New York's Attorney General sees a scandal in electronic housing records.

New York Attorney General Eric Schneiderman seems to think his job is to sift through the wreckage of the housing market and shoot the wounded. His latest target is electronic mortgage record-keeping, which he calls a scandal, perhaps because he doesn't understand it.

Mr. Schneiderman is following Delaware's Beau Biden, who sued the Mortgage Electronic Registration Systems in October, and Massachusetts's Martha Coakley, who added banks to her suit in December. The New York complaint names many of the same institutions and alleges that MERS, as the database is known, has harmed homeowners by undermining judicial foreclosure and creating "confusion and uncertainty" about property ownership interests.

MERS is used by 3,000 lenders, servicers and government agencies, operates in all 50 states, and has roughly 30 million active mortgage loans in its system. The housing market can't recover until the nation's courts work through foreclosure backlogs, an area in which MERS plays a vital role. So it's not clear what the AG wants to accomplish, other than to hit another private housing institution for cash and slow down foreclosures.

Mr. Schneiderman implies that MERS itself is a scam, created in 1995 by the mortgage industry and Fannie Mae and Freddie Mac to "allow financial institutions to evade county recording fees, avoid the need to publicly record mortgage transfers, and facilitate the rapid sale and securitization of mortgages en masse." This "bizarre and complex end-around" has saved more than $2 billion, he complains.

Well, yes. The mortgage industry created MERS to bring the recording process into the technological age and facilitate securitization, which allows lenders to bundle mortgages into securities, spread risk and lower costs for borrowers. MERS is similar to the Depository Trust Company for financial securities, insofar as it's a database that tracks ownership changes and servicing rights on mortgages for a nominal fee. Lenders still register mortgages in county records, but they don't have to keep paying fees when that paper is sold a second, third or fourth time.

Mr. Schneiderman also alleges that MERS technically doesn't have the right to foreclose under its own name and improperly allowed its members to foreclose. Courts have already grappled with these issues, notably in last year's Cervantes v. Countrywide Home Loans, which confirmed that MERS is an agent for the lender, so if the lender owns the mortgage and wants to foreclose, MERS can do so. Because it's a lean operation, MERS often designates a person at the lender itself to act on its behalf. Nothing improper there.

The New York AG's office is on even thinner ground in asserting that MERS deceived homeowners through its "complex and unusual structure" and "effectively eliminated the homeowner's and the public's ability to track the purchase and sale of properties through the traditional public records system." MERS's role is often detailed in mortgage contracts, and the company provides information on current ownership and servicing rights for free by telephone or online. Sneaky.

It's curious that Mr. Schneiderman suddenly finds evil in electronic databases, given that MERS started registering and tracking mortgages in 1997. Nor does the AG provide evidence that responsible homeowners current on their mortgage payments were improperly kicked out of homes. The MERS scare may give these AGs one more pelt on the wall, but it won't help the housing market.