The haunting and failure American land title recording system

Written by Biloxi

We are hearing more and more each day of the nightmare by homeowners whose homes are not actually owned by the financial institutions that they took out a mortgage loan. This country is caught up in the invention of Mortgage Electronic Registration System (MERS) in the land title system of homeowners by the mortgage lenders. How did we get into this mess again? Here is an excellent excerpt essay by Tanya D. Marsh of Wake Forest Law School which is entitled "Foreclosures and the Failure of the American Land Title Recording System" where Ms. Marsh outlined the introduction of MERS:

The Mortgage Electronic Registration Systems, Inc. (MERS) was created by the Mortgage Bankers Association, Fannie Mae, Freddie Mac, the Government National Mortgage Association, the Federal Housing Administration, and the Department of Veterans Affairs in 1993 to provide “electronic processing and tracking of [mortgage] ownership and transfers.” MERS was established in part to facilitate the bundling of debt and sale of mortgage portfolios. When a loan registered with MERS is made, the mortgage names MERS in conflicting terms.


In a typical formulation, the Fannie Mae/Freddie Mac approved mortgage Form 3010 1/01 contains the following provision: “MERS” is Mortgage Electronic Registration Systems, Inc. MERS is a separate corporation that is acting solely as nominee for Lender and Lender’s successors and assigns MERS is the mortgagee under this Security Instrument. When the mortgage or portfolio is subsequently sold, the conveyance information is registered in MERS, but no assignment is recorded.

Only paid customers of MERS are able to access the information it stores.

We have seen in Florida, for example, that many mortgage lenders used a mortgage form created by Fannie Mae and Freddie Mac like(form 3520 1/01-adjustable rate note and form 3010 1.01 (02/01/07 mortgage) that named MERS as nominee. However, these forms were used by mortgage lenders who were not members of MERS and the mortgages were not and never were Fannie Mae or Freddie Mac. And the real question is how MERS can claim it is the legal holder of the mortgage while someone else holds the note. Here is a sample Florida document from Fannie Mae/Freddie Mac  is what the form looks like: Florida Security Instrument (Form 3010): Word.  And here is an actual Florida recorded mortgage of assignment in 2007 where MERS is named as nominee for a property of homeowners Jose and Lorena Baez. Click here. Taylor, Bean, and Whitaker law firm was named as the lender. On the mortgage assignment document, it displayed MIN number which is MERS servicer ID: 100029500015883865. I looked of the MIN number on MERS' website and this is what it said for the information of the investor:

Investor: This investor has chosen not to display their information. For assistance, please contact the servicer. The servicer is Ocwen Loan Servicing.

So, here is one example of mortgage assignment where the homeowner don't know who owns the note.

In addition, here is another example of mortgage assignment that named MERS as nominee. Check out this 2006 mortgage assignment in California where the form itself on the recorded document is not the California Fannie Mae/Freddie form 3005 1/01. The borrower on the mortgage assignment is Luis Acevedo. The form that was used was Florida form 3001 1/01. Click here. The lender is Ownit Mortgage Solutions, Inc. According to the borrower's MIN number 1002246-4000093557-8 on the mortgage assignment, the servicer is HomeComings Financial, LLC and the investor, like the Florida mortgage assignment recorded document, has chosen not to display their information. By the way, the California Fannie Mae/Freddie Mac form 3005 1/01 looks like this: California Security Instrument (Form 3005): Word. Here is the entire list of the Fannie Mae/Freddie Mac Single Family Mortgage Uniform Instruments of each state that is recommended to the mortgage servicers. Click here. As you can see from these two examples of mortgage assignments, the mortgage banks did not necessary use the required forms outlined by Fannie Mae and Freddie Mac and side stepped the states' recorder of deeds.

It will be interesting of the results of  the investigation by the New York and Delaware Attorneys General into the back end of the mortgage assembly lines: the bank trustees that oversee the securities for investors. Both attorneys general are investigating Wall Street’s mortgage securitization practice and trustee banks' roles in which haven't been a focus in much of the investigations by the federal agencies and Obama administration. Since the trustee banks' role are administrators of the securities, the two state Attorneys General are probing whether the documentation of the mortgage securities was proper and complete by the trustee banks as required. If the two state Attorneys General find that the trustee banks didn't properly complete the documentation of the mortgage securities, this will indicate that the nightmare for the banks in the housing crisis will not over. The MERS land title recording system creation is the least of the banks' woes. And this sums it up for the banks from the NY Times article:

The stakes are potentially high. If the trustees did not follow the rules set out in the prospectus, they may be liable for breaching their duties to investors who bought the securities. That could expose the banks to costly civil litigation.

And I think it will.