You won’t find anything on the ALTA site about this one.
NAILTA has confirmed through the American Land Title Association (ALTA) that ALTA’s CEO, Kurt Pfotenhauer, recently became the Chairman of the Board for MERSCorp, Inc. and its controversal subsidiary, MERS, Inc. (MERS). MERS is the mortgage recording registry that ALTA and the banking industry helped create back in the 1990′s. Since it’s creation, MERS has helped turn the foreclosure crisis upside down. MERS has been in the news for months after revelations over its structure and its questionable legal efficacy arose in courtrooms across the United States. Several state supreme courts have recently held that the registry improperly foreclosed on homeowners and lacks legal standing to prosecute foreclosure actions. The registry has also been the subject of scorn from county recorders who believe that MERS acted as a conduit to syphon county recorder fees from local governments and, in turn, allowed banks and mortgage entities involved in MERS to profit from the troubled registry. The registry has also come under fire from the land title industry, including NAILTA, NALTEA and others, who believe that the MERS registry destroyed the time-honored tradition of unity between the note and mortgage (i.e. once they are separated — as they are in the MERS registry — the mortgage is no longer enforceable).
Pfotenhauer is no stranger to the mortgage industry having cultivated a long career lobbying for the Mortgage Bankers Association prior to his ascension to CEO for ALTA. He has also served on the MERS Board since its inception making him — and ALTA — directly involved in the messy history of MERS.
What does this mean to the title insurance industry? Plenty. The titular head of the title insurance industry is now the Chairman of the Board of one of the most controversial and troublesome failures of the housing and mortgage collapse. The conflict of interest issue is inescapable. ALTA’s support for the further consolidation of the title insurance industry with the mortgage and banking industry is fully evident. However, MERS has not brought about the improvements it promised in the 1990′s.
It has done the opposite.
MERS participants have no penalty and thereby no incentive to make the registry current or accurate. Title examiners must continue to stumble through the weeds to find who the actual servicer or real party in interest is relative to the 60 million mortgages still found on the MERS registry system. Time has not been saved, it has been wasted. At its core, MERS was nothing more than a shell game designed to increase referral source participation in the title profit stream.
If you are not convinced that the present leaders of ALTA are hell-bent on finishing off the title insurance industry and its traditional methods of risk elimination, this news should do it.