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Texas judge dismisses homeowner’s case against MERS

MERS has been the target of many lawsuits from counties claiming unpaid fees, but a homeowner recently tried their hand at suing and has failed, thus far.

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MERS gets a precedent-setting win

In 2011, Mortgage Electronic Registration Systems Inc. (MERS) became the subject of and onslaught of lawsuits from counties across the nation as District Attorneys allege the company never owned the loans they were facilitating foreclosures for, and in most cases, judges agree, and their authority to facilitate has been denied in several counties. Dallas County alleged the mortgage-tracking system violates Texas laws and shorted the county anywhere from $58 million to over $100 million in uncollected filing fees due to the MERS system, dating back to 1997, and Texas homeowner Bea Huml agreed, filing a wrongful foreclosure complaint, claiming unpaid county recording clerk filing fees in two Texas counties and fraudulent misrepresentation, negligent misrepresentation, negligent undertaking, unjust enrichment, and conspiracy.

Huml’s case against MERSCORP, Bank of America, and the Bank of New  York Mellon was dismissed by a U.S. District Court in the Western District of Texas, El Paso Division, who rejected the plaintiffs’ claim that MERS failed to record subsequent transfers of interest in certain real property subject to mortgage, which allegedly resulted in lost revenue due to the counties, ruling that individual homeowners do not have the standing to sue MERS over recording fees.

“We are pleased that this meritless case is finally closed and that the court found that plaintiffs lack standing to seek rewards for third-party county recorders,” says Janis Smith, MERSCORP Holdings’ vice president for corporate communications. “Complaints with generalized and unsupported allegations are a common foreclosure delay tactic, but multiple opinions by courts in Texas have supported MERS’ authority as a mortgagee under Texas law because the deeds of trust signed by borrowers at closing identify MERS as the beneficiary and the nominee for the original lender and its successors and assigns.”

Huml’s attorney, Richard Roman denies accusations that his client is looking for a free house; the court found that there was a failure to state a claim, which led to the dismissal of the case. Roman claims that he was about to present evidence that the foreclosure was processed with robo-signed documents when the case was moved to federal court. Huml is considering filing an appeal with the fifth court.

Additional precedent set earlier this year

Earlier this year, in the U.S. Court for the Western District of Kentucky, Chief Judge Joseph McKinley Jr. dismissed a lawsuit filed by the Christian County Clerk, denying relief to the County. In his written opinion, Judge McKinley said, “the persons intended to be protected by Kentucky’s land recording system consists of existing lienholders seeking to give notice of their secured status, prospective purchasers and creditors seeking information about prior liens, and owners of property seeking release of liens once debts are paid off.”

Additionally, the court said the county clerk did not possess a real interest in the property, finding that “[t]here is nothing in the plain language of the statute that indicates that the statute was designed to be enforced by a county clerk,” and that the General Assembly did not provide a statutory mechanism for the recovery of fees for unfiled assignments by county clerks. The court said that “[h]ad the General Assembly wanted to allow county clerks to file lawsuits regarding recording fees, it certainly knew how to do so.”

Smith said in a statement, “This is a significant and precedent-setting decision for MERS. The Court determined that county clerks lack standing to sue or collect damages from MERS.”

15 years of filing fees across the nation

MERS was initially established by Fannie Mae and Freddie Mac just over 15 years ago in conjunction with several major banks as a means to expedite the loan recording process as it used to be done through individual county clerk offices which was slow. “The founders went ahead even though no state laws authorized them to bypass the required filing with clerks,” according to Reuters.

Dallas County District Attorney Craig Watkins claims the establishment of MERS by banks was simply to avoid paying filing fees and claims that MERS “has all but collapsed this system throughout the U.S.”

Economist Barry Ritholtz said, “The politics of this are quite fascinating: The bankers may own the corrupt US Congress, and they may have intimidated or bought off many of the more cowardly State Attorneys General, but there simply are too many counties and District Attorneys representing local interests throughout the country to all be bought off. Buying/intimidating/controlling all of the local country District Attorneys may be like herding cats — nearly impossible. I am going to stand by my original prediction: The early litigants may get something, but the latter lawsuits will likely result in bankrupting MERS.”

Tara Steele is the News Director at The American Genius, covering entrepreneur, real estate, technology news and everything in between. If you'd like to reach Tara with a question, comment, press release or hot news tip, simply click the link below.

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1 Comment

1 Comment

  1. Tbeks

    June 25, 2015 at 7:33 am

    interesting. The first time I read something like that.

