERS system provided an extraordinarily easy and effective way to prevent the 2004-2008 era of mortgage fraud by “investor” purchasers of residential real estate, and provides information of who knew/should have known what at the origination stage. It was these “investor” loans that were the first to go bad in first payment/early payment defaults. It was this type of loan that really gassed appraised values because the “investor” was actually getting paid to buy (that is, the “actual purchase price” was less than the “stated purchase price” that the lender was making a loan on, difference being pocketed – multiple times – which could have easily been determined by anybody who cared to look, BTW. All of this was, of course, highly illegal.

    But, there were other aspects of the transactions that were entirely legal – encouraged even – that enquiring minds ought to want to know as well, for example, the allowance of 6% “seller paid closing costs” that could be credited to the buyer. Result: on a 100% financed purchase of a $100,000.00 property, the lender was originating a loan that under any reasonable analysis was on a $94,000.00 property, despite the “stated price” of $100,000.00.

    For whatever reason, lenders thought that Ronald Coase was an idiot.

  49. MinnItMan says:

    One additional thought: MERS provides one thing that I don’t think existed* during post-S&L RTC clean-up – a clear record of purported note owners.

    *My own experience began a few years after this, but I wouldn’t be suprised if this wasn’t a far worse problem then, mitigated in part, because real estate values only “declined” in certain areas, but nationwide, did not decline (hence the NARs’ and others’ “real estate never goes down” rhetoric/assumptions/underwriting guidelines/policy preference etc.). The S&L melt-down was considered “as bad as it gets.”

    It wasn’t.

  50. MinnItMan says:

    Finally, looking for Roger Waters tix in the Twin Cities tomorrrow night.

  51. josey says:

    From above (RR111): …”This is from a bankruptcy judge in Nevada, Judge Linda Reigle, in reference to MERS (in 2009),”Simply being a beneficiary or having an assignment of a deed of trust is not enough to foreclose on the property…” …

    From a legal standpoint/framework, this judge is exactly right. The issue is privity of contract, and ultimately standing, in this foreclosure mess. Banks wouold be wise to start thinking VERY HARD about negotiating settlements whenever possible. Right now, their focus seems eslewhere…