Registrars of Deeds as Unexpected Foot Soldiers Fighting Mortgage Abuses?

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As regular readers no doubt know, the reason for creating the electronic mortgage registry service MERS was to save on recording fees when notes (the borrower IOUs) were transferred through multiple parties when mortgage securitizations were set up. As MERS legal status has come under questions, a few local registrars of deeds (the officers in charge of local recording offices) have made estimates of the losses to their county and have come up with significant numbers.

As more and more information about mortgage abuses have gotten media coverage, some registrars of deeds have dug further into their records to document their extent.

So far. only a couple of local officers are undertaking these assessments, on their own initiative. At the same time, their efforts provide persuasive evidence of the extent of abuses, and thus help support the critics’ case. If more recorders were to take interest and start digging in their files and come up with tallies of various types of misconduct, this could have a significant effect on the debate. A favorite tactic of the banks has been to treat problems as “mistakes” and therefore exceptional. If more local level compilations show that “mistakes” are common or even pervasive, it will reveal that these alleged errors were a cynical profit maximizing policy dressed up as incompetence. And it would again show the banks to be liars.

From Dave Dayen at the American Prospect:

Jeff Thigpen, the register of deeds in Guilford County, North Carolina, a county of about 465,000 in the center of the state (the largest city is Greensboro), decided to survey all the mortgage documents submitted to his office by DocX, a notorious “mortgage mill” that processes documents on behalf of lenders, between August 2006 and April 2010…

Out of the 6,100 documents Thigpen examined, 4,500 showed signature irregularities. The name of one DocX employee, Linda Green, who was acting as a vice president for several major banks, was forged 15 different ways on the Guilford County documents, rendering them invalid. Thigpen’s investigation was one of the first systematic assessments of mortgage document fraud in the entire country, certainly more robust than anything conducted by state and federal regulators…

Thigpen hooked up with another register of deeds, John O’Brien of Essex County in Massachusetts, who was just as concerned about MERS and pervasive document fraud. O’Brien is seeking back fees from the banks for the mortgage transfers that went through MERS and circumvented the registers’ offices (and the accompanying recording fee), which could amount to hundreds of millions of dollars for his county…. Thigpen and O’Brien want to attract more registers to their cause, saying they’re currently in “alarm-sounding mode.”…

Thigpen, O’Brien, and other registers have two goals. First, they want to return the system of land titles to public hands, phasing out MERS and requiring all transfers to be filed. “You need an entity with public oversight tracking these transfers, not a private entity with no accountability,” Thigpen says.

Second, they want to slow down the rush to settlement between state attorneys general and the banks. They have publicly called on Iowa Attorney General Tom Miller, who is leading the negotiations, to put them on hold until there is a deeper investigation of the damage caused by the banks. They also want to be involved in any future settlement talks, armed with the knowledge of what is sitting in their offices. Miller has yet to respond.

It looks like they’ve already gotten their wish as far as the attorneys general settlement talks are concerned, From what we can tell, they are falling apart. Hopefully Thigpen and O’Brien will enlist some of their peers, and perform some tabulations which will demonstrate how the officialdom has failed to do basic datagathering on the mess that continues to afflict the one of the foundations of the American economy.

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  1. attempter

    Thigpen, O’Brien, and other registers have two goals. First, they want to return the system of land titles to public hands, phasing out MERS and requiring all transfers to be filed.

    But this has to mean a resotration of the status quo ante. Let’s be vigilant against Shock Doctrine attempts to use this as a pretext to “nationalize” mortgage recording, as many of the more gullible (or lying) anti-MERS critics are willing to fall for.

    That would only make things far worse. The banksters would even further consolidate their control, the system would become even less transparent and accountable, and it would be yet another federal government power grab. The private-public MERS is bad enough. A public-private MERS would be much worse.

  2. ct

    it’s too bad the 3100 county recorders in this country weren’t worried about MERS when it got started 16 years ago.

    1. eclair

      Thanks for the nudge, ArkansasAngie! I just sent off an e-mail to our County Clerk and Recorder – with copies to our state newspaper and our local community paper. I included a link to a county recorder newsletter that had a great article on county registrars who are researching this, including John O’Brian of Essex County – where I grew up.

    2. BonnieD

      There were Registers of Deeds and County Clerks that objected and tried to prevent the creation of MERS. Banksters and their lobbyists nipped that in the bud – as usual.

