We were shocked this morning to hear JP Morgan Chase chief executive Jamie Dimon say his bank had dumped MERS, the electronic mortgage clearing house.
It turns out, however, that JP Morgan stopped using MERS two years ago.
Diana Olick got the story straight from the horse's mouth:
It was news to me, and to the AP wires, but a spokesman confirms, JP Morgan Chase no longer uses MERS, the electronic mortgage clearing house, that is at issue now in foreclosure litigation across the country. They dropped MERS in 2008.
"Chase doesn't register retail-originated loans with MERS. Many of the correspondent loans we purchase are already registered on MERS as are some of the loans that we service for investors," says spokesman Tom Kelly.
CEO Jamie Dimon kind of mentioned it off-hand on the earnings call this morning without really elaborating.
So I asked Kelly why they dropped MERS. First he said, "In truth some courts won't accept MERS for foreclosures." But then he said it was "a matter of policy." I'm sure they don't want to come right out and say, well, we're not exactly sure MERS is all that legal.
Oh, and something I noticed in the earnings ... JP Morgan upped its reserves for "litigation and repurchase." Repurchase refers to when the bank is forced to buy back loans (called "putbacks") from the investor or security due to some problem with the origination. They have the biggest reserves of all the banks, according to experts."
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