White Article (Do Not Delete) 5/4/2012
Loyola Consumer Law Review
[Vol. 24:4mortgage servicers’ response to the tremendous volume of mortgagedefaults and foreclosures after 2007: assembly-line signing andnotarizing of affidavits for foreclosure cases, mortgage assignments,note allonges and related documents, all filed in courts and deedrecorders in counties across the United States. In early 2012, the stateattorneys general, together with the Federal Department of Housingand Urban Development and other agencies, announced a settlementwith five major banks and mortgage servicers of robo-signing relatedclaims.
Many hope that this settlement would not only resolve someof the liabilities arising from robo-signing but also somehow resolvelegal questions about a variety of mortgage industry practices,allowing the foreclosure process and housing markets to return tonormal.
Lying at the intersection of contract assignment and propertytransfer law, the structures and practices governing mortgage loantransfers find themselves in a state of confusion. While the recordingand transfer of corporate debt and stock securities successfullyshifted to an electronic system in the 1970’s, with legal support fromArticle 8 of the Uniform Commercial Code and relevant Securitiesand Exchange Commission rules,
the law and practice of electronictransfers of the largest individual credit obligations, home mortgageloans, have not yet converged. On the practice side, the MortgageElectronic Registration System (“MERS”) came about in the 1990’son the basis of a legal opinion letter, completely devoid of anystatutory or regulatory authority.
On the legal side, the Federal E-Sign statute, providing for electronic Note negotiation,
as well as the
preparation for an impending foreclosure.
Jim Puzzanghera & Alejandro Lazo,
Mortgage settlement is also housingrelief package,
Feb. 10, 2012,
Questions and answers about what the foreclosure-abusedeal will and won’t do
., Feb. 9, 2012,
Richard A. Hakes,
UCC Article 8: Will the Indirect Holding of Securities Survive the Light of Day?
. 661 (2002) (detailingboth the history and subsequent evolution of Article 8 of the Uniform CommercialCode).
Two Faces: Demystifying the Mortgage Electronic Registration System’s Land Title Theory
, 53 W
. 111, 116-17(2011).
15 U.S.C.A § 7021 (West 2012) (defining “transferable records” andauthorizing electronic equivalent to a paper negotiable instrument);
What Is a Transferable Record and Who Cares?