The allegations against MERS continue as Multnomah County, Oregon, reaches a $9M settlement with MERS. MERS (Mortgage Electronic Registration System) was created by the banks as a repository back in 1997. Allegations have been made that the big banks associated with MERS came together to create this system explicitly to get around filing with the counties.
Counties suffering, deeds of trust unclear
By avoiding filing with the counties, thousands of filing fees have gone uncollected and counties have suffered from the lack of income. In addition to the lost filing fees, county records have also been contaminated as the deed of trust were not properly recorded; homeowners have no clear picture of who the beneficiary of the deed of trust is or who the bank is, as MERS was listed instead. In a normal transaction, you would go to the county recorder’s office so you can preserve your security interest; this is not the case in these MERS transactions.
$38 million against MERS
As we previously covered, MERS cannot legally be listed as the beneficiary; yet it is still happening. The Multnomah County case (Multnomah County v. MERS et al) was originally filed as a $38 million lawsuit against MERS and MERSCORP Holdings, Inc. While it began in state court, it eventually moved to federal court, then mediation.
“The abuse of the public recording system and failures of the MERS System are not some hypothetical wrong—they are real and have had devastating and long-term effects upon the public recording system and the homeowners who have been its victims,” the county’s suit said. The agreement also resolves claims against several banks, and does not say which of “certain defendants” would pay the $9 million.
Multnomah County recieves a gag order
According to the Portland Tribune, Multnomah County will receive $6.1 million of the total settlement. The remainder will go to three outside law firms the county hired to pursue the case. In return for the money, county commissioners have signed a gag order that restricts what they can say outside of public meetings. According to a script negotiated by the outside lawyers, they can say only that the case was settled and they are happy with the outcome.
MERS headed for dissolution?
There has been no mention or decision as to how the county’s share of the settlement will be spent. The Portland Tribune states, “ in late 2012, media reports said that former county Chair Jeff Cogen said the money would be used to help county homeowners who were subjected to non-judicial foreclosures involving MERS,” but whether or not this will still hold true, remains to be seen.
This settlement could pave the way for other counties to file similar grievances. If so, MERS could be in hot water. What do you think? Is this long overdue? Is MERS headed for destruction and dissolution?