The Ghetto Economist and Dulce on MERS – do you know where your house note is?

[Joanne98]

There is an entity called MERS (Mortgage Electronic Registration Systems) which registers about 60% of our residential mortgages. Your mortgage consists of two parts-the note which is an IOU and the lien which is the enforcement mechanism.

We’re in a digital age, so the old process of signing over the note and delivering it to the new owner of the note is costly and time-consuming. As a practical matter it saves fees and other than the fact that it’s illegal (note has to be wet-ink signed by a legal owner and delivered to a legal owner in most states) this has become the approved process.

Since the note MUST go to the owner, the big banks involved in this matter (JP Morgan Chase, Bank of America, Wells Fargo, Citi) designate MERS as the nominal owner of the mortgages. So other than not having the note wet-ink signed thus preventing legal ownership, designating MERS as owner makes sense.

Well, actually there’s another thing. Small thing, really. In order to protect parent companies and ratings agencies, certain financial vehicles are set up bankruptcy remote.

MERS is one such entity, per its by-laws it CAN’T own the note. Technicality, I know. Smarter individuals than an Indian and a cat set this process up.

One funny thing about MERS. How many people work there, anyway? 1,000? 10,000? I mean, with them recording 60% of all mortgages gotta be plenty, right? Give up?

Zero. That’s right, zero. Nobody works there. It’s a shell company. Here’s some interesting reading from a deposition on a post at Washington’s blog.

http://madmikesamerica.com/2010/10/the-ghetto-economist-and-dulce-on-mers-do-you-know-where-your-house-note-is/





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

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?

A There are no employees of MERS.

http://www.washingtonsblog.com/2010/10/what-is-mers-and-what-role-does-it-have.html

[fasttense]

1. This is getting really awful.

When I first bought a house about 20 years ago, the loan officer asked if I wanted a title search (it was optional). I asked what it would cost and he said either it was free or very cheap, so I took it.

Before I got it, I asked what it was. And the Realtor said it was insurance that there are no loans or claims on the house. That the person who was selling it had the right to sell it. He said that years ago he would always recommend it. In the rural area I was buying in to, a lot of titles had been questionable because of the Great Depression and massive foreclosures. With so many foreclosures all at once, the titles and notes were sometimes lost and/or questionable. Some homes in the rural area had not been sold since the Great Depression and titles turned out to be questionable when the families, many years later, sold their family home. He then added that today, all those questionable titles had worked through the system and he didn't expect to see any problems.

So, there is precedent for banks screwing up the paper work. Especially when they are on a feeding frenzy of massive foreclosures.