Why MERS Needs to be Taken Out and Shot

Some readers may have been unhappy with my failure to comment on a Washington Post article late last week about a push by the mortgage registry service, MERS, to “legalize” its activities. Even though the article indicates that dollars are being thrown at lobbyists to sell the MERS version of reality in DC, their approach seemed to be so unlikely to have much impact as to not merit comment. It described MERS lobbying efforts thus far ($1 million since 2008, which I believe is tantamount to couch lint by DC standards, although they have apparently ratcheted up spending of late). The surprising part is the focus of the efforts:

The industry is seeking legislation that would effectively affirm MERS’s legality and block any bill that would call into question what MERS does.

The latter bit, trying to block anti-MERS legislation, does have a shred of logic, given that the electronic database is coming under unfavorable scrutiny. Not only has Marcy Kaptur proposed legislation that would bar Fannie and Freddie from buying mortgages registered in MERS, but even Republican senator Richard Shelby, who once owned a title insurer, roughed up MERS president R.K. Arnold in hearings earlier this week.

But the idea of passing a Federal statue to solve MERS’ growing state-level problems is a huge stretch. As the latest report of the Congressional Oversight Panel noted,

In the absence of more guidance from state courts, it is difficult to ascertain the impact of the use of MERS on the foreclosure process. The uncertainty is compounded by the fact that the issue is rooted in state law and lies in the hands of 50 states judges and legislatures.

We’ve been told that Constitutional scholars have said that repeated Supreme Court decisions have found real estate transactions to be beyond the reach of Commerce clause, and hence not subject to Federal intervention. So the idea that MERS can be legitimated by Congress appears far-fetched.

But what are the problems with MERS? The focus so far has been on its questionable legal standing, but its operational failings are every bit as serious.

Although critics have provided a number of arguments against MERS, the most fundamental relate to MERS’ claim that it acts as mortgagee of record. While the language it uses to register mortgages in the name of MERS in local courthouses says it is both the nominee for the mortgagee and the mortgagee (a legal impossibility), in depositions its executives have repeatedly said that MERS is the mortgagee (see here and here for examples).

In 45 states, that position would seem to be a non-starter. In those states, the note (the borrower IOU) is the critical document; in these states, the mortgage is a mere “accessory” to the note and has no independent force. Indeed, in these states, you cannot be a mortgagee unless you are also the creditor. But in depositions, MERS has repeatedly acknowledged that it does not lend money and does not collect interest payments. But MERS effectively takes the position that you can separate the mortgage from the note and reunite them, a position that was rejected in an 1873 (no typo) Supreme Court decision, Carpenter v. Longan (Carpenter v. Longan, 83 U.S. 271, 21 L.Ed. 313 [1873])):

.The note and mortgage are inseparable; the former as essential, the latter as an incident. An assignment of the note carries the mortgage with it, while an assignment of the latter alone is a nullity.

Case law in virtually every state follows Carpenter.

But aside from this rather large legal elephant in the room, MERS also suffers from very serious operational shortcomings. MERS, which is the mortgage and servicing rights database, has no employees; its parent, MERSCORP, has roughly 50 employees.

MERS instead relies on “certifying officers”, a bogus arrangement in which employees of “MERS members”, which for the most part are mortgage servicers and foreclosure mills, temporarily act on behalf of MERS. As Christopher Peterson describes it:

As a practical matter, the incoherence of MERS’ legal position is exacerbated by a corporate structure that is so unorthodox as to arguably be considered fraudulent….MERSCORP simply farms out the MERS, Inc. identity to employees of mortgage servicers, originators, debt collectors, and foreclosure law firms. Instead, MERS invites financial companies to enter names of their own employees into a MERS webpage which then automatically regurgitates boilerplate “corporate resolutions” that purport to name the employees of other companies as “certifying officers” of MERS. These certifying officers also take job titles from MERS stylizing themselves as either assistant secretaries or vice presidents of the MERS, rather than the company that actually employs them. These employees of the servicers, debt collectors, and law firms sign documents pretending to be vice presidents or assistant secretaries of MERS, Inc. even though neither MERSCORP, Inc. nor MERS, Inc. pays any compensation or provides benefits to them… MERS even sells its corporate seal to non-employees on its internet web page for $25.00 each.

Per Senate testimony by MERSCORP president R.K. Arnold last week, MERS has over 20,000 signing officers. There is ample evidence its controls over them lie somewhere between deficient and non-existent.

Let us start with the fact that the MERS end uses are under no obligation to update the MERS database. MERS officers admit that the data is only as good as what their users provide. MERS certifying officers have testified that the signing authority agreement specifically states that all parties agree that MERS is not responsible for the accuracy of any information provided by member. And there appears to be little within the system procedures to assure data integrity.

We asked our Richard Smith, who is a capital markets IT professional and has considerable experience in databases, to review key sections of a deposition of R.K. Arnold that dug a bit into operational matters. His excerpts deposition and commentary

1. The “handshake”

This is a matching and confirmation process:

So whenever a transfer occurs of any
10 interest, be it beneficial interest in the
11 promissory note or be it servicing
12 interest, those you expect to be entered on
13 the MERS system?
14 A. It’s not so much that we expect it. We
15 operate a system that offers that
16 capability. So it’s always the parties
17 that transact by an electronic handshake.
18 Q. An electronic handshake. That’s an
19 interesting term. What exactly does that
20 mean?
21 A. One company goes in and stages it
22 electronically and it waits in a status
23 until another company comes in and confirms
2 Q. And is that typically done through the
3 process of an upload or like a batch file?
4 A. Preferably.
5 Q. And y’all have internal coding that tells
6 you what each of those types of —
7 handshakes was your term — what each of
8 those are; right?
9 A. Yes.
10 Q. And so if you have those codes, you know
11 exactly what was changed hands and at what
12 point in time according to those parties;
13 right?
14 A. Yes. And that’s what makes the system
15 instantaneous.
16 Q. Correct. But the system relies upon the
17 actual execution of the underlying
18 agreements and documents?
19 A. Yes.
20 Q. So while your system may indicate the
21 intent to undertake a certain act, it is
22 not proof that that act actually was
23 undertaken, is it?
Page 180
1 MR. BROCHIN: Object to the form.
2 A. As far as its evidentiary nature, you know,
3 I — that would depend on whatever the
4 circumstances were. But it’s not intended
5 to reflect the actual transaction. It’s
6 not the transaction. It’s tracking that
7 transaction.
8 Q. Sure. It is, in fact, a memorialization of
9 the underlying paper that is allegedly in
10 existence between the parties?
11 MR. BROCHIN: Object to the form.
12 A. You know, the — basically it’s a — we
13 operate a system that lets the members
14 through electronic handshakes tell us who
15 we’re working for. And that’s the extent
16 of it. So we serve in the land records for
17 the members, and then the system tells us
18 who we’re serving for.

