Wednesday, August 17, 2011

Land Court and MERS

MERS - Mortgage Electronic Registration Systems Inc - has been much in the news lately. Questions have been raised as to whether MERS should have been recording assignments for all the mortgages it held as those mortgages (or the underlying note secured by the mortgage) bounced from investor to investor. My understanding has always been that the whole purpose of MERS was to eliminate the need for recording those assignments in the first place. The motivation was not so much to cheat the Commonwealth out of recording fees - which, when MERS was created, were just $10 per assignment, not the $75 charged today - rather, MERS was a pro-consumer measure. During the collapse of the housing bubble in the late 1980s and early 1990s, many banks merged, were sold or collapsed, often taken over by the FDIC. Homeowners often faced an impossible task in trying to obtain assignments and discharges. By retaining the record title of mortgages in a single entity - MERS - it was expected that homeowners would never again have to face the same difficulty in obtaining such documents.

Recently I came across a May 12, 1999 memo from Peter Kilborn, then Chief Justice of the Land Court, that corroborates my recollection of the creation of MERS. Here are some relevant portions of that memo:

MERS is a national electronic registry for tracking servicing rights and beneficial ownership interests in mortgage loans; it also acts as the mortgagee of record and, as such, is the nominee for both the servicer and the beneficial owner of mortgage loans in public land records . . . We have all experienced considerable problems with missing assignments. Hopefully, this system will eliminate these problems in the future.

1 comment:

Jay said...

Nice to see a common sense explantion of MERS for a change!