Despite legal troubles the electronic mortgage database known as MERS has encountered recently, there is no legislation rescue coming soon, according to sources on Capitol Hill.
Not only is there no legislation being drafted on Capitol Hill, there is no chance that any such legislation will come up during the lame-duck session of Congress begun this week, according to both Democratic and Republican sources.
What’s more, Republican lawmakers have indicated that they would oppose a bailout of MERS if it were to be proposed in the next Congress, according to a source familiar with the matter.
MERS—short for Mortgage Electronic Registry Systems—was created in 1997 by banks to speed along the securitization process. Instead of individually filing paperwork with county property record offices every time a mortgage switches hands, banks keep track of transfers through MERS.
MERS has become controversial as lawyers have charged that MERS and the banks utilizing MERS lack standing to foreclose on homes whose owners have defaulted on their mortgages. Lawyers have alleged that MERS, by creating an alternate mortgage registration system, has cheated country property record offices of billions of dollars in fees.
I reported last week that Neil Garfield, a self-styled consumer advocate, had written that his sources had told him that legislation was being passed to retroactively forgive flaws in the mortgage and foreclosure process under MERS. Garfield said that President Obama was prepared to sign the bill.
My sources on Capitol Hill say that no such legislation is coming anytime soon.
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