The Brecht Forum-
A long string of socially costly misdeeds by major private US banks have been exposed since the current crisis hit in 2007. The latest concerns an obscure enterprise named Mortgage Electronic Registration Systems, or Mers.
Founded in 1995, this private company in Virginia never employed more than 50 people full-time. Big private banks (Bank of America, JP Morgan Chase, etc) and housing finance companies, like Fannie Mae and Freddie Mac, founded Mers in order to speed the processing of mortgages into mortgage-backed securities (MBS). Investors were willing to buy these new securities (bundles of Americans’ mortgages). Most importantly, US financial institutions wanted the huge profits from producing and trading MBS.
Different local procedures for registering mortgages and processing the paperwork for trading mortgages had been slow and cumbersome across the US, but financial mega-corporations were impatient – so they created this fast, computerized way of registering mortgages and mortgage trades. Mers achieved its purpose during the housing boom that occurred from 1995 to 2007. But when mortgage defaults precipitated the housing crash and then broader economic crises, banks and lenders used Mers to foreclose on defaulted mortgages.
Mers, it now turns out, was lax and loose, as well as fast, in processing foreclosures. Beyond facilitating mortgage transactions, it often represented ultimate lenders (who alone can legally initiate foreclosures) whose exact identities were sometimes questionable. In so doing, Mers violated state laws that strictly regulate foreclosure procedures.
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