What was MERS' role in the housing bust? A new white paper claims it was substantial.
David Woolley, a California licensed land surveyor and certified fraud examiner, is leading a new study in tandem with the Harbinger Analytics Group Real Estate Fraud Experts on the recently disbanded company, Mortgage Electronic Registration Systems (MERS). The topic of Woolley’s research is how MERS destroyed the chain of title and ultimately damaged the housing industry as a whole.
Woolley writes in his report, “thanks to the Mortgage Electronic Registry System’s (MERS) failure to accurately complete and/or publically record property conveyances in the frenzy of banks securitizing home loans and ins subsequent foreclosure actions, neighbors of a foreclosed property (with a sequential conveyance) as well as a foreclosed property itself will have unclear boundaries and clouded/unmarketable titles making it difficult, if not impossible, for these homeowners to sell their properties and for subsequent purchasers to obtain title insurance on the property.”
The report goes on to point out that courts have criticized MERS model as being flawed and have ruled against MERS’ stance to foreclosure. MERS is described as being, “wholly inaccurate and not allowing homeowners to fight foreclosures because it [MERS] shields the true owner of a mortgage in public records.”
MERS has been under investigation by the States Attorney General, as well as federal bank regulators, for suspicion of charges including fraudulent robo-signing and back dating missing documents.
“A few County Registrars of Deeds are claiming that they are owed millions of dollars in lost revenue from mortgage assignment transfers that were not recorded because MERS was listed as the mortgagee in public records.”
The difficulties created by MERS business practice make it difficult to determine property boundaries and proof of ownership for foreclosed properties This problem is exacerbated as the issue affects neighboring properties well. The situation, Whoolly says, “amounts to much larger and more costly problems that have previously been addressed by the media, lawmakers, courts or any settlements with MERS.”
Whoolley’s fill report, “MERS: The Unprecedented Effects of Lost Chain of Title on Real Property Owners,” can be viewed by following this link.