I agree about the laxity: 1) if there is collusion outside the system, just about any set of transfers could be input and confirmed by two parties. Where is the dual-keying and management supervision? This ends up at the accountability question, below. 2) There’s no indication of any reconciliation process, ie daily checking for transfers that don’t match and sorting out who made a mistake. It beggars belief that there wouldn’t be confirmation failures, with human beings on either side of the transaction.

Combine 1 & 2 and it’s easy to see how the physical legal reality and the electronic record might not agree. As the lawyer keeps emphasizing in his questions, there is nothing here which would make a chain of transfers evidentiary of anything, if it’s the paperwork that actually counts legally. It does seem to be just a (potentially shaky) electronic copy of the physical docs.

Other observations: the guy being interrogated seems like a low level operator who doesn’t necessarily understand the system too well (*update* after closer reading FUCK ME, he’s the CEO).


Q. And it says that — with respect to those
Page 192
1 issues, once a person is certified by MERS
2 as a certifying officer, does MERS ever
3 undertake any action to verify that those
4 persons are actually corporate officers of
5 the company, that they have certified
6 themselves to be so?
7 A. Well, first off, it has not always been a
8 requirement that they would be officers of
9 the member.
10 Q. Right. And so you’ve certified whomever
11 they’ve asked; right?
12 A. Yes.
13 Q. And irrespective of how many persons there
14 were; right?
15 A. It — the bigger the company, the more
16 certifying officers they’re probably going
17 to want to have.
18 Q. Especially nowadays; right?
19 MR. BROCHIN: Object to the form
20 of the question, if that’s a
21 question.
22 Q. A lot more foreclosures going on today than
23 lately; right?

Q. Again, when did you implement this
8 requirement that these persons with signing
9 authority be officers of the corporation?
10 A. Within the last couple of years.
11 Q. Is it your contention that anyone who is
12 signing as a certifying officer who is not
13 an officer of the corporation is not
14 validly acting on behalf of MERS?
15 MR. BROCHIN: Object to the form
16 of the question.
17 A. No, I wouldn’t agree with that.
18 Q. Do you have any idea how many people are
19 certified as certifying officers of MERS in
20 the country today?
21 A. Me personally? Me personally?
22 Q. Through you personally or through your
23 company, what you know as CEO of MERS.
Page 194
1 A. Well, you say any idea.
2 Q. I mean, ballpark?
3 A. We’ve got a very good idea.
4 Q. Do you know exactly how many?
5 A. We — we have every name.
6 Q. Okay. And do you track every transaction
7 that they undertake in MERS’ name?
8 MR. BROCHIN: Object to the form
9 of the question.
10 A. No.
11 Q. Do you have any idea how many transactions
12 are conducted daily by persons who are
13 identified as certifying officers of MERS?
14 A. I don’t understand the question, any idea.
15 Q. Do you keep any record of the number of
16 transactions undertaken by persons who are
17 designated as certifying officers of MERS
18 on a daily basis in this country?
19 A. There is certain things that the system is
20 required to be updated to reflect, so, yes.
21 Q. What are those things?
22 A. When a loan is paid off, when a foreclosure
23 begins.

So – authentication is essentially non-existent. Look, they only introduced their ridiculous porous authentication process a couple of years ago. This is a real collusion enabler. Not saying there has been any, just that there’s absolutely nothing here that tends to promote integrity between MERS’ account of the txns and the actual transactions. See also pp 201-204, 234.

Access Control
Would like to know if there are ‘super users’ who can tinker behind the
scenes. There seem to be seven distinct user authorizations but no detail on
what they are.


With authentication that poor, you don’t have accountability, even if you do have some kind of audit trail. Which *might* exist:

11 Q. (Mr. Wooten continuing:) Mr. Arnold, we
12 looked at several reports generated as part
13 of this discovery. And specifically to
14 those issues, is there any method that
15 you’re aware of whereby a user of the MERS
16 system could go back and alter any of those
17 transactions that have been entered or
18 registered on the system, change any of the
19 terms or the timing or anything like that?
20 A. No.
21 Q. Is that a — is there some sort of audit of
22 the technology to assure that that can’t
23 take place or some sort of firewall? How
1 does that occur? Do you know?
2 A. You just wouldn’t be able to go in and
3 change anything that had been done. You’d
4 have to update it.
5 Q. So if — is there a way to make an entry
6 which would allege that the prior entry was
7 an error and it be replaced on your system?
8 A. You could correct a prior entry with a new
9 entry.
10 Q. Would the old entry be deleted if you
11 correct it?
12 A. No.
13 Q. So even if, say, somebody decided that they
14 didn’t like the timing of some of these
15 transfers in one of these reports, even if
16 they tried to go back and change the dates
17 with a correction, it would still show the
18 previous entries?

This certainly looks as if it’s meant to be an audit trail.

Yves here. Based on my reading of other depositions (another of Arnold, one of Richard Hultman, I’d not place much stock in what passes for audit in MERS-land. MERS keeps track of who is a certifying officer, but its records do not capture what actions have been taken by a particular certifying officer, which is a serious impediment to any sort of accountability. In addition, even though MERSCORP claims to conduct audits and quality reviews, it appears to have at most 16 people devoted to this activity. Given the weakness of the procedures and management information systems, it is very doubtful that so few people can provide effective oversight to over 20,000 people who can and do act on behalf of MERS. And why should MERS bother with supervision? MERS’ agreement with each and every certifying officer disclaims any responsibility for the accuracy of the information.

And without even looking for it, I’ve come across evidence of gross failings of MERS’ operational integrity. In the one consumer foreclosure case I’ve sat in on, the attorney for the foreclosure mill was put on the stand and said that she had transferred a note from an originator, which at the time of the assignment, was bankrupt. That entity had no way of authorizing this action, since it no longer had any employees or officers. Any approval would have had to come from the bankruptcy trustee, who would not have been a MERS member. The fact that this assignment was made on a routine basis calls into question whether this electronic handshake can possibly be an effective safeguard.

In addition, by happenstance, Lisa Epstein of Foreclosure Hamlet sent me a document which shows that one Linda Green, who executed mortgage assignments on behalf of MERS, in fact had no authority to do so in certain cases. While MERS says it has since tightened up its procedures for obtaining authorizations for its certifying officers, it is not clear whether this unauthorized action took place before or after the policy change. Even if it occurred before the new requirements were in place, it is not clear that these measures are adequate, given that the robo signing abuses demonstrate that servicers and foreclosure mills do not have strong operational controls either.

In Congressional testimony last week, R.K. Arnold asserted that MERS is well positioned to be the recording system of the future and can solving some of the problems in foreclosures. Not only does this view seem delusional, particularly given his failure to address any of the concerns raised about MERS.

