MERS: The Mortgage Database That’s Clouding Millions of Titles

Abigail Field at Daily Finance has a good primer on MERS and why title may be clouded on millions of homes.  Boot Camp graduate and former New Jersey deputy attorney general, Mark Malone was interviewed for the article.

MERS has one purpose: to hold and track mortgages. It’s basically an incorporated database financed and maintained by its members, who represent most of the mortgage industry. The MERS database simplifies securitization and makes it much cheaper by bypassing the requirement that every change in ownership of a mortgage be recorded in the county where the mortgaged property is located.

Instead, the mortgage is recorded once, in the name of MERS, and all the other transfers are tracked on the MERS system only, or even not tracked at all. Entering data into the MERS database is optional for members: MERS Chief Executive R.K. Arnold told Congress recently that “Members tend to register only loans they plan to sell.” …

MERS has no employees, so how does it do this? Basically, it doesn’t. MERS’s members upload and manage their own data, and whenever a MERS member wants MERS to do something for it, the member just tells a MERS “certifying officer” — of which there are some 20,000 — to do what the member wants it to do.

These certifying officers, who usually have a traditional corporate title like vice president or assistant secretary but specific and limited powers, don’t report to anyone at MERS, much less get paid by it. Indeed, their only link to the company is a corporate resolution signed by MERS Secretary Hultman appointing them as officers of MERS. …

…when Hultman was deposed, he said he didn’t know if the current MERS ratified his appointing power. Of course, as corporate secretary he’s perhaps in the best position of anyone at MERS to know. …

So What Are the Consequences?

Malone was blunt: “What Hultman says in the resolutions he signs is false. He’s not saying by the power delegated to me by the board. He’s saying the board met and adopted a resolution, and what he’s signing is a ‘true copy’ of that resolution. Which is just false — there’s no original resolution that it’s a true copy of.” Which, of course, raises the question: Why write the resolution the way he does, if his “power” to appoint the certifying officers complied with the bylaws?