IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

STATE OF DELAWARE,
Plaintiff,

v.

MERSCORP, Inc., a Delaware corporation, and
Mortgage Electronic Registration Systems, Inc.,
a Delaware Corporation,
Defendants.

VERIFIED COMPLAINT

Excerpt:

17. Since January 1, 2008, MERS has filed over 1,600 foreclosure
actions in Delaware. Thousands more foreclosures on MERS-registered mortgages
have been filed in Delaware after assignments out of the MERS System that were
based on the unreliable data in MERS’ records. Many more thousands of
mortgages associated with outstanding loans remain recorded in the Delaware
county land records in the name of MERS without appropriate indications or
avenues to ascertain the identity of the true mortgagee in interest.

[…]

51. Many foreclosed-upon mortgage loans have previously been
securitized and are purportedly owned at the time of foreclosure by a securitization
trust. Under the law governing the creation of many securitization trusts, the
contractual arrangements setting forth the manner and conditions under which
mortgage loans were to be sold into a securitization is crucial to whether the
securitization succeeded in owning the mortgages it purportedly bought.

[…]

C. Defendants committed and continue to commit deceptive trade
practices by assigning or foreclosing upon mortgages for which
MERS did not possess authority to act because the mortgage loan
was never properly transferred to the purported beneficial owner.

55. The MERS System is designed to reflect the intended transfer
of the beneficial ownership of a mortgage loan, but does not have adequate
safeguards to ensure that the transfer recorded in MERS System accurately reflects
an actual transfer of ownership. Where MERS seeks to assign a mortgage or
foreclose on a mortgage loan on behalf of a securitization trust that, despite being
registered as the mortgage owner in the MERS System, does not own the loan,
MERS acts without authority. This is a deceptive trade practice within the meaning
of 6 Del. C. § 2532(a)(2), (3), (5) and (12).

[…]

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