America the mortgage: All your info, one click away
Ben Bernanke's letter on housing, which suggests an REO-to-rental program, garnered plenty attention focused on that idea alone. But there is something equally notable: the Federal Reserve chairman and his teams of researchers also want an online database on every single mortgage lien in America. Don't get me wrong, publishing the white paper is a good thing. Housing feedback from the central bank is a long time coming, and the markets devoured it. For example, FTN Financial analyst Jim Vogel wrote "the analysis is the best expression we've seen of the Fed's concerns about how badly housing's woes are holding back the consumer." "Unfortunately, the Fed's understanding of housing finance appears (in the paper, at least) to be as behind as it was in 2006-2007," he added. But if there is one thing the federal government consistently worked toward since the housing bubble burst, is a one-stop shop for all the information on the nation's homeowners and their mortgages. It is as if the government is no longer satisfied knowing the household make-up of its citizenry via Census data; it now wants to know how we pay for it, what our property is worth and who, in the end, is holding the cards. "A final potential area for improvement in mortgage servicing would involve creating an online registry of liens," the Fed white paper suggests. "Among other problems, the current system for lien registration in many jurisdictions is antiquated, largely manual, and not reliably available in cross-jurisdictional form." Not having such a database, the Fed argues, makes it difficult to establish parameters for mortgage modifications. Multiple loans on a single property, for example, should be more transparent if a government-led modification is to be best administered. "Requiring all holders of loans backed by residential real estate to register with a national lien registry would mitigate this information gap and would allow regulators, policymakers and market participants to construct a more comprehensive picture of housing debt." The national lien registry would also record the name of the mortgage servicer. "Currently, parties with a legitimate interest in contacting the servicer have little to go on from the land records because, among other reasons, many liens have been recorded only in the name of the trustee or of Mortgage Electronic Registration Systems," according to the Fed letter. "Registering the servicer, and updating the information when servicing is transferred, could help local governments and nonprofits, for example, who might be working to resolve the status of vacant or abandoned properties," according to the Fed letter. Such a system means the mortgage finance buck would stop at the government level. It completes the circle nicely. The Census Bureau tracks household makeup. Mixed in will be information from the Federal Housing Finance Administration's Uniform Mortgage Data Program, which is the Fannie Mae and Freddie Mac electronic appraisal standard; a massive data portal recording the valuations of properties. A national online registry of mortgage liens would provide another missing piece to the housing puzzle and deliver unto federal, state and local governments all of the information on the nation's homeowners. The Fed warns that lien information would need to be collected efficiently and consistently to work. The white paper is an acknowledgment — if nothing else — that Bernanke and the Fed understand housing is interconnected on many levels. Strangely, the attempts of the federal government to extensively detail all of this information is so far a nonissue. I could argue that critics bemoan the big brother angle, but there are no critics. Indeed, there is little dialogue at all. Perhaps the day will come. But, in the meantime, let it be known that in the name of housing recovery, a little bit more of America's privacy is being sidestepped. I'm not for it, nor against, merely noting that "economic progress" and "increased transparency" will come at a necessary price. What this may cost us remains to be seen. In truth, it's barely even noticed. Write to Jacob Gaffney. Follow him on Twitter @jacobgaffney.