Delegate Marshall's Floord Speech on his MERS Bill
I introduced HB 1506 to require banks to maintain up-to-date records on Virginia home loans with county Clerks of Courts rather than with a private bank run database (Mortgage Electronic Registration System-MERS) which is losing track of mortgage records and operates without oversight.
HB 1506 will come up this Monday in a House of Delegates Courts Subcommittee. It has nationwide implications for up to 65 million homeowners who bought their homes since 1997.
Powerful Wall Street Banking interests oppose my records transparency bill! Inaction by the General Assembly in 2011 will amount to another bail out of Wall Street gamblers who expect taxpayers to finance their investment “habits.”
If you are thinking your title insurance protects you, be aware that these policies were issued without taking into account the potential number of homes that might have flawed titles. Your title cannot be protected if your Title Insurance Company fails.
Seven State Supreme Courts have rejected the MERS Wall Street database as highly flawed. My bill requires that banks produce the proper paperwork before they foreclose. Homeowners would also be given 45 days before their houses could be auctioned, not just the current 14 days. Without proper title, no one can buy, sell or pass a home to heirs.
If a bank cannot produce the proper paperwork to foreclose on a home, they do not have the proper paperwork to comply with the US Securities laws for insuring that there is sufficient real property backing a Mortgage Backed Investment Security as loan collateral as required by law.
If the General Assembly ignores this mortgage problem we may be moral accessories to securities fraud and the public would be rightly outraged. Failure to straighten out the confusion affecting tens of millions of home titles could seriously weaken our economy.
HB 1506 would impose penalties on lenders for foreclosing based on false documents, require court review before foreclosing if challenged by homeowner, make it easier for homeowners to find out who controls their debt, and impose perjury penalties on banks which use fraudulent, robo-signed documents.
HB 1506 directly challenges the bank created database system called MERS, which attempts to speed the pooling and sale of mortgages to investors by ignoring 400 years of Virginia property law involving court house recordings and recording fees, a system which has protected property owners from fraudulent claims.
John T. Frey, Republican clerk of the Fairfax County Circuit Court, estimates that in FY 2009, roughly $100 million more would have gone to localities had fees and taxes associated with mortgage sales been paid. Washington Post, 11-3-10)
Background of HB 1506
I became involved in the MERS issue because in October a constituent told me he could not find out who owned his mortgage. When I tried to help, I discovered a disturbing problem that could potentially affect all homeowners who purchased homes since 1997.
Think about it: No convenience store clerk would pay off a winning lottery ticket without requiring a winning stub as proof. But big Wall Street banks operating in Virginia are attempting to walk away with homes without proof they hold the mortgages! Anyone who purchased a home since 1997, whose mortgage was part of a mortgage backed security, can be at risk for a home’s legal title.
In 1997 big Wall Street banks including Freddie Mac, Fannie Mae and the Mortgage Bankers Association, decided they could ignore the land title recordation system, which dates back to 1624 in Virginia. With no legislative or judicial authority, the Big Banks created the Mortgage Electronic Registration System, (MERS) as its own private system of land records, bypassing the clerks of the courts. When the initial sale or refinance of a home was recorded with county clerks, MERS was recorded as the beneficiary of the note or its nominee. MERS now has almost 65 million mortgages recorded.
As individual mortgages within a larger mortgage-backed security are sold multiple times, no one at MERS thought it necessary to record subsequent sales with county clerks because MERS claimed it had legal title for the mortgage notes registered in its database. I asked MERS to provide me with any legal opinion affirming that their actions were allowed under law. That was two months ago. I have still not received an answer.
MERS supported a 2004 change in Minnesota law to allow MERS to foreclose. But if MERS had this right all along as they claimed, they did not need this law changed.
On January 7, 2011 the Supreme Court of Massachusetts threw out foreclosures by Wells Fargo and U.S. Bancorp because the banks could not produce the necessary documents showing they held the mortgages. (Massachusetts foreclosure and property law is very similar to Virginia’s.)
Massachusetts Supreme Court Robert J. Cordy summarized the crippled state of America’s housing market: “What is surprising about these cases... (is) the utter carelessness with which the plaintiff banks documented the titles to their assets…The plaintiff banks... failed to prove that the underlying assignments of the mortgages that they allege (and would have) entitled them to foreclose ever existed in any legally cognizable form before they exercised the power of sale that accompanies those assignments.”
Please contact your delegate by 1 PM this Monday, January 17 whether or not they are on the House Courts Committee, and ask them to PLEASE VOTE FOR HB 1506. To learn who your delegate is and how to contact him, go to: http://conview.state.va.us/whosmy.nsf/main?openform.
Members of the House of Delegates Courts Civil Law Sub Committee who will vote on Monday include: Clay Athey (Chairman), Terry Kilgore, Sal Iaquinto, Christopher Peace, Manoli Loupassi, Bill Cleaveland, Gregory Habeeb, David Toscano, Joe Johnson, William Barlow, Jennifer McClellan.
Delegate Bob Marshall R - 13th District of Virginia www.delegatebob.com