Designed by the major banks to track the rapid trading of mortgages between themselves, Mortgage Electronic Registration Systems (MERS) has emerged as the epicenter of the current nationwide mortgage foreclosure crisis. Since MERS was “discovered” by the media in recent months — which has prompted investigations by all 50 states’ attorneys general — foreclosures nationwide for mortgages traded on the MERS system have ground to a halt. The problems in foreclosing on these mortgages are expected only to get worse as more details emerge about the rampant fraud perpetrated on homeowners and buyers of foreclosed properties through a criminal conspiracy involving MERS and the major banks.
The privately-owned MERS system has managed to stay under the radar for years by keeping its internal operations secret from the public. Homeowners are denied access to MERS records of the trading of their own mortgages. MERS only allows the bank currently servicing a mortgage loan to access the MERS records for that loan. Not even other members of MERS are allowed to see the MERS records for mortgage loans that they are not servicing.
With all of the recent attention on MERS and its role in the massive foreclosure fraud crisis, the banks that own MERS know that they will not be able to keep its internal operations secret much longer. It’s only a matter of time until the full extent of the illegal activities conducted by MERS through its member banks will become public knowledge.
Judges that have turned a blind eye to patently fraudulent foreclosure documents for years, are being forced to examine the affidavits, assignments and other documents presented by attorneys for large banks, and to dismiss foreclosure actions that have been tainted by MERS fraud. Additionally, attorneys in New York and many other states are now being forced to swear under the penalties of perjury that they have reviewed all documents and information pertaining to a foreclosure action and investigated any irregularities, and that the documents and information being presented to the court are complete and accurate to the best of their knowledge.
This combination of circumstances has created a perfect storm in which banks and foreclosure attorneys have become fearful of bringing foreclosure actions on the vast majority of mortgages that are registered with MERS. Not only do the banks and foreclosure attorneys risk prosecution for fraud (and disbarment for the attorneys), but every foreclosure that is thrown out of court for fraud sets additional negative legal precedent, and reporting of these cases increases public awareness of MERS fraud. Increased awareness of MERS fraud has caused many homeowners facing foreclosure to hire foreclosure defense attorneys to challenge the rights of the banks to foreclose — which is creating more negative legal precedent for foreclosing banks.
Furthermore, increased awareness of MERS fraud by people considering buying foreclosed properties has made them reluctant to buy for fear of not receiving clear title to the properties, since the banks selling the properties may not be the rightful owners. In fact, major title insurance companies are refusing to insure titles on foreclosure properties whose mortgages were traded through MERS. Without title insurance, even people who want to buy a foreclosed “MERS property” are not able to get a mortgage. As a result, banks are holding an increasing inventory of foreclosed properties that they are unable to sell.
Faced with the disastrous consequences of further criminal investigation, civil litigation, and additional publicity regarding the MERS system, the major banks have decided that the simplest way to resolve their problems is to “change the law” and “legalize MERS” as the official national registry of the trading of mortgages between banks. As a quasi-governmental agency with federal approval, MERS would become largely immune to the current attacks on its practices.
For banks and other large corporations, “changing the law” has become a rather simple endeavor since the Roberts Supreme Court ruled that corporations may contribute as much as they desire to any candidate’s political campaign. In the past two weeks the major banks have sent droves of lobbyists and bank executives, armed with hundreds of millions of dollars in potential campaign contributions and other rewards, to meet with legislators and their staff members.
The meetings have two main purposes. First, the lobbyists and bank executives are briefing legislators with strategies to rationalize supporting the extremely unpopular MERS system without committing political suicide. Second and more importantly, the major banks are reminding legislators that banks have unlimited spending power to have them thrown out of office by donating as much as necessary to the campaigns of their opponents. On the other hand, if the legislators cooperate with the banks, the money will be spent to keep the compliant legislators in office until the banks need them to cover up their next massive fraud.
Presented with an offer they can’t refuse, legislators will vote for the interests of the banks. Once the issue of the legality of MERS is behind them, banks will be free to resume foreclosures based upon fraudulent MERS records without reprisal. The foreclosure fraud crisis might be mostly over for the banks, but foreclosure fraud would continue to have the same disastrous effects on owners of homes in foreclosure and buyers of foreclosed properties.
The new legislation would violate longstanding principals of property law governing the physical assignment, transfer and recording of mortgages and other property interests. Additionally, the new law would create numerous conflicts with the property laws of all 50 states that would take years, hundreds of lawsuits, and heaps of blackmail and bribery to resolve.
One thing is certain: Without lively public discussion of what banks are doing, they will succeed effortlessly in robbing the public once again, and the politicians they control will suffer minimal repercussions from voters.
Please write or email your Senator and Representative, as well as President Obama, and tell them that if they vote to “legalize” MERS, you will vote for their opponents in the next election. Anyone with other ideas of how to stop the impending legislative whitewash of the MERS conspiracy is encouraged to leave a comment.