Marcy Kaptur (D-OH), a Congresswoman  from Toledo, Ohio, has introduced H.R. 6460 a bill known as the "Transparency and Security Mortgage Registration Act of 2010".  The bill is designed to prohibit Fannie Mae, Freddie Mac, and Ginnie Mae - otherwise referred to collectively as government sponsored entities or GSEs -- from owning or guaranteeing any mortgage that is assigned to the Mortgage Electronic Registration Systems (MERS) or for which MERS is the mortgagee of record.

While simple on its face, the bill has engendered immediate opposition and early disfavor from the title insurance underwriter trade associations that argue that the bill would create a Federal land recordation system similar to the Torrens system.

Opponents of H.R. 6460 are trying to defeat the bill in its entirety by concentrating on a non-binding, feasibility study found within the thirteen page bill; rather than the heart of the bill which focuses squarely on the problems associated with the MERS registry system.  Contrary to the opposition, the bill does not establish a Federal Torrens land registration system. Rather, in light of the potential defects in the MERS land registry system, members of Congress believe that all potential solutions, including possible torrenization of land records, must be considered when HUD and the Comptroller of Currency report back to Congress one year after the bill passes, assuming passage.

Again, the real focus of H.R. 6460 is the recent legal failings of the MERS registry system.  Academics, state Supreme Courts and several Federal bankruptcy courts have all questioned the continued viability of MERS as an assignee or as a mortgagee in foreclosure cases across the country.  Because the title insurance underwriter trade associations were intimately involved in the construction of MERS, the stakes are high to oppose the bill.  While NAILTA is not a supporter of torrenization, the bill is being miscast by opponents as a Torrens bill.  H.R. 6460 aims to end the national confusion concerning the MERS registry and the legal ambiguities it has created.

NAILTA supports that end and therefore supports the bill.

For more information on NAILTA's stance concerning MERS and H.R. 6460, please click here.

The OAITA Board has voted in support of NAILTA's actions and joins them in applauding Representative Kaptur for seeking to end the title clouds created by the MERS system. Both OAITA and NAILTA believe that concerns over a rumored Federal Torrens system, which is not actually established by H.R. 6460, are premature.

Most of the early opposition to H.R. 6460 comes from groups such as the American Land Title Association who helped fund MERS since its inception and who stands to lose the product offering if Kaptur's bill becomes law. ALTA's opposition centers on a non-binding feasibility study that would look at the possibiity of creating a Federal land title recordation system (i.e. Torrens system). Because of this study, ALTA wants the whole bill scrapped.

OAITA and NAILTA do not support such a rash response to the bill. Instead, both encourage Congress and HUD to unmask the MERS process and to return validity and transparency to the land records process. Further, both organizations support Kaptur's attempt to develop best practices and uniform assignment standards throughout the United States. H.R. 6460 is the first of many steps to improve these areas of the land title recordation process.

Click here for a copy of the NAILTA white paper.