MERS still the subject of many lawsuits
After a Texas judge dismissed a recent case against Mortgage Electronic Registration Systems Inc. (MERS), but the U.S. District Court for the Eastern District of Pennsylvania has now ruled that a class-action suit filed on behalf of Pennsylvania County recorders may move forward on the grounds that Pennsylvania law requires the recording of all conveyances of property.
According to court documents, allegations include not only the failure to record assignments, but engaged in civil conspiracy, unjust enrichment, and declaratory and injunctive relief. The court is allowing all allegations to move forward, and if won, MERS would be required to pay the registration fees but threw out the civil conspiracy claim.
A spokesperson for MERS said: “We will continue to defend this suit. We believe that we will prove that the MERS business model does comply with Pennsylvania law.”
Nancy Becker, the recorder of the deeds in Montgomery County, filed the lawsuit in 2011, claiming MERS helped financial firms and parties involved in mortgage securitization avoid payment on multiple mortgage assignments. The U.S. District Court opinion was that “the avoidance of recording fees both deprives her office and Montgomery County of revenue needed to support vital public functions.”
Recording fees are being pursued by other states, but with laws differing in each jurisdiction, the outcomes will likely differ.
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.”