I 

112TH CONGRESS 

1ST SESSION H. R. 2425 

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. 

IN THE HOUSE OF REPRESENTATIVES 

JULY 6, 2011 

Ms. KAPTUR 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 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Transparency and Se5 curity in Mortgage Registration Act of 2011’’. 

6 SEC. 2. PROHIBITION ON GUARANTEEING MERS MORT7 GAGES. 

8 (a) FANNIE MAE AND FREDDIE MAC.— 


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1 (1) FANNIE MAE.—Section 302(b) of the Na2 tional Housing Act (12 U.S.C. 1717(b)) is amended 

3 by adding at the end the following new paragraph: 

4 ‘‘(7)(A) After the date of the enactment of the Trans5 parency and Security in Mortgage Registration Act of 

6 2011, the corporation may not purchase, acquire, newly 

7 lend on the security of, newly invest in securities con8 sisting of, or otherwise newly deal in any MERS mortgage 

9 or mortgages. 

10 ‘‘(B) After the expiration of the period under sub11 paragraph (C), MERS shall not be the named mortgagee 

12 or mortgagee of record on any mortgage owned, guaran13 teed, or securitized by the corporation. Not later than the 

14 expiration of such period, the corporation shall require 

15 that all mortgage loans owned, guaranteed, or securitized 

16 at such time by the corporation and on which MERS is 

17 the named mortgagee or mortgagee of record shall be as18 signed to the servicer, holder, or creditor, as defined by 

19 the guidelines of the corporation. The corporation shall 

20 not reimburse the servicer, holder, or creditor for any ex21 pense incurred in the carrying out or recording such an 

22 assignment. 

23 ‘‘(C)(i) Except as provided in clause (ii), the period 

24 under this subparagraph is the 6-month period beginning 


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1 on the date of the enactment of the Transparency and Se2 curity in Mortgage Registration Act of 2011. 

3 ‘‘(ii) In the case of any mortgage owned, guaranteed, 

4 or securitized by the corporation for which the servicer, 

5 holder, or creditor has demonstrated to the corporation, 

6 in accordance with standards established by the Director 

7 of the Federal Housing Finance Agency, that compliance 

8 with subparagraph (B) by the expiration of such 6-month 

9 period will cause a severe threat to the continued financial 

10 viability of such entity, the period under this subpara11 graph shall be the period that begins on such date of en12 actment and has such duration as determined by the cor13 poration, in accordance with standards established by the 

14 Director, but in no case has a duration longer than 12 

15 months. 

16 ‘‘(D) Not later than the expiration of the 6-month 

17 period referred to in subparagraph (C)(i), the corporation 

18 shall submit a report detailing its compliance with sub19 paragraph (B) to the Congress, the Director of the Fed20 eral Housing Finance Agency, the Financial Stability 

21 Oversight Council, and the Director of the Bureau of Con22 sumer Financial Protection of the Federal Reserve Sys23 tem, which shall describe any extensions of the period for 

24 compliance with subparagraph (B) granted pursuant to 

25 subparagraph (C). 


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1 ‘‘(E) For purposes of this paragraph, the following 

2 definitions shall apply: 

3 ‘‘(i) The term ‘MERS’ means the Mortgage 

4 Electronic Registration Systems, Inc., or any suc5 cessor entity of such corporation. 

6 ‘‘(ii) The term ‘MERS mortgage’ means any 

7 mortgage— 

8 ‘‘(I) for which the MERS is, or was at any 

9 time, the original or nominal mortgagee or 

10 mortgagee of record under the mortgage; 

11 ‘‘(II) that is, or was at any time, assigned 

12 to or recorded in the MERS; or 

13 ‘‘(III) for which the MERS is, or was at 

14 any time, acting as nominee in the county land 

15 records for the lender or servicer of the mort16 gage.’’. 

17 (2) FREDDIE MAC.—Section 305(a) of the Fed18 eral Home Loan Mortgage Corporation Act (12 

19 U.S.C. 1454(a)) is amended by adding at the end 

20 the following new paragraph: 

21 ‘‘(6)(A) After the date of the enactment of the Trans22 parency and Security in Mortgage Registration Act of 

23 2011, the Corporation may not purchase, acquire, newly 

24 lend on the security of, newly invest in securities conVerDate Mar 15 2010 20:33 Jul 07, 2011 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H2425.IH H2425

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1 sisting of, or otherwise newly deal in any MERS mortgage 

2 or mortgages. 

