How an Obscure Outfit Called MERS Is Subverting Our Entire System of Property Rights

Kaye Beach
Dec. 18, 2010

We are in well into the craze of government modernization or “e-government”.

E government means digital government, online government or transformational government.  E = Electronic.  Electronic refers specifically to information in an electronic format. With e government  critical information is stored, transmitted and shared electronically by computer over the internet.  Sharing information electronically can be done instantaneously and since efficiency is the primary goal of e-government the original charge of protecting and defending  our fundamental rights begins to get lost in the shuffle.

Promises of efficiency, transparency and cost cutting are tempting arguments in favor of government modernization or e government.  There are downsides though and I think the MERS home foreclosure travesty illustrates some of theses downsides beautifully.

“For the first time in the nation’s history, there is no longer an authoritative, public record of who owns land in each county.”

Even though not a single state legislature or appellate court had authorized this change in the real property recording, investors interested in subprime and exotic mortgage backed securities were still willing to buy mortgages recorded through this new proxy system.

These statements are taken from the testimony of Christopher L. Peterson Associate Dean for Academic Affairs and Professor of Law University of Utah, S.J. Quinney College of Law Salt Lake City, Utah submitted to the House of Representatives Committee of the Judiciary on Dec 2, 2010

“Foreclosed Justice: Causes and Effects of the Foreclosure Crisis”

Read this!

This article explains the reality of this nightmare better than I ever could hope to-

Dude, Where’s My Mortgage? How a Corrupt Outfit Called MERS Is Destroying Our System of Property Rights

Key points-

Another epic failure of the private sector to uphold the laws and traditions of American society, even something as fundamental as property rights.

And why would we be surprised?

Private business is in business to make a profit.  Our Government is charged first with protecting our rights.  When essential government functions are delegated to the private sector, especially when these functions are performed electronically-just imagine the potential for mishap and abuse.

If you cannot imagine just look at the MERS situation;

The story begins in mid-’90s with the founding of MERS, Inc. by the nation’s most powerful banks, ostensibly with the aim of streamlining and modernizing the process of registering and tracking mortgages. Traditionally, there has been no centralized registry of real estate ownership information, with counties maintaining their own records for properties within their borders—a system that has remained virtually unchanged since colonial times.


7 responses to “How an Obscure Outfit Called MERS Is Subverting Our Entire System of Property Rights

  1. This article is pretty far off the mark. MERS has nothing to do with actual ownership of the property, but rather who owns the right to foreclose on it. The author claims that government is best as long as it remains free of corruption (that is to say, as long as it isn’t run by human beings). But still, it is only through government that a third party, MERS, is allowed to foreclose without providing overwhelming evidence of an interest in the property. Perhaps when she finds an example of a particular non-corrupt government that should be emulated, then we can talk.

  2. Good observations. The point I was trying to make though really has to do with relinquishing control over critical government functions to a third party.

  3. You make a very good point Kaye.
    p.s. Ya need to call pest control, ya have troll’s…

  4. Aww. I luv my trolls

  5. There was no electronic mortgage exchange before MERS showed up to the scene. Government is still in charge evicting the homeowner at the behest of a third party that does not sufficient prove its interest in the property. There was never and hopefully never will be a central land registry. What “critical government function” exactly has been “relinquished to a third party”?

  6. Trolls are fun aren’t they….

  7. Ryan, you know a lot more about this situation and the systems at play but I drew some conclusions based on the testimony of Christopher L. Peterson (linked above) the critical function I am referring to is processing, recording etc or mortgages. The third party would be the totality of those participating in MERS.
    I know the gov is still in charge of carrying out evictions and the county register and records is what was skipped over, not a central register.
    If I am misunderstanding this-please explain because it is confusing.

    The end results, as it is explained by the Prof. is that necessary records regarding ownership of land were not made due to MERS

    Am I completely misunderstanding what happened?

    Even though not a single state legislature or appellate court had authorized this change in the real property recording, investors interested in subprime and exotic mortgage backed securities were still willing to buy mortgages recorded through this new proxy system.13 Because the new system cut out payment of county recording fees it was significantly cheaper for intermediary mortgage companies and the investment banks that packaged mortgage securities. Acting on the impulse to maximize profits by avoiding payment of fees to county governments much of the national residential mortgage market shifted to the new proxy recording system in only a few years. Now about 60% of the nation’s residential mortgages are recorded in the name of MERS, Inc. rather than the bank, trust, or company that actually has a meaningful economic interest in the repayment of the debt.14 For the first time in the nation’s history, there is no longer an authoritative, public record of who owns land in each county.

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