Many Wall Street types who complain that the problem with the mortgage market, and the explanation for all of these robo-signing issues, is that the mortgage system is antiquated and paper intensive and needs to be modernized.

The system that RK Arnold presides over is far worse than the county recording system – it is not transparent to outsiders, the way the county recording system is, and no one has any global responsibility for it. It makes Facebook’s privacy controls look sophisticated, by comparison. It is the exact opposite of what should replace a complex, supposedly antiquated system.

If the mortgage market were to be modernized, it would be a real database, with extensive control points and would be centralized and accessible to the servicer, homeowners, prospective homeowners, and investors.

MERS is such a loosely run operation, independent of its questionable legal standing, that it would need to be rebuilt from the ground up to have the integrity and the transparency that its constituents deserve. MERS’ failings prove that if the 50 states were to embrace the idea of a centralized mortgage registry, it would be better to replace MERS than to attempt to reform it.

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  1. attempter

    Now, are these electronic handshakes the same electronic notarizations that bill wanted to ram down our throats, or am I getting two different things mixed up?

    We can see from all this how we don’t want a “modernized” mortgage registry, which would simply be easier to “legally” game. It would put up less resistance to organized crime. Its very pseudo-efficiency would offer less handholds for citizen action.

    We’re learning once again, as we’re learning everywhere else, that so-called inefficiency and redundancy really mean resiliency and at least the potential for accountability.

    As for this specific case, I see nothing wrong with the existing legal procedure (not the scofflaw mortgage mill and securitization procedure). Is it slow when you’re trying to convey and securitize millions of loans? Yes – which is a good thing. Slow is Good. And as we should have learned by now, we never needed or wanted such financialization of mortgages in the first place. They should stay with the originator, with what worked perfectly well before these crimes got revved up.

    There’s no need for shock-doctrine speed and false efficiency, which as we’ve learned to our sorrow is a false economy.

    Slow is Good.

  2. vlade

    This system looks like just a record db with “you enter whatever and someone else enters whatever”.
    If it was to be a proper legal replacement, it would need at least:
    – complete tracability (who did what when) => auditing, security, identifiability etc.
    – strong external auditing
    – with regards to the documents, it would need at the very least keep an electronic copy of the document (especially in the current legal framework as I understand it, where the document over-rules any electronic stuff that might have – or not – been captured on this). Ideally tamper-proof (so I’d say double-digital-signing, with at least one party being external).

    Lot of the paperwork probably could be eliminated, but if one wants real security, a lot of the double-signing/confirmation (by external parties, such as notaries, court officials etc.) would still have to stay. That means extensive (and expensive) technical infrastructure.

    Overall, it’s not unlikely that the current paper system is cheaper to run securely than creating a proper secure nationwide electronic registry (in absence of other system it could tag on).
    To me like MERS was something that was used originally for sending electronic messages of “these are the mortgates we sent you, load them to your system and the reconcile yourselves”, to save a bit of time in loading the stuff into servicers’/banks’ systems (where it eventually has to go). Then someone though “Hey, isn’t this system good? We could use it as a registry!”, without thinking how a sharing system differs from a registry.
    Sort of like if you’d want to use facebook for birth and marriages register.

    1. Richard Smith

      Yup, agree with all that. That’s a horribly plausible guess about how it all started BTW.

      Mickey Mouse.

      Also – if electronic registration was really “the” legal process for transfer of title, there would be some enabling legislation to supersede the paper process (we did this in the UK for Taurus/CREST share registration, and for land registry too, I think). That would put extra requirements on the integrity of the system too.

      But AFAIK no such legislation underlies MERS…

    2. Enkco

      MERS reminds me of the state of electronic voting. Electronic voting machines and their security is so deliberately awful, and so readily hacked, that it is impossible to escape the conclusion that it is not merely a fatal side effect, but a deliberate objective.

      Voting should be accomplished with a manual hand-count of paper ballots conducted on video with multiple witnesses. Any electronic records or recording should be an adjunct, and not a replacement, for those paper records.

      Property records should also be on paper, with an electronic registry functioning as a computer index, and not as a wholesale replacement.

    3. Kenneth Eric Trent

      If I can be forgiven for singing my own praises, I am one of the first attorneys in the country to publicly accuse MERS of being a criminal enterprise. I am counsel for the Plaintiff in Figueroa v. MERSCORP, Inc., et al., which is currently pending in the US District Court of the Southern District of Florida.I have read all of the testimony by RK Arnold and I agree with the commentator who wrote that he seems clueless for a CEO. Perhaps he’s a “robo-exec.” There is no way he is the brains behind this epochal fraud from which the entire economy and so many people have fallen prey. Consistent with all MERS-related activity thus far observed, I believe him to be a strawman – – –

  3. BS

    We’ve been told that Constitutional scholars have said that repeated Supreme Court decisions have found real estate transactions to be beyond the reach of Commerce clause, and hence not subject to Federal intervention. So the idea that MERS can be legitimated by Congress appears far-fetched.

    I suggest you find better Constitutional scholars.


    What is the name of the form used in settlement? HUD-1?

    1. Miko

      Plus, this whole thing now starts to smell like straight out “crime”, instead of ooopsie, we miss some papers. This is straight up fraud.

      The legislative/lobbying effort is also part of the crime. I mean covering a crime is a crime too right?

      Few weeks ago, I already make smart ass comment about how the MBS really has no “mortgage” behind it. Lo and behold, there is no mortgage behind all those MBS!!

      1. BS

        Why don’t you think RESPA has an effect real estate transactions that are supposed to be beyond the reach of Commerce clause?

      2. readerOfTeaLeaves

        Miko, under your ‘it looks like crime to me’, re-read this bit:

        Access Control
        Would like to know if there are ’super users’ who can tinker behind the
        scenes. There seem to be seven distinct user authorizations but no detail on
        what they are.

        Having worked around dB’s, and designed some smallish ones, this passage strikes me as particularly suspicious.

        Any dB admin that I’ve ever worked with is meticulous about permissions, about being able to track who comes on, track what was done, pull up daily reports, weeklies, and monthlies. If only to justify their own paycheck, to say nothing of privacy issues.

        If the kind of system that we are reading about here was implemented in any hospital or medical clinic that I’m aware of the entire IT staff would probably find themselves jobless in less than ten seconds, if only for the HIPA (health privacy) regs in the US.

        The carelessness about the single topic of access levels and permissions is simply mind-boggling.

        I’d say MERS can’t be shot soon enough.

    2. Francois T

      “I suggest you find better Constitutional scholars.”

      I suggest you find us some sources to back up your suggestion. Inquiring minds would like to see where the author was wrong.

