Wednesday, May 02, 2012

My visit to the Northeast Assn of Realtors

This morning I was joined by Kevin Harvey, the assistant register of deeds of Essex South as the guest speakers of the quarterly meeting of the Northeast Association of Realtors at the organization's headquarters at 6 Lyberty Way in Westford.  Kevin, who was appearing on behalf of his boss, Essex South Register of Deeds John O'Brien, who is perhaps the nation's most recognized critic of MERS which stands for Mortgage Electronic Registration Systems Inc.  Kevin gave a detailed and very interesting account of how concerns about MERS were first brought to Register O'Brien by a constituent.  The deeper O'Brien dug, the more questions arose.  He has not stopped digging.  Along the way, he also latched onto the issue of robo-signers (the practice by employees of some major lenders signing the names of other employees to legal documents), an abusive practice that was highlighted on Sixty Minutes.

My own view of MERS and robo-signers is more nuanced.  MERS has been in existence since the mid-1990s and as long as everything was going well with real estate, no one worried about it.  Only after the market collapsed in 2007 did people start questioning the legality of MERS.  I know that MERS was involved in some shabby practices, but so was almost every national lender doing business during the housing boom.  There's nothing unique to MERS that should cause that entity to be singled out.  But that's just my opinion and as I told the realtors, if the law in this and other areas was black and white, the Supreme Court wouldn't decided cases on 5 to 4 votes.

The topic that was of greatest interest to the assembled realtors was the continuing effects of the Massachusetts Supreme Judicial Court's decision in the Ibanez case.  There, the SJC held that in order to foreclose a mortgage, the foreclosing entity must first have ownership of the mortgage by some type of assignment.  Without an effective assignment in existence before the foreclosure, the foreclosure would be void and all subsequent owners would have defective titles.  Since this would make such properties unmarketable until the defect is cleared, realtors have a practical reason for distinguishing between good foreclosures and defective foreclosures.  Why put a lot of effort into a sale that's likely to fall through just prior to closing because of a void foreclosure in the recent past?  Unless some curative legislation is enacted, a substantial number of properties will fall into this category.

In conclusion, it was a pleasure speaking with this assembled group of realtors.

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