New York Sues Banks Over Mortgage Registry System[MERS]

WSJ ^ | 03 Feb 2012 | Chad Bray

[Theoria]

New York Attorney General Eric T. Schneiderman sued three of the nation's largest banks over a private national mortgage registry system, contending it has resulted in a wide range of deceptive and fraudulent foreclosure filings.

The lawsuit, filed in New York State Supreme Court in Brooklyn, names units of Bank of America Corp., J.P. Morgan Chase & Co. and Wells Fargo Corp. as defendants, as well as MERSCorp., which owns and operates the Mortgage Electronic Registration Systems, known as MERS.

In his complaint, Mr. Schneiderman alleges that MERS has effectively eliminated the public's ability to track property transfers because those transfers are maintained in the private registry, rather than in the local county clerk's office. He contends the system is riddled with inaccuracies and, as a result, it is difficult to verify the chain of title for a loan or a current noteholder for many properties.

The attorney general says the system was designed to allow financial institutions to evade county recording fees, eliminate the need to publicly record mortgage transfers and to facilitate the rapid sale and securitization of mortgages.

"Once the mortgages went sour, these same banks brought foreclosure proceedings en masse based on deceptive and fraudulent court submissions, seeking to take homes away from people with little regard for basic legal requirements or the rule of law," Mr. Schneiderman said. "Our action demonstrates that there is one set of rules for all—no matter how big or powerful the institution may be—and that those rules will be enforced vigorously."

A Wells Fargo spokeswoman said the bank was reviewing the lawsuit and declined further comment. A J.P. Morgan spokesman declined to comment, while a Bank of America spokeswoman had no immediate comment.

[Theoria]

A.G. SCHNEIDERMAN ANNOUNCES MAJOR LAWSUIT AGAINST NATION’S LARGEST BANKS FOR DECEPTIVE & FRAUDULENT USE OF ELECTRONIC MORTGAGE REGISTRY

Paging Linda Green.

[Theoria]

“The banks created the MERS system as an end-run around the property recording system, to facilitate the rapid securitization and sale of mortgages. Once the mortgages went sour, these same banks brought foreclosure proceedings en masse based on deceptive and fraudulent court submissions, seeking to take homes away from people with little regard for basic legal requirements or the rule of law,” said Attorney General Schneiderman. “Our action demonstrates that there is one set of rules for all – no matter how big or powerful the institution may be – and that those rules will be enforced vigorously. Only through real accountability for the illegal and deceptive conduct in the foreclosure crisis will there be justice for New York’s homeowners.”

[isthisnickcool]

I've been studying MERS for some time. Imagine the lien on your car that banks hold. Then imagine that all the banks decided that they would build a computerized system to track all the liens. They would brush aside the state DMV departments and just do it themselves. Because they did not want to pay the state fees and because they wanted to bundle all the car loans and then sell them as some kind of financial instrument.

That is kind of what MERS was set up for. Like my example for vehicles, there is NO LEGAL BASIS for some private entity to simply take over the government function of tracking mortgages just because some lawyers tell them they can.

MERS is the biggest financial mess in American history. Why? Because the transfer of mortgages on millions of loans are not legal because they occurred outside of the counties. Which brings up all sorts of problems. A person may have had their house foreclosed on and then was evicted. Based upon totally bogus documentation. That house then may have been sold to another party in a fashion that is technically fraudulent. The problem is that the original deed was recorded properly. So, the original owner may still be the real owner and the person that bought the house at foreclosure is not. That is why lawyers have been able to have some people simply show back up at their house they were kicked out of and LEGALLY move back in.

This is all a huge mess. A monster mess.

MERS itself may owe TRILLIONS in fees to various counties across the country for what they did. This is all a very scary situation....

[driftdiver]

Only took him 5 years to show his aggression.

[Texas Fossil]

Now, the damage control.

What Percentage of home mortgates in the past 10 years were sold or resold through MERS?

How far back does the problem go?

It appears to me that rectifying the defects in ability to transfer clear title must be “fixed” on an individual mortgage basis.

That will be costly. And this will pay a lot of lawyers salaries for years to come.

[Elle Bee]

Florida AG Pam Bondi (Mittens' soon to be health care czar) has com down on the side of the banks ... what a prostitute

.

[Wuli]

I expect the suit will fail, by it’s inability to prove that “result” was determined and driven by “intent” and its inability to prove that will be due to its inability to show that the “results” it is suing to correct were the “most common” results for most mortgages in the system.

Were the mistakes it is suing to correct the intended results of the defendents actions, they would be found as the kind of results for most mortgages in the system - they’re not.

The mistakes that were made ought to be corrected. The NY state treasury does not deserve a big financial windfall for itself due to those mistakes.

[vollmond]

I think the real purpose for the suit is to pressure Congress to shelter the banks and MERS from the consequences. The banks pay off the state governments, and homeowners and share holders get hammered.

There's also the added benefit of public pensions taking a hit when their portfolio values drop, requiring raises in taxes to cover it.

[Theoria]

'pressure Congress to shelter the banks and MERS from the consequences.'

Sure, but that pressure is already coming from bank and real estate lobbyist. States have already been trying a 'comprehensive' settlement in the past which would have given banks and MERS a pass.

Schneiderman held out saying it was too weak. Some months ago.