DC Attorney General May have Just Banned MERS Mortgages

[UCGal]

I’ve been thinking for a while that it would be counties (and districts) challenging the lack of recording (and therefore lack of fees collected) that would change MERS.

Local governments are broke. They want the transactions recorded and fees paid.

It doesn’t change the transactions – homedebtors still owe their mortgage, mortgages will still be owned, bundled, sold, traunched… but it will need to be recorded.

[SD Transplant]

I’m not trying to derail from the main subject, but I’d like to dig a little deeper and understand how would this action impact a Bank’s prefference on short sales vs. foreclosures. In my mind, if I were a bank, with the MERS fiasco & potential costs associated, I’d hate the idea of foreclosure & try to get any short sale deal done ASAP……Of course, I’m trying to find a reason to the madness as I’m awaiting answer on a short sale offer(2 weeks later). The bank in question is one of the big ones that initially claimed no issue w/ the robosigns or confidence in the paperwork, yet later, it admited that may have found some irregularities(that’s my personal biass).

[SD Transplant]

I’m not trying to derail from the main subject, but I’d like to dig a little deeper and understand how would this action impact a Bank’s prefference on short sales vs. foreclosures. In my mind, if I were a bank, with the MERS fiasco & potential costs associated, I’d hate the idea of foreclosure & try to get any short sale deal done ASAP……Of course, I’m trying to find a reason to the madness as I’m awaiting answer on a short sale offer(2 weeks later). The bank in question is one of the big ones that initially claimed no issue w/ the robosigns or confidence in the paperwork, yet later, it admited that may have found some irregularities(that’s my personal biass).

[SD Transplant]

I’m not trying to derail from the main subject, but I’d like to dig a little deeper and understand how would this action impact a Bank’s prefference on short sales vs. foreclosures. In my mind, if I were a bank, with the MERS fiasco & potential costs associated, I’d hate the idea of foreclosure & try to get any short sale deal done ASAP……Of course, I’m trying to find a reason to the madness as I’m awaiting answer on a short sale offer(2 weeks later). The bank in question is one of the big ones that initially claimed no issue w/ the robosigns or confidence in the paperwork, yet later, it admited that may have found some irregularities(that’s my personal biass).

[SD Transplant]

I’m not trying to derail from the main subject, but I’d like to dig a little deeper and understand how would this action impact a Bank’s prefference on short sales vs. foreclosures. In my mind, if I were a bank, with the MERS fiasco & potential costs associated, I’d hate the idea of foreclosure & try to get any short sale deal done ASAP……Of course, I’m trying to find a reason to the madness as I’m awaiting answer on a short sale offer(2 weeks later). The bank in question is one of the big ones that initially claimed no issue w/ the robosigns or confidence in the paperwork, yet later, it admited that may have found some irregularities(that’s my personal biass).

[SD Transplant]

I’m not trying to derail from the main subject, but I’d like to dig a little deeper and understand how would this action impact a Bank’s prefference on short sales vs. foreclosures. In my mind, if I were a bank, with the MERS fiasco & potential costs associated, I’d hate the idea of foreclosure & try to get any short sale deal done ASAP……Of course, I’m trying to find a reason to the madness as I’m awaiting answer on a short sale offer(2 weeks later). The bank in question is one of the big ones that initially claimed no issue w/ the robosigns or confidence in the paperwork, yet later, it admited that may have found some irregularities(that’s my personal biass).

[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.

When an ag states what the law is with out referring to the statute at issue, skepticism is appropriate.

In general, county recorders and recording systems are there for folks who want to protect their interests by recording documents such as assignments so that their interests are perfected against consenting owners or subsequent parties who may have a claim against the chain of title. Someone who does not record their interest takes a risk as to these third parties by not doing so. But that is the party’s risk, it is not some sort of governmental entitlement. The county recorder should not care less whether someone is protecting their rights by recording or not recording an assignment. The notion that a county recorder can transmogrify the failure to record an assignment into some kind of “right” to fees for not doing so is kind of bizarre IMHO.

[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.

When an ag states what the law is with out referring to the statute at issue, skepticism is appropriate.

In general, county recorders and recording systems are there for folks who want to protect their interests by recording documents such as assignments so that their interests are perfected against consenting owners or subsequent parties who may have a claim against the chain of title. Someone who does not record their interest takes a risk as to these third parties by not doing so. But that is the party’s risk, it is not some sort of governmental entitlement. The county recorder should not care less whether someone is protecting their rights by recording or not recording an assignment. The notion that a county recorder can transmogrify the failure to record an assignment into some kind of “right” to fees for not doing so is kind of bizarre IMHO.

[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.

When an ag states what the law is with out referring to the statute at issue, skepticism is appropriate.

In general, county recorders and recording systems are there for folks who want to protect their interests by recording documents such as assignments so that their interests are perfected against consenting owners or subsequent parties who may have a claim against the chain of title. Someone who does not record their interest takes a risk as to these third parties by not doing so. But that is the party’s risk, it is not some sort of governmental entitlement. The county recorder should not care less whether someone is protecting their rights by recording or not recording an assignment. The notion that a county recorder can transmogrify the failure to record an assignment into some kind of “right” to fees for not doing so is kind of bizarre IMHO.

[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.

When an ag states what the law is with out referring to the statute at issue, skepticism is appropriate.

In general, county recorders and recording systems are there for folks who want to protect their interests by recording documents such as assignments so that their interests are perfected against consenting owners or subsequent parties who may have a claim against the chain of title. Someone who does not record their interest takes a risk as to these third parties by not doing so. But that is the party’s risk, it is not some sort of governmental entitlement. The county recorder should not care less whether someone is protecting their rights by recording or not recording an assignment. The notion that a county recorder can transmogrify the failure to record an assignment into some kind of “right” to fees for not doing so is kind of bizarre IMHO.

[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.

When an ag states what the law is with out referring to the statute at issue, skepticism is appropriate.

In general, county recorders and recording systems are there for folks who want to protect their interests by recording documents such as assignments so that their interests are perfected against consenting owners or subsequent parties who may have a claim against the chain of title. Someone who does not record their interest takes a risk as to these third parties by not doing so. But that is the party’s risk, it is not some sort of governmental entitlement. The county recorder should not care less whether someone is protecting their rights by recording or not recording an assignment. The notion that a county recorder can transmogrify the failure to record an assignment into some kind of “right” to fees for not doing so is kind of bizarre IMHO.

[SK in CV]

[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.

[/quote]

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.

It could get incredibly messy.

[SK in CV]

[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.

[/quote]

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.

It could get incredibly messy.

[SK in CV]

[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.

[/quote]

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.

It could get incredibly messy.

[SK in CV]

[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.

[/quote]

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.

It could get incredibly messy.

[Author]

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