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How an Obscure & Quasi-legal Outfit Called MERS Is Subverting Our System of Property Rights, & what we can do about it

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Banksters have scrambled America's system of private property ownership to the point that no one knows who owns what.   This according to a recent article by Yasha Levine, a simplified, clarified and somewhat abbreviated version of which makes up most of what follows here.

"For the first time in the nation's history, there is no longer an authoritative, public record of who owns land in each county."

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                 -- University of Utah law professor Christopher Peterson

There is an unbelievable scandal in the making that threatens to subvert our four-century-old method for guaranteeing a fundamental building block of the American republic--property ownership.   This is a story of deception engineered at the highest level of power, for the sake of short-term gain by a few.   It's also the story of yet another epic failure of the private sector to uphold the laws and traditions of American society, even something so fundamental to it as property rights.   MERS may have permanently destroyed public land records by breaking the chain of title to millions of homes.

Created in 1995 by the country's biggest banks, Mortgage Electronic Registration Systems, Inc (MERS) quietly took control of, and thereby, in one fell swoop, privatized, mortgage record-keeping across the country.   In the span of a few years, it scrambled America's private property ownership records to the point where no one could figure out who owns what.  

Incredibly, this was no accident;   it was done by design.   But why?  

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MERS was a tool used by America's top financial institutions to greatly pump up America's real estate market, and thereby allow some to make billions in profits.   Mortgage-backed securities, robo-signers, lightning quick foreclosures, subprime mortgages and just about everything else that went into feeding the biggest real estate bubble in U.S. history could not function without help from MERS.   But unlike many of the Wall Street scandals, this one could eventually blow up in the banks' faces, with the little guy laughing all the way back to his free McMansion, while local governments see their empty coffers fill back up with the billions of dollars in unpaid fees that MERS had circumvented and essentially stolen from them.

The story begins in the mid-'90s with the founding of MERS, Inc. by the nation's most powerful banks, ostensibly with the aim of streamlining and modernizing the process of registering and tracking mortgages.   Traditionally, there has been no centralized registry of real estate ownership information;   counties maintained their own records for properties within their borders--it's a system that has remained virtually unchanged since colonial times.

The MERS database went live in the middle of the dot-com bubble, and was supposed to take inefficient government bureaucracies kicking and screaming into the future by providing a centralized, national registry of mortgage ownership information.   "MERS addresses a problem that was costing the industry (banksters) a significant amount of money," Rick Amatucci, a Fannie Mae vice president and the agency's liaison with MERS, told Mortgage Banking magazine, just as the new registry went online in 1997.   The database would:

  • give lenders across the country instant access to real-time mortgage information,
  • diminish potential for fraud, and
  • lower costs for servicers and borrowers.

These planned achievements were echoed by the Mortgage Banking Association, which was tasked with overseeing the project.

But this kind of talk was just for the press release  

As it turns out, the banking industry wasn't really concerned with efficiency or transparency or the greater good.   It was all about their making money, as quickly and efficiently as possible.   In actuality, MERS was created to help the industry push its latest money-maker:   mortgage-backed securities, a Wall Street financial scam that dressed up the most toxic, guaranteed-to-fail loans as Grade-A investment vehicles that could be sold to suckers looking for easy gain.

However, before mortgage-backed securities could be unleashed on the residential housing market, on a massive scale, bankers needed to get rid of America's long-standing real estate recording laws, which required lenders to file all mortgage transactions--the origination of a new loan, for instance, or the transfer or sale of a mortgage between banks--with the county in which the property is located.   While this recording requirement was not a problem in the sleepy pre-securitization days of the home loan business when mortgage transactions were kept to a minimum, it was going to be much more difficult--if not impossible--with widespread use of securitization.   If this financial scam was to succeed, mortgages would have to be changing hands dozens of times, going from loan originators to banks to Wall Street investment houses, which would collect them by the thousands and package them into complex debt instruments that would be chopped up into shares and sold off to multiple investors all over the world.   Few people, if any, other than those conducting the operation, understood what was going on.   The main point was that hundreds of billions in bankster "profits" would soon be available for the taking.

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Essentially, the banksters needed a quick, clean way of reassigning mortgages without having to go through the "cumbersome" process of recording them with county courts and recorder offices.   But instead of working with municipalities to modernize title registration by a creating a national database that was aboveboard and that everyone could use, the bankster industry did what it does best:   it hid the information with sly accounting tricks.

And this deception succeeded beyond their wildest dreams.   In just a few short years, MERS quietly took over the bulk of residential mortgage registration!   There are about 80 million residential mortgages in America today, and MERS now tracks 60 percent of them.

"[M]ortgage bankers formed a plan to create one shell company that would pretend to own all the mortgages in the country--that way, the mortgage bankers would never have to record assignments, since the same company would always 'own' all the mortgages," wrote University of Utah law professor Christopher Peterson, who wrote a key paper on MERS and the mortgage industry.

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Several years after receiving my M.A. in social science (interdisciplinary studies) I was an instructor at S.F. State University for a year, but then went back to designing automated machinery, and then tech writing, in Silicon Valley. I've (more...)

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