Dude, Where’s My Mortgage? How a Corrupt Outfit Called MERS Is Destroying Our System of Property Rights

Corruption Porn / December 16, 2010

By Yasha Levine

This article was first published by AlterNet

***

“For the first time in the nation’s history, there is no longer an authoritative, public record of who owns land in each county.” — University of Utah law professor Christopher Peterson

There is an unbelievable scandal in the making that threatens to subvert our four-century-old method for guaranteeing a fundamental building block of the American republic—property ownership. The biggest reason why you probably haven’t heard much about it is that it involves one of the most generic and boring company names imaginable: Mortgage Electronic Registration Systems, Inc., or MERS. It is a story of deception engineered at the highest level of power for short-term gain, and another epic failure of the private sector to uphold the laws and traditions of American society, even something as fundamental as property rights.

Created in 1995 by the country’s biggest banks, MERS quietly took control of and privatized mortgage record-keeping across the country and, in the span of a few years, scrambled America’s private property ownership records to the point where no one could figure out who owns what. This was no accident, and was done by design: MERS was a tool used by America’s top financial institutions to pump up the real estate market. Mortgage-backed securities, robo-signers, lightning quick foreclosures, subprime mortgages and just about everything else that went into feeding the biggest real estate bubble in U.S. history could not function without help from MERS. But unlike many of the Wall Street scandals, this one could blow up in the banks’ faces, with the little guy laughing all the way back to his free McMansion, and local governments seeing their empty coffers fill back up with the billions of dollars in unpaid fees that MERS circumvented.

The story begins in mid-’90s with the founding of MERS, Inc. by the nation’s most powerful banks, ostensibly with the aim of streamlining and modernizing the process of registering and tracking mortgages. Traditionally, there has been no centralized registry of real estate ownership information, with counties maintaining their own records for properties within their borders—a system that has remained virtually unchanged since colonial times.

The MERS database went live in the middle of the dot-com bubble, and was supposed take inefficient government bureaucracies kicking and screaming into the future by providing a centralized, national registry of mortgage ownership information. “MERS addresses a problem that was costing the industry a significant amount of money,” Rick Amatucci, a Fannie Mae vice president and the agency’s liaison with MERS, told Mortgage Banking magazine, just as the new registry went online in 1997. The database would give lenders across the country instant access to real-time mortgage information, diminish potential for fraud, and lower costs for servicers and borrowers, according to Mortgage Banking Association, which was tasked with overseeing the project.

But that kind of talk was just for the press release. The banking industry wasn’t concerned with efficiency or transparency or the greater good. It was all about making money, as quickly and cheaply as possible. And that is what MERS was for. It was created to help the industry push its latest money-maker: mortgage-backed securities, a Wall Street financial scam that dressed up the most toxic, guaranteed-to-fail loans as Grade A investment vehicles that could be sold to suckers looking for an easy gain.

But before mortgage-backed securities could be unleashed on the residential housing market on a massive scale, bankers needed to get rid of America’s long-standing real estate recording laws, which required lenders to file all mortgage transactions—the origination of a new loan, for instance, or the transfer or sale of a mortgage between banks—with the county in which the property is located. While this recording requirement was not a problem in the sleepy pre-securitization days of the home loan business, when mortgage transactions were kept to a minimum, it was going to be much more difficult—if not impossible—with widespread use of securitization, which jacked up the industry like high-grade meth. Mortgages would be changing hands dozens of times, going from loan originators to banks to Wall Street investment houses, which would collect them by the thousands and package them into complex debt instruments that would be chopped up into shares and sold off to multiple investors all over the world.

Bankers needed a quick, clean way of reassigning mortgages without having to go through the “cumbersome” process of recording them with county courts and recorder offices. But instead of working with municipalities to modernize title registration by a creating a national database that was aboveboard and that everyone could use, the banking industry did what it does best: hid the information with sly accounting tricks.

And it succeeded. In just a few short years, MERS took over the bulk of residential mortgage registration. There are about 80 million residential mortgages in America today, and MERS tracks 60 percent of them.

“[M]ortgage bankers formed a plan to create one shell company that would pretend to own all the mortgages in the country—that way, the mortgage bankers would never have to record assignments since the same company would always ‘own’ all the mortgages,” wrote University of Utah law professor Christopher Peterson, who wrote a key paper on MERS and the mortgage industry.

Here is how the plaintiffs in a class action suit filed in Florida in July 2010 against MERS and a legal firm described the MERS registration system:

The whole purpose of MERS is to allow “servicers” to pretend as if they are someone else: the “owners” of the mortgage, or the real parties in interest. In fact they are not. … With the oversight of Defendant Merscorp and its unknown principals, the MERS artifice and enterprise evolved into an “ultra-fictitious” entity, which can also be understood as a “meta-corporation.” To perpetuate the scheme, MERS was and is used in such a way that the average consumer, or even legal professional, can never determine who or what was or is ultimately receiving the benefits of any mortgage payments. The conspirators set about to confuse everyone as to who owned what. They created a truly effective smokescreen which has left the public and most of the judiciary operating “in the dark” through the present time.

