Last week, a San Francisco city audit of almost 400 home foreclosures reported that 84% had faulty documentation and/or irregular processing. Problems with information in the Mortgage Electronic Registry System (MERS), a Reston, VA based intermediary in processing mortgage, was also cited. (MERS was set up in 1995 by Fannie Mae and Freddie Mac, along with several of the larger market participants - its motto: "process loans, not paperwork".) Various sources believe the San Francisco results are representative of continuing problems across the U.S. mortgage market. Separately, New York Attorney General Eric Schneiderman is suing Bank of America Corp., Wells Fargo & Co. and JPMorgan Chase & Co. for improper foreclosures and the use of poor MERS data.
As the U.S. housing market seeks
stability, we are reminded of the lack of integrity in the processing of both
mortgage filings and foreclosures.
Note: while the audit focused on
foreclosures, the inaccurate MERS data can cause problems in the purchasing and
refinancing of existing homes as well.