H.R. 2425 (112th): Transparency and Security in Mortgage Registration Act of 2011

112th Congress, 2011–2013. Text as of Jul 06, 2011 (Introduced).

Status & Summary | PDF | Source: GPO

I

112th CONGRESS

1st Session

H. R. 2425

IN THE HOUSE OF REPRESENTATIVES

July 6, 2011

introduced the following bill; which was referred to the Committee on Financial Services

A BILL

To prohibit Fannie Mae, Freddie Mac, and Ginnie Mae from owning or guaranteeing any mortgage that is assigned to the Mortgage Electronic Registration Systems or for which MERS is the mortgagee of record.

1.

Short title

This Act may be cited as the Transparency and Security in Mortgage Registration Act of 2011.

2.

Prohibition on guaranteeing MERS mortgages

(a)

Fannie Mae and Freddie Mac

(1)

Fannie Mae

Section 302(b) of the National Housing Act (12 U.S.C. 1717(b)) is amended by adding at the end the following new paragraph:

(7)
(A)

After the date of the enactment of the Transparency and Security in Mortgage Registration Act of 2011, the corporation may not purchase, acquire, newly lend on the security of, newly invest in securities consisting of, or otherwise newly deal in any MERS mortgage or mortgages.

(B)

After the expiration of the period under subparagraph (C), MERS shall not be the named mortgagee or mortgagee of record on any mortgage owned, guaranteed, or securitized by the corporation. Not later than the expiration of such period, the corporation shall require that all mortgage loans owned, guaranteed, or securitized at such time by the corporation and on which MERS is the named mortgagee or mortgagee of record shall be assigned to the servicer, holder, or creditor, as defined by the guidelines of the corporation. The corporation shall not reimburse the servicer, holder, or creditor for any expense incurred in the carrying out or recording such an assignment.

(C)
(i)

Except as provided in clause (ii), the period under this subparagraph is the 6-month period beginning on the date of the enactment of the Transparency and Security in Mortgage Registration Act of 2011.

(ii)

In the case of any mortgage owned, guaranteed, or securitized by the corporation for which the servicer, holder, or creditor has demonstrated to the corporation, in accordance with standards established by the Director of the Federal Housing Finance Agency, that compliance with subparagraph (B) by the expiration of such 6-month period will cause a severe threat to the continued financial viability of such entity, the period under this subparagraph shall be the period that begins on such date of enactment and has such duration as determined by the corporation, in accordance with standards established by the Director, but in no case has a duration longer than 12 months.

(D)

Not later than the expiration of the 6-month period referred to in subparagraph (C)(i), the corporation shall submit a report detailing its compliance with subparagraph (B) to the Congress, the Director of the Federal Housing Finance Agency, the Financial Stability Oversight Council, and the Director of the Bureau of Consumer Financial Protection of the Federal Reserve System, which shall describe any extensions of the period for compliance with subparagraph (B) granted pursuant to subparagraph (C).

(E)

For purposes of this paragraph, the following definitions shall apply:

(i)

The term MERS means the Mortgage Electronic Registration Systems, Inc., or any successor entity of such corporation.

(ii)

The term MERS mortgage means any mortgage—

(I)

for which the MERS is, or was at any time, the original or nominal mortgagee or mortgagee of record under the mortgage;

(II)

that is, or was at any time, assigned to or recorded in the MERS; or

(III)

for which the MERS is, or was at any time, acting as nominee in the county land records for the lender or servicer of the mortgage.

.

(2)

Freddie Mac

Section 305(a) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1454(a)) is amended by adding at the end the following new paragraph:

(6)
(A)

After the date of the enactment of the Transparency and Security in Mortgage Registration Act of 2011, the Corporation may not purchase, acquire, newly lend on the security of, newly invest in securities consisting of, or otherwise newly deal in any MERS mortgage or mortgages.

(B)

After the expiration of the period under subparagraph (C), MERS shall not be the named mortgagee or mortgagee of record on any mortgage owned, guaranteed, or securitized by the Corporation. Not later than the expiration of such period, the Corporation shall require that all mortgage loans owned, guaranteed, or securitized at such time by the Corporation and on which MERS is the named mortgagee or mortgagee of record shall be assigned to the servicer, holder, or creditor, as defined by the guidelines of the Corporation. The Corporation shall not reimburse the servicer, holder, or creditor for any expense incurred in the carrying out or recording such an assignment.

(C)
(i)

Except as provided in clause (ii), the period under this subparagraph is the 6-month period beginning on the date of the enactment of the Transparency and Security in Mortgage Registration Act of 2011.

(ii)

In the case of any mortgage owned, guaranteed, or securitized by the Corporation for which the servicer, holder, or creditor has demonstrated to the Corporation, in accordance with standards established by the Director of the Federal Housing Finance Agency, that compliance with subparagraph (B) by the expiration of such 6-month period will cause a severe threat to the continued financial viability of such entity, the period under this subparagraph shall be the period that begins on such date of enactment and has such duration as determined by the Corporation, in accordance with standards established by the Director, but in no case has a duration longer than 12 months.

(D)

Not later than the expiration of the 6-month period referred to in subparagraph (C)(i), the Corporation shall submit a report detailing its compliance with subparagraph (B) to the Congress, the Director of the Federal Housing Finance Agency, the Financial Stability Oversight Council, and the Director of the Bureau of Consumer Financial Protection of the Federal Reserve System, which shall describe any extensions of the period for compliance with subparagraph (B) granted pursuant to subparagraph (C).

(E)

For purposes of this paragraph, the following definitions shall apply:

(i)

The term MERS means the Mortgage Electronic Registration Systems, Inc., or any successor entity of such corporation.

