Prof. Nancy Wallace of the Haas School of Business, UC Berkeley gave a presentation titled Beyond the Mortgage Electronic Registration System (MERS). She explained the mortgage-securitization process as well as the mortgage supply chain. She posits that the efficiencies from the bond market working electronically have a conflict with the lien market which works on paper. This led to the hope of MERS in order to make the system more efficient.
However, MERS has led to very little transparency over how notes and liens travel down the highway because MERS shows up as the only recorded owner. Furthermore, MERS can look up a true owner but the internal database entry is not the same as the recorded assignment even within MERS. In this way, MERS does not maintain a comprehensive database.
Prof. Wallace articulates that the MERS predicament is a symptom of a recording utility that became too greedy. She put forth three alternative proposals: (1) having a more modest private utility, (2) establish a federal recording system that would accept electronic filings, and (3) invest in new infrastructure for existing land title systems to accommodate electronic recording.
She concluded by stating that there is evidence that significant damage may have already occurred in publicly available real property records. Securitized mortgage markets and the efficiencies they afford require a modern electronic and verifiable lien transfer, recording and assignment system that is consistent with the real property laws of states. Indeed, this will affect the cost of mortgage debt.