Mortgage Servicing Fraud
occurs post loan origination when mortgage servicers use false statements and book-keeping entries, fabricated assignments, forged signatures and utter counterfeit intangible Notes to take a homeowner's property and equity.
Articles |The FORUM |Law Library |Videos | Fraudsters & Co. |File Complaints |How they STEAL |Search MSFraud |Contact Us
Sandy
I read a testimony from a MERS executive who stated registering the loans into the system is OPTIONAL. He said members "tended to register only the loans they expected to sell."

Why would registering be optional? Why would a member not sell a loan, and what could be gained from not registering and selling it? There has to be something in it for someone. And if some loans might not be registered, why were 60 million or so mortgages assigned to MERS at closing? This seems fishy to me.
Quote 0 0
William A. Roper, Jr.
Quote:
Sandy said:
Why would registering be optional?


Sandy:

Carefully read the MERS Terms and Conditions, as well as the MERSCorp Rules of Membership:


This will give you much additional insight into how MERS works.

I think that the distinction is that for any given loan closed, the MERS member can ELECT whether this loan is to be registered to MERS or held by the originating Lender in its own name.  Where the Lender ELECTS to close the loan using instruments that identify MERS as the original mortgagee (a so-called MERS as Original Mortgagee -- "MOM" -- loan), registration is mandatory.  If the Lender is named as the mortgagee, the loan may be assigned to MERS.  Upon assignment, the loan would then need to be registered on MERS' system.

Quote:
Sandy said:
Why would a member not sell a loan, and what could be gained from not registering and selling it?


Almost ALL loans made by mortgage originators are SOLD after origination.  But historically one major source (the original source) of residential mortgage capital was building & loans, savings & loans, savings banks and similar thrift institutions.  These entities invested depositor money in mortgage loans.

A loan which is made for the purposes of investment rather than sale is said to be a portfolio loan.  Very often these loans would carry some premium over the established market interest rate and would be made on a basis other than the basis of other major mortgage market investors. 

The decision as to whether to sell or to portfolio a loan is an investment decision.  However, while depository institutions, with a source of funds for investment, may CHOOSE whether to sell or hold a loan, most mortgage lenders (lacking a source of deposit funds) do NOT have this choice and virtually ALL of their loan production is SOLD.

The deposits of commercial banks are usually of much shorter duration than the deposits of savings or thrift institutions and therefore commercial banks historically have NOT invested in whole mortgage loans.  There are a variety of reasons, other than credit risk, that commercial banks OUGHT NOT BE INVESTING IN MORTGAGE LOANS.

*

The decision as to whether to register a loan to MERS or to use the established county recording system is a business decision.  Those institutions which have registered loans on MERS are now finding that to be a VERY UNFORTUNATE DECISION.  JPMorgan Chase has STOPPED using MERS for newly originated loans.  I would suspect that other lenders will soon follow and MERS will collapse due to market forces even before its officers can be brought to justice for their criminal activities.
Quote 0 0
Bill
William,
    Can the government really afford to let MERS fail?  The government has a history of not letting some big business fail ie.  banks, savings n loans, major car builders, ect...  If people think there is a lot of fraud now, imagine if the servicers couldn't even say they are certified officers. 
Quote 0 0
Write a reply...