Watch for Change at the State House: Note Registration Before Foreclosure?
More on our "Watch For Change (at the state house)" series (prior postings on new business tax; new foreclosure fee) . . . .
I suspect that many state and local authorities soon will be requiring lenders to register a loan BEFORE the loan is foreclosed.
Yes, another foreclosure trip wire.
Recently, a representative of MERS (the electronic note registry used extensively with residential mortgage note and to a lesser extent with commercial mortgage notes securitized in CMBS pools) told me that MERS is being used in new ways - most notably, several cities (such as Chula Vista, CA) are using the registry to "track down" and identify owners, servicers and managers of foreclosed single family houses.
He also tells me that several states (VA & CA, for example) have pending legislation requiring all foreclosed property to be registered in a database for use by governmental authorities (data points for the registry include ownership, servicer, property manager, etc.). (I'm tracking down information on this.)
- Why? Thousands of homes have been foreclosed, and sit vacant and unattended. And the public wants them to be kept secure, yards mowed, pools serviced, etc. No one wants a meth lab, or a party house, as your newest next door neighbor.
- Why not? Public officials want votes, so they're looking for ways to "please" the public without spending public funds.
However, since most commercial mortgage notes are NOT registered with MERS, it will NOT be a data-ready tool for use in tracking down commercial lenders after foreclosure (one caveat: some CMBS notes have been registered in MERS).
. . . yet. I predict that this will catch on in state legislatures across the nation - making registration a requirement before foreclosure.
If you can give us some information on this, or if you have any questions or comments, please post a contact.
