Marcy Kaptur (D-OH), a Congresswoman from Toledo, Ohio, has introduced H.R. 6460 a bill known as the “Transparency and Security Mortgage Registration Act of 2010”. The bill is designed to prohibit Fannie Mae, Freddie Mac, and Ginnie Mae – otherwise referred to collectively as government sponsored entities or GSEs -- from owning or guaranteeing any mortgage that is assigned to the Mortgage Electronic Registration Systems (MERS) or for which MERS is the mortgagee of record.

While simple on its face, the bill has engendered immediate opposition and early disfavor from the American Land Title Association (ALTA) which argues that the bill would create a Federal land recordation system similar to the Torrens system.

Surprisingly, opponents of H.R. 6460 wish to drum up support to defeat the bill in its entirety by concentrating on a non-binding feasibility study buried within the thirteen page bill. The feasibility study likely has little chance of bearing fruit to create a Federal Torrens system. The bill states that the study is just that, a study.

The title insurance industry’s concerns, as expressed by ALTA, on a veritable “dead-on-arrival” proposal is perhaps meant to draw attention away from the fact that the national title insurance underwriting community and its trade organization were deeply involved in creating MERS, which is the focal point of the bill.

Despite its early detractors, H.R. 6460 shines a light on MERS and gives hope that the title insurance industry will finally deal with some of its own demons and improve the process for all participants, not just the largest players.