The ongoing battle over the foreclosure crisis is complicated in large part by the gulf between the entirely local costs and impact of foreclosures and the remote nature of the bulk of mortgage servicers, many of whom have been swallowed up in a series of transactions into the usual mega-bank suspects. This disparity is reflected in the struggle over regulatory power, with the local state attorneys general (with some damaging exceptions, as Yves Smith has documented extensively) generally pushing for greater servicer penalties while the federal organizations formally charged with oversight of the mega banks that own the largest servicers (the OCC and – in the case of GMAC/Ally – the Fed) have by and large put forward much more lenient proposals.
The resulting paralysis has left the door open to more local action by the one group that has been largely ignored since the beginning of the crisis – county recorders, or Registers of Deeds, who are ultimately responsible to for the integrity of the local land records that underlie property rights in the U.S. (integrity that has been shredded by MERS). The decisions of two local
recorders Registers of Deeds today to refuse to accept robo-signed documents (O’Brien in Massachusetts and Thigpen in North Carolina) point to the benefits of the dispersion of land records across counties, rather than at the federal level, in that lax federal oversight is not a constraint.
It will be worth watching to see how successful they are, as precedent is not on their side. When MERS was first introduced in the mid-1990s, with its “innovation” of using a single placeholder entity in land records rather than registering each beneficial owner of the debt, there was only scattered dissent from county clerks, at least as far I could find. The only instance I came across was in a 1996 article in National Mortgage News (not available online, unfortunately), which noted in passing that county
recorders Registers in Illinois had pressured Senator Carole Mosley Braun to introduce federal legislation reaffirming the need to use traditional methods of land recording. Senator Mosley Braun agreed to do so, but eliminated the provision at the last minute before bringing the affordable housing bill to which it had been appended to the floor. More recently, a recorder Register of Deeds on Long Island in 2001 refused to take MERS mortgages, but was ultimately ruled against by the NY Supreme Court (for more on this, and MERS in general, Christopher Peterson is invaluable).
With that said, the tide does appear to be turning. Too late for an awful lot of people, but here’s hoping that these actions throw at least a little sand in the gears of the foreclosure machine.