Is the biggest fraud in the history of the US housing market about to come unglued? If so, take our prediction of a $100 billion total in future BofA rep and warranty reserves and triple it.
From the WSJ:
The chief executive of the privately-held Mortgage Electronic Registration Systems, or MERS, is planning to leave the company and an announcement could come within days, according to people familiar with the matter.
The company has been under fire by Congress and state officials for its role in the mortgage-document crisis. The firm's board of directors has met in recent days to address the fate of the company and its chief executive, R.K. Arnold, the people said.
Arnold and other MERS executives didn't respond to requests for comment. A MERS spokeswoman Friday declined comment. Arnold, a former U.S. Army Ranger, has served as the CEO and president of Merscorp Inc., the parent company of MERS, since 1998 and has been with the company since its inception 15 years ago, according to a corporate biography.
MERS was built by Fannie Mae (FNMA), Freddie Mac (FMCC), and several large U.S. banks in 1996 as an electronic registry of land records. That created a parallel database to facilitate the packaging of loans into securities that could be sold and re-sold without being recorded in local county courthouses, reducing costs for banks. The company's name is listed as the agent for mortgage lenders on more than 65 million home loans.
But the company's practices have begun to receive heavy scrutiny from state prosecutors and federal regulators, particularly in light of foreclosure-document problems that surfaced last fall. State and federal lawmakers have begun to consider bills that would make it harder for banks to use or foreclose on properties through MERS.
MERS's legal standing also has been challenged by legal experts because it doesn't own the underlying debt. Previously, the mortgage and the promissory note weren't split between different parties.
Critics of the company have raised concerns over whether notes were properly assigned or tracked within the electronic system. Judges have also begun to question the company's practices of "deputizing" hundreds of bank executives to handle foreclosures by naming them "vice presidents" of MERS.