The MERS thing is what scares me. Essentially, to save a buck by not paying countys what they were owed to file documents and to be able to “bundle” mortgage loans as financial instruments the lenders created MERS out of whole clothe. This was insane.
It would be as if google today decided that they were going to handle all the vehicle liens in the country and the lenders agreed that was a good idea and started using a new database product called “google liens”. “google liens” would be their new electronic database for handling vehicle liens, not the state systems. Then, “google liens” via Goldman Sachs would start “bundling” all the vehicle loans in to financial instruments and sell them to investors. Keep in mind, these are just the “liens” and not the actual vehicle title itself. The state would show the lienholder as “google liens” and not the actual lenders name. “google liens” would then merrily track the bank handling the loan and watch as the loan was transferred from bank to bank. All the while never actually putting the lenders name on the state title because our generated out of nothing “google liens” company would do that. Even though it was not legal.
Starting something like “google liens” would be a big risk and likely not something they would even do because there is no foundation in law for such a system. The states would tear their heads off if they tried this but MERS got away with doing the same kind of thing because the counties were unable to fight the MERS system. There was no foundation in law for MERS and like my pretend “google liens” MERS was an illegal system from day one.
MERS essentially disconnected the deed from the mortgage because the lenders used MERS to get around filing the proper paperwork with the county. Again, to save a buck and to bundle the loans so they could be resold as financial instruments. In my pretend “google liens” analogy it would be like having a title through the state that had no or the wrong lienholder on it. Technically, you would own the vehicle free and clear subject to a supposed lien through “google liens”. The problem with this and MERS is that you cannot legally disconnect the two things at the county level or the state level in the case of vehicle liens. Because of this MERS may cause the total financial meltdown of the American economy and the destruction of the chain of title to real property. It is possibly real estate and real property ownership Armageddon in America.
You see TV stories about people, lawyers in tow, moving back in to their forclosed houses. How can this be? Well, due to MERS they may have a deed to the property that has no legally filed note against it at the county level. Only paperwork through MERS. “Lenders” may not be able to prove they actually had the note. Because of that they have made false statements (robo-signing) so they could “foreclose”. Even though the “homeowner” did not pay those lenders may be legally liable for money damages because they committed fraud. Or, and I’m waiting for this, the lenders may be subject to criminal prosecution.
The legal weight of the MERS mess is substantial. The damages from false affadavits, illegal foreclosures (technically illegal) and the loss of income by the counties is more than any economy can bear. More than the government can bail out. Much more. On top of this what happens when people figure out they can default on their “loan” and own their house free and clear? Or maybe they just reduce their “mortgage” payments because they can without losing their house.
And what about the “homeowners” credit report and credit score? If indeed the foreclosure was technically illegal and the loan was a mess due to MERS what happens when a court case makes the credit reporting agencies purge the adverse hit on the homeowners credit report report because their is no proof they owe the mortgage entity on the credit report. In essence, the “lender” provided adverse information to the credit bureaus based upon false information. If Bank of America, for example, does not really hold a legally valid mortgage because it went through MERS then what kind of legal damages does that create? A mess. A big mess!
You can read more about MERS all over the Internet. Here is a good link:
To save a few bucks some big lenders constructed an entity, MERS, from whole clothe to save a few bucks. I predict that action will come back to bite them and all of us.