Rep. Marci Kaptur of Ohio has introduced a short bill, H.R. 6460, which would seriously restrict the operations of MERS by effectively removing Freddie, Fannie and Ginnie as users. The bill would bar the GSEs from guaranteeing or owning any mortgage that is either assigned to MERS or lists MERS as the mortgage of record. Note that those are the two roles typically set forth in the registrations at local courthouses which register mortgage in the name of MERS.
Not surprisingly, the pushback started quickly. The Kaptur bill requires that HUD, in conjunction with the Office of the Comptroller of the Currency, undertake a study of land recordation in the US, including the impact of the lack of electronic records, the current state of play in the use of electronic records at the local level, and whether a Federal system could be created that would not interfere with the local recordation system or state laws.
Note this study is just that, a study, and therefore may not come out strongly in favor of a national system. Remember, the main motive for MERS was to save local recording fees. If a national system is merely a database and mortgage assignments need to be recorded locally, the incremental value of a centralized information repository may be very limited.
But the title industry is misrepresenting the bill in its efforts to block it. From :
While simple on its face, the bill has engendered immediate opposition and early disfavor from the American Land Title Association (ALTA) which argues that the bill would create a Federal land recordation system similar to the .
Surprisingly, opponents of H.R. 6460 wish to drum up support to defeat the bill in its entirety by concentrating on a non-binding feasibility study buried within the thirteen page bill. The feasibility study likely has little chance of bearing fruit to create a Federal Torrens system.
Of course, this salvo may also be a diversionary tactic, given that MERS is the handiwork of the title insurers, along with the GSEs and securitization industry.