, the two largest counties of Minn. - Ramsey and Hennepin sued
Mortgage Electronic Registration Systems Inc. (MERS) and a number
of financial institutions. The lawsuit has been filed in the U.S.
District Court of Minnesota on behalf of taxpayers and other
counties in Minn.
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The case alleges MERS of failing to keep records of consequent
assignments of mortgage loans and recording payment of the filing
fees. Co-defendants include Wall Street giants -
JPMorgan Chase & Co.
Bank of America Corporation
Virginia-based MERS was formed by
), Freddie Mac and the mortgage industry, as a commercial and
easy means of trading mortgage debt. Previously, mortgages were
registered at county clerks' offices and a fee was charged
against these. However, MERS replaced the system and introduced
one-time online registration.
MERS used to record servicing rights and ownership interests in
mortgage loans on registration, enabling banks to buy and sell
loans without recording transfers with counties. Though MERS
saved mortgage lenders' money, yet it was a flaw for counties and
homeowners. Counties were deprived of the revenue from
transaction fees. Moreover, erroneous property records became an
issue for homeowners.
The counties alleged MERS of deceiving millions of dollars in
mortgage-related fees. Additionally, MERS, which provides
database for mortgage servicers, has been accused of sloppy
record keeping, concealing identities of the holders of mortgage
debt from borrowers and evading fees.
Therefore, the counties received a court approval for suing MERS
as a class. They demand recording of every mortgage and
assignment in the state in the county where the core property is
located along with reimbursement.
MERS defended with the argument that use of the MERS system is
lawful in all 50 states and it abides by Minn. property recording
state laws. However, spokesmen from various big financial
institutions involved in the case refrained from any comments.
The primary motive behind the lawsuit is to get proper
accountability of the mortgage-related documents in lawful and
legal procedures. Additionally, the lawsuit aims to provide
relief to the counties, which were deprived of their fees and
homeowners, whose property had been wrongly foreclosed by the
misconducts of the mortgage servicers.