3 ‘‘(B) After the expiration of the period under sub4 paragraph (C), MERS shall not be the named mortgagee 

5 or mortgagee of record on any mortgage owned, guaran6 teed, or securitized by the Corporation. Not later than the 

7 expiration of such period, the Corporation shall require 

8 that all mortgage loans owned, guaranteed, or securitized 

9 at such time by the Corporation and on which MERS is 

10 the named mortgagee or mortgagee of record shall be as11 signed to the servicer, holder, or creditor, as defined by 

12 the guidelines of the Corporation. The Corporation shall 

13 not reimburse the servicer, holder, or creditor for any ex14 pense incurred in the carrying out or recording such an 

15 assignment. 

16 ‘‘(C)(i) Except as provided in clause (ii), the period 

17 under this subparagraph is the 6-month period beginning 

18 on the date of the enactment of the Transparency and Se19 curity in Mortgage Registration Act of 2011. 

20 ‘‘(ii) In the case of any mortgage owned, guaranteed, 

21 or securitized by the Corporation for which the servicer, 

22 holder, or creditor has demonstrated to the Corporation, 

23 in accordance with standards established by the Director 

24 of the Federal Housing Finance Agency, that compliance 

25 with subparagraph (B) by the expiration of such 6-month 


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1 period will cause a severe threat to the continued financial 

2 viability of such entity, the period under this subpara3 graph shall be the period that begins on such date of en4 actment and has such duration as determined by the Cor5 poration, in accordance with standards established by the 

6 Director, but in no case has a duration longer than 12 

7 months. 

8 ‘‘(D) Not later than the expiration of the 6-month 

9 period referred to in subparagraph (C)(i), the Corporation 

10 shall submit a report detailing its compliance with sub11 paragraph (B) to the Congress, the Director of the Fed12 eral Housing Finance Agency, the Financial Stability 

13 Oversight Council, and the Director of the Bureau of Con14 sumer Financial Protection of the Federal Reserve Sys15 tem, which shall describe any extensions of the period for 

16 compliance with subparagraph (B) granted pursuant to 

17 subparagraph (C). 

18 ‘‘(E) For purposes of this paragraph, the following 

19 definitions shall apply: 

20 ‘‘(i) The term ‘MERS’ means the Mortgage 

21 Electronic Registration Systems, Inc., or any suc22 cessor entity of such corporation. 

23 ‘‘(ii) The term ‘MERS mortgage’ means any 

24 mortgage— 


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1 ‘‘(I) for which the MERS is, or was at any 

2 time, the original or nominal mortgagee or 

3 mortgagee of record under the mortgage; 

4 ‘‘(II) that is, or was at any time, assigned 

5 to or recorded in the MERS; or 

6 ‘‘(III) for which the MERS is, or was at 

7 any time, acting as nominee in the county land 

8 records for the lender or servicer of the mort9 gage.’’. 

10 (3) REGULATIONS.—Not later than the expira11 tion of the 90-day period beginning on the date of 

12 the enactment of this Act, the Director of the Fed13 eral Housing Finance Agency shall issue any regula14 tions necessary to carry out the amendments made 

15 by paragraphs (1) and (2). In issuing such regula16 tions, the Director shall consult and coordinate with 

17 the Secretary of Housing and Urban Development to 

18 ensure that the regulations issued by the Director 

19 and the regulations issued by the Secretary pursuant 

20 to subsection (b)(2) of this section are uniform and 

21 consistent to maximum extent possible. 

22 (b) GINNIE MAE.— 

23 (1) PROHIBITION.—Section 302(c) of the Na24 tional Housing Act (12 U.S.C. 1717(c)) is amended 

25 by adding at the end the following new paragraph: 


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1 ‘‘(6)(A) After the date of the enactment of the Trans2 parency and Security in Mortgage Registration Act of 

3 2011, the Association may not newly guarantee the pay4 ment of principal of or interest on any trust certificate 

5 or other security based or backed by a trust or pool that 

6 contains, or purchase or acquire, any MERS mortgage. 

7 ‘‘(B)(i) After the expiration of the period under sub8 paragraph (C), MERS shall not be the named mortgagee 

9 or mortgagee of record on any mortgage owned or held 

10 by the Association or on any mortgage contained in a pool 

11 backing or on which is based any trust certificate or other 

12 security the payment of principal of or interest on which 

13 is guaranteed by the Association. 

14 ‘‘(ii) Not later than the expiration of such period, the 

15 Association shall require that all mortgage loans that are 

16 owned or held at such time by the Association, or that 

17 at such time are contained in a trust or pool backing or 

18 on which is based a trust certificate or other security the 

19 payment of principal of or interest on which is guaranteed 

20 by the Association, and on which MERS is the named 

21 mortgagee or mortgagee of record, shall be assigned to 

22 the servicer, holder, or creditor, as defined by the guide23 lines of the Association. The Association shall not reim24 burse the servicer, holder, or creditor for any expense inVerDate Mar 15 2010 20:33 Jul 07, 2011 Jkt 099200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H2425.IH H2425

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1 curred in the carrying out or recording such an assign2 ment. 