      1. leapfrog

        Yes, indeed, many did voice their concern. I’m very happy to know that my state, CA, has a qui tam suit against MERS.

      2. Francois T

        Banksters, their lobbyists, and their pet slaves in CONgress.

        Let’s never forget this truism: In DC, when comes the time to screw the weakest, both parties always rediscover the marvels of bipartisanship.

    1. eclair

      Maybe I’ll get the “reply” thing right this time.

      And, thanks to you, Yves, for not letting this issue go away.

    2. Wolf10

      Yes I have, and so far I’ve gotten a whole lot of duh. Although one of the, putatively more progressive counties in the U.S. (Alameda, CA) it appears this matter has totally escaped their attention and interest. Perhaps there is something about filing requirements in CA I don’t know about yet that obviates recording of transfers of deeds of trust pursuant to securitization.

      Alameda County (CA)records show that the last documents filed on my house were at origination of my subsequently securitized loan with now defunct Washington Mutual in 2004. Chase is now the servicer. This document claims the right to transfer ownership of the Deed of Trust but also states that such transfers will be recorded. They appear not to have been.

      I requested proof of title from the bank months ago explaining that since they denied me a modification I might default and I would like to negotiate directly with the investor prior to taking this action. They claim to be researching the matter.

      A local title company has assured me that they have been facilitating numerous sales of houses with document filing histories like mine. Do deficiencies in documentation block foreclosures but not sales or are the laws in my area such that no such deficiency exist?

    3. leapfrog

      yes, I have and at first I had no luck. I’d get a clueless clerk who told me everything is just fine and we like MERS. Ugh. Turns out that was NOT the truth. My recorder was involved in the qui tam suit against MERS. However, I did not know this until I contacted my county board of supervisors representative. He got me an answer and talked directly to the recorder. I suggest anyone else who is frustrated with the lower level bureaucrats and no answer from the higher level, contact their supervisor. Kudos to mine – I will vote for him again.

    4. eclair

      Points to Arapahoe County, Colorado Clerk for getting back to me within 24 hours. Here is her reply:

      “I am aware of this issue in Massachusetts. However, I have checked with
      my attorney and have been told that there is no requirement in Colorado
      for recording the assignment of Deed of Trust or note. Therefore, I
      cannot take any action on this.”

      Whew! Does this mean in Colorado that we all have no idea who owns our mortgage?

      Do I just let this go? Next step?

  3. Tony Arko

    My local REALTOR association was trying to get a law passed in Virginia that got rid of MERS type filings. It was stopped by the bankster representatives that are members of the Virginia legislative body. We are going to push it again in the fall. This time we will have more ammunition and make the less informed legislators take a hard look at the title issues created by the horrible record keeping and fraudulent behavior carried out by banksters in the name of MERS. I wonder how many deeds Linda Green signed here in Loudoun County VA.

    1. wunsacon

      >> I wonder how many deeds Linda Green signed here in Loudoun County VA.

      You only need one! That’s the beauty of it.


  4. Nonanonymous

    AA, very good point. Registrars are public officials and should be notified, if they haven’t been already.

    The other point I wanted to make is a big thank you to Yves for her unwavering commitment to uncovering mortgage fraud. Easy credit driving caused the housing bubble, and if that’s all there was to it, that would be the end of it. Instead our global financial system is in havoc, the US federal government owns 46% of all foreclosed property, federal deficit spending has been increasing exponentially since the end of WWII, we have an inequitable tax code where corporations pay little or no taxes, and 10% of income goes to the top 1% of households.

    Gas prices were the tipping point to the mortgage fraud. Mortgage fraud may very well be the tipping point to the collapse of the dollar. The inability of federal regulators to prosecute fraud only means that maintaining status quo is more important than the law. Perhaps the states attorneys general can wield a bit more influence.

    I’m proud that a North Carolina Registrar is one of those fighting the good fight, and I intend to send this article to my local and national elected representatives. If the Attorney General of North Carolina published an e-mail address, I would send a copy to his office, as well.

    1. Francois T

      The inability of federal regulators to prosecute fraud only means that maintaining status quo is more important than the law.

