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MERS Critic Christopher Peterson Appointed to CFPB

totalmortgage.comMay 10, 2012

By Michael Kraus

I do not like the Mortgage Electronic Registration System.  I have written about it extensively over the past couple of years, and don’t really want to recap it all here.  If you’re totally unaware of it, MERS is a system owned by banks designed to make mortgage securitization easier.  It also allowed those involved in mortgage transactions to avoid billions of dollars in county filing fees that were associated with real estate transactions.  It is at the center of a slew of foreclosure-related lawsuits, and may be responsible for clouding the title of millions of homes (Harper’s wrote an excellent article about it called “Clouded Title – The Gross Illegality of MERS” that I would love to link to, but cannot because Harper’s appears to be stuck in the 1970s).

Anyway, the point of this post is not to bash MERS further, but to point out that Professor Christopher L. Peterson (S.J. Quinney College of Law at the University of Utah), a big-time critic of MERS, was appointed to the CFPB yesterday, which I became aware of due to an article on Housing Wire yesterday.  The Professor has testified in Congress about foreclosures and MERS, and has written a series of academic articles on the subject.  In his congressional testimony, Peterson said that “MERS is a deceptive and anti-democratic institution,” and that MERS’ “corporate structure is so unorthodox as to be considered fraudulent.”  I think it is pretty clear on where he stands on this subject.

So what does all this mean?  That’s really an excellent question.  On the one hand, it gives me a grain of optimism that the CFPB is indeed serious about going after some of the entities that helped contribute to the economic mess that we find ourselves in.  On the other hand, we have seen this administration attempt to totally whitewash an enormous fraud in the recent mortgage settlement, so I don’t know how much leash the CFPB is going to have to go after MERS.

The only thing I really feel confident saying is that I feel that it is unlikely that Peterson, an academic, backs off his well-established positions after joining the government agency (unlike the presumably more politically motivated NY AG Eric Schneiderman, who talked a big game about pursuing mortgage fraud right up until he capitulated and joined the administration’s efforts).  I have no idea if he (or the agency) has any plans to pursue MERS-related issues.  Still, I like this appointment.


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