By Daniel Pennell, a systems expert who has testified before the Virginia House of Representatives on MERS
This week demonstrated how financial special interests have created an obscene and incestuous relationship with the leadership in the state legislature and the Governor’s office in Virginia. This cabal managed to kill off a bill (HB-1506) proposed by Delegate Bob Marshall, a bill designed to protect the integrity of the county property records and preserve the integrity of home owner’s title to their property. Simultaneously they attempted to alter the Uniform Commercial Code (UCC) with HB-1718, such that any “record” (the previous version said document) signed or unsigned by a person they claim owed a debt would be good enough for the banks to win a legal judgment against a person. In other words a spreadsheet from a bank would be good enough to take someone’s home or report someone to a credit bureau. This was in direct response to a Supreme Judicial Court decision in Massachusetts, Ibanez, where the court said that a bank had to have proof it owned a mortgage before it could foreclose.
The problem that HB-1506 addresses originated in 1995 when Wall Street banks took upon themselves the authority to replace the existing public land title recordation system with its 300+ years of successful history, with a member’s only private system. This system called the Mortgage Electronic Registration System (MERS) gutted the public property records and left millions of homes with questionable titles. This was done without any government approval and against the recommendations of the title industry and the county recorders. MERS has been found by 10 state supreme courts to be acting illegally and is currently being sued by CA, NV, TN and 14 other states. The Federal Reserve, Office of the Comptroller of the Currency (OCC), regulator of the national banks and the FDIC are investigating MERS for questionable business practices and for the systemic risk it poses to the nation’s financial system. The CEO resigned last week. Speculation in Washington has the OCC taking over MERS and nationalizing our land records, a clear violation of states’ rights.
Delegate Merricks submitted HB-1718. Bills to change the UCC are rare because the implications of unintended consequences are usually substantial and unforeseeable. The bill summary on the Legislative Information System (LIS) says the bill is intended to address recent court decisions and changes in technology. There is no question that the bill was targeted at both protecting MERS and avoiding a court decision in VA similar to that in MA. Delegate Merricks, member of a bank board and a former vice president of a bank, seems to suggest that take the home first and then figure out who actually is entitled to do so later. Never mind the risk to title that a future buyer of a foreclosed home faces or that we have situations in VA where multiple banks are foreclosing at the same time on the same person. In that fight the winner gets the house and the loser the right to sue the borrower for the loan amount.
The banks wanted HB-1506 killed and HB-1718 passed to protect MERS and, I believe, to avoid providing proof to mortgage investors that they were defrauded. The requirement to record would have provided evidence to investors in mortgage backed securities (MBS) that what they bought was empty; the mortgages were never legally transferred to the MBS. In my humble opinion if you sell someone a security that you claim is backed by collateral when it is not then that would be securities fraud. Among these investors are Fannie Mae and Freddie Mac whose losses are being paid for with tax dollars to the tune of billion of dollars. Other investors include state and private pension funds. The total exposure to the banks exceeds $1.5 trillion. You can see why they would fight so to avoid a $21 fee and the right to use their own “records”.
HB-1506 was killed by the Speaker of the house (Delegate Howell), the Chairman of the Courts Committee (Delegate Albo), the Chairman of the Civil Subcommittee (Delegate Athey) and the governor’s office.
Delegate Howell, the Speaker, sits on the board of Virginia Heartland Bank.
Courts Chairman Albo received 13% of his campaign funds from the VA Bankers Association and more from two major bank servicers.
The lobbyist representing the bankers, Matt Bruning, at the hearing of the Civil Subcommittee was a former aide to the chairman of the subcommittee, Delegate Athey, and an aid to the governor.
A reason given by Delegate Athey for not passing HB-1506 on was that the governor’s office in the person of Terri Suit, head of the governor’s foreclosure task force sent a letter asking the subcommittee to hold off and let the task force work on it. The Virginia Public Access Project reports that Terri Suit, ,chair of the Foreclosure Task Force, was a paid lobbyist for the Mortgage Lenders Association and the “private” members of the Task Force largely comprise representatives of the mortgage industry.
HB-1718 was pulled from the floor when Delegate Marshall threatened to attach an amendment excluding mortgages from the language. Had the speaker left it on the floor, the members would have had to record a vote on the amendment and with the amendment there no longer was reason to pass it. Delegate Merricks sits on the board of Virginia Bank & Trust and has 25 years in the banking industry.
The relationships are so inappropriate as to cause any reasonable citizen to question the integrity of the process.
A survey released today in the Financial Times shows that Americans trust of all large institutions is at an all time low with only 25% of American saying that they trust financial institutions.
A survey published last week ranked Virginia as the country’s second most corrupt state only after Tennessee.
The citizens of Virginia appear to be making an accurate assessment based on the shenanigans going on in Richmond this week.