The use of MERS as a generic placeholder for the real owner of a mortgage was a crucial component of the entire securitization machine.”[T]he entire scheme was predicated upon the fraudulent designation of MERS as the ‘beneficiary’ under millions of deeds of trust,” according to a class action suit filed in Nevada in 2009 against MERS and all the big, crooked banks we’ve learned to fear and hate. “Before MERS, it would not have been possible for mortgages with no market value . . . to be sold at a profit or collateralized and sold as mortgage-backed securities. Before MERS, it would not have been possible for the Defendant banks and AIG to conceal from government regulators the extent of risk of financial losses those entities faced from the predatory origination of residential loans and the fraudulent re-sale and securitization of those otherwise non-marketable loans.”

How efficient was MERS at perpetuating trickery in the real estate market? Well, according to statistics published by the U.S. Treasury’s Financial Crime Enforcement Network, from 1997—the year MERS went online—to 2005, mortgage fraud reports increased by 1,411 percent.

The MERS hustle had another benefit: it saved the banking industry—and cost municipal governments—tens of billions of dollars by allowing lenders to avoid paying county filing fees, which cost an average of $30 a pop. According to the AP, if every mortgage tracked by MERS had been resold and re-recorded with a county just one time, the system would have saved the banking industry $2.4 billion in filing fees. In reality, most mortgages are sold and resold a dozen times—sometimes more, which means that MERS extracted at minimum around $30 billion from cash-strapped local governments. “Some counties also use recording fees to fund their court systems, legal aid organizations, low-income housing programs, or schools. In this respect, MERS’s role in acting as a mortgagee of record in nominee capacity is simply a tax evasion tool,” says Professor Peterson.

But there was one major downside to the scam: because MERS departed from established real estate recording requirements, there was no guarantee that its claim to ownership, if challenged, would be honored by the courts.

Transparent real property registration was one of the earliest—and most important—functions of the American government, a practice that has changed amazingly little since the colonial times. According to “Foreclosure, Subprime Mortgage Lending, and the Mortgage Registration System,” American colonists began to enact laws requiring land sales, transfers and mortgages to be entered into the public record with a government agency going back almost 400 years. The Massachusetts Plymouth Bay Colony adopted its first such “recording law” in 1636, which stated that “all sales exchanges giftes mortgages leases or other Conveyances of howses and landes the sale to be acknowledged before the Governor or anyone of the Assistants and committed to publick Record.”

By the time the Boston Tea Party rolled around, every English colony had passed laws that required lenders and landowners to enter their names and property and mortgage information into the public record. The reasons for the popularity of the laws are simple and utilitarian: transparent public records of property ownership prevented disputes over who owned what and allowed people to use land as collateral on loans. “The necessity and usefulness of these early public title records is attested to by their nearly universal and uninterrupted force in subsequent American law. Indeed, Pennsylvania’s first recording act, first adopted in 1717, remains in force to this day,” wrote Peterson. Banks that failed to register mortgage transactions risked losing their ability to enforce the contract. And that is exactly what is on the verge of happening with mortgages registered with MERS.

Dozens of lawsuits all across the country have been filed against MERS and its partners to put this very issue to the test. And while most of them are still ongoing, it’s clear that MERS is fighting for its life.

The Wall Street Journal:

Now, critics and homeowners facing foreclosure are increasingly challenging, among other things, MERS’ role and legal standing in home foreclosures where it acts as legal representative of the mortgage holder. MERS has fought and won legal challenges in the past. But the nationwide epidemic of foreclosures in the wake of the housing collapse will present it with a wave of challenges unlike any it has seen previously.
Trouble for MERS could add risk to banks by slowing down the securitization process, and creating uncertainty during a time when banks are struggling to reassure shareholders and customers. One hedge fund investor said Friday that questions around MERS are adding to his concerns about banks in the mortgage business and are keeping him from investing in the sector.

While MERS officials say they are confident about their business model, it has become clear that their scheme might very well be on the verge of toppling. On November 17, Congress quietly rammed through a sneaky, vaguely worded bill that would have legalized MERS’ dealings retroactively. And while the bill didn’t pass, we can expect Wall Street’s lackeys in Congress to continue their efforts. After all, if courts continue to rule against MERS’s business model—and it looks like they will—many homes may become foreclosure proof. As Reuters put it: “If court rulings against MERS’ authority to foreclose proliferate, many foreclosure cases may be halted indefinitely, and some homeowners in default may end up with clear title to their homes.” Owners will still owe money to banks, but their homes would no longer be counted as collateral on the loan. In short, banks would not be able to kick people out of their homes. And clearly, that is something that America’s plutocracy just cannot abide.

