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MERS? It May Have Swallowed Your Loan
NYT, March 5, 2011

Category: Digital Media, Legal, Real Estate

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.

6 Responses to “MERS Swallowed Your Mortgage”

  1. Petey Wheatstraw says:

    The chart is inaccurate. The criminal fraud begins outside the box in step 1, which shows the deed and the note as having no real connection, when in reality, and in most, if not all, cases (and unless I’m seriously misunderstanding the scam), the deed and the note are required to be transferred together, as if they are one thing, legally (the deed being the link to the real asset held as collateral on the loan).

    At step 9 of the chart (the point at which some poor sucker is taken to court in a foreclosure action), they’re magically shown together. That’s how the swindle was supposed to work (and mostly has worked, until lately).

    Also, the caption to step 1 is misleading, in that it fails to explain that everybody knew that the “promissory note” was a promise that would never be kept. Fraud agreed to by all parties (the promisor being the goat). This point is crucial to understanding the most important aspect of the crime and the raison d’être for MERS: motive.

    The banks knew that there would be no revenue stream from the vast majority of these loans, and that the underlying asset’s value would never cover the principle amount (much less interest on it), should the borrower default, or the market turn. So they baked all of the shit (fraud) into a pie, marked it as all natural and 100% organic, and sold it to others (another massive fraud). MERS was created to expedite (by the illegal transfer of the obligation to pay without the legally required contemporaneous transfer of the collateral), the manufacture and distribution of securities composed of fraudulent mortgages.

    MERS was CREATED to lose your mortgage.


    Note: That’s right, mofos, I said, “raison d’être.”

  2. rktbrkr says:

    MERS “We don’t need no stinkin minutes”. They didn’t even have minutes for the formation of the corporation! I hope some business reporter gets a hold of the incorporation papers, I assume it’s structured as a not-for-profit with a flow thru of the benefits to the members. I also assume it’s incorporated in a permissive jurisdiction maybe Nevada. Could be some legal issues creating a non-profit to shield profits.

    Structuring MERS as a non-profit probably shielded them from the prying eyes of bank examiners and auditors who might have uncovered the problems before they rose to front page magnitude. They claim to perform audits but can’t describe the audits.

  3. Great chart explaining the process. Not arguing right or wrong here for the moment, but let me ask a few questions…

    1) If you change this process, what will be the cost added to every single loan going forward?

    2) Did the Borrower who received money to purchase a home agree to pay it back under the terms of the Note, and pledge the home as collateral for that promise to pay? (Meaning that if they didn’t pay, the home should be foreclosed on?)

    PW starts on a good point that they problem occurred “outside the box in step 1″. The bigger problem was the breakdown in traditional underwriting standards, and an industry that designed and packaged loan products that never should have been sold to the public at large (the products were not inherently bad, but how they were applied in the industry is what caused the disaster).

    The worst propagators of these products no longer are in business (as it should be). The Investors who bought these loans (and thought they could demand high yields with no risk) were blinded by greed and didn’t do their due diligence (and are now suffering the losses they deserve).

    The Borrowers fall into two camps… A) those who knew they were gaming the system to buy homes they couldn’t afford in the long run, but saw it as the road to quick riches for an easy “flip” as the property jumped in value. B) those who were misled by Mortgage Bankers, Mortgage Brokers and Realtors who they had turned to as professionals for advice, into thinking that they could afford more home than their personal financials could feasibly allow. Instead of seeking competent advice, people chase the “lowest rate”. Those who compete on price need to make up for it in volume (meaning no time for real advice). It was (and still is in many places) “churn ‘em and burn ‘em”. Caveat emptor.

    In the end, if someone was misled by fraud, that is where the focus needs to be on bringing justice. If someone is being foreclosed on who has been making their payments on time as they agreed, this needs to be pursued. However, if a Borrower is no longer able to make payments, then there are a few options.

    1) The most time consuming is the case-by-case steps being taken by the top Loan Servicers to determine if a loan can be modified to keep an a Borrower in their current home (the Borrower needs to qualify, shown not to simply be trying to shirk their responsibilities, and the end Investor has to be willing to accept less).

    2) The Borrower is within their rights during a foreclosure process to bring their loan current and retain their home. The Investor is within their rights to foreclose and liquidate the pledged collateral to recoup a portion of their principal. To look for technicalities of “who ‘really’ has the right to foreclose” in a system that is designed to make lending available at lower costs to consumers, in my humble opinion is really barking up the wrong tree (especially when there are plenty of other trees that we really should be barking at).

  4. Moss says:

    Based on the chart is it correct to assume that at each re-assignment the local municipality should have been informed and therefore due some payment from ‘owner’?

  5. bdw says:

    Mortgage Advisor: To address your questions:
    1) the incremental cost increase in a loan because it should be recorded publicly is a small price to pay for stability.
    2) The borrower did agree to pay the note and allow the home to be sold at auction if in default, provided that the entity foreclosing has both the note and security instrument.

    If the note and deed or mortgage are separated, then the note loses the security of the real property; it becomes unsecured and my uncle will come after you with a wrench to collect it. It is clearly not a question of “if someone was misled by fraud.” Rather as many on this blog have put it, there is a big bowl of felony that should be served. Technicality is nice way of saying, sorry, I lost your $500,000 check with a “pay to the order of _____” on the back of it, but I am still taking your house.

  6. willid3 says:

    and i am thinking if the lender wants the state to be involved in enforcing their contract, they need to involve it when they sell the notes/mortgages. otherwise the state will not have any idea who is the owner. and that should be just part of doing this business. otherwise don’t be in it