    3. Justicia

      Wrong. RESPA doesn’t purport to affect the validity of mortgages under state law.


      RESPA is about closing costs and settlement procedures. RESPA requires that consumers receive disclosures at various times in the transaction and outlaws kickbacks that increase the cost of settlement services. RESPA is a HUD consumer protection statute designed to help homebuyers be better shoppers in the home buying process, and is enforced by HUD.

      1. BS

        Look at what was quoted.

        “We’ve been told that Constitutional scholars have said that repeated Supreme Court decisions have found real estate transactions to be beyond the reach of Commerce clause.”


        RESPA is about closing costs and settlement procedures.”

        Don’t closing costs and settlement procedures have to do with real estate transactions? So there is already a federal role in real estate transactions.

        1. Steve Hamlin

          There is a federal jurisdictional hook in supervising the national mortgage lenders’ activities & fees, which is what RESPA is targeted at. If you don’t involve a federally-insured lender in your real estate transaction, then RESPA most likely doesn’t apply to you.

          However, without this jurisdictional hook, dirt law, proper title to land, and the foreclosure process are state law, and this is what the comments are directed at.

          It is not that every facet of real estate lending, from origination to securitization through the public financial markets is beyond the federal reach, it is simply that the foreclosure process, involving state law and county-level land records, appears to be without compelling federal jurisdiction.

          Yours is a pedantic argument.

  4. RueTheDay

    “We’ve been told that Constitutional scholars have said that repeated Supreme Court decisions have found real estate transactions to be beyond the reach of Commerce clause, and hence not subject to Federal intervention.”

    Those on the right only invoke a strict constructionist interpretation of the Commerce Clause when said interpretation is pro-business (which indeed is most of the time), however in this case there will be silence.

  5. Keith

    The promissory is not an I.O.U. IT IS A CHECK. When you guys figure this out you’ll be playing the right game on the right field, instead of in left field. Why do you think that A FED WIRE is necessary to complete THE EXCHANGE ? The bank will only write A COMPANY CHECK TO PAY CLOSING COSTS AFTER THE PROMISSORY HAS FUNDED. The ONLY ITEM OF CONSEQUENCE is the promissory note, and this is after it is fully monetized. Correct me if I’m wrong but I.O.U.s are NOT MONETIZED, and monetized only so far as a bankrupted treasury can monetize anything
    that lacks substance like a Federal Reserve Note (dollar’s or worthless paper) Whether you want to believe it or not all the court systems are operating under admiralty law and all operate using double entry treasury accounting. The banks, courts, treasury utilize money of account or figures
    on a ledger in the public while private people operate with money of exchange, the intermediary for the private to the public is the bank, court, treasury..etc. Banks utilizing mortgages done using a piece of monetized commercial paper (promissory note) then charging interest over 20-30 years are done in fraud. The bank takes ZERO RISK, in commerce
    no risk, means no credibility, means no court standing, why do you think that some states allow non judicial foreclosure ? BUT if you sue the lender and bring these issues to light they are stuck. I’ve developed an administrative process that never needs to see a court, and if the bank decides to sue they must overcome my claim in affidavit form in order to be successful. If any of what I’ve written makes sense and you think you might want some answers concerning your situation Write me at riceowlex@gmail.com

  6. wbt

    A centralized database run by a trusted (oversight) third party entity, (remote of lenders good ol’ boy network MBAA/ABA and their lobbyists), is the only way a new system will can and will be trusted.

    The lenders along with FNMA/FLMC have created MERS; it’s hard to shoot your own dog even when it is frothing at the mouth.

    Remember the adage: “Speed Kills”

  7. lambert strether

    Great, great detail on the technical aspects of the MERS database — the word “travesty” comes to mind.

    The architectural issue — where the digital representation of a real (physical, paper) object becomes separated from that object and is, moreover, infinitely reproducible as the object is not — is well handled by Walter Benjamin in his essay, “The Work of Art in the Age of Mechanical Reproduction”:

    ven the most perfect reproduction of a work of art is lacking in one element: its presence in time and space, its unique existence at the place where it happens to be. This unique existence of the work of art determined the history to which it was subject throughout the time of its existence. This includes the changes which it may have suffered in physical condition over the years as well as the various changes in its ownership. The traces of the first can be revealed only by chemical or physical analyses which it is impossible to perform on a reproduction; changes of ownership are subject to a tradition which must be traced from the situation of the original.

    The presence of the original is the prerequisite to the concept of authenticity.

    It’s interesting to put mortgage paperwork in the place of a “work of art,” no? Of course, today our real artists are to be found in the realm of accounting control fraud…

    1. Sandy

      What an excellent post! The last line of the quote is, to me, the bottom-line argument for REQUIRING the original note, not an artful copy.

      Why do judges allow copies of the note? Seems to me that having to present the original paper would cut to the chase. No original, no foreclosure. No lost notes allowed, outside destruction by devastating natural disaster…hurricane level.

      1. F. Beard

        No lost notes allowed, outside destruction by devastating natural disaster…hurricane level. Sandy

        Nah. Sounds like a God-given Jubilee to me, so let it be.

  8. svsm

    I literally LOL’d at
    “Other observations: the guy being interrogated seems like a low level operator who doesn’t necessarily understand the system too well (*update* after closer reading FUCK ME, he’s the CEO).”

    In our modern business world, it seems that a CEO exists only to drive efficiencies and maximize investor returns. Actually knowing how the business operates doesn’t figure into the job responsibilities.

  9. RegReader

    svsm – I agree with you – knowing how the business operates doesn’t figure into job responsibilities at MANY companies. Several years ago the head of WAMU put a guy with a credit card background in charge of real estate! The real estate employees at first were horrified, but over time as the company deteriorated their horror changed to amusement as they worked to find jobs elsewhere.

    1. svsm

      Staggering isn’t it? OT but it seems CEO’s these days make decisions without any heed to or seeming understanding of long term consequences to the businesses they are entrusted with. They simply have to make their numbers for the next quarter.

      America’s corporations are simply a herd of cash cows being milked to make unreasonable quotas with no heed to their long term health. And why not? The investors can take out life insurance on the cows that look like they’re dying, starve them of feed then move on to the next cow. The CEO’s walking away having made millions on the milk produced and no accountability for death or injury.

      1. AR

        If you read the depo you’ll learn that R.K. Arnold was the first of the original four ‘temporary officers’ (he was ‘Senior VP, general counsel and secretary’) of the original concept of MERS in 1995, prior to MERSCORP’s incorporation in 1998. He was the real estate lawyer who, I’d guess, created the duplicitous MERS-as-mortgagee and nominee concept, to facilitate attempts at squirming away from responsibility. Hashing out the concept (“We were setting up a system to eliminate unnecessary assignments and track mortgage loans.”) and “establishing a technology relationship with another company” (software?) took up most of their time. So R.K. Arnold is in fact one of the architects of MERS.

