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Special companies

Specialization

Specialized companies
To facilitate securities handling, banks use specialized companies; for registration, for default and foreclosure handling, even for robo-signing documents.

The Mortgage Electronic Registration Systems
In the US, different states and even different counties have different rules as to mortgage registration and fees for registration. With mortgage securitization and nationwide trading, this became costly and many banks decided to bypass the rules. For this, they use MERS, the Mortgage Electronic Registration System. As the law requires that the mortgages are registered by clerks of court, the legality of MERS has been challenged.
MERS is also used to initiate foreclosures. Here too, the legality has been questioned. The part to initiate foreclosure should be the owner, not somebody registering the mortgage.

The Lender Processing Services
LPS, Lender Processing Services, was the biggest firm in default services. It got documents from banks and other financial institution, documents that were then given to foreclosure mills, firms commissioned to implement foreclosure.
Often the documents were deficient so LPS had to complement them. The documents were treated according to the assembly line principle, with little or no time to check things out and big risk for introducing and propagating mistakes. The security was very lax; with shared passwords it was easy for many people to change the documents, by mistake or deliberately.

DOCX
Often the original documents had been lost in the securitizing process; they had to be replaced, with a newly manufactured copy or with an affidavit. So here come the robo-signers. LPS even had its own subsidiary, DOCX, producing missing documents with a fixed pricelist for different types of documents.

Foreclosure mills
Often specialized firms, so called foreclosure mills, are used to enforce foreclosures. Their processes are streamlined, often breaking the law; for example "wrongfully allocating work to non-marshals, forging papers, failing to serve papers, and making kickbacks."

SPEs and SIVs
To make their books look better, banks could hide their risky assets in companies without normal bank supervision, in companies like Special Purpose Entities (SPEs) and Structured Investment Vehicles (SIVs).

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