No convenience store clerk would pay off a winning lottery ticket without requiring a winning stub as proof. But big Wall Street banks operating around the United States have been able to walk away with homes without proof they ever held the mortgages!
With the weakened influence of Glass-Steagell, in 1997, Freddie Mac, Fannie Mae and the Mortgage Bankers Association decided to ignore the property 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 clerks of the courts. When the initial sale or refinance of a home was recorded with county clerks, MERS declared their organization was the beneficiary of the note or its nominee.
As individual mortgages which were part of larger mortgage-backed security products were sold multiple times, no one at MERS thought it was necessary to record subsequent sales of the mortgages with county clerks. MERS claimed it held legal title for the mortgage notes registered in its private database of home mortgages. In some cases the chain of ownership was lost. In other cases, it could not be determined which bank held the mortgage.
On January 7, 2011 the Supreme Court of Massachusetts threw out foreclosures by Wells Fargo and U.S. Bancorp noting, “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.”
Because of the ease with which electronic records may be altered or sabotaged through computer viruses or hackers, Congress should require mortgage banks to file accurate paper documents (with electronic back-ups) with county and city clerks of court who are usually elected public officials accountable to the public. The private mortgage recording system, MERS, is not subject to Freedom of Information laws. If banks refuse to comply, then the government should refuse to cover any losses through government insurance which is subsidized by the taxpayers.
I introduced legislation in the Virginia General Assembly to require the filing of paper documents with clerks of courts, but MERS and mortgage investment banks (large donors to committee members), prevailed in killing my bills which would have prevented unjust foreclosure proceedings based on robo-signing of legal documents, fraudulent documents and misleading mortgage refinancing schemes followed by homeowners subsequently losing their homes anyway.
Securing paper records of home ownership in our courthouses may be somewhat cumbersome, but there is no better way to retain proof of home ownership. For most Americans a home is the largest investment they will have in their lifetime. Failure of public officials elected and accountable to the public to secure this investment by protecting proper titles, is inexcusable. It is interesting to note that in the case of a civil disturbance, I have been told that the first building secured is the Courthouse because if property ownership records were destroyed, it would lead to chaos and civil unrest.