Minnesota Counties sue MERS
Minnesota's two largest counties have joined together to file a lawsuit against the Mortgage Electronic Registration Service, Inc. (MERS) on behalf of taxpayers and all other counties in Minnesota, alleging that MERS has likely deprived states and counties of somewhere around $7.2 billion nationally.
Established in 1995 by many of the nation's largest mortgage lending institutions, the plaintiffs say MERS was formed to create a semi-private system for MERS members to quickly and cheaply assign their mortgages to one another.
Unfortunately, says the office of Ramsey County Attorney John Choi, this came at the expense of the integrity of our public land records and of county taxpayers in lost recording fees.
The Complaint filed Friday in Ramsey County Court seeks to require MERS and its members to follow Minnesota law and properly record each mortgage assignment with the county recorder/registrar of titles and to recover the recording fees MERS and its members deliberately avoided paying by refusing to record these assignments.
Here's another such suit in IL (2013):
St. Clair County Circuit Judge Vincent Lopinot set a scheduling order Jan. 23 for parties in a lawsuit against Mortgage Electronic Recording System (MERS).
St. Clair County State’s Attorney Brendan Kelly’s office sued MERS and several major banks in May, alleging they created a shadow mortgage recording system that effectively eliminates the ability to track the purchase and sale of properties through the traditional public records system.
The scheduling order states the defendant’s joint motion to dismiss is due Feb. 15. The plaintiff’s response is due March 18. The defendant’s reply is due April 8.
The St. Clair County suit, in addition to MERS, names as defendants: Bank of America, CCO Mortgage Corp., CITI Mortgage, Corinthian Mortgage Corp., Everhome Mortgage Co., GMAC Residential Funding Corp., Guaranty Bank, HSBC Finance Corp., Suntrust Mortgage, Wells Fargo Bank, WMC Mortgage Corp., Bank of O’Fallon, Compass Mortgage, First Collinsville Bank, FirstCo Mortgage Corp., First County Bank, Mid America Mortgage Services of Illinois, Mortgage Services III, Midland States Bank, Peoples National Bank, Commerce Bank, Regions Bank and UMB Bank.
The County claims the defendants’ method of recording – kept in a private database maintained by MERS – is “unreliable and inaccurate.”
The suit claims the system set up by MERS allows financial institutions to avoid transparency in transfer of property and to evade county recording fees which every other citizen has to pay.
That's the kind of list of defendants I like to see!
And another one in KY (2013):
Hundreds of thousands of Kentucky loans are registered in the MERS system. As a result of not publicly recording the mortgage assignments and paying the required fees, the lawsuit alleges that MERS violated Kentucky's Consumer Protection Act by committing unfair, false, misleading or deceptive conduct. Under Kentucky law, MERS could be fined up to $2,000 for every violation.
"This process undermines the integrity of Kentucky's public land records," General Conway said. "Before the bottom fell out of the housing market, banks were bundling and selling loans on the securities market as fast as the ink could dry on the paperwork. When homeowners had trouble paying their mortgages during the economic downturn, they struggled to find out who owned their loans. It made it difficult to find out who to call to request a loan modification or to defend the foreclosure. There is and was no public record of the transfers."
In addition, the lawsuit makes civil claims that MERS created this system to unjustly enrich and pad its bottom line at the expense of consumers and the Commonwealth of Kentucky. To view a copy of the complaint visit http://goo.gl/IqkxA.
Other states have filed similar lawsuits against MERS, including Massachusetts, Delaware and New York.
"I commend Attorney General Conway for taking action against MERS," New York Attorney General Eric T. Schneiderman said. "The banks created this system as an end-run around the public property system and state recording fees. In Kentucky, New York, and across the country, these actions have left financially troubled homeowners in the dark about who owns their mortgages, making the difficult process of negotiating a modification or fighting a foreclosure action even harder. Attorney General Conway's lawsuit is an important step towards accountability for these abusive practices."