MERSY MERSY ME

Another one of those peculiar subplots that keep popping up in the economic crisis.

As early as last fall I recall talk ab homeowners who were facing foreclosure but could not locate and talk to a bank or mortgage company or business entity of any kind holding their loan. They would try to talk to the organization to whom they sent their monthly mortgage payments but they were not the lender, and most bizarrely, could never tell the desperate homeowner who the lender was.

Part of this story, it turns out, involves a small company called MERS, Mortgage Electronic Registration Systems. This small entity, only 44 employees, owned by big boys like Citigroup and Wells Fargo, holds 60 million mortgages on American homes, and has reportedly saved banks a billion dollars over the last decade by creating electronic records that have dramatically reduced the need for loan paperwork. That all sounds good but the screwy part is that MERS operates under an agreement of confidentiality w/in the mortgage backed securities industry. So, frequently, MERS has initiated foreclosure proceedings but won't divulge to borrowers the lenders they are foreclosing for.

On the face of it, something like MERS seems to be Obama’s favorite pet project for modernizing the health care system. Perhaps this story should give us pause. Securitization should not be such a problem in health care. But it’s already apparent that health care profiteers are going to fight tooth and nail to sabotage any public alternative to the HMOs. I wouldn’t put it past them to game any electronic records system for their ends.

At any rate, MERS is just another layer of confusion for stressed borrowers trying to hold onto their homes. Another layer is the 3,000 “servicing” firms that file mortgage loan records with MERS. These are the people you send your mortgage loan payments to, but they are not your lender either. If you talk to them, apparently, they will almost always claim that “investor guidelines” preclude the possibility of renegotiating a mortgage loan.

So, in the end, there is no longer a lender, just a borrower, a home loan, and some investors, who do not want to be identified, but who want to get paid.

Tracking Loans Through a Firm That Holds Millions

Currently playing:OMC "How Bizarre"