      Allow me to register a slight disagreement with the above statement. IMO, it should read:

      The unwillingness of politicians to tolerate any real or perceived threat to the flow of campaign money coming their way has totally hindered federal regulators to prosecute fraud. This only means that the rule of of law doesn’t apply whenever one is the bearer of sufficient funds to make politicians bend over as far as they are asked to do. Some will even forgo the Vaseline.

  5. Apikoros

    Yves, I’m sorry, I love the subject matter but a person who registers something is a registrar. Register is a verb, registrar is the job title.

    1. watercarrier4diogenes

      Yves is INNOCENT, I tell ya! INNOCENT!!! All the misuse of the word ‘register’ is in Dave Dayen’s story. 8^)

  6. tz

    Individuals and local officials can do what the old or any new bureaucratic superagency cannot. Except for the sewers of Jefferson County, Alabama, the banks haven’t seemed to be able to corrupt the thousands of local officials.

    NIMBY works well against national institutions.

  7. Ellen Anderson

    I was delighted to read about Registrar O’Brien’s activities awhile ago and have written to him with congratulations. Theft of real property was very common before the registries were established. I agree with the concerns expressed here that they are expensive, paper-intensive entities that are increasingly being viewed and treated as anachronisms. There will certainly be a move to nationalize the system. I don’t know whether people understand it well enough to fight about it but it is at the heart of our system of property ownership. You would think that conservatives would be the very people who would stand up to protect it.
    It is about the money though. County government is seriously underfunded and mostly dead in Massachusetts except for the registration of deeds. The registrars are likely to notice when deeds don’t get recorded and the tax stamp revenue goes away.

  8. ambrit

    Did I read that right? “..which could amount to hundreds of millions of dollars for his county.” I’m not qiute up to the math here but, take that figure and multiply it out by nation wide housing volume and you get, what? Hundreds of billions!?!? If this stands up, it’ll be another transfer of the tax burden off of the backs of the elites and on to the backs of the “commons.” Do the counties have a chance for some serious clawback here? I hope so, and so do my property taxes.
    On another front: Nonanonymous claimed that, “US Federal government owns 46% of all foreclosed property.” Also if true, a huge opportunity beckons for the Feds to do some good things for people for a change. If you want to really help the banks, big and small, just yank these non performing loans off of their balance sheets and reclassify them as national assets. Then admit to our previous barberings and modify the loans directly. National bank you say? With all of the money we’ve thrown at them so far, a case could be made that “We The People” already own a large chunk of the banking industry. Just rationalize the process and here comes the promised land.
    Nothing’s perfect, but as the joke says: “Anythings got to be better than this!” he screamed as he suffered death by Bankster.

    1. Nonanonymous


      Something most certainly could be done, that is fair and equitable for all. Unfortunately, that doesn’t seem to be the case.

      We the people have to find a way to take our country back, by whatever means necessary. One famous patriot stated once, “Give me liberty, or give me death”. It remains to be seen what means will be necessary to secure liberty from our creditors, as we’ve become a debtor nation, given into the hand of Satan.

      God help us all.

      1. ambrit

        Dear Nonanonymous;
        I think it was Cromwell who said; “God will help us if we do His work.” Thanks for the foot work on this issue. We’re beginning to see some signs of social stress down here in the Deep South. Like FDR did in the thirties, we need Justice “to be seen to be done” to give people some hope to hang on to. Hard times are always easier to endure when you know you are not alone.
        Keep up the good work!

  9. indio007

    I’m highly doubtful that about the common wisdom that the purpose of MERS was to avoid recorders fees.
    The fees are quite minimal for a multi trillion dollar market.
    I would even bet MERS membership costs more over the life of a 30 year mortgage than a county’s fees.

    My belief is that MERS was formulated to hide the circulation of promissory notes from the IRS and the borrower. These notes where not sold at par in every instance therefore the transfer is a taxable event.

    However there never appears to be a transfer on the surface because there isn’t any assignment in the public record. It just looks like a continuous ownership be MERS.

    Where is the IRS? I don’t understand why they aren’t hammering the REMICS or digging into MERS to find evidence of unreported sales.

    1. Yves Smith Post author

      You have not done your homework. That was the explicit reason for its creation. The “antiquated recording system” palaver is just PR.

      And $70 (two recording fees saved) over 5000 mortgages (typical MBS size) is $350,000. That’s a meaningful expense. For some deals, there were more pre-closing transfers, so even more fees were saved.