***

So who or what is MERS? How was this little-known corporation able to change nearly 400 years of legal practice in the span of a decade, and do so much damage so quickly? And why did no one blow the whistle?

As a result of the lawsuits being filed against MERS, a lot of previously unknown information about the inner workings of MERS is coming to light.

The people who developed the concept of MERS were connected with Fannie Mae and Freddie Mac, as well as the most corrupt lending institutions in America. People like Brian Hershkowitz, former director of the Mortgage Bankers Association and founder of the association’s technology committee that oversaw the early development of MERS in the early ’90s, according to a homeowner-turned-activist-blogger, who is involved in a class action lawsuit against MERS (In 1993, Mortgage Banking magazine referred to this new mortgage resignation system as “New Age Delivery.”)

“Ain’t accounting fraud great?”

Hershkowitz was an early tech-booster in the banking industry, heralding a new age where efficiency and profitability would reign supreme. In the early 90s he attributed the success of Countrywide Financial to the fact that it embraced emerging computer technology. “They use technology in ways that give them a competitive advantage and set them apart. They were operating with excess capacity, and now they are putting it to use,” Hershkowitz, then-associate director of the Mortgage Bankers Association, told the New York Times in 1991. A few years later he went to work for Countrywide as an executive involved in “areas of strategic planning and executive management.” From 1982 to 2003, Countrywide performed like a Ponzi scheme, with shareholders gleefully getting a 23,000.0 percent return on their investment, until the bank collapsed under the weight of its own fraud schemes in 2007.

It seems that MERS has operated along similar lines. According to sworn testimony by various MERS executives, the organization has cycled through four different corporate entities in its brief lifespan. MERS also has almost no paid employees and does not seem to keeps any records or minutes of corporate meetings. When pressed to explain the inner workings of the organization, its executives evaded questions, feigned ignorance and generally acted like provincial mafia bosses on trial—exactly the kind of professionalism one would expect for a company responsible for tracking the ownership information of 50 million mortgages. It was just a couple of guys sitting around, chatting, smoking…and making sure not to leave any evidence behind. No wonder county officials who blew the whistle on MERS early on were squashed.

Edward Romaine, a Republican recorder of deeds for New York’s Suffolk County, was one of the few officials who tried to refuse to take filings from MERS. “He argued that not only would the county lose out on fees—$1 million in one year alone—but that MERS failed to even maintain a clear chain of title on a property. He got backing from New York’s attorney general,” reported the Associated Press. MERS sued Suffolk County and took the case all the way up to the state’s highest court, where it won on appeal in 2007. The court forced the county to accept MERS filings because the county lacked the statutory authority. Put another way, the court forced a municipal government to do business with a criminal organization, despite objections from county officials.

MERS cost local governments billions of dollars in lost revenue, but there is a chance that the cash-strapped counties will be able to claw some of that money back. Lawsuits have been filed against MERS in California, Nevada, Tennessee and 14 other states that accuse the company of functioning as a tax evasion vehicle designed to help banks circumvent filing fee requirements. “In California, the suit against MERS could cost the company somewhere between $60 to $120 billion in damages and penalties. With so much money extracted from California’s municipalities, no wonder the Golden State is facing a $25 billion budget gap,” reported the Associated Press.

We’re constantly being told that liberalization, deregulation and privatization automatically equal greater freedom and increased efficiency. But MERS provides us with a different narrative, one in which the government works perfectly well, when not corrupted by corporations who want to use it to loot public wealth.

Yasha Levine is an editor of The eXiled.

