Do you want a National Mortgage Registry system?

Over 72 million families (based on 2.5 per household – that’s 180,000,000 constituents) have been negatively affected by Mortgage Electronic Registration Systems, Inc. and its parent company MERScorp Holdings, Inc. Too many to count foreclosures have resulted over the past decade with forged assignments documents allegedly signed by Mortgage Electronic Registration Systems, Inc. (MERS) employees who actually work for someone other than MERS.

Many of the homeowners who have bought a home or refinanced a home since 2002 will find Mortgage Electronic Registration Systems, Inc. listed as the “nominee” mortgagee in their mortgages – and they don’t even know it. Now, the federal government is proposing a “National” mortgage registry system – and one would have to wonder why?

Please consider voting your opinion. 

One thought on “Do you want a National Mortgage Registry system?

  1. A national registry, for both mortgages, and notes, is precisely what was proposed in the “Home Foreclosure Procedures Act,” the version I have being dated 2014. There may be updated, or revised, versions.

    Look particularly at the drafters notes at Part 4. It covers the elimination of paper notes, and those pesky little requirements of UCC, It also states that “a certificate or record issued by the sponsoring organization is conclusive evidence …”

    From Article 4, Right to Foreclose: Sale Procedures
    § 401. Right to Foreclose
    (a) A person described in subsection (b) may commence a foreclosure only after default in the obligation and satisfaction of all conditions required by the mortgage agreement and by law.
    (b) (1) Except as otherwise provided in paragraph (2) and in subsection (e), only a person entitled to enforce the obligation secured by the mortgage, as determined by law other than this [act], may commence a foreclosure.
    (2) If the obligation is registered in a mortgage registry, the only person who may 25 commence a foreclosure is the person designated as owner or holder of the obligation by the 26 mortgage registry as of the time the foreclosure is commenced.
    (c) In a judicial-foreclosure proceeding, the creditor must plead that it has the right to foreclose under subsection (b).
    (1) If the obligation is evidenced by a negotiable instrument, the [complaint] must include:
    (A) a copy of the negotiable instrument in its present condition including
    any indorsement or allonge and a statement indicating who is in possession of the negotiable 1 instrument; or 2
    (B) a statement that the negotiable instrument has been lost, destroyed, or 3 stolen and a copy of the negotiable instrument in its last known condition, in which case the 4 [complaint] must include a lost-negotiable-instrument affidavit that complies with Section 403. 5
    (2) If the obligation is not evidenced by a negotiable instrument, the [complaint] 6 must include a copy or printout of the records evidencing the obligation and the creditor’s right 7 to enforce the obligation. 8
    (d) In a foreclosure proceeding, the creditor may, in a record, authorize another person to 9 foreclose. The [complaint] described in subsection (c) must disclose the name of both the 10 creditor and the name of the person authorized by the creditor to foreclose. 11
    (e) If an obligation is evidenced by a negotiable instrument and a creditor does not own 12 the obligation, the [complaint] described in subsection (c) must disclose the name of the legal 13 owner of the obligation.

    Drafters Notes

    1. This act does not define events of default. Instead, like UCC Article 9, this act leaves the definition of default to contract law. The obligation may be stated in a promissory note (i.e., an obligation to make monthly installment payments) or in another instrument such as the mortgage agreement.

    2. The conditions referred to in subsection (a) are those indicated in the mortgage agreement or under this act and other law as necessary to accomplish before the commencement of foreclosure.

    3. Subsection (b)(1) resolves the problem of who has standing to foreclose by designating the person who is entitled to enforce the obligation, to be determined under other law. When the obligation is evidenced by a negotiable instrument, Article 3 of the Uniform Commercial Code provides the governing rules. When the obligation is not evidenced by a negotiable instrument, law other than UCC Article 3 will determine who is entitled to enforce the obligation. One example of other law is the Uniform Electronic Transactions Act (UETA), which
    grants to a person having control of a “transferable record” the rights to enforce a promissory noted evidenced by an “electronic record,” as those terms are defined in that act.

    4. Subsection (b)(2) authorizes foreclosure by a person identified as the owner or holder of the obligation in a mortgage registry, a term defined in Article 1. A mortgage registry does not presently exist, but there is substantial interest in its creation. Thus, the Act contemplates the possibility of an electronic recording system where all notes are electronically generated and where, as a consequence, there is no paper note which might be “possessed in order to satisfy the holder in due course requirements of UCC Article 3.

    Under this section, a certificate or record issued by the sponsoring organization is conclusive evidence that the person named in the certificate as owning the obligation, holding the negotiable instrument (if the obligation is evidenced by an negotiable instrument), or acting on behalf of the owner or holder, has the right to foreclose under Section 401.

    5. When the obligation is evidenced by a negotiable instrument, subsection (c) requires that the complaint identify the possessor of the instrument. The creditor may possess the instrument through an agent. If the agent is not an employee of the creditor and has a place of business in a location other than an office of the creditor, the complaint should identify the agent as the possessor.

    6. This section does not state a separate rule for determining when a creditor who holds a security interest in a note to secure an obligation owed to the creditor has the right to foreclose. UCC Article 9 covers both sales of instruments and assignments of instruments that secure an obligation of the assignor. A creditor who takes possession of a negotiable instrument will acquire the right to foreclose. Other law determines when a creditor who takes possession of an instrument that is not negotiable to secure an obligation owed to the creditor acquires the right to foreclose. For example, UCC § 9-607(a) and (b) provide rules indicating when a secured party has the right to collect on collateral and to enforce the debtor’s rights with respect to property that secures obligation owed to the debtor (i.e., the obligation to pay the mortgage loan to the debtor).

    7. Multiple persons may hold the right to foreclose a mortgage. Other law, including UCC Article 3 and the law of agency, determines whether the right to foreclose may be exercised by fewer than all such persons.

    8. When the obligation is owned by a trust, the owner of the obligation for purposes of this Section is the trustee, not the beneficial owner or owners of the trust property.

    9. Under subsection (c) the creditor’s production of the original negotiable instrument is not necessary at the time of the filing of a complaint in a judicial
    foreclosure. Production of the original would later become appropriate if, during the course of the proceedings, the homeowner or obligor seeks further demonstration of the copy’s authenticity or the whereabouts of the original. Similarly, in a nonjudicial foreclosure, if there are subsequent judicial proceedings, a court may decide to order production of the original instrument if necessary to resolve a particular issue.

    10. Subsection (d) authorizes the person who has the right to foreclose to exercise that right through an agent. By requiring a description of the agency it does not permit the principal to remain undisclosed. An agent authorized to foreclose may be a loan servicer who has a pre-existing contractual relationship with the creditor, or any other person appointed at any time. If the secured obligation is evidenced by a negotiable instrument, the agent or the principal (the person entitled to enforce the note) may hold and retain possession of the note. Subsection (d) is not intended to change existing laws that authorize a third person, such as a trustee under a deed of trust, to foreclose in nonjudicial proceedings. In such circumstances, subsection (d) allows the beneficiary to appoint an agent, but does not speak to the procedure for appointing a substitute trustee.

    In allowing an agent or representative to foreclose, this section is consistent with the standing decision in Sprint Communications Co. v. APCC Services, Inc., 554 U.S. 269 (2008). There, payphone operators had assigned claims for compensation from long-distance carriers to collection firms. In Sprint the Court permitted an assignee of a legal claim for money to pursue that claim in federal court, even when the assignee had promised to remit the proceeds of the litigation to the assignor.

    The entire proposed legislation is close to mandatory reading for anyone in the trenches.

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