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Massachusetts to investigate mortgage registry
BOSTON |
BOSTON (Reuters) - Massachusetts Attorney General Martha Coakley will investigate Mortgage Electronic Registration Systems, a key player in the U.S. mortgage system, over its possible role in connection with illegal foreclosures.
While the probe continues, Coakley said, she will not sign an agreement between state attorneys general and major banks related to foreclosures if the deal absolves banks from liability related to mortgage securitization.
In a letter dated Monday, Coakley said her office was "investigating creditor misconduct in connection with unlawful foreclosures, including failure to establish the right to start a foreclosure."
"We have focused particularly on creditors' reliance on MERS and whether MERS conforms to the requirements of Massachusetts law, in the context of foreclosures and otherwise," Coakley said.
A MERS spokeswoman said the organization will cooperate, adding that Coakley's assertions are without merit.
"The use of MERS has been litigated in Massachusetts courts and judges have upheld the legality of the MERS business model in the Commonwealth," MERS' Janis Smith said in a statement.
MERS is an electronic-lien registry created by the mortgage banking industry as a way to streamline and speed up the mortgage recording and transfer process.
The Reston, Virginia, enterprise claims to own about half of all mortgages in the United States, and is involved in about 60 percent of new mortgages issued.
Coakley wrote to registers of deeds across Massachusetts that her office intends to gather "critical information" for its investigation over the next week.
State attorneys general have been meeting with the nation's largest mortgage servicers to make what is expected to be a multi-billion-dollar settlement for robo-signing and other irregularities in handling foreclosures that surfaced in 2010.
In her letter, Coakley said that Massachusetts "will not sign on to any global agreement with the banks if it includes a comprehensive liability release regarding securitization and the MERS conduct."
MERS has been accused of sloppy record-keeping and worse in its massive computer database of U.S. mortgages.
Recent decisions by some state and federal courts have ruled that MERS does not have the right to transfer promissory notes and mortgages.
(Reporting by Ros Krasny. Editing by Robert MacMillan)
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* Each Sub-prime derivative was divided into maybe 10 Tranches. All of the top Tranches were ‘AAA’ rated because over 30% of sub-prime mortgages would have to default before a single default could enter a top tranche!
* Normally, because of the chain of title, there is no way to guarantee that ALL defaults go to bottom tranches. You would have to be prepared to change the INK on millions of mortgages as they defaulted.
* Or, you could invent a MERS computer system that could electronically switch the defaulting mortgages to lower tranche ‘owners’ instantly.
* The only problem is that the INK trail on 50 million titles is now broken. MERS overcomes this problem by exploiting a loop-hole that allows for “fixing” accidentally broken ‘chains of title’. MERS claims that all 50 million title deeds were “accidentally broken”.
* Those top tranches were so profitable that the bottom tranches were not sold and were retained as ‘junk’.
Surely there is more to investigate than just ‘sloppy bookkeeping’!
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