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27 Comments

Add your own

1. Pascual Gorostieta | December 16th, 2010 at 11:37 am
Fucking Gold!!! Real journalism.
2. CaptainMongles | December 16th, 2010 at 12:02 pm
“As Reuters put it: “If court rulings against MERS’ authority to foreclose proliferate, many foreclosure cases may be halted indefinitely, and some homeowners in default may end up with clear title to their homes.” Owners will still owe money to banks, but their homes would no longer be counted as collateral on the loan. In short, banks would not be able to kick people out of their homes. And clearly, that is something that America’s plutocracy just cannot abide.”
But would people still be able to strategically default on underwater mortgages?
3. John Figler | December 16th, 2010 at 2:35 pm
“If court rulings against MERS’ authority to foreclose proliferate”…
They won’t. If they do the robber-barons would win. If they lose, they’ll rig it to win anyway.
Suffolk Co. tried and lost. Why should it be different elsewhere?
Common´, wake up!
4. Zirb | December 16th, 2010 at 3:40 pm
Check it out, I’m a libertard troll who’s gonna pretend I agree with your article but then I’m gonna disagree on a “technical” point, which will casually lead me to an “objective” argument defending freemarket economics because that just the kind of billionaire butt maggot that I am. I just love burrowing deep into a billionaires colon and sucking nourishment. Yum yum. Ready? Okay, here I go:
Well done article. Here’s a stab at a counterargument to the last paragraph:
Counties were forced into an involuntary relationship by the courts because, ultimately, the counties have no real, independent power. Fannie and Freddie, explicitly, and banks, implicitly, worked hand-in-hand with the central government to centrally plan and “deregulate” for the benefit of the corporations… i.e. fascism. Decentralized local counties or voluntary private organizations wouldn’t have let this happen.
Did you see that, folks. Arent we libertards clever maggots? Remember this phrase “voluntary private organizations” thats a euphemism “servants of billionaires.” Gotta go! Got go burrow in a billionaires ass! Ta-ta!
5. Zirb | December 16th, 2010 at 4:54 pm
I was not pretending when I said your article was good.
But check it out, as a billionaire ass maggot I have to be persistent. How else do you think we worm our way up through impacted fecal matter up dozens of feet of intestine? Resource concentration is caused by government giving power to corporations and suppressing competition. Look back at the 1800s when government spending was less than 10% of GDP, and you’ll find less resource concentration. See that? Let me break down my strategy for you. I say that governemtn is to blame for things like monopolies and before you have time to think about how totally fucking dumb that is, I throw in a “logical” example from a really really long time ago that seems proves my point. Look back at the Stone Age, a time of small government and very very small government spending, and you’ll see less “resource concentration” and no corporate monopolies because governemtn was not giving power to corporations. Ain’t I clever?
6. David | December 16th, 2010 at 6:00 pm
It’s shameful: when someone contests their foreclosure, the stock response is “but they’re deadbeats or we wouldn’t be taking their house”. In reality, the person foreclosing sold the mortgage ages ago!
The real owner isn’t going to show up, because the real owner of the mortgage doesn’t even know this house is being foreclosed on, and doesn’t even know he owns this specific mortgage.
7. Ash | December 16th, 2010 at 6:01 pm
CaptainMongles: “But would people still be able to strategically default on underwater mortgages?”
Sure, they could just stop paying them.
8. Michael | December 16th, 2010 at 7:46 pm
Great article! Thank you. L. Randall Wray, a professor of economics also has an article in the Dec 16 huffington post entitled “Anatomy of Mortgage Fraud, Part III: MERS’S Role in Facilitating the Mother of All Frauds” in which he describes this bankster scam as “the biggest scandal in human history”.
And for those who would like to keep up to date on the Mers bankster fraud and related topics, this subject has been written about extensively by Yves Smith at her nakedcapitalism website.
9. Zirb | December 16th, 2010 at 9:17 pm
The billionaires aren’t the problem. http://media1.break.com/dnet/media/2007/11/29nov21-big-ass-maggot.jpg
Also, please read The Rational Optimist, written by a neoliberal/libertarian fluffer to billionaires who was chairman of first UK bank to have a bank run in 150 years and needed a $45 billion bailout. Not everyone that says government is a major part of the problem is a libertard. I’m not a libertarian. But really I am.
http://www.monbiot.com/archives/2010/06/19/ridleyed-with-errors/
http://www.monbiot.com/archives/2010/06/01/the-man-who-wants-to-northern-rock-the-planet/
10. Kamron | December 16th, 2010 at 10:22 pm
“But would people still be able to strategically default on underwater mortgages?”
They could default the same as they do now; the difference is, they keep the house. Even if the homeowner has to declare bankruptcy to get rid of the large unsecured loan, in most (all?) jurisdictions they cannot take your primary residence from you in a bankruptcy proceeding. The only way they can take your house is if they have a proper mortgage on the property.
11. Peter | December 17th, 2010 at 4:27 am
From a marxist perspective, crises are a necessary consequence of the anarchistic nature of capitalism (everybody against everybody). The capitalists that survive a crisis can then accumulate the capital from those that went belly up. And so monopolies are formed. The government officials try to ameloriate the effects of capitalism in order to protect the state and the class of capitalists. The state can’t safe everyone, so those with the best connections win.
