The foreclosure mess that banks are now suffering through has generated lots of media about so-called robo-signers and the legality of what they do. A less-discussed issue has been the life cycle of a mortgage, that is, the daisy chain that most mortgages spin through as it is sold from the bank to a host of other entities. The Mortgage Electronic Registration Systems (MERS) was the industry's solution; it is owned by big banks as well as the two big GSEs.
The goal was to streamline the process of re-sale and securitization, which MERS achieved by essentially standing in for banks, so the servicers and banks did not have to get mired in the details of title recording and the like. MERS has survived many legal challenges, and its executives confidently predict it will survive the current scrutiny, according to the WSJ blog Developments.
I would say they odds are with them. But the wildcard is that the interest of state attorneys general has been piqued. They tend to be a populist bunch. Given the flood of foreclosures, there may well have been some procedural lapses.
For more:
- here's the article
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