Today, MERS and MERSCorp, courtesy of the government, entered into a Consent Order and now must attempt to unravel the mess it created.
I understand where Mr.Wyatt Bell was 'coming from' in response to my blog entitled "Mers: Design or Unwitting Accomplice?". He's just too, too kind, and this writer has to disagree. Why? Because I don't see a "real problem" which needed solving, other than Wall Street's, well, greed. Notes didn't take that long to get to securitization, really. It's true there was a real rush to get them there and get the money, the money, the money. I'm trying to remember....there was the originator, the depositor, and one or two other parties max (yes?) before the loan got 'securitized'.
Driving this rush was the unprecedented number of mortgage loans originated and capable of being originated - many of which had no business being made - the infamouse liar loans, (I'm still angry and dismayed about the guy in jail while the you-know-who's sip those mojitos) option arms, negative amortization, for examples. Loans made to anyone with a pulse. Loans designed to fail? That doesn't make sense at a glance, but in reality, apparently it did - for Wall Street.
Which is the chicken here and which is the egg? Did Wall Street's hunger for these, also unprecedented, profits create incentive for these lousy loan programs, or did the lousy loan programs incentivize Wall Street? I doubt one can ever know or at this point that it matters much. It only goes to whether or not there was a real problem needing resolution. Really, I just don't think Wall Street's 'need' was anything more than a lustful, and as it turns out shameful and shameless , desire to spin yarn into gold at supersonic speed. Wyatt Bell said,
"Once we're beyond this ignorant past, however, we have to deal with financial system securitization and its conformance with constructive notice requirements. We must build some kind of registry which allows tracking of interests in the financial instruments",
with which I agree, of course.
Today, MERS entered into a Cease and Desist Order, I guess it's being called. Well, actually, it's a Consent Order. It looks like finally, finally the lack of governance and diligence by MERS is being addressed. From a cursory review, it looks like the government is trying to find a way to have MERS line up its computer 'records' (remember - the entries made on a strictly voluntary basis by its members?) with the facts. Facts? Imagine that! The Order states that there are 31 million loans registered on the MERS database. That's a lot of cross-referencing to do! As a practical matter, I just don't know how they can actually do it, despite being ordered to actually hire some employees. One of the biggest problems facing this new crew is finding the notes. Did this note or that note actually go into this trust or that trust? Since the members didn't record assignments in land records like they were supposed to, there's just no reason to believe entries of note transfers were made in the database, either. And then there are all those issues with endorsements which weren't done, etc., etc., etc.
This Order appears to confirm what I have always believed, and that is that MERS members, in addition to doing everything else in MERS' name, also litigate in MERS' name, and sometimes without even noticing MERS. There are some significant legal ramifications to this, at a minimum having to do with corporate identity. The Order also addresses foreclosures-in-process in MERS' name.
Well, they have to start somewhere, right?
I hope and pray, truly, that this Order actually has some teeth and is more than lip service to a polity that is madder than he--.
If one googles, "MERS enters into Consent Order", it will pop up. It's also on scribd.