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~ MERS Exposed II: General Counsel Tells WHOPPERS in Testimony Before Virginia House...!! ~

~ From the article:

Sunday, January 23, 2011
MERS Exposed II: General Counsel Tells Whoppers in Testimony Before Virginia House

It has become so common for members of the securitization industry to play fast and loose with the truth that nothing should surprise me any more. Nevertheless, I am taken aback by a rough transcript of the remarks by William Hultman, the general counsel of MERS (formally “senior vice president and corporate division manager“), before members of the Virginia House of Representatives last week. The overwhelming majority of statements he made about matters that can be verified are either untrue or at best disingenuous.

(Link to transcript included, but also embedded within the article for viewer perusal)...

We’ll parse the troubling bits more or less in order, starting here:

We’re the beneficiary, but we’re an agent of the lender. So instead of having two — one party be both the payee on the note and the beneficiary in deed of trust, we’re the beneficiary as their agent. In other words, we’re holding title to the mortgage lien on their behalf.

Law professor Chris Peterson in his legal analysis of MERS said “it is axiomatic that a company cannot be both an agent and a principal with respect to the same right”. Being a beneficiary is tantamount to being a principal. The necessity under the law of playing one role or the other renders Hultman’s statement, which reflects ongoing MERS’s contention that it really can have its cake and eat it too, incorrect.

Corroboration of Peterson’s view comes via court rulings in multiple states, including some state supreme court rulings, that have effectively found that MERS can only play one role. For instance, the Supreme Court of Arkansas in Mortgage Electronic Systems, Inc. vs. Southwest Homes of Arkansas and the Supreme Court of Kansas in Landmark National Bank v. Kessler found that MERS was only an agent. Similarly, per Mitchell, a Nevada bankruptcy court case that has been cited in other cases in that state as a precedent:

MERS does not have standing merely because it is the alleged beneficiary under the deed of trust. It is not a beneficiary and, in any event, the mere fact that an entity is a named beneficiary of a deed of trust is insufficient to enforce the obligation.

Note that the idea that MERS really can legitimately play multiple roles comes up repeatedly in Hultman’s discussion.

Here is the next questionable claim by Hultman:

….prior to MERS all these assignments were not getting recorded or they were being done improperly, they would get rejected, and there would be breaks in the chain of title.

It is ironic that MERS officers continue to brandish the canard that the US was rife with bad mortgage records prior to the widespread use of the data service. Prior to MERS, the mortgage securitization industry was not very happy with how long recording took, but there is no evidence that it caused a breaks in title. It simply took time and created hassles.

If a recording was rejected, before and after MERS, it could be cured by the filing party. In a securitization, that would be the servicer’s job. A break would not occur unless someone else came in and recorded an intervening assignment. But if there was a backlog, the odds of this would be pretty remote.

And there is a good reason why, contrary to Hultman’s claim, there is no evidence of pre-MERS widespread problems with the integrity of local records. Real property transactions are usually significant to the parties involved, and mortgage recording is required for the lender to have a priority claim. The “first” mortgage is “first” because it was RECORDED first. If someone puts another lien on a house and rushes to the courhouse and files it before the earlier lien is recorded, it becomes the senior lien. That gives lenders a very big incentive to make sure their lien is recorded promptly and accurately.

But Hultman later makes further false claims about the accuracy of the local recording system:

If history shows anything, adding additional requirements to record documents with a county or clerk will result in more problems, not less problems. It adds costs. People will forget to do it, because people are human, and then there’s a question about what happens if we don’t file it, what impact does it have on the process other than just trying to foreclose.

~ The article and the transcript from the website:

[link to www.nakedcapitalism.com]

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