        1. svsm

          Yes, MERS was set up as a criminal enterprise from the get go, designed to skate around well established property law and recording fees. The sheer arrogance of it is stunning. You have to wonder what they expected would happen.

          1. Justicia

            They expected that housing prices would increase forever, that sub-prime borrowers could always refinance, that liars and NINJAs would pay their debts and no one would ever default.

            Anyway, that’s their story and they’re sticking to it.

  10. MichaelC

    Question: Who pulls the trigger?

    Do each of the state legislatiures/courts need to act?
    Does NY State have the authority to invalidate MERS for securitizations done under NY Trust law?
    Is Federal action required?
    Can the AGs do the shooting?

    1. Sandy

      Very good question; I look forward to the answer. With that answer, we would know how “to shoot for effect.”

      Americans are fed up, but just don’t know how to concentrate their effort to force the right person/entity to act.

      Indeed, who pulls the trigger?

  11. Gloomy Doom

    Yes, take it out and shoot it. Assuming it is of importance,
    the borrower is losing his/her home just fine n’ dandy with not so much a mouse of a whisper ’bout MERS. It takes cash to litigate. The cost of lawyers is another issue entirely. So, we see that decent housing, or ownership is verbotten or out of reach of many Americans [Barney Frank and Tim Geithner both said this], we understand that access to members of a highly paid profession (attorneys) is out of reach for them as well, even while they are being driven into the ground. We’d naively assume that the rule of law is about Democracy and Fairness and all those other fairy tales. It takes 30-40K to wage a counter attack. Lawyers can prey on the desperate even more then mortgage brokers could, this too has happened.

  12. Frank T,

    Are the lenders collectively running an unregistered REIT? If you place the mortgages in a slicer/ blender, are not the end products simply pieces of a Real Estate fund? If the lender does not hold the mortgage, and cannot reassemble it in some credible way, he has simply sold a security to unknown parties? Should not the SEC be called in to rule on just what these critters are?

  13. Tao Jonesing

    “We’ve been told that Constitutional scholars have said that repeated Supreme Court decisions have found real estate transactions to be beyond the reach of Commerce clause, and hence not subject to Federal intervention. So the idea that MERS can be legitimated by Congress appears far-fetched.”

    You’re thinking too linearly about this.

    Yes, it is impossible for Congress to pass a law that on its face retroactively blesses the fraudclosure mess and sweeps it under the rug.

    But that does not stop Congress from passing a law that has the same practical effect.

    The “problem” the banks and servicers have been experiencing in papering over the fraudclosure mess has arisen only because of judicial foreclosure, i.e., foreclosures where you have a judge overseeing the matter and ensuring Due Process. If it weren’t for that pesky Due Process, the banks and servicers would have gotten away with it . . .

    So, to fix the problem for the banks and services, all Congress has to do is get rid of Due Process in foreclosures.

    They can’t do that, can they? Why yes they can! And they already have with respect to mortgages owned by the federal government. Back in the 1990s, Congress passed 12 USC Sec. 3701 et seq. and 12 USC 3751 et seq. to provide federal non-judicial foreclosure for mortgages owned by the federal government. If the government owns the mortgage, the federal non-judicial foreclosure process can be used regardless of which state the property is located.

    Since Congress has already managed to overcome the twin hurdles of the Commerce Clause and the Due Process Clause in passing the existing federal non-judicial foreclosure laws, all Congress need do is figure out how to expand the subject matter jurisdiction of those laws to include mortgages that are privately owned.

    So, what can Congress legitimately point to as a proper basis under the Commerce Clause to expand federal non-judicial foreclosures to mortgages owned by the banks and/or MERS? First, Congress could find that any mortgage that is guaranteed by the federal government should be treated the same way as mortgages owned by the federal government. Second, Congress could find that any mortgage that has been securitized affects interstate commerce. They’ll do both.

    Easy peasy lemon squeezy.

    As soon as I read the ex post facto law canard, I viewed it as intentional misdirection. It’s just too easy to knock down, and once it’s knocked down, people will think they’re safe. Unfortunately, one is never safe in our predator state.

    Any bill introduced during the lame duck session that seeks to amend Titles 7, 12, 15 should be looked upon with suspicion, particularly if they refer to or amend the existing frederal non-judicial foreclosure laws.

    1. davidgmills

      Interesting comment.

      However, just because a mortgage is in a non-judicial foreclosure state, doesn’t mean that such a foreclosure is not subject to legal scrutiny. But it is much harder. I live an a non-judical foreclosure state and am aware of the difficulty of challenging a wrongful foreclosure here.

      There are several problems. Since the mortgage is presumed to be valid, the burden shifts to the property owner to prove the invalidity of the mortgage, at least initially. Arguably, the burden ultimately shifts to the lender. But what happens as a practical matter is that since the action to stop the foreclosure is an injunctive action, the courts frequently require bonds that the property owner can not pay. So most of these cases are decided without reaching the merits.

      The solution I presently recommend to borrowers is bankruptcy. In bankruptcy the foreclosure is automatically stayed and the lender has to file a motion to lift stay. The burden is then on the lender to prove the validity of the mortgage and the homeowner is not faced with a bond. The bankruptcy courts have been particularly hard on lenders who can not produce the original note, and particularly steadfast in the requirement that the note and deed of trust or note and mortgage not be separated. {As an aside, even those states that allow separation of note and lien, usually allow it in cases of mistake or negligence as a corrective measure. Here the separation is intentional).

      As these cases pile up, more and more non-judicial state courts may forego the requirements of bonds and allow cases to be reached on the merits.

      Even if a federal system of non-judicial foreclosure were enacted, ultimatley, I think the system will still permit legal challenges on foreclosures.

      Moreover, a federal system of judicial foreclosure will not make the liens any better and will not solve the problem of recordation. A MERS lien has a strawman for a lienholder and as such, MERS is really operating as a fiduciary, rather than a beneficiary as the liens claim. States have laws regarding corporate fiduciaries and MERS does not qualify. MERS as strawman also creates an unidentifiable beneficiary which violates trusts laws. Moreover, any release signed by MERS or the originating lender will be suspect when the note has been sold. Can MERS give a valid release if it never has acquired an interest in the note? Can the original lender who sold it? Can the present holder of the note give a release of lien when the holder’s name never appears as lienholder? Can the present holder of the note even be located or can the note be located?

      There are many ways to attack these liens and making a federal statute may hinder the process, but it can’t plug all the holes.

  14. RegReader

    Frank T – I did a quick google search and found reference to an SEC investigation of a REMIC from JUNE 2010, but why aren’t we seeing more of these?

