Fannie Mae claims to have owned my mortgage a month BEFORE we bought the house!

[Yo_Mama]

38. Once the mortgage is done in MERS' name, there is no conveyance

Thus no legal need for for an assignment to be recorded.

The issues of the legalities of the trusts are entirely different, based on state law and the trust agreements.

Sale of bonds to investors based on the anticipated payment stream from a pool of mortgages does not convey a mortgage. Transfer of a beneficial interest in a property is not transfer of the property under common law.

There have been legal cases which determined that the trust did not indeed have the ownership interest. Thus MERS procedure has changed somewhat, in that when a Trustee wishes to foreclose, it's now often procedure for MERS to convey the mortgage in question to the Trustee, which then goes ahead and records the assignment to the Trustee, and then goes ahead to pursue foreclosure under its name.

Fannie Mae was one of the founders of MERS, and the theory was that MERS could actually execute the foreclosure, but that theory has been rejected by judges in some states.

However the idea that securitization alone clouds ownership is ridiculous. Securitization is not that new, and it has always entailed splitting beneficial interest from legal ownership. In the traditional Fannie type of mortgage, servicing rights were split from the mortgage, and then rights to the stream of payments arising from the mortgage were split from the mortgage.

This novel theory that any transfer of beneficial interest from a property creates a recordable transaction is not going to fly even in PA. It is true that the Montgomery County lawsuit survived the first round in part (civil conspiracy thrown out), but the survival is technical, and if the final court decision were to go in Montgomery County's favor, the resulting chaos would force the state legislature to change their laws - perhaps even their Constitution.

State laws may indeed force an entity wishing to foreclose to legally convey the property from MERS to its own ownership first, and I believe they do in PA and many other states. But state law cannot force a recordation requirement for any change in beneficial interests arising from a mortgage, and that is because parties have legal contractual rights to make such arrangements, and long-standing practice has created a web of such interests that is rather complex and has existed for some time.

Thus, if a change in beneficial ownership (i.e., a right to a part or all of the payment stream arising from a mortgage) were ruled to require recordation, any time a servicer changed a conveyance of the servicing rights would theoretically have to be recorded in Montgomery County, PA. A rather remarkable legal doctrine, that.

And then there is the entire question of the mortgage bonds arising from the pooled mortgages. Would a change in beneficial interest have to be recorded every time a bond was bought or sold? Of course not! No court is going to rule that such is the case.