By Dave Krieger
When you first glance at page 1 of this House Bill, initiated by Ohio Congresswoman Marcy Kaptor, it’s almost as if you’d think, “Yes, there is a God!”
However, the “Transparency and Security in Mortgage Registration Act”, while nailing MERS in regards to prohibiting Fannie Mae, Freddie Mac and Ginnie Mae from owning or guaranteeing any MERS mortgage where MERS is claiming to be the “mortgagee of record” (which is about 65,000,000 properties), also dabbles with the idea of a “federal land title system”, something this author thinks may shortchange our states’ rights to real property recordation.
While the National County Recorder’s Association tries to sort out the damage MERS has done in county courthouses all across America, through potential clouding of title and deprivation of income (as in Essex County, Massachusetts’ Register of Deeds John O’Brien’s case of $1.95-million a year for every electronic transaction MERS does that circumvents his recordation process), the National Association of Independent Land Title Agents (NAILTA) begs to argue Kaptor’s real intentions.
From its own 7-page “white paper”, NAILTA takes aim at H.R. 6460 in that it seeks to impose a federal land recordation system similar to the Torrens system (wherein the title is essentially judicially determined), wherein the federal government has no business guaranteeing anything that usurps rights under the 10th Amendment that were reserved to the States to delegate. It should come as no surprise to this author that the infighting amongst the title companies has begun as to the opposition of this bill by the American Land Title Association is a virtual “unzipping of the fly” in exposing that fact that ALTA, First American Title and Stewart Title, were all founding MERS members, along with Fannie and Freddie and the major banking entities. As pointed out in this paper, common law title requires a non-judicial abstract.
On Page 3 of the “white paper”, NAILTA takes the real “bull by the horns” in analyzing “agency”. This is what this author has been saying for years, is that MERS cannot be both agent and principal of the same instrument, when it claims to be the mortgagee of record. From this author’s viewpoint, if MERS is going to be proven to be a shell corporation for the purpose of tracking transfers, then anything outside of that parameter becomes agency-problematic. This white paper even went so far as to list all of the applicable case law supporting that conclusion!
This white paper echoes the very tenets of the agency arguments that University of Utah Law Professor Christopher Peterson argued in his first “white paper”, issued out of the S.J. Quinney School of Law. The real problem then becomes HOW to deal with the aftermath of what the MERS recordation system has caused to the states and their respective counties, who have been preserving public record for nearly 400 years.
Page 4 of this latest white paper also calls to the attention of what many in the foreclosure defense industry and many judges term “robosignors”, leaving out the fact that the “certifying officers” are not bonded or covered under MERS’s errors and omissions insurance from the acts they commit. In many instances, case law has shown that these certifying officers were actually employees of a foreclosure mill, acting on one hand as the MERS official and then turning around and acting in their employed capacities to initiate assignments, which are easily picked apart by any attorney that knows how to conduct proper depositions; this despite whether or not the law firm’s “employee”-turned-MERS-certifying-officer” had any personal knowledge of the mortgage loan at all. This is what is going to make quiet title actions unique in their very nature.
Even though the bill itself only purports to commission HUD to do a study on the feasibility of a federal land title system, the scrutiny such a study would bring would certainly further expose the culprits behind the MERS system. Again, this bill is a means to an end. While NAILTA recognizes that legal issues still have to be argued, the premise for title business as it relates to more in-depth title searches to prove clouds on title and other concerns will certainly present certain financial opportunities.
The real problem this white paper does address is “What were the people at MERS thinking when they created this monster?” The circumvention of the county recordation processes alone is enough to boggle the mind, let alone the agency-problematic concerns with MERS’s certifying officers indemnifying the principal for their behaviors in clouding up our tried-and-true system of recordation. The end result appears to be that H.R. 6460: (1) will open doors to solutions, but American property owners and their title companies are going to have to keep their eye on the evolution of this bill and its resulting amended version; and (2) has at least brought healthy debate of the strengths of our original land title recordation system back to the forefront where they belong.