    Here’s what I found:

    Deerfield Capital Receives Wells Notice From Staff Of SEC Regarding Mortgage Securities Transactions – Quick Facts 6/8/2010 6:30 AM

    (RTTNews) – Deerfield Capital Corp. (DFR: News ) announced that it received a “Wells notice” from the Staff of the Securities and Exchange Commission stating that the Staff will recommend that the SEC bring an enforcement proceeding against DFR for possible violations of Sections. The potential proceeding relates to the Staff’s investigation of certain transactions and the related accounting therefor. The SEC has requested and obtained certain information from DFR and DCM.

    The company had said that the SEC has been investigating certain mortgage securities transactions effected by Deerfield Capital Management LLC or “DCM”, now DFR’s indirect wholly-owned subsidiary, for DFR in 2005 and 2006, involving real estate mortgage investment conduits or REMICs and re-REMICs, and the accounting for those transactions.

  15. dejavuagain


    It seems to me that you are working against yourself here.

    First, you state: “We’ve been told that Constitutional scholars have said that repeated Supreme Court decisions have found real estate transactions to be beyond the reach of Commerce clause, and hence not subject to Federal intervention.”

    Then you quote, without explanation, a US Supreme Court case, on the principle that the mortgage follows the note and that “Case law in virtually every state follows Carpenter”. So, here you are stating that state courts followed a US Supreme Court case as authority on an issue you just claimed was not subject to Federal intervention.

    So, here you seem to be suggesting that the Supreme Court laid out the principles of what on the other hand you are claiming is solely the province of state law: real estate recording, mortgage and financing law.

    So, unless the reader understands a subtle fact, you have argued against yourself. The fact is that were a state Supreme Court to rule to the contrary, the state court could not be overruled by the Supreme Court. The other fact is that the holding is dicta.

    The case you cite is the US Supreme Court case: Carpenter v. Longan, 83 U.S. 271 [1873])). In this case, the US Supreme Court was in effect acting as as the court of last appeal for the territory of Colorado, It was ruling on territorial law. But, it could never rule on such an issue for any of the states – period.

    I have another problem using Carpenter v. Longan as an authority: the statement you are quoting is nothing more than dicta – it was an editorial comment of the court, and was not in any way related to the decision. It is not the holding of the court and thus should not be cited in a state court for this proposition, even were there was any jurisdiction of the US Supreme Court over the subject in a state court. Even in a bankruptcy case, the bankruptcy court must apply state law.

    If any one reads the case, it is more about whether the assignee of the note and mortgage was a holder in due course, and could collect the full amount payable by the borrower, even though the borrower had claimed to already have made partial payment to the assignor of the mortgage.

    What is even more curious in the Supreme Court case is that the assignor assigned both the note and mortgage to the assignee – which is why in a sense the quoted statement is dicta in this case.

    Further, in the Supreme Court even admitted that “It must be admitted that there is considerable discrepancy in the authorities upon the question under consideration.”

    Carpenter is really a terrible case to base our system upon – this is what it holds in essence:

    Let us assume that a borrower mortgages his house to Countrywide and starts paying Countrywide.

    Then Countrywide assigns the note to Wells Fargo. The Borrower pays off Countrywide, though. Then, Wells Fargo shows up with the note and asks to be paid the full amount.

    According to Carpenter, the borrower owes the full amount to Wells Fargo.

    This is a fair reading of the case. One could limit the facts of the case to balloon mortgages, perhaps. But, it is really more of a case about holder in due course. Note the statement “The case is a different one from what it would be if the … note .. had been assigned after maturity.”

    Carpenter is a poorly reasoned case, limited by its view of Colorado Territorial law.

    Moreover Carpenter illustrates the belief of many, this writer, that the assignor of a mortgage note should be required by statute to assign the mortgage and then record an assignment of the mortgage – this is the only approach that would protect a consumer borrower. This would establish unequivocally the owner of the mortgage. Then the MERS mess would disappear.

    But, whatever, any state court should just ignore the Carpenter case, for it is binding on NO state court (but, perhaps Colorado territory states).

    I would like to hear the views or refinements of other lawyers on this issue.

    1. davidgmills

      I commented above but will elaborate further here. I live in a state where purportedly the law of 100 years ago still stands and permits the separation of the note and deed of trust. An argument that the note and deed of trust can be separated and then put back together makes some sense where the separation was due to mistake or neglect or possible even gross negligence. In those circumstances, equity could dictate that the lien still be valid.

      However, with MERS we are dealing with a situation where the lien rights were intentionally separated from the note ab initio and not separated at a subsequent time by mistake neglect or gross negligence. So I don’t think the rationale for putting separated note and lien back together makes any sense when they were intentionally taken apart to begin with.

      1. dejavuagain

        ” An argument that the note and deed of trust can be separated and then put back together makes some sense where the separation was due to mistake or neglect or possible even gross negligence. In those circumstances, equity could dictate that the lien still be valid.”

        Well, people seem to be tossing around the meme that the mortgage follows the note – by that, the concept in its most narrow sense is that an assignee of the note is still secured by the mortgage, even if the mortgage is not assigned. I guess the separation of the mortgage occurs if the note is assigned but not the mortgage.

        Under this theory, I do not know why the mortgage cannot be put back together again. What difference does it make if the separation occurs by fraud or mistake?

        But, having been put back together, the holder of the note and mortgage needs to make sure the mortgage is recorded prior to release or foreclosure, for there is the possibility that the mortgage was assigned to someone else.

        The dirty little problem is that the borrower know nothing of what is going on – and it is hard for me to understand how the borrower knows whom to pay. Sure, notices shnotices from a servicer – one would rely upon that??

        And at the end of the day, the mortgage is recorded and the mortgagee or assignee thereof needs to be able to provide a satisfaction or release of mortgage.

        1. davidgmills

          It is one thing to put a mortgage back together that has been split by mistake or negligence; it is quite another thing to put a mortgage together that was intentionally split apart ab initio.

          In the first case one puts a mortgage back together ostensibly on some equitable ground and the lender has not incurred an advantage from the split. In such a case, it would be unfair to give an unintended and undeserved borrower the break of an unsecured mortgage.

          In the second case where it was the intention of the lienholder to do it in the first place and attempt to take advantage of its split, after having taken advantage of the split, why should it then be allowed to take advantage of putting it back together? I don’t see that this deserves equitable treatment at all.

  16. Fran

    The very first thing that struck me, when I read about MERS, was that it is a simple database and it had NO images of documents. A legal document MUST be in an image format that CANNOT be altered.

    This is simple knowledge to a programmer. Therefore, I thought, either they had poor programmers, or the programmers were more or less paid to not question anything.

    MERS cannot be used for any legal purpose. I suppose it could be used as a casual, unreliable (since there is no requirement to submit info)source of info – all of which makes it pretty useless.

