I learned a new word today. I found it reading an article in the British press about entities which the coalition government is targeting for closure, to help with the budget issues facing their government. What struck me was the extensive list they had to choose from. I kept scrolling and scrolling and scrolling and scrolling and scrolling and scrolling …
Then I started to do the math. If each one of these entities employed 15 people (and you know it takes that many just to push the elevator buttons in some organizations), and if they paid each of those people a mere £35,000 a year (that’s Alt+0163 for those of you wondering, “How can I put a pound sign on my numbers?”), what sort of bunker busting number would we come up with? As I didn’t actually count all the title listings, we’ll just say, way more money than we would need to buy a small house in the country and fill up all the sinks with precious stones.
The name given to these entities, especially in Britain is Quango or more precisely but less easily pronounced, Qango, which stands for Quasi-autonomous non-government organization.
The best example to illustrate a Quango in the US is the post office. The sale of postage pays for the operation, not a budget item from the Federal Government, but it is integral to the functioning of the nation and is seen as an extension of the government by most people.
And now MERS. MERS (Mortgage Electronic Registration System) is a privately held subsidiary of MERSCORP of Reston, VA , licensed in Delaware, headquartered in Vienna, VA with a mailing address in Flint, MI. They appear to prefer you not get too close to them.
MERS was created in 2004, during the housing boom, to track the ownership (Holder in Due Course) of the promissory Note you executed to obtain your home loan.
The theory is MERS creates a “safe haven” for the note, letting it sit quietly while an “authorized eNote,” a copy of your original, is bought and sold in a flurried frenzy. The ownership of the complacent mai-tai sipping couch potato of a Note being documented via a MIN (MERS Identification Number). You should be able to send MERS a note saying, “Hey, it’s me! Paul Gugenblatzenheimer. Could you tell me who currently owns my promissory note?” and they should be able to respond, “Well that would be Daisy Duke Holdings, LLC of Vancouver, WA, whose address is …..”
MERS was created by the real estate and mortgage industry to make life simpler. On the board of MERS currently sit austere members from Fannie Mae, American Land Title Association, Freddie Mac, … well here’s the list, credit to CBS MoneyWatch.
- Ed Albrigo, Senior Vice President, Enterprise Services, Freddie Mac, McLean, VA
- R.K. Arnold, President & CEO MERSCORP, Inc., Vienna, VA
- Barry Bier, President Cooper River Financial, LLC, Fort Washington, PA
- John Courson, President and Chief Operating Officer, Mortgage Bankers Association, Washington, DC
- … follow the link for the complete list. These are people with a vested interest in streamlining the process by which they all make money.
MERS says it derives its authority to keep track of your note from 2 pieces of “enabling” legislation, the E-Sign Act of 2000 and UETA of 1999, and there are a few issues with both of those.
- Neither piece of legislation gives authority to make copies of legal tender magically turn into tracked legal tender. That would be the same as saying it was OK to copy dollar bills and as long as there is a tracking, the copy is legal tender. Um, no.
- E-sign is for Interstate and Foreign Commerce and allows for an electronic signature to be valid if both parties agree. It does not give anyone authority to make a wet ink signature transform into a valid electronic signature.
- UETA required ratification by the individual states. To date 47 states have done so. If you live in New York, Illinois or Washington state as of this writing, this act (Uniform Electronic Transfer Act) has no legal bearing on you.
The bigger issue for MERS and the current robo-signing problem is they have failed to negate the wet ink signature as the legal tender. It’s a bit like playing poker. You put down some money to buy chips. Hand after hand the pot goes to various players and at the end of the game, everyone cashes in their chips and takes away whatever money is owed to them. If during the game one of the players went to outside to buy a newspaper and tried handing the newstand attendant a poker chip, even though it might be “worth” $10,000, the guy in the stand is not likely to accept it; you can buy poker chips at any dime store. Our player would have to go back inside, cash in his chip and give the vendor LEGAL TENDER.
The issue the courts are going to struggle with over the coming few months is whether MERS has the right to foreclose — are they the Holder in Due Course of the original note with its wet ink signature, which is the only LEGAL TENDER involved in a foreclosure action.
The robo-signers were taking MERS’ word that all the documents were in place. Now there is less certainty.