Home mortgage holders and the financial organizations that bundled them for re-sale listed the deed (separate from the promissory note) with a private firm, called Mortgage Electronic Registration Systems (MERS) because it saved the cost of public registration of deeds and promissory notes. The transaction cost economics of Nobel prize-winning Oliver Williamson and others argued that reduction of transaction costs was a clear gain for everyone. But, they forgot that not all affected parties may be party to any given transaction whose costs are minimized. The original mortgagee desires a registration system that is transparent. But with MERS, home owners can't tell who owns their mortgage after it is re-sold numerous times and packaged with others in a bond. This is now being contested in the courts.
Christopher Ketcham, "Stop Payment! A homeowners' revolt against the banks," in the January issue of Harpers suggests that the real estate crisis with its complex highly leveraged derivatives might not have happened without MERS.