(ii)

The term MERS mortgage means any mortgage—

(I)

for which the MERS is, or was at any time, the original or nominal mortgagee or mortgagee of record under the mortgage;

(II)

that is, or was at any time, assigned to or recorded in the MERS; or

(III)

for which the MERS is, or was at any time, acting as nominee in the county land records for the lender or servicer of the mortgage.

.

(3)

Regulations

Not later than the expiration of the 90-day period beginning on the date of the enactment of this Act, the Director of the Federal Housing Finance Agency shall issue any regulations necessary to carry out the amendments made by paragraphs (1) and (2). In issuing such regulations, the Director shall consult and coordinate with the Secretary of Housing and Urban Development to ensure that the regulations issued by the Director and the regulations issued by the Secretary pursuant to subsection (b)(2) of this section are uniform and consistent to maximum extent possible.

(b)

Ginnie Mae

(1)

Prohibition

Section 302(c) of the National Housing Act (12 U.S.C. 1717(c)) is amended by adding at the end the following new paragraph:

(6)
(A)

After the date of the enactment of the Transparency and Security in Mortgage Registration Act of 2011, the Association may not newly guarantee the payment of principal of or interest on any trust certificate or other security based or backed by a trust or pool that contains, or purchase or acquire, any MERS mortgage.

(B)
(i)

After the expiration of the period under subparagraph (C), MERS shall not be the named mortgagee or mortgagee of record on any mortgage owned or held by the Association or on any mortgage contained in a pool backing or on which is based any trust certificate or other security the payment of principal of or interest on which is guaranteed by the Association.

(ii)

Not later than the expiration of such period, the Association shall require that all mortgage loans that are owned or held at such time by the Association, or that at such time are contained in a trust or pool backing or on which is based a trust certificate or other security the payment of principal of or interest on which is guaranteed by the Association, and on which MERS is the named mortgagee or mortgagee of record, shall be assigned to the servicer, holder, or creditor, as defined by the guidelines of the Association. The Association shall not reimburse the servicer, holder, or creditor for any expense incurred in the carrying out or recording such an assignment.

(C)
(i)

Except as provided in clause (ii), the period under this subparagraph is the 6-month period beginning on the date of the enactment of the Transparency and Security in Mortgage Registration Act of 2011.

(ii)

In the case of any mortgage owned or held by the Association, or contained in a trust or pool backing or on which is based a trust certificate or other security the payment of principal of or interest on which is guaranteed by the Association, for which the servicer, holder, or creditor has demonstrated to the Association, in accordance with standards established by the Secretary, that compliance with subparagraph (B) by the expiration of such 6-month period will cause a severe threat to the continued financial viability of such entity, the period under this subparagraph shall be the period that begins on such date of enactment and has such duration as determined by the Association, in accordance with standards established by the Secretary, but in no case has a duration longer than 12 months.

(D)

Not later than the expiration of the 6-month period described in subparagraph (C)(i), the Association shall submit a report detailing its compliance with subparagraph (B) to the Congress, the Secretary, the Financial Stability Oversight Council, and the Director of the Bureau of Consumer Financial Protection of the Federal Reserve System, which shall describe any extensions of the period for compliance with subparagraph (B) granted pursuant to subparagraph (C).

(E)

For purposes of this paragraph, the following definitions shall apply:

(i)

The term MERS means the Mortgage Electronic Registration Systems, Inc., or any successor entity of such corporation.

(ii)

The term MERS mortgage means any mortgage—

(I)

for which the MERS is, or was at any time, the original or nominal mortgagee or mortgagee of record under the mortgage;

(II)

that is, or was at any time, assigned to or recorded in the MERS; or

(III)

for which the MERS is, or was at any time, acting as nominee in the county land records for the lender or servicer of the mortgage.

.

(2)

Regulations

Not later than the expiration of the 90-day period beginning on the date of the enactment of this Act, the Secretary of Housing and Urban Development shall issue any regulations necessary to carry out the amendments made by paragraphs (1) and (2). In issuing such regulations, the Secretary shall consult and coordinate with the Director of the Federal Housing Finance Agency to ensure that the regulations issued by the Secretary and the regulations issued by the Director pursuant to subsection (a)(3) of this section are uniform and consistent to maximum extent possible.

3.

HUD study

(a)

Study

The Secretary of Housing and Urban Development, in consultation with the Comptroller General of the United States, shall conduct a study to analyze and determine—

(1)

the impacts of the lack of electronic records and uniform standards found in local land title recordation systems currently used in the various States;

(2)

any progress States have made in developing electronic land title recordation systems for their localities that contain uniform standards, and any findings and conclusions and best practices resulting from such development;

(3)

the current oversight role of the Federal Government in the transfer and recordation of land titles;

(4)

opportunities, and the feasibility of such opportunities, that may be present to leverage progress made by some States and localities to create an electronic land title recordation system, including through—

(A)

a system that would maintain all previous records of the land-property without invalidating, interfering with, or preempting State real property law governing the transfer and perfection of land title; and

(B)

further actions by the States or by the Federal Government, or coordinated actions of both; and

(5)

the feasibility of creating a Federal land title recordation system for property transfers that would maintain all previous records of the land-property without invalidating, interfering with, or preempting State real property law governing the transfer and perfection of land title.

(b)

Report

Not later than the expiration of the 12-month period beginning on the date of the enactment of this Act, the Secretary of Housing and Urban Development, in consultation with the Comptroller General of the United States, shall submit to the Congress a report on the results and findings of the study conducted under this section.