Curious Puzzle costing Hillsborough County revenues?

An Associated Press article describes how Mortgage Electronic Registry Systems, Inc. (MERS) has cost counties billions of dollars in lost revenue. By pooling home loans into mortgage-backed securities they avoid county recording fees and avoid paying taxes on interest income. While this may be perfectly legal, is this something that any county wants to aid and abet?

Recently, the Hillsborough County Housing Finance Authority (HFA) placed an authorization request to issue $250,000,000 in bonds on the draft Nov. 4, 2010 BOCC Consent (no discussion) Agenda. This was pulled from the Final Agenda, but will reappear on the Dec 1, 2010 agenda. It appears that the bonds will go to purchase low and medium income, first time homeowner mortgages that would be bundled as tax-exempt municipal bonds and sold to investors. This may or may not be related to MERS, but the possible loss in future county revenue may very well result.

The website for MERS “about” page describes their company as:

MERS was created by the mortgage banking industry to streamline the mortgage process by using electronic commerce to eliminate paper. Our mission is to register every mortgage loan in the United States on the MERS® System.

Beneficiaries of MERS include mortgage originators, servicers, warehouse lenders, wholesale lenders, retail lenders, document custodians, settlement agents, title companies, insurers, investors, county recorders and consumers.

MERS acts as nominee in the county land records for the lender and servicer. Any loan registered on the MERS® System is inoculated against future assignments [county fees] because MERS remains the nominal mortgagee no matter how many times servicing is traded. MERS as original mortgagee (MOM) is approved by Fannie Mae, Freddie Mac, Ginnie Mae, FHA and VA, California and Utah Housing Finance Agencies, as well as all of the major Wall Street rating agencies.

 So, some questions for Hillsborough County:

Could the issuance of $250,000,000 in these HFA bonds have any possible negative impact on future County revenues, and what are the County needs thus served and benefits to the average taxpayer?

The County HFA just announced that they still has $41 million left over from a previous $50 million tax-exempt bond offering for multi-family development, and earlier this year had $20 million available for single-family homes.

What is the reason for ANOTHER $250 MILLION?

Someone needs to ask the hard questions and get the hard answers.

<IMHO> Fred Jacobsen


One Response to “Curious Puzzle costing Hillsborough County revenues?”

  1. […] Verbum Sapienti * A word to the wise * « Curious Puzzle costing Hillsborough County revenues? […]

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