[quote=Kingside]This strikes me as pure politics. If an attorney general thinks there is a violation of law, they should start an enforcement action, not issue the equivalent of a press release inviting consumers in foreclosure to contact them.
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I don’t entirely disagree with you here. I certainly agree with you on the process part. But I don’t think it’s purely politics. The problem is that MERS is acting as the nominee trustor on these trust deed tranfers and all subsequent transfers. Some jurisdictions don’t have a provision for nominee trustors (or at least some courts have held this to be the case.) So trust deeds get transfered, and MERS remains as nominee owner of record. In jurisdictions that have a mandatory 90 day period for recording transfers, and may not recognize MERS nominee status, that’s a very real problem.
I don’t know if California has this 90 mandatory recording law. Nor do I have any idea of exactly what the remedy is for not recording transfers within the 90 day period. It seems draconian that it invalidates the security interest, thereby voiding the lien.
UCGal may have hit on an important issue, i.e, the various jurisdictions losing fees for recordings, which probably number in the millions.
In any case, this is potentially a huge issue. And will vary state by state. There is a humungous potential liability to the investment banks that sponsored all of the MBS trusts, in addition to those that actively managed those trusts. If the security instruments are voided, the losses will greatly exceed all previous losses, and somebody will be on the hook for those losses. It’s not just market risk losses, it’s losses as a result of gross negligence.