    Probably why we have County Recorders Offices in the first place!

    The only real reason that the existing system seemed to be too cumbersome is because of what the banks were doing with the mortgages in the first place. And that was not right anyway. Normally, in real estate, transactions are not occurring at such a level of frequency and amount. I would think. The argument that we need something like MERS seems circular. For most counties, you can get records online. Otherwise, you can get them in person, or request them in writing.

    1. LJR

      Bingo! And by allowing notaries to digitize the documents they sign and associate a hash code that simultaneously identifies the notary, the date (enforced by notarization hardware), and fingerprints the image I think much of the problem could be resolved.

      Beggars belief that this database doesn’t include images.

      A longer term requirement we haven’t faced is the need for a simple, reliable, legally binding and well accepted means to digitally authenticate (sign) electronic documents. Until that hurdle is jumped we will continue to suffer from half-assed expedients like MERS being foisted on us in the name of efficiency.

      Bruce Schneir for President!

      Presumably this issue doesn’t get brought into political view because we, as a country, are too damn dumb to make any kind of informed collective decision about it. Most people can’t understand how RSA one-way encryption works. We have great faith in “signatures” but that’s the same kind of faith we have in airplanes – historically most don’t fall out of the sky so we climb aboard without fear. Introduction of a new kind of electronic signature would bring the loonies and conspiracy theorists out in droves.

      From my perspective it seems, in our circumstances, like a sane and reasonable way to go but I admit it further tightens the noose of collectivism around our individual throats. But, hell, the trapdoor has already sprung and we’re all dangling like hapless puppets. We may as well accept our situation and do what we can to make the rules of bondage transparent and subject to the rule of law. If we had taken this step years back we wouldn’t have the MERS problem.

      At least this would eliminate the DocX kind of idiocies where complete folders of documents were being “recreated.” In my scheme a document would have to be signed by the borrower and all transfers would have to be digitally notarized and encoded. One interesting problem concerns whether there will be a “golden copy” or master. That would be difficult but perhaps not necessary given that all signatures would be dated.

      This is the kind of issue I always thought would have been resolved in 1995. Goes to show ya, huh? Ever the optimist.

      1. Enkco

        Look, we can get geeky and talk about hash algorithms all day, how to make things secure, etc, etc. And in the abstract I would agree, these things would be beneficial and improve things. But likely only in the abstract.

        These complicated technical answers are problems in search of a solution. Paper works real well, and it works real well for a reason – it is non-trivially difficult to forge something that exists in the real world, and which people get immediate copies of at the time of origination. This is why voting should be conducted not with elaborate bogus digital signature hierarchies and $4,000 vote-switching machines, but by paper ballots and a hand count. (Check out http://www.blackboxvoting.org.)

        If any MERS replacement is set up by sociopaths intent on looting and fraud – which I’d argue MERS was – it won’t make a lick of difference. I’m actually HAPPY that MERS is so blatantly terrible. Having what *appeared* to be proper security would actually make the frauds which occurred possibly easier to disguise, or at least harder to understand. (Attorney to court: “The signature made on the document was a self-signed RSA signature, rather than the current one for the lender, and anyhow it was discovered that the enclosing signature block on this signature was from an expired signature from the lender.” Court: “Huh?”)

  17. dke

    Of course this all grossly deficient. When did investment bankers ever build reliable, bullet-proof back-office systems without the pressure of lawyers, auditors, legislators, etal? All they do is reduce the profitability and damage the bonus structures.

  18. RegReader

    Fran – there are images of the legal documents in loan servicer files, originator files, etc. Just because they are not collected by MERS doesn’t mean they dont’ matter legally. MERS can be used for a legal purpose until and unless courts rule that it can’t. In litigation you can claim all kinds of things that wouldn’t make sense to a programmer or ordinary citizen. It’s up to the court to decide what to allow and what to disallo.

    As to what’s normal in real estate, commercial real estate finance is totally different from residential. In commercial you have a lot less transactions, and for larger amounts, which makes it easier for each link in the securitization chain to make money off each loan.

    In residential real estate there are a lot more transactins, and they are smaller, which is why the originators didn’t want to have to spend the money to record assignments of all those small mortgages to the entities that hold the loans until the REMIC is created and can take them via assignment.

    In the last 15 to 20 years all institutions have done everything possible to cut costs, especially on high volume transactions like you see in the consumer world, in order to boost profits. MERS was all about reducing costs.

    Personally I think it was sloppiness and disrespect for the law rather than fraud, but in any case I want to see all these originators, REMIC trustees, servicers, and law firms held accountable for their actions, they way we individuals (who aren’t CEOs and CFOS) are held accountable for what we do and fail to do.

    1. Fran

      The securitization and sales of mortgage bundles to investors was almost always done with sub primes loans because the banks wanted them off of their balance sheets, for one thing. I was referring to residential mortgages.

      I am not an expert, but I have personally identified fraudulent documents that were issued by Wells Fargo and their associates. One was signed by a known (he has given a deposition) robo signer who works for WF and signed documents as an officer of MERS. This is more than sloppy.

    2. LJR

      A lot of “the dog ate my homework” loan docs were probably “smoking guns.” Remember that this was subprime crap and you’ll not convince me that a lot people at Countrywide were more than happy to “disappear” documents they knew wouldn’t bear scrutiny. What better way that MERS? Oh, and let’s just not forward the paperwork.

  19. kravitz

    HousingWire – Why wasn’t the media all over the Senate and House banking committee meetings on foreclosures?

    “You would think that every media outlet would have covered these hearings since the foreclosures crisis, considering the alleged misdeeds of the mortgage industry would be something the public would want to know about since it will affect every homeowner in America.”

    What will it take for the media to care about the $2 trillion foreclosure crisis?

    Wow! A pro-industry publication? Ouch!

  20. Pat

    I wouldn’t be so dismissive of the possibility of a MERS Whitewash bill.
    In the past 10 years or so there have been a number of laws passed that have gone against tradition and turned convention and law on their heads. No one would have thought such laws possible — until they happened, e.g. the recent bankruptcy act, the Patriot Act, the individual mandate part of the health care bill, and especially the provision that provides that Medicare cannot challenge drugmakers’ prices. We are through the looking glass already, so anything is possible.
    Do the congressmen really care if they upend hundreds of years of common law real property and recording laws? Or if they conveniently reverse their professed devotion to states’ rights? I doubt it.
    In fact a MERS whitewash could be effected by something as easy as an amendment to the Federal Rules of Evidence, to the effect that MERS registration creates a rebuttable presumption of ownership (possession of the note) in foreclosure cases, in which case the homeowner would have to prove full compliance with the terms of the mortgage and can’t simply prove that the foreclosing party simply doesn’t have the original note.

