Wednesday, October 20, 2010
I haven't posted lately for a very good reason -- I've been distracted by the recording acts, the residential foreclosure crisis, and the Mortgage Electronic Recording System (MERS). I've been fascinated by the news articles making vague and mysterious references to lender affidavits which are taking the place of missing "paperwork." Some of the missing paperwork, no doubt, is evidence (in the form of a mortgage assignment) that the foreclosing lender actually owns the debt that it is attempting to foreclose. Presumably, if one is in the business of lending and purchasing debt, keeping good records about what debt one actually owns would be a fairly fundamental concept. I am constantly surprised that in reality it isn't that simple.
MERS, a private, parallel recording system owned by and for the benefit of the mortgage industry, has been .... I think the right word here is "interfering" ... with the American land title system since 1995. Basically, lenders become dues-paying members of MERS then record an original mortgage with MERS named as the lender's "nominee" or "mortgagee of record." But MERS never actually owns the debt -- it is just an agent. Apply this legal fiction to state mortgage law and hilarity, or possible a foreclosure debacle, ensues. Christopher Peterson (Utah) has written a very thorough article on the subject which was published this summer in the University of Cincinnati Law Review or can be found on SSRN here: "Foreclosure, Subprime Mortgage Lending, and the Mortgage Electronic Registration System".
So, I've been spending my free time learning more about the foreclosure moratorium and writing a short essay that I hope to publish in an online law review. In my essay, I argue that this whole mess demonstrates that the time has come to replace our local land title recording system with a single federal online system organized around the kind of searching technology that we take for granted on our smartphones. If anyone has any advice on submitting to an online journal, please let me know.
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