it’s 3 am, do you know where your mortgage note is?
This has been bouncing around the blogosphere for a few days and I thought you’d find it interesting. Dan Edstrom is a securitization auditor, which is a fancy way of saying that he’s an expert in figuring who owns what in the world of securities. This is his attempt at figuring out who actually owns his mortgage note.
It’s now well known that the banks have been acting in bad faith with regard to properly recording their loans, which has caused severe problems. What’s worse is that the courts have shown no interest at all in enforcing the rules. Sure, borrowers screwed up, but we don’t need courts condoning fraud.
Another deeper issue is that economies need some degree of transparency when it comes to property rights. If you can’t figure our who owns what, even if it’s something as abstract as an income stream, then that corrodes the entire system. What effect will this have on other sectors of the economy? Will murky titles “infect” other industries? Will this signal to other industries that it’s ok to be lax with ownership and title as long as courts look the other way?
Property rights systems? This looks like a job for Hernando de Soto!
Most of “the Mystery of Capital” book was about what happens when you can’t use your property rights because you have only a tenuous legal claim to it. Commerce starts and stops at a halting pace and people have to rely on local customary property rights systems rather than national systems.
James
November 28, 2010 at 7:06 am