3 ‘‘(C)(i) Except as provided in clause (ii), the period 

4 under this subparagraph is the 6-month period beginning 

5 on the date of the enactment of the Transparency and Se6 curity in Mortgage Registration Act of 2011. 

7 ‘‘(ii) In the case of any mortgage owned or held by 

8 the Association, or contained in a trust or pool backing 

9 or on which is based a trust certificate or other security 

10 the payment of principal of or interest on which is guaran11 teed by the Association, for which the servicer, holder, or 

12 creditor has demonstrated to the Association, in accord13 ance with standards established by the Secretary, that 

14 compliance with subparagraph (B) by the expiration of 

15 such 6-month period will cause a severe threat to the con16 tinued financial viability of such entity, the period under 

17 this subparagraph shall be the period that begins on such 

18 date of enactment and has such duration as determined 

19 by the Association, in accordance with standards estab20 lished by the Secretary, but in no case has a duration 

21 longer than 12 months. 

22 ‘‘(D) Not later than the expiration of the 6-month 

23 period described in subparagraph (C)(i), the Association 

24 shall submit a report detailing its compliance with sub25 paragraph (B) to the Congress, the Secretary, the FinanVerDate Mar 15 2010 20:33 Jul 07, 2011 Jkt 099200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H2425.IH H2425

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1 cial Stability Oversight Council, and the Director of the 

2 Bureau of Consumer Financial Protection of the Federal 

3 Reserve System, which shall describe any extensions of the 

4 period for compliance with subparagraph (B) granted pur5 suant to subparagraph (C). 

6 ‘‘(E) For purposes of this paragraph, the following 

7 definitions shall apply: 

8 ‘‘(i) The term ‘MERS’ means the Mortgage 

9 Electronic Registration Systems, Inc., or any suc10 cessor entity of such corporation. 

11 ‘‘(ii) The term ‘MERS mortgage’ means any 

12 mortgage— 

13 ‘‘(I) for which the MERS is, or was at any 

14 time, the original or nominal mortgagee or 

15 mortgagee of record under the mortgage; 

16 ‘‘(II) that is, or was at any time, assigned 

17 to or recorded in the MERS; or 

18 ‘‘(III) for which the MERS is, or was at 

19 any time, acting as nominee in the county land 

20 records for the lender or servicer of the mort21 gage.’’. 

22 (2) REGULATIONS.—Not later than the expira23 tion of the 90-day period beginning on the date of 

24 the enactment of this Act, the Secretary of Housing 

25 and Urban Development shall issue any regulations 


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1 necessary to carry out the amendments made by 

2 paragraphs (1) and (2). In issuing such regulations, 

3 the Secretary shall consult and coordinate with the 

4 Director of the Federal Housing Finance Agency to 

5 ensure that the regulations issued by the Secretary 

6 and the regulations issued by the Director pursuant 

7 to subsection (a)(3) of this section are uniform and 

8 consistent to maximum extent possible. 

9 SEC. 3. HUD STUDY. 

10 (a) STUDY.—The Secretary of Housing and Urban 

11 Development, in consultation with the Comptroller Gen12 eral of the United States, shall conduct a study to analyze 

13 and determine— 

14 (1) the impacts of the lack of electronic records 

15 and uniform standards found in local land title rec16 ordation systems currently used in the various 

17 States; 

18 (2) any progress States have made in devel19 oping electronic land title recordation systems for 

20 their localities that contain uniform standards, and 

21 any findings and conclusions and best practices re22 sulting from such development; 

23 (3) the current oversight role of the Federal 

24 Government in the transfer and recordation of land 

25 titles; 


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1 (4) opportunities, and the feasibility of such op2 portunities, that may be present to leverage progress 

3 made by some States and localities to create an elec4 tronic land title recordation system, including 

5 through— 

6 (A) a system that would maintain all pre7 vious records of the land-property without in8 validating, interfering with, or preempting State 

9 real property law governing the transfer and 

10 perfection of land title; and 

11 (B) further actions by the States or by the 

12 Federal Government, or coordinated actions of 

13 both; and 

14 (5) the feasibility of creating a Federal land 

15 title recordation system for property transfers that 

16 would maintain all previous records of the land-prop17 erty without invalidating, interfering with, or pre18 empting State real property law governing the trans19 fer and perfection of land title. 

20 (b) REPORT.—Not later than the expiration of the 

21 12-month period beginning on the date of the enactment 

22 of this Act, the Secretary of Housing and Urban Develop23 ment, in consultation with the Comptroller General of the 

24 United States, shall submit to the Congress a report on 


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1 the results and findings of the study conducted under this 

2 section. 

Æ 


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