Attorney General Jack Conway announced that his office filed a lawsuit today in Franklin Circuit Court against MERSCORP Holdings, Inc., and its wholly owned subsidiary Mortgage Electronic Registration Systems, Inc. (MERS) for violations of Kentucky law. The lawsuit is a result of General Conway’s investigation of mortgage foreclosure issues in Kentucky.
The lawsuit alleges that MERS violated Kentucky law by not recording mortgage assignments with County Clerks when mortgages were sold or transferred from one bank to another. By law, mortgage assignments must be recorded in the appropriate County Clerk’s office and a $12 fee is collected by the