In a bombshell story about Ginnie Mae and Bank of America–which is a big deal unto itself–Yves Smith brings in the following about MERS (Mortgage Electronic Registration Systems), which is the cornerstone of the securitization fail (Smith quotes Bloomberg):
“As the rest of the housing industry recovers, a little-known firm with a key role in U.S. mortgage finance remains stuck in limbo, wrestling with regulators, lawsuits and the departures of senior employees.
The turbulence feeds uncertainty about the fate of Mortgage Electronic Registrations Systems Inc., or MERS, which documents the ownership and resale of about half of U.S. home loans. A breakdown could force clients such as Fannie Mae (FNMA) and Bank of America Corp. to make costly changes to their loan businesses.
Management hasn’t completed fixes promised in a broad 2011 U.S. settlement designed to stop foreclosure abuses, according to two people briefed on MERS’ operations. Regulators rejected one of the firm’s consultants as unqualified and are examining why four employees hired to help with reforms — including the chief legal officer — recently quit, said the people, speaking on condition of anonymity because the matter is private.
The closely held Reston, Virginia-based firm, a unit of Merscorp Holdings Inc., is also facing scores of lawsuits and state probes that challenge its business model as well as the legality of its filings in hundreds of county courthouses.“
So apparently the cover-up…er, settlement is not proving to be the cure-all for the very real problem of what both MERS and “securitization” really are, i.e. elaborate illusions, grandiose delusions, sound and fury signifying nothing, fakery, flim-flam, bamboozlement. You get the picture.
Apparently Bank of America and Fannie Mae are finally having to admit what they have been denied in lawsuits across the country, i.e., that MERS is bullshit (again Smith quoting Bloomberg):
“’If the use of MERS is found not to be valid, we could be obligated to cure certain defects or in some circumstances be subject to additional costs and expenses,’” Bank of America reported in a February filing. ‘Our use of MERS as nominee for the mortgage may also create reputational risks for us.’
Fannie Mae, in its annual financial report filed in February, also noted the potential effects if the lawsuits or regulatory pressures force changes in MERS.
‘A large portion of the loans we own or guarantee are registered in MERS’s name and the related servicing rights are tracked in the MERS System,’ Fannie Mae’s report said, adding that if the firm couldn’t function in the same way, lenders could be forced to go back to time-consuming and expensive methods of recording land transfers.”
What’s interesting is that none of this has been secret, nor has it been especially hard to figure out. Nor is any of this real. It’s all completely fake.
For example, in the quote above, Fannie Mae says it “owns” loans. No it doesn’t–Kemp v. Countrywide demonstrated that. Indeed, Fannie was Countrywide’s biggest buyer (and Countrywide was the biggest originator) until they both essentially went bust, and in Kemp, Countrywide employee Linda DeMartini openly admitted that in the regular course of business, Countrywide didn’t endorse notes unless an endorsement was needed to fool a judge in a lawsuit. Indeed, she said she had never seen a note with an endorsement at the bottom! Abigail Field corroborated that by examining notes from New York–Countrywide notes lacked endorsements. And legally, no endorsement means no negotiation, and no negotiation means that Fannie Mae doesn’t own anything.
Furthermore, as I’ve written in these pages before, MERS admitted in my own lawsuit that MERS never owned my mortgage note, that if MERS assignments transfer anything, all they transfer is something that I would argue doesn’t even exist (i.e., “title to” a deed of trust or mortgage), and that even if they do that, that doesn’t transfer ownership of the note, which is the fundamental thing. And who swore to that? William Hultman, one of the head guys at MERS.
Here’s where all this was admitted:
Happy Easter, everybody! Except the banks, of course…
IMPORTANT NOTE/DISCLAIMER: The above article is not legal advice and was not written by an attorney. It is merely a collection of common-sense, rational observations written by a sane, rational layperson with common sense. It is recommended that you consult with an attorney for any and all legal advice and/or action.