  10. Stay Classy San Diego?

    We’ve discussed this – one build feature of MERS was to make foreclosures faster and more convenient. Banks, knowing in advance that the loans were shit, needed to grease their way to profits with proprietary code. I’m suprised ‘Muricans aren’t rioting at this point. I remain confident the enemy would like to see this, their loser tactic is to blame the defenseless. Peaceful, thorough examinations of the mechanisms behind the looting are already seeping through. You can see some of the debt collectors blaming the so-called servicers. Even Krugman is calling bullshit on the elites for their tactic of blaming the proles.

  11. John Breek

    Most people seem to forget that there is an important difference between
    the abstract world of our symbols and the real world that supplies our
    food, water, fuel, etc; that’s why people are willingly going along with
    projects that threaten their ability to support themselves from the land
    that surrounds them, whether it’s more deepwater drilling that kills
    marine life or hydraulic fracturing poisoning the aquifer or simply the
    enforced dependence of almost everybody on a food supply that comes from a
    long way off and is heavily dependent on petroleum every step of its way
    into our mouths. As long as what we’re doing seems to make sense in this
    world of our symbols–or as long as everyone else trusts that the much
    smaller group of people who currently benefit from it have their interests
    at heart–we ignore what’s under our noses, go to our jobs (if we have
    them), exchange the symbols we are rewarded with for a whole slew of other
    symbols (salary dollars for interest payments), and then for the
    necessities of life if there’s anything left over.

    World-class philosopher John Searle lets the cat out of the bag about how
    it all works in his recent book Making the Social World, explaining how
    corporations come into being through a series of symbolic actions: an
    attorney writes certain symbols on pieces of paper, brings the papers
    before a judge, and the judge makes a declaration, bringing the
    corporation into “existence” by fiat–but it’s actually all just “words,
    words, words,” so nothing is really created in any physical sense. So why
    are corporations thought of as powerful “things” that can interfere with
    our lives in so many ways? Searle explains this (p. 107), under the
    heading “How Do We Get Away With It?”:

    “The short answer to the question is that we get away with it to the
    extent that we can get other people to accept it.”

    An important reason why people accept such symbolic entities being created
    in this way, of course, is that the whole process is backed by the force
    of an enormous network of institutions, economic, legal, police, and
    military. But these institutions themselves are also patterns of human
    organization ultimately dependent upon people’s acceptance of symbols, and
    Searle goes on to ask why people accept these large-scale institutional
    structures. A very general answer to this question is that we believe our
    institutions work for our benefit, and many of them do, much of the time,
    or so we used to think. But, Searle points out, there are all sorts of
    institutions that people continue to cooperate in maintaining that do not
    work in their own interest at all, institutions that structure our human
    activities in ways that are most unjust, in fact, so he has to repeat the
    question, and finally answers it this way:

    “In accepting the institutional facts, people do not typically understand
    what is going on. They do not think of private property, and the
    institutions for allocating private property, or human rights, or
    governments as human creations. They tend to think of them as part of the
    natural order of things, to be taken for granted in the same way they take
    for granted the weather of the force of gravity.”

    Well, of course–how many people do you know who have ever thought deeply
    about how the symbols that figure so prominently in our lives these
    days–like the mathematical calculation of compound interest, a purely
    symbolic operation that creates absolutely nothing real–and the
    institutions that support them came into being in the first place?

    The important conclusion, which Searle does not go on to draw but that we
    can draw here, is that when enough of us start to realize that the present
    institutional structures are ultimately a matter of symbols held together
    by people’s continuing acceptance of them, we can start to think
    consciously about how the patterns that these symbols force our activities
    into might be changed to make them more just, in everybody’s interest,
    and, if we’re lucky, maybe even sustainable with our own local soil,
    water, and energy.

  12. M.Feldspar

    Since I can’t find any way to actually drop an e-mail to Yves about this case anywhere on the site, I’ll mention it here: Yesterday the U.S. Court of Appeals for the Sixth Circuit issued an opinion slamming MERS for recording a mortgage in the wrong Michigan county. Case was a lien fight with the IRS where the court found MERS failed to record (a fact which was not disputed).

    I wish I could say the MERS lawyers raised some unusual arguments that made the decision even remotely interesting to read, but they didn’t. I haven’t seen the briefs, but it seems that one of the primary arguments raised by MERS was: We’re special because we provide people with a centralized lien-recording system. To which the court replied: “If the law routinely protected lien holders who filed in the wrong county, that would go a long way to defeating the benefit of having a centralized lien-recording system in the first place.”

    Anyhow, if someone wants to read the decision it’s Mortgage Electronic Registration Systems Inc. v. Church (case number 09-2513) and it’s on the Sixth Circuit’s website.

    1. leapfrog

      Go to bottom of page and click Aurora Advisors highlight, then “contact,” then you will see Yves e-mail.

  13. Foster Boondoggle

    OK, take as a given that the users of MERS were slipshod and made many mistakes, and that they also avoided paying lots of recording fees to local county officials. Can someone please explain to me why it would be a good idea to go back to a paper-based system with county-by-county variation in process and fees at every step for keeping track of mortgages?

    That cost will have to be paid by someone. If there’s enough sand thrown in the gears by the extra complication and cost, then each bank that’s potentially making a mortgage loan has to treat it as illiquid, and build that into the cost they charge. They’ll need to hold larger reserves against potential losses, and therefore charge higher interest, given a required ROE.

    What’s the benefit to adding these costs and recording headaches to the process? If the point is to prevent predatory lender behavior, how about just having the new CFPB focus on doing a better job at it than the OTS did during the Bush era, rather than hoping a bunch of county recorders will somehow prevent lender malfeasance?

    1. bill

      If the banks had any risk in mortgage lending, you can be certian they would go to the inconvenience of paying the thirty dollar recording fee each time the loan was transferred. This is what any reasonable person or investor would do to insure their right to the collateral was protected. Two bit used car salesman get this concept. Why were the best and brightest of our most pestigious business schools unable to grasp this concept?

      The scummy folks who decided to throw the recording process out the window did it by design for profit. It becomes so much easier to sell the same crap mortgage to more than one mark if you never have to publically record or disclose which mark now owns the property.

      They didnt start mers to avoid piddly little fees, they started mers to realize huge profit from fraud.

      I fear they have us beat. If the rule of law regarding all these mortgages in mers is upheld, no one has a legal right to the property and we revert to a state of nature where you take by force what you want. At this point, I fear some of my fellow citizens more than I fear the governmentbanknatlguard.

  14. Anchard

    To ct:

    There was some resistance when MERS was first started, though not nearly enough. There was one county recorder on Long Island who refused to accept MERS, triggering rounds of litigation that went all the way to the state supreme court in 2006. The court ultimately ruled against the clerk, with one justice admonishing him for overstepping his “merely ministerial” role (I got that info from Christopher Peterson’s 2010 piece on MERS).

    A bit more obscure, but I found an article from the mid-1990s in a trade publication called Mortgage National News that detailed a movement by county recorders in Illinois to counteract MERS. They put pressure on Carole Mosley Braun to to introduce legislation reaffirming the primacy of local land records. After agreeing, Senator Mosley Braun eliminated the provision at the last minute before bringing the affordable housing bill to which it had been appended to the floor.

    Outside of that I haven’t been able to find many signs of resistance.

    to Foster Boondoggle:

    “costs” is a pretty big concept in this instance. I would calculate “costs” as inclusive of clouded chains of title nationwide, massive numbers of fraudulent foreclosures, and a general subversion of the notion of property rights, on top of the hundreds of billions in lost revenues for the local counties. Right now we are all paying that – it’s hard to see how “costs” would be worse if we reverted to some form of actual recordkeeping.

    As for your efficiency argument, I also have to ask – efficiency for whom? The argument presented by MERS executives (and by the MBA in their 1995 Utah law journal article announcing the “MERS Concept”) has consistently been made around the notion that efficiency in the lending process is the primary good. It’s not at all clear how that is also a social good, which means it’s not at all clear why the rest of us should be concerned about any reduction in efficiency.

  15. Anchard

    Sorry, typing too fast there – I meant the 1995 Idaho Law Review, not Utah (apparently I had Christopher Peterson on the brain).

  16. leapfrog

    “MERS and its partners made the decision to create and operate under a business model that was designed in large part to avoid the requirements of the traditional mortgage-recording process. The court does not accept the argument that because MERS may be involved with 50 percent of all residential mortgages in the country, that is reason enough for this court to turn a blind eye to the fact that this process does not comply with the law.”

    -U.S. Bankruptcy Judge Robert E. Grossman

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