WAPO – The “Great MERS Whitewash Bill”, Aggressive Lobbying Defends Mortgage-Trading System

Aggressive Lobbying Defends Mortgage-Trading System

Washington Post Staff Writers
Thursday, November 18, 2010; 11:10 PM

The financial services industry has launched an aggressive campaign on Capitol Hill to bolster the legality of the way companies have turned mortgages into securities and traded them across the globe in recent years.

The companies have opened wide their wallets for lobbying and are flying top executives to Washington for one-on-one meetings with lawmakers. They are holding briefings for key staffers, including an event last week that drew more than 60 aides. And they are blanketing Congress with white papers, memos and other documents that lay out their arguments.

The focal point of their efforts is Mortgage Electronic Registration Systems, or MERS, the controversial, privately run electronic database that is used by practically every lending institution and investment company to track the transfer of the ownership of mortgages as they are packaged into securities and traded at lightning speed around the globe.

But MERS does more than just track the trading of loans. In the vast majority of mortgage documents at local courts and offices across the country, it is listed as the holder of the loans. That allows the financial industry to trade mortgages as much as it wishes without spending the time and money to refile the paperwork.

The industry is seeking legislation that would effectively affirm MERS’s legality and block any bill that would call into question what MERS does. MERS has spent more than $1 million in lobbying since fall 2008, when lower courts around the country began to rule against it. But MERS had kept its name under the radar until the recent uproar over foreclosures revealed broad problems in mortgage paperwork.

If successful on Capitol Hill, the industry could in one quick swoop make all lawsuits related to MERS across the country moot and remove one of the key uncertainties dangling over the mortgage industry. On the flip side, lawmakers could create a new federal registry, effectively killing MERS’s business and forcing the industry to submit to greater oversight.

In recent years, MERS has become the target of numerous legal challenges from homeowners in foreclosure who allege that mortgage transfers made through the system are invalid because they bypass local recording laws. MERS, the lawsuits contend, does not have standing to foreclose because it is only a database and not the actual holder of the mortgage.

The liabilities could be astronomical for MERS. One lawsuit in California alone is seeking recording fees that could cost the company from $60 billion to $120 billion. But the consequences for the financial industry are even greater, as challenges to the validity of transfers done by MERS call into question the entire process of how loans were securitized and could render the 66 million mortgages in its system foreclosure-proof.

In the wake of such controversies, lobbyists for Reston-based Merscorp, which runs MERS, have been floating the idea of legislation that would establish the firm as the national registry to track the transfer of mortgages.

The MERS database “is a powerful tool that can be harnessed by the Congress and the industry to improve the mortgage finance system,” R.K. Arnold, Merscorp chief executive, told members of the Senate banking committee this week.

Tom Deutsch, deputy executive director of the American Securitization Forum, an industry group that defended the validity of MERS in a recent paper being circulated on Capitol Hill, said establishing a centralized tracking system would resolve much of the confusion resulting from the patchwork of local laws governing mortgages and their transfer.

“There’s a lot of validity in the idea of a national mortgage registry that is complete and unambiguous about legal title to loans across all 50 states,” he said in an interview.

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6 Responses to “WAPO – The “Great MERS Whitewash Bill”, Aggressive Lobbying Defends Mortgage-Trading System”
  1. housemanrob says:

    Has anybody seen a BIGGER SACK OF SHIT THEN TOM DEUTSCH? Watched him on CNBC on friday. THIS GUY IS A SOCIOPATH……..completely without a concience!

  2. Charles Fetters says:

    Ariana and Brady
    Thank you for keeping us posted as to the MERS scams.
    I recently sent you and email concerning our story that was also emailed to Rebecca Jarvis of CBS.
    Again John Duncan the Bush croeny is scamming us the homeowners of our rights. If the Congress members line their pockets with lobby monies, we then will know how important our rights are. We have been lied to by both the government and banks long enough. If the MERS is continued to operate, the securitizing of mortgage notes will continue the fraud, making it worse than it is now. What do these Congress members think we are idiots?
    If ever there was a time for a nation to pray,this is the time. You think the depression was bad, wait for Congress to screw us of our property rights.

  3. Elyse says:

    Call the White House at (202) 456-1111 and demand the President stop these lobbists and throw their asses of the Hill…MERS is creating a homeless America and they must be stopped and told to pay up!!

    If these new Republican Congressmen and women are allowed to be bought off as soon as they take their seats, then we are screwed….

    What is it going to take to band together and get those Town Hall meetings going???
    Come on…

  4. John R says:

    Yea, and hacked by anybody and this database becomes completely useless and worse! If intelligently hacked, the hackOr could make only subtle changes, effectively, selectively ruining lives. Now that’s power! We, the people, already have a system in place that has been working for decades and besides doing a good job, that system employs thousands of Government workers… woe to them too. But then again it’s Corporate America! Fire Americans and replace them with ANYTHING else. They don’t need no jobs!

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