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Austin

Austin tops the list of best places to buy a home

When looking to buy a home, taking the long view is important before making such a huge investment – where are the best places to make that commitment?

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Looking at the bigger picture

(REALUOSO.COM) – Let us first express that although we are completely biased about Texas (we’re headquartered here, I personally grew up here), the data is not – Texas is the best. That’s a scientific fact. There’s a running joke in Austin that if there is a list of “best places to [anything],” we’re on it, and the joke causes eye rolls instead of humility (we’re sore winners and sore losers in this town).

That said, SelfStorage.com dug into the data and determined that the top 12 places to buy a home are currently Texas and North Carolina (and Portland, I guess you’re okay too or whatever).

They examined the nerdiest of numbers from the compound annual growth rate in inflation-adjusted GDP to cost premium, affordability, taxes, job growth, and housing availability.

“Buying a house is a big decision and a big commitment,” the company notes. “Although U.S. home prices have risen in the long term, the last decade has shown that path is sometimes full of twists, turns, dizzying heights and steep, abrupt falls. Today, home prices are stabilizing and increasing in most areas of the U.S.”

Click here to continue reading the list of the 12 best places to buy a home…

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Housing News

Average age of houses on the rise, so is it now better or worse to buy new?

With aging housing in America, are first-time buyers better off buying new or existing homes? The average age of a home is rising, as is the price of new housing, so a shift could be upon us.

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aging housing inventory

The average home age is higher than ever

(REALUOSO.COM) – In a survey from the Department of Housing and Urban Development American Housing Survey (AHS), the median age of homes in the United States was 35 years old. In Texas, homes are a bit younger with the median age between 19 – 29 years. The northeast has the oldest homes, with the median age between 50 – 61 years. In 1985, the median age of a home was only 23 years.

With more houses around 40 years old, the National Association of Realtors asserts that homeowners will have to undertake remodeling and renovation projects before selling unless the home is sold as-is, in which case the buyer will be responsible to update their new residence. Even homeowners who aren’t selling will need to consider remodeling for structural and aesthetic reasons.

Prices of new homes on the rise

Newer homes cost more than they used to. The price differential between new homes and older homes has increased from 10 percent traditionally to around 37 percent in 2014. This is due to rising construction costs, scarcity of lots, and a low inventory of new homes that doesn’t meet the demand.

Click here to continue reading this story…

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Housing News

Are Realtors the real loser in the fight between Zillow Group and Move, Inc.?

The last year has been one of dramatic and rapid change in the real estate tech sector, but Realtors are vulnerable, and we’re worried.

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zillow move

Why Realtors are vulnerable to these rapid changes

(REALUOSO.COM) – Corporate warfare demands headlines in every industry, but in the real estate tech sector, a storm has been brewing for years, which in the last year has come to a head. Zillow Group and Move, Inc. (which is owned by News Corp. and operates ListHub, Realtor.com, TopProducer, and other brands) have been competing for a decade now, and the race has appeared to be an aggressive yet polite boxing match. Last year, the gloves came off, and now, they’ve drawn swords and appear to want blood.

Note: We’ll let you decide which company plays which role in the image above.

So how then, does any of this make Realtors the victims of this sword fight? Let’s get everyone up to speed, and then we’ll discuss.

1. Zillow poaches top talent, Move/NAR sues

It all started last year when the gloves came off – Move’s Chief Strategy Officer (who was also Realtor.com’s President), Errol Samuelson jumped ship and joined Zillow on the same day he phoned in his resignation without notice. He left under questionable circumstances, which has led to a lengthy legal battle (wherein Move and NAR have sued Zillow and Samuelson over allegations of breach of contract, breach of fiduciary duty, and misappropriation of trade secrets), with the most recent motion being for contempt, which a judge granted to Move/NAR after the mysterious “Samuelson Memo” surfaced.

Salt was added to the wound when Move awarded Samuelson’s job to Move veteran, Curt Beardsley, who days after Samuelson left, also defected to Zillow. This too led to a lawsuit, with allegations including breach of contract, violation of corporations code, illegal dumping of stocks, and Move has sought restitution. These charges are extremely serious, but demanded slightly less attention than the ongoing lawsuit against Samuelson.

2. Two major media brands emerge

Last fall, the News Corp. acquisition of Move, Inc. was given the green light by the feds, and this month, Zillow finalized their acquisition of Trulia.

…Click here to continue reading this story…

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