Ellen Brown: Fixing the Mortgage Mess: The Game-changing Implications of Bain v. MERS


Ellen Brown: Fixing the Mortgage Mess: The Game-changing Implications of Bain v. MERS

Ellen Brown: Fixing the Mortgage Mess: The Game-changing Implications of Bain v. MERS

The Web of Debt-

Two landmark developments on August 16th give momentum to the growing interest of cities and counties in addressing the mortgage crisis using eminent domain:

(1) The Washington State Supreme Court held in Bain v. MERS, et al., that an electronic database called Mortgage Electronic Registration Systems (MERS) is not a “beneficiary” entitled to foreclose under a deed of trust; and

(2) San Bernardino County, California, passed a resolution to consider plans to use eminent domain to address the glut of underwater borrowers by purchasing and refinancing their loans. 

MERS is the electronic smokescreen that allowed banks to build their securitization Ponzi scheme without worrying about details like ownership and chain of title.  According to trial attorney Neil Garfield, properties were sold to multiple investors or conveyed to empty trusts, subprime securities were endorsed as triple A, and banks earned up to 40 times what they could earn on a paying loan, using credit default swaps in which they bet the loan would go into default.  As the dust settles from collapse of the scheme, homeowners are left with underwater mortgages with no legitimate owners to negotiate with.  The solution now being considered is for municipalities to simply take ownership of the mortgages through eminent domain.  This would allow them to clear title and start fresh, along with some other lucrative dividends.

A major snag in these proposals has been that to make them economically feasible, the mortgages would have to be purchased at less than fair market value, in violation of eminent domain laws.  But for troubled properties with MERS in the title—which now seems to be the majority of them—this may no longer be a problem.  If MERS is not a beneficiary entitled to foreclose, as held in Bain, it is not entitled to assign that right or to assign title.  Title remains with the original note holder; and in the typical case, the note holder can no longer be located or established, since the property has been used as collateral for multiple investors.  In these cases, counties or cities may be able to obtain the mortgages free and clear.  The county or city would then be in a position to “do the fair thing,” settling with stakeholders in proportion to their legitimate claims, and refinancing or reselling the properties, with proceeds accruing to the city or county.


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2 Responses to “Ellen Brown: Fixing the Mortgage Mess: The Game-changing Implications of Bain v. MERS”

  1. Guy Fawkes says:

    I disagree with this “eminent domain” argument. What I think needs to be done and should be done is a public trustee be employed to get out in front of these “wild deed” properties. The state then quiets title, appoints a special master and the property owner pays the state the fee that it cost the state to quiet the title. Then, you have clear title, the state can make money on this process and get themselves out of this shit hole of a financial problem that they are in…and the homeowner winds up with massive equity again. This is win-win. For both the states and the homeowners.

  2. papergate says:

    Kudos Guy – I absolutely agree – put that suggestion in the main presses (Huff, etc.) maybe they’ll finally get it . . .


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