MERS and its granted Autority

Now, in order for the owner of a mortgage to perform certain legal actions — like “conveying an interest” in the land — some states require the signature of a “Vice President”. Imagine for a moment why a state might impose such a requirement, and then read this quote from Prof. Peterson’s new paper (emphasis ours):

“As a practical matter, the incoherence of MERS legal position is exacerbated by a corporate structure that is so unorthodox as to arguably be considered fraudulent. Because MERSCORP is a company of relatively modest size, it does not have the personnel to deal with legal problems created by its purported ownership of millions of home mortgages. To accommodate the massive amount of paperwork and litigation involved with its business model, MERSCORP simply farms out the MERS, Inc. identity to employees of mortgage servicers, originators, debt collectors, and foreclosure law firms. Instead, MERS invites financial companies to enter names of their own employees into a MERS webpage which then automatically regurgitates boilerplate ‘corporate resolutions’ that purport to name the employees of other companies as ‘certifying officers’ of MERS. These certifying officers also take job titles from MERS stylizing themselves as either assistant secretaries or vice presidents of the MERS, rather than the company that actually employs them. These employees of the servicers, debt collectors, and law firms sign documents pretending to be vice presidents or assistant secretaries of MERS, Inc. even though neither MERSCORP, Inc. nor MERS, Inc. pays any compensation or provides benefits to them. Astonishingly, MERS ‘vice presidents’ are simply paralegals, customer service representatives, and foreclosure attorneys employed by other companies. MERS even sells its corporate seal to non-employees on its internet web page for $25.00 each. Ironically, MERS, Inc.—a company that pretends to own 60% of the nation’s residential mortgages—does not have any of its own employees but still purports to have thousands of assistant secretaries and vice presidents.”  [**]

The evidence of this situation is so exposed now that MERS doesn’t even bother to deny or explain it. There was a recent article in National Mortgage News written by Austin Kilgore titled “Tough Questions for the New CEO at Embattled MERS”, in which CEO Bill Beckmann admits, “We did not have a robust process to make sure that all data on our system was accurate, timely, and reliable.” In addition, when asked if he felt MERS was still a viable component of the mortgage industry, Beckmann did not answer “yes”, “of course”, or even “absolutely” – instead, he only snidely answered “What’s the alternative? Is the alternative to go back 20 years and start recording these things on paper again?” [***]

To sum up… “As a matter of sound public policy our courts should not allow MERS or its so-called ‘members’ to circumvent and/or violate long standing laws of commerce, simply because some greedy mortgage executives thought they could shoe-horn their so-called ‘paperless system’ into the framework of our current system of commerce. Our system still requires such sundry instruments as promissory notes be used to evidence debts and also requires that these instruments change hands when sold or transferred to a new owner. Our system also requires a new holder of a promissory note to record an assignment of security interest or mortgage in order to enforce a lien which secures the debt evidenced by the promissory note. No one should be able to simply ignore these long standing laws just so they can reap billions of dollars in illicit bonuses by quickly originating and then flipping loans without the attendant delivery of notes and assignments of mortgages. Our system of commerce does not operate this way. This is because we have laws of commerce including the UCC which regulates our system of commerce.”

** http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1684729##
*** http://www.nationalmortgagenews.com/nmn_features/tough-questions-ceo-mers-1026574-1.html?CMP=OTC-RSS *thanks to Mr. Edward M. Bloom from The Real Estate Bar Association: http://www.scribd.com/fullscreen/65930604