  21. Cedric Regula

    The possibility of hacker attacks on MERS directly or any of the 20,000 PCs connected to it to obtain a “certified officer” password is mind boggling. Or maybe they can just ask for one.

    If the Chinese super hackers presently harassing the Pentagon or the KGB decide to topple the US, this looks like the way to do it. Then we should at least raise the terror alert level to orange.

  22. Lyle

    It is clearly possible to build an electronic system to hold securities, look at DTCC (stock certificates are becoming dinosaurs many companies no longer issue them).
    The question I have did anyone in the mortgage industry try to get the uniform commission on state laws to come up with a standard way that states could adopt to move to electronic registration of mortgages. If the commission had done it then on a state by state basis legislatures could have adopted it. Did they even try, or just decide that states are all fuddy duddies and do their own version of federal preemption?
    Of course its likley that this solution would cost more to operate, since the whole officer idea would have to be changed. One solution is to set up the officers of this legal Mers as part of county clerks offices, who take reports of changes, and record them. (That could be done from banks offices electronically) (After all we buy and sell stocks electronically over the web today, and adding fingerprint recognition to the banks officers computers is easy)

    1. LJR

      It’s also likely that the result would have been the preservation and transmittal of fraudulent documents (liar loans). So it’s hard to fathom why the perps of this fraud would seek a system that preserves the incriminating evidence. I think they knew exactly what they were doing.

      1. Lyle

        Actually the liar part is on the application for the mortgage which is not even in Mers. Even if you recorded both the note and the deed of trust the lies are not there.

        1. Cedric Regula

          Looks like those got buried at the “sponsors” and rating agencies. MBS investors never got the details either. however, it seems John Paulson got a peak in the ABACUS deal. It’s all one big company. That’s why some are calling it racketeering.

  23. Cronyism

    The lobbyists in DC scurrying about like rats, “bolstering MERS legality” as the Washington Pot reports: “Flying top executives into DC for one on one meetings with lawmakers.”

    More from the Post:

    “If successful on Capitol Hill, the industry could in one quick swoop make all lawsuits related to MERS across the country moot and remove one of the key uncertainties dangling over the mortgage industry. ”

    No way!

  24. windcatcher

    Thanks for the laughs Yves, the testimony was sad but true and great classical Greek humor. Ha. Ha. What makes it even more humorous is that the 111th. Congress passed HR3808 which would have “legalized MERS” but President Obama didn’t sign the bill into law, instead he vetoed the bill. Ha. Ha.

    After the Congress recess and the elections, the exposed override veto vote failed in the House. Now, doesn’t that make a prime example of Congress Corruption? Ha. Ha.

    I don’t think the banksters will kill President Obama for his touch of INTEGRITY but I am sure they are not happy with him. Ha. Ha.

    Sooner or later, the big four world banksters and MERS will have to be placed in receivership. You can get away with a well thought out crime if it is so massive that it overwhelms everyone; that is the bankster’s strategy for getting away with the crime. Ha. Ha.

    The center of the crime family is the secret, privately owned by the world banksters, Federal Reserve Central Bank system. The US mortgage fraud becomes even more massive and the Fed through QE1, 2, 3, 4 will buy up the debt that they created by merely printing more money and purchasing US bonds and Mortgage Backed Securities from US banks and from holders around the world.

    While the Fed buys up the debt THAT THEY CREATED for FREE they will temporarily lower the interest charged on our National debt that they are acquiring so that the Federal Government can borrow more money from them! Sweet Racketeering Huh. Ha. Ha.

    The well planned bank bailout becomes a totalitarian overthrow; the Federal Reserve Central Bank owns American citizens and we are enslaved to them by the National Debt that they created!

    I would love to see the CEO of MERSCORP, the bankster terrorist gang member operating MERS, interrogated by Homeland Security as a member of the criminal economic terrorist group that is attacking America. Homeland Security could demonstrate on national TV how effective waterboarding is on getting to the Truth. Ha. Ha. They could even ask him the same set of questions. Ha. Ha.

  25. WarOnErrorDKos


    This has Fraudsters written all over it. Yves, my first MERS article was written 9/25/2008.

    It’s has some great stuff in it. Enjoy:


    You will find link to MERS 1999 Foreclosure plans for each state. The MERS link has been archived as MERS took it down. Too damning!

    Here’s the link:

    And there is a ton of important info here:

    The Choreography of the The Housing Bubble: Places Everyone


  26. Fran

    I don’t even think ‘legalizing’ MERS would solve all the lawsuit problems. Phony documents are still phony. What I found were 2 ‘legal’ documents that contradicted each other. You needed to have both to compare them. It might make it harder to prove, but I don’t think it would ‘solve’ the ‘problem.’ I think you will see more or bigger lawsuits from the investors first because they have more resources than the poor homeowners. There are individuals plugging away at this, however, and, once you pull a thread, it continues to unravel.

  27. ChrisPacific

    I don’t know how anybody could read this testimony and conclude that MERS is effective as a system of record for mortgage transactions, as the servicers have claimed.

    The CEO admits it outright:

    “…it’s not intended
    5 to reflect the actual transaction. It’s
    6 not the transaction. It’s tracking that
    7 transaction.”

    1. Cedric Regula

      An inaccurate tracking system is of questionable use too. What’s the CEO wants us to do? Find the paperwork, fight it out in court, then correct the tracking errors in MERS?

  28. kravitz

    “Last week, Essex County Register of Deeds John O’Brien sent a letter to Attorney General Martha Coakley requesting that she investigate whether or not the Mortgage Electronic Registration Systems, Inc. has failed to pay the recording fees required when a lender assigns a mortgage to another entity.”

    “O’Brien, whose district includes 30 cities and towns in Essex County, said that in his registry alone, if it is proven that fees were not properly paid, it could amount to hundreds of thousands of dollars in lost revenue for the state.”

    Essex County Register of Deeds requests investigation of MERS

    I wonder who’s gonna testify if they have no employees? One of the 20,000 temps?

    (h/t Foreclosure Hamlet)

  29. Deborah

    How can you transfer interest in homeowner and borrower Notes and Deeds that you do not possess. That’s the problem…not how they transfer it, but that they have no right to transfer, sell, assign or foreclose…when no one ever loaned any money for any loans to purchase the properties, or the cars or any alleged debt owed by the people.

  30. lambert strether

    MERS is accounting control fraud. Of COURSE our “Little Republic of San Marcos” will legalize it. That’s what the legislature is FOR: Retroactive legalization.

    See Randall Wray: Part one, part two, and part three.

    The states may protest at first, but now we see why leaving the states in debt is a feature, not a bug. Obama could have implemented policies to relieve them, but he didn’t. Why? Leverage.

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