What is MERS? - Mortgage Electronic Registration Systems or "MERS" - It is the company created and owned by all of the big banks to process title to property in the U.S. Approximately 60% of the nation’s residential mortgages are recorded in the name of MERS.
Why was MERS created in the first place? In the mid-1990s mortgage bankers decided they did not want to pay recording fees for assigning mortgages anymore. This decision was driven by securitization—a process of pooling many mortgages into a trust and selling income from the trust to investors on Wall Street. Securitization, also sometimes called structured finance, usually required several successive mortgage assignments to different companies. To avoid paying county recording fees, mortgage bankers formed a plan to create one shell company that would pretend to own all the mortgages in the country—that way, the mortgage bankers would never have to record assignments since the same company would always “own” all the mortgages.
"At the Root of the Crisis We Find the Largest Financial Swindle in World History", Where "Counterfeit" Mortgages Were "Laundered" by the Banks - (Washingtons Blog - 10/12/2010)
The tidal wave of evidence showing that the giant banks have engaged in fraudulent foreclosure practices is so large that the attorneys general of up to 40 states are launching investigations.
People's homes are being taken when they didn't even hold a mortgage, and the big banks have been using "robo signers" to forge mortgage related documents. Indeed, even president Obama has been hit by robo signers (see this and this).
Its so blatant that foreclosure mills have published price lists for forging documents, including such gems as:
"Create Missing Intervening Assignment" $35
"Cure Defective Assignment" $12.95
"Recreate Entire Collateral File" $95
According to economist Max Wolff:
The securitization process worked by "packag(ing), sell(ing), repack(aging) and resell(ing) mortages making what was a small housing bubble, a gigantic (one) and making what became an American financial problem very much a global" one by selling mortgage bundles worldwide "without full disclosure of the lack of underlying assets or risks."
Buyers accepted them on good faith, failed in their due diligence, and rating agencies were negligent, even criminal, in overvaluing and endorsing junk assets that they knew were high-risk or toxic. "The whole process was corrupt at its core."
Indeed, there was fraud at every step of the mortgage process. The big banks intentionally signed up borrowers with insufficient income and assets, threw out the documentation because it would prove fraud, racked up loan fees and received short-term payments before all of the new borrowers ran out of money, and then laundered the bad loans into securitized instruments to sell to the suckers.
The banks created an intermediary called "MERS" to hold all of the documentation, in at attempt to shield the banks legally. But courts have held that this scheme doesn't fly, and that MERS doesn't have title to foreclose on houses. See this and this (and as Tyler Durden points out, MERS might have infected the commercial real estate market as well.)
Then there's the whole foreclosure scandal, where banks have forged and backdated documentation to try to prove they are entitled to foreclose. This is the part that is in the news right now. But because fraud was committed every step of the way - from mortgage origination and loan applications, to securitization, to MERS to foreclosures - it shows a fraudulent scheme, and not just sloppy paperwork.
The Hound's Take: Wall Street and the financial institutions in our country are who have gotten us into this mess that is an economic depression. We need to look back to the TARP fund and its passage by the Congress in the heat of the moment during the weeks following the wild rides of the stock market in the middle of September 2008.
What was done at that point in time has certainly not remedied the situation that we faced then and still face today. Please look at the Drudge Report where the top news of the day is Federal Reserve Chairman Ben Bernanke looking forward to the Federal Reserve purchasing United States Treasury Securities. This will not fix anything. This is monetizing the debt (devaluing the currency). This has never been attempted in this country before and in every country where this has been attempted it has lead to hyperinflation. If this Genie is let out of the bottle, the possibilities of controlling the valuation of our currency will be at serious risk.
What we see today is a serious systemic crisis based upon corruption. We need to go back and correct the mistakes that were made two years ago. That would be the best thing to do. We gave a few individuals way too much power and they have not acted in the American peoples interest. They have acted only in Wall Street's interest. We should not continue down this path of uncertainty. We need to correct the mistakes that have been made.
Let's look at the value of homes. Honestly,if we were evaluating how much a homeowner can sell their house for it is substantially less than what it was a few years ago. What is holding up this redefinition of market values? I believe it is collusion between the financial institutions and the government as a coordinated action. Governments at all levels do not want to see housing values fall, because this will have an effect on tax revenues and banks do not want to lower the value of assets that they have on the books. They don't want to write down these values and don't want to put these toxic assets on the market and accept the losses and purge the system of these assets that were overvalued because of the bubble economy related to real estate.
The bottom line is that the banks are insolvent and the sooner that we come to that conclusion, the sooner we are going to be able to get out of this depression. We need to break up the banks and decentralize the power concentrated on Wall Street through Bank of America, J.P. Morgan Chase, Wells Fargo,and Citibank. We need to force these megabanks to be broken up much the same as AT&T was broken up back in the late 1970s.
Most of the actions above, which were unethical, were perpetrated in the name of consolidation, which ultimately led to corruption caused by greed. Greed may be good for those at top of the food chain, but what we have seen is people have their lives ruined so that these scavengers at the top of the financial food chain could get bigger and bigger just for the sake of getting bigger and bigger. These people are narcissistic sociopaths who care nothing about the security of this nation and its people. They are out of control and it is time to reign them in and rectify this situation and make the people of this great nation whole again. There is nothing wrong with accumulating wealth, but when you do it through fraud and at the expense of innocent people, then it is wrong and you should be made to pay back these ill gotten gains. We know what the problems are and we need to fix them and we need the ensure that we never go back down this road again.
2nd wave of the Banking Meltdown is here
How can the United States avoid Bankruptcy?