PROVIDENCE, R.I. (Legal Newsline) - Rhode Island Attorney General Peter Kilmartin announced Tuesday that a proposed bill to be heard before the state Senate and House would increase mortgage transparency and make loan owners more apparent.
The legislation, S0547 and H5512, sponsored by Sen. William Conley (D-18th) and Rep. Brian Kennedy (D-38th), respectively, was heard before the Senate Committee on Judiciary and House Corporations Committee on Tuesday. The legislation would require that all residential mortgage transfers provide a clean chain of title, changing the practice in which most mortgages are held in the name of a private registry known as Mortgage Electronic Registration Systems Inc.
The banking industry has used MERS since 1997, which undermines the accuracy of public records and causes negative consequences for consumers and municipalities.
"The changing of servicing and subservicing rights within the lending history often leaves the borrower confused regarding which entity they are supposed to be dealing with on a monthly basis and why," Kilmartin said. "The legislation is designed to give borrowers a public record of who ultimately owns their loans, increasing the ability of homeowners to negotiate with their lenders and their ability to have full knowledge of their rights, counterclaims and defenses if they are faced with litigation."
The proposed legislation would make it easier for borrowers and regulators to determine who owns loans secured by mortgages on Rhode Island properties. Borrowers facing foreclosure would be able to more easily determine who owns the loans before it is too late. Municipalities would be able to determine the responsible parties for abandoned homes.
"The housing and mortgage foreclosure crisis in Rhode Island and the country did not happen overnight," Kilmartin said. "It is going to take time, as well as reforms to existing systems like MERS to right the housing market and to eliminate past bad practices from happening again."
Since January 2011, Kilmartin has worked to dig the state out of the housing and mortgage foreclosure crisis. In 2012, Kilmartin signed onto the National Mortgage Settlement and brought $187 million in relief to homeowners. For the last two years, Kilmartin proposed legislation that would require a mortgagee to engage in a good faith conciliation conference before foreclosure proceedings.