A second TARP?
At the center of the fights over the legal standing of banks in foreclosure cases is the Mortgage Electronic Registration Systems (MERS), Reston, Va.
According to its website, “MERS is an innovative process that simplifies the way mortgage ownership and serving rights are originated, sold, and tracked. Created by the real estate finance industry, MERS eliminates the need to prepare and record assignments when trading residential and commercial mortgage loans.”
Put another way, MERS “allows big financial firms to trade mortgages at lightning speed while largely bypassing local property laws throughout the country that required new forms and filing fees each time a loan changed hands,” reports The Washington Post. “Without this system, the business of creating massive securities made of thousands of mortgages would likely have never taken off.”
Only recently has the company’s role come into question. Court cases in several states have challenged MERS’ standing, some successfully.
In other places, like Minnesota, legislators explicitly gave MERS the right to bring foreclosures. Meanwhile, this whole mess has some saying the foreclosure problems could even trigger the need for a second Troubled Assets Relief Program.
While all this was going on, the Interstate Recognition of Notarizations Act, a bill that could have shielded bank and mortgage processors from liability for foreclosure documents that were prepared improperly, was quietly turned away by the White House after passing through the House in the spring and the Senate in September.
Fortunately, credit unions still are the good guys of lending. And I don’t know what you’re thinking after reading all this. But for me, the next time I get a mortgage or refinance one, I‘ll probably hire a lawyer so I have someone to blame if things go sour.
Is there a doctor in the house?