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Dude, Where’s My
Mortgage? How an Obscure Outfit Called MERS Is Subverting Our Entire System of
Property Rights

Yasha Levine
Alternet

For the first time in the nation’s history, there is no longer an
authoritative, public record of who owns land in each county.” — University
of Utah law professor Christopher Peterson

There is an unbelievable scandal in the making that threatens to subvert our
four-century-old method for guaranteeing a fundamental building block of the
American republic—property ownership. The biggest reason why you probably
haven’t heard much about it is that it involves one of the most generic and
boring company names imaginable: Mortgage Electronic Registration Systems, Inc.,
or MERS. It is a story of deception engineered at the highest level of power for
short-term gain, and another epic failure of the private sector to uphold the
laws and traditions of American society, even something as fundamental as
property rights.

Created in 1995 by the country’s biggest banks, MERS quietly took control of
and privatized mortgage record-keeping across the country and, in the span of a
few years, scrambled America’s private property ownership records to the point
where no one could figure out who owns what. This was no accident, and was done
by design: MERS was a tool used by America’s top financial institutions to pump
up the real estate market. Mortgage-backed securities, robo-signers, lightning
quick foreclosures, subprime mortgages and just about everything else that went
into feeding the biggest real estate bubble in U.S. history could not function
without help from MERS. But unlike many of the Wall Street scandals, this one
could blow up in the banks’ faces, with the little guy laughing all the way back
to his free McMansion, and local governments seeing their empty coffers fill
back up with the billions of dollars in unpaid fees that MERS circumvented.

The story begins in mid-’90s with the founding of MERS, Inc. by the nation’s
most powerful banks, ostensibly with the aim of streamlining and modernizing the
process of registering and tracking mortgages. Traditionally, there has been no
centralized registry of real estate ownership information, with counties
maintaining their own records for properties within their borders—a system that
has remained virtually unchanged since colonial times.

The MERS database went live in the middle of the dot-com bubble, and was
supposed take inefficient government bureaucracies kicking and screaming into
the future by providing a centralized, national registry of mortgage ownership
information. “MERS addresses a problem that was costing the industry a
significant amount of money,” Rick Amatucci, a Fannie Mae vice president and the
agency’s liaison with MERS, told Mortgage Banking magazine, just as the new
registry went online in 1997. The database would give lenders across the country
instant access to real-time mortgage information, diminish potential for fraud,
and lower costs for servicers and borrowers, according to Mortgage Banking
Association, which was tasked with overseeing the project.

But that kind of talk was just for the press release. The banking industry
wasn’t concerned with efficiency or transparency or the greater good. It was all
about making money, as quickly and cheaply as possible. And that is what MERS
was for. It was created to help the industry push its latest money-maker:
mortgage-backed securities, a Wall Street financial scam that dressed up the
most toxic, guaranteed-to-fail loans as Grade A investment vehicles that could
be sold to suckers looking for an easy gain.

Read Full Article

December 16,
2010

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