New York Attorney General Eric T. Schneiderman has filed a lawsuit against several of the nation's largest banks, charging that the creation and use of Mortgage Electronic Registration Systems (MERS) has resulted in a ‘wide range of deceptive and fraudulent foreclosure filings in New York state and federal courts, harming homeowners and undermining the integrity of the judicial foreclosure process.’
The lawsuit further asserts that MERS has ‘effectively eliminated homeowners' and the public's ability to track property transfers through the traditional public records system.’ Instead, this information is now stored only in a private database, which Schneiderman claims to be ‘plagued with inaccuracies and errors.’
Furthermore, the lawsuit asserts that employees and agents of Bank of America, J.P. Morgan Chase and Wells Fargo, acting as ‘MERS certifying officers,’ have repeatedly submitted court documents containing false and misleading information that made it appear that the foreclosing party had the authority to bring a case when, in fact, it may not have. The lawsuit is aimed at the lenders, their mortgage subsidiaries and MERSCORP Inc. and its MERS subsidiary.
‘The banks created the MERS system as an end-run around the property recording system, to facilitate the rapid securitization and sale of mortgages,’ says Schneiderman. ‘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.
‘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,’ he adds. ‘Only through real accountability for the illegal and deceptive conduct in the foreclosure crisis will there be justice for New York's homeowners.’
In an email to MortgageOrb, Janis L. Smith, vice president of corporate communications for MERSCORP, responded to the lawsuit.
‘MERSCORP Inc. and its subsidiary, MERS, comply with laws as well as county and state recording statutes and mortgage regulations,’ says Smith. ‘Federal and state courts around the country have repeatedly upheld the MERS business model, and the validity of MERS as legal mortgagee and nominee for lenders. We refute the attorney general's claims and will defend the case vigorously in court.’