The MERS Mess, Stage Two Is Here

Denninger's been on this like bees on honey, or maggots on dead raccoons, or something.

Here he quotes Josh Rosner, of Graham-Fisher:

Nearly all Pooling and Servicing Agreements require that “On the Closing Date, the Purchaser will assign to the Trustee pursuant to the Pooling and Servicing Agreement all of its right, title and interest in and to the Mortgage Loans and its rights under this Agreement (to the extent set forth in Section 15), and the Trustee shall succeed to such right, title and interest in and to the Mortgage Loans and the Purchaser's rights under this Agreement (to the extent set forth in Section 15)”. Also, an Assignment of Mortgage must accompany each note and this almost never happens.

We believe nearly every single loan transferred was transferred to the Trust in “blank” name. That is to say the actual loans were apparently not, as of either the cut-off or closing dates, assigned to the Trust as required by the PSA.

This will not end well for a lot of Banks, nor for the warehouse-loan intermediary firms, like Goldman/Sachs, Merrill (now part of BofA), etc.