This means: without government intervention there would be pure carnage. Who would come out victorious, I don’t know.
I don’t try to convince Zirb, I just thought someone might be interested.
12. Courson | December 17th, 2010 at 10:01 am
This is class warfare from above, as the banksters try to eliminate what remains of the American middle class.
When will the working and middle classes understand that the criminal bankster elites are looting this country for every dime they can possibly steal? And that it’s time for us to start fighting back before our hopelessly corrupt kleptocrat rulers drive us all into slavery.
13. internal exile | December 17th, 2010 at 4:00 pm
Rich white people are doing this and that makes it ok. Why don’t you talk about the real problem, which is niggers on crack? All you have to do is look at your TV to see that I am right.
14. Zhu Bajie | December 17th, 2010 at 5:09 pm
“Look back at the Stone Age, a time of small government and very very small government spending”
when 25 was old because of no public health care or sanitation.
15. Zhu Bajie | December 17th, 2010 at 8:39 pm
The banksters aren’t that smart, because they are screwing themselvs in the process. They can’t really do much without the rest of us! It’s not like they can grow their own potatoes or pork,
16. Bob Marshall VIrginia state legislator | December 18th, 2010 at 6:18 am
My response to MERS. The language in italics below is the new language I am proposing for the Virginia General Assembly 2011 Session which convenes January 12.
HB 1506
Bill Summary — Foreclosure procedures; assignment of deed of trust. Provides that the trustee under any deed of trust or mortgage shall not proceed with any sale of the property unless the land records of the locality in which the property is located contain a duly recorded assignment to the person who asserts that he is the holder of the obligation. The trustee may proceed with the sale (i) upon the recordation of any assignments not recorded or, if an intervening assignment cannot be located, upon the receipt of an affidavit from the party secured that he is the party secured by the deed of trust, and (ii) upon the payment by the person who asserts that he is the holder of the obligation of any fees and taxes for recording the assignment. The bill also provides that a nominee of a grantee or mortgagee for a deed of trust or mortgage has no authority to request that the trustee proceed with any sale of the property conveyed to him by the deed of trust or mortgage. The bill also requires that the party secured by the deed of trust or mortgage provide notice of his intent to foreclose to the property owner at least 45 days before any proposed sale. The bill provides further that a person who (i) knowingly makes, used, or causes to be made or used any false or fraudulent record, document, or statement or (ii) knowingly swears or affirms falsely to any matter, in support of any foreclosure is liable for a civil penalty of $5,000, which shall be paid into the local treasury. The bill also creates a civil cause of action for such a violation in favor of the owner of the property foreclosed upon.
history | hilite | pdf
11100743D
HOUSE BILL NO. 1506
Offered January 12, 2011
Prefiled December 17, 2010
A BILL to amend and reenact §§ 26-15, 55-59.1, and 55-66.01 of the Code of Virginia and to amend the Code of Virginia by adding sections numbered 55-59.5 and 55-59.6, relating to foreclosure procedures; assignment of deed of trust.
———-
Patron– Marshall, R.G.
———-
Committee Referral Pending
———-
Be it enacted by the General Assembly of Virginia:
1. That §§ 26-15, 55-59.1, and 55-66.01 of the Code of Virginia are amended and reenacted and that the Code of Virginia is amended by adding sections numbered 55-59.5 and 55-59.6 as follows:
§ 26-15. Accounts of sales under deeds of trust, etc.
Within six months after the date of a sale made under any recorded deed of trust, mortgage or assignment for benefit of creditors, otherwise than under a decree, the trustee shall return an account of sale to the commissioner of accounts of the court wherein the instrument was first recorded. Promptly after recording any trustee’s deed, the trustee shall deliver to the commissioner of accounts a copy of the deed. The date of sale is the date specified in the notice of sale, or any postponement thereof, as required by subsection A B of § 55-59.1. The commissioner shall state, settle and report to the court an account of the transactions of such trustee, and it shall be recorded as other fiduciary reports. Any trustee failing to comply with this section shall forfeit his commissions on such sale, unless such commissions are allowed by the court.
If the commissioner of accounts of the court wherein an instrument was first recorded becomes aware that an account as required by this section has not been filed, the commissioner and the court shall proceed against the trustee in like manner and impose like penalties as set forth in § 26-13, unless such trustee is excused for sufficient reason. If after a deed of trust is given on land lying in a county, and before sale thereunder, the land is taken within the limits of the incorporated city, the returns of the trustee and settlement of his accounts shall be before the commissioner of accounts of such city.
Whenever the commissioner reports to the court that a fiduciary, who is an attorney-at-law licensed to practice in the Commonwealth, has failed to make the required return within 30 days after the date of service of a summons, the commissioner shall also mail a copy of his report to the Virginia State Bar.
§ 55-59.1. Notices required before sale by trustee to owners, lienors, etc.; if note lost.
A. At least 45 days before any proposed sale in execution of a deed of trust, the party secured or mortgage servicer shall provide written notice to the present owner of the property to be sold of the intent of the party secured to foreclose upon the property. The notice shall contain the name, address, and telephone number of the party secured, the trustee, and any employee or department of the mortgage servicer, the party secured, or any agent of the party secured that can be contacted for inquiries regarding alternatives to foreclosure, including loan modifications. The notice shall be sent by certified or registered mail to the present owner’s last known address as such owner and address appear in the records of the party secured.
B. In addition to the advertisement required by § 55-59.2, the trustee or the party secured shall give written notice of the time, date and place of any proposed sale in execution of a deed of trust, which notice shall include either (i) the instrument number or deed book and page numbers of the instrument of appointment filed pursuant to § 55-59, or (ii) said notice shall include a copy of the executed and notarized appointment of substitute trustee by personal delivery or by mail to (i) (a) the present owner of the property to be sold at his last known address as such owner and address appear in the records of the party secured, (ii) (b) any subordinate lienholder who holds a note against the property secured by a deed of trust recorded at least 30 days prior to the proposed sale and whose address is recorded with the deed of trust, (iii) (c) any assignee of such a note secured by a deed of trust provided the assignment and address of assignee are likewise recorded at least 30 days prior to the proposed sale, (iv) (d) any condominium unit owners’ association which has filed a lien pursuant to § 55-79.84, (v) (e) any property owners’ association which has filed a lien pursuant to § 55-516, and (vi) (f) any proprietary lessees’ association which has filed a lien pursuant to § 55-472. Written notice shall be given pursuant to clauses (iv) (d), (v) (e) and (vi) (f), only if the lien is recorded at least 30 days prior to the proposed sale. Mailing of a copy of the advertisement or a notice containing the same information to the owner by certified or registered mail no less than 14 days prior to such sale and to lienholders, the property owners’ association or proprietary lessees’ association, their assigns and the condominium unit owners’ association, at the address noted in the memorandum of lien, by ordinary mail no less than 14 days prior to such sale shall be a sufficient compliance with the requirement of notice. The written notice of proposed sale when given as provided herein shall be deemed an effective exercise of any right of acceleration contained in such deed of trust or otherwise possessed by the party secured relative to the indebtedness secured. The inadvertent failure to give notice as required by this subsection shall not impose liability on either the trustee or the secured party.
BC. If a note or other evidence of indebtedness secured by a deed of trust is lost or for any reason cannot be produced and the beneficiary submits to the trustee an affidavit, under penalty of perjury, to that effect, the trustee may nonetheless proceed to sale, provided the beneficiary has given written notice to the person required to pay the instrument that the instrument is unavailable and a request for sale will be made of the trustee upon expiration of 14 days from the date of mailing of the notice. The notice shall be sent by certified mail, return receipt requested, to the last known address of the person required to pay the instrument as reflected in the records of the beneficiary and shall include the name and mailing address of the trustee. The notice shall further advise the person required to pay the instrument that if he believes he may be subject to a claim by a person other than the beneficiary to enforce the instrument, he may petition the circuit court of the county or city where the property or some part thereof lies for an order requiring the beneficiary to provide adequate protection against any such claim. If deemed appropriate by the court such a petition is made, the court may condition shall not permit the sale on a finding unless it finds that the person required to pay the instrument is adequately protected against loss that might occur by reason of a claim by another person to enforce the instrument. Adequate protection may be provided by any reasonable means. If the trustee proceeds to sale, the fact that the instrument is lost or cannot be produced shall not affect the authority of the trustee to sell or the validity of the sale.
CD. When the written notice of proposed sale is given as provided herein, there shall be a rebuttable presumption that the lienholder has complied with any requirement to provide notice of default contained in a deed of trust. Failure to comply with the requirements of notice contained in this section shall not affect the validity of the sale, and a purchaser for value at such sale shall be under no duty to ascertain whether such notice was validly given.
DE. In the event of postponement of sale, which may be done in the discretion of the trustee, no new or additional notice need be given pursuant to this section.
§ 55-59.5. Sale by trustee; additional requirements; nominee cannot request sale.
A. On or after July 1, 2011, if a deed of trust or mortgage has been assigned by the original grantee or mortgagee, the trustee, or any substitute trustee, under any deed of trust or mortgage shall not proceed with any sale of the property unless (i) all assignments of the deed of trust or mortgage have been duly recorded with the land records of the locality in which the property is located and (ii) the person who asserts that he is the holder of the obligation secured by the deed of trust or mortgage can directly trace his interest through the duly recorded assignments to the original grantee or mortgagee.
B. If all assignments of the deed of trust or mortgage have not been duly recorded with the land records of the locality in which the property is located, the trustee, or any substitute trustee, may proceed with the sale of the property conveyed to him by the deed of trust or mortgage upon (i) the recordation of any assignments necessary to trace the interest of the person who asserts that he is the holder of the obligation secured by the deed of trust or mortgage to the original grantee or mortgagee or, if an intervening assignment cannot be recorded because the assignee no longer exists, the provision of an affidavit by the party secured to the trustee, or any substitute trustee, attesting under penalty of perjury that the person is the party secured under the deed of trust, and (ii) the payment of all fees, taxes, and other costs applicable to the recording of the assignments. The person who asserts that he is the holder of the obligation secured by the deed of trust or mortgage is solely responsible for paying all fees, taxes, and other costs required in clause (ii).
C. A nominee of a grantee, mortgagee, or beneficiary for a deed of trust or mortgage has no authority to request that the trustee, or any substitute trustee, proceed with any sale of the property and the trustee, or any substitute trustee, shall not proceed with any such sale upon the request of the nominee. As used in this section, “nominee” means a person who is designated in the deed of trust or mortgage, or who is subsequently designated to act on behalf of the grantee, mortgagee, or beneficiary. The term “nominee” does not include an agent or other fiduciary.
§ 55-59.6. Foreclosure; civil penalty for fraud; civil action.
A. Any person who (i) knowingly makes, uses, or causes to be made or used a false or fraudulent record, document, or statement or (ii) knowingly swears or affirms falsely to any matter, in support of any foreclosure upon property under this chapter shall be liable for a civil penalty of $5,000 for each violation.
B. Any attorney for the Commonwealth for the county or city or any attorney for the county, city, or town in which an alleged violation occurred may bring an action to recover the civil penalty, which shall be paid into the local treasury. A person violating this section shall be liable for reasonable attorney fees and costs of a civil action brought to recover any such penalty.
C. The owner of the property subject to foreclosure has a civil cause action against a person who has violated this section, and shall be entitled to recover from such person compensatory damages in the amount of three times the damages incurred by the owner as a result of the violation in addition to reasonable attorney fees and costs.
D. The civil penalty provisions of this section shall apply in addition to any applicable criminal penalties for forgery set forth in §§ 18.2-168 and 18.2-172 and perjury set forth in § 18.2-434 or any other applicable criminal penalty.
§ 55-66.01. Protection of assignees or transferees of debts secured by real estate; form of certificate of transfer.
A. Whenever a debt or other obligation secured by a deed of trust, mortgage or vendor’s lien on real estate has been assigned, the assignor or the assignee, at its option, may cause the instrument of assignment to be recorded in the clerk’s office of the circuit court where such deed of trust, mortgage or vendor’s lien is recorded provided such instrument is otherwise in recordable form, or may cause a certificate of transfer signed by the assignor to be recorded in such clerk’s office, and such instrument of assignment or certificate of transfer, upon recordation, shall operate as a notice of such assignment. The instrument of assignment or certificate of transfer shall be indexed in the name of the assignor and in the names of the obligor or maker, and the trustees, as applicable, all of whose names shall be set forth in such instrument or certificate. The certificate of transfer shall conform substantially to the following:
CERTIFICATE OF TRANSFER
Place of Record:           Clerk’s Office of the Circuit
                            Court of the ………… of
                            …………, Virginia
Date of [Deed of Trust/
Mortgage/Vendor’s Lien]:   …………….,
Deed Book
…….., Page  ……..
Name of Obligor or Maker:  ……………………………………
Names(s) of Trustee(s)
    [if a Deed of Trust]:   ……………………………………
                            ……………………………………
Name of Original
Payee or Obligee:          ……………………………………
Original Amount Secured
    [if applicable]:
    $ ……………………………………………………….
The undersigned, the original payee or obligee [or the subsequent assignee]
of the obligation secured by the above-mentioned [Deed of Trust/Mortgage/
Vendor’s Lien], hereby certifies that the obligations secured thereby have
been assigned to …………………………………………….
……………………………………………………………
[If a credit line deed of trust, the name and address to which notice may
be mailed or delivered to the Noteholder as provided by § 55-58.2 is as
follows:
……………………………………………………………..
…………………………………………………………….]
Given under [my/our] hand(s) as of the …………………………..
day of ……………., ……….
      …………………………………
      (Assignor)
……………… of ………….
County/City of ……………….., to wit:
Subscribed, sworn to and acknowledged before me by ………………..
this ……………….. day of ………… 20……….
My Commission Expires:     …………
                            …………………………………..
                            Notary Public
For purposes of this statute, the word “assigned” shall include endorsed, pledged, hypothecated or otherwise transferred. Nothing in this statute shall be deemed to invalidate any other form or notice of assignment that may have been heretofore recorded. Nothing in this statute shall imply that recordation of the instrument of assignment or a certificate of transfer is necessary in order to transfer to an assignee the benefit of the security provided by the deed of trust, mortgage or vendor’s lien.
B. On or after July 1, 2011, all assignments of a debt or other obligation secured by a deed of trust or mortgage shall be recorded in the clerk’s office of the circuit court where such deed of trust or mortgage is recorded. The trustee, or any substitute trustee, under any deed of trust or mortgage shall not proceed with any sale of the property conveyed to him by the deed of trust or mortgage at the request of a person who asserts that he is the holder of the obligation secured thereby unless the land records of the locality in which the property is located contain a duly recorded instrument evidencing the assignment of the secured obligation to such person.
Legislative Information System
17. Fissile | December 18th, 2010 at 6:50 am
This is more evidence to confirm something that’s been obvious for a long time. Privatization schemes are nothing more than transfers of money from do-little government worker slugs, to do-nothing corporate klepto-crats. More taxes, on the working poor, less services for the working poor. That’s the Mush Limpblow/Sean Insanity ‘merican way.
BTW, Yasha is kidding himself if he sees an upside to this MERS ripoff for Joe Homeowner. I’ve been to court a couple of times were I was addressed as “the defendant”. From my personal observation, Judges accept legal technicality arguments when it benefits the prosecution, cops or classes of litigants with connections. For everyone else, legal technicalities are ignored.
18. michael nola | December 18th, 2010 at 9:22 am
The banksters are that smart, but they just can’t contain their short term greed, even at the expense of their long term greed.
Well educated sociopaths are still just sociopaths.
19. CensusLouie | December 18th, 2010 at 8:06 pm
Jesus christ, take a look at the house vote #573 link. 170 of the 185 yes votes were Republican.
Has there ever been any other time in this country’s history where one party wasn’t so blatantly united towards screwing everyone over? How are people this stupid? Am I hoping for too much that things will get better once the generation raised on cold war propaganda and institutionalized racism dies off?
20. Pushkin | December 19th, 2010 at 12:06 am
Great! The “who’s to blame?” question is answered. Now, for the “what’s to be done?” part…
21. Strelnikov | December 19th, 2010 at 12:41 pm
No one has mentioned the “Obama-Biden” campaign sign in the woman’s yard….I’ve heard so many stories where the scumfuck banks pretty much steal a person’s house even though they PAID CASH for it. This story explains how they could get away with this shit.
New Exiled slogan “Shoot a Libertarian for the Public Good.”
22. T.B. | December 19th, 2010 at 12:53 pm
The repeal of the Glass-Steagall Act in 1999 was a strategic event that enabled banks to merge with brokers. Before the repeal, banks could make no more than 10 percent income from security markets. However,after the Act was repealed, banks, insurance companies, and security firms could merge and sell each other’s products, and create financial instruments such as the mortgage backed securities.
23. ...winter | December 19th, 2010 at 4:24 pm
Can’t blame the theory of government because its been subverted by corporate lobbyists and now the supreme court. Once we find some honest sorts and make them czars …NAH, its hopeless, too far down the rabbit hole. Best we can hope for is to continue with capitalisms perpetual ponzi scheme.
24. Mr Whipple | December 22nd, 2010 at 2:02 pm
Dear fellow eXiled comment comrades, now that I’ve joined libertards anonymous, I have to uphold the oath I made to my LA sponsor that whenever I have the urge to climb up a billionaires asshole and post an anonymous pro-libertarian comment, I will openly admit that I am a sad, pathetic billionaire-sphincter-munching libertard who cannot control his urge to serve his filthy rich masters and spread their dumbshit propaganda. Thank you for listening.
“It’s too late to work within the system, and too soon to shoot the bastards.”
– Claire Wolfe, “101 Things to Do Until the Revolution”
“You state in your letter that you find it difficult to comprehend, why persons who had a right to demand coin from the Banks in payment of their notes, so long forebore to exercise it. This no doubt appears paradoxical to one who resides in a country where an act of parliament was necessary to protect a bank, but the difficulty is easily solved. The whole of our population are either stockholders of banks or in debt to
them. It is not the interest of the first to press the banks and the rest are afraid. This is the whole secret. An independent
man, who was neither a stockholder or debtor, who would have ventured to compel the banks to do justice, would have
been persecuted as an enemy of society.”
– David Ricardo (1821)
My, how things have changed. It is impossible to properly regulate a fraudulent system.
25. sieben | January 3rd, 2011 at 11:44 am
This is to property ownership what the Federal Reserve was (and is) to money and its value.
26. matt weidner | January 4th, 2011 at 3:58 am
Private attorneys have been screaming about this for decades…finally the rest of the world is listening. What people really need to understand is that the foreclosure crisis is just one symptom of the larger rot at the core of our economy. The Wall Street Fat Cats have robbed us all. They’ve looted pensions, 401ks and retirement accounts. It’s just mind boggling what they are getting away with in courtrooms all across this country every day. Some states like Ohio and New Jersey are finally stepping in but it’s too little too late. WE’RE ALL DOOMED.
27. Wolfie52 | October 4th, 2015 at 5:46 pm
Ridiculous. The VAST majority of properties are documented properly. The REAL problem is that people are conditioned to think that buying a house is what there are supposed to do (wrong) and failing to tell them what a house AND THE MORTGAGE, which is often greater than the cost of the house, REALLY COST.
If we make it a law that, for example, a 200,000 with a 30 year mortgage (which most people are likely to refinance over and over simply to draw out $ to spend) is advertised at its REAL PRICE, say 375,000 or whatever the current market is, we would have people with real information, and perhaps make a different choise!