PATH: House Republican GSE Bill Would Codify MERS, Pre-Empt Private Property Rights
The top Republican on the House Financial Services Committee has tucked a provision into his mortgage finance reform bill that would create a privately held “National Mortgage Data Repository.” The repository would basically look like MERS, the bank-owned electronic database tracking mortgage transfers. The difference is that, while MERS’ activities have drawn legal challenges across the country, the National Mortgage Data Repository would have the force of statute to carry out the exact same behavior. According to the bill text, any document arising from this repository would be seen as presumptively legal, pre-empting state and federal laws on demonstrating the right to foreclose.
Jeb Hensarling, the chair of the House Financial Services Committee, introduced the bill last Thursday. Hensarling has already gotten into trouble this year for taking a ski vacation/fundraiser with Wall Street lobbyists, including an official from the American Securitization Forum, just six weeks after getting the Financial Services Committee gavel. Financial interests donated over $1 million to Hensarling in the last election cycle. It’s not a stretch to suggest that legislation offered by Hensarling at least has the stamp of approval from Wall Street, if it’s not directly written by their lobbyists.
The bill is called the Protecting American Taxpayers and Homeowners (PATH) Act, and it’s the House Republican response to a series of bills and initiatives to resolve Fannie Mae and Freddie Mac, and set a course for the future of mortgage finance. Most of the bill deals with that: in Hensarling’s vision, Fannie and Freddie are totally dismantled within five years, and private actors take up the slack with virtually no government guarantee. While in the past I’ve trashed the idea of just reconstituting Fannie and Freddie under a different name, in reality, expecting private actors to recreate a secondary mortgage market without any guarantee (or even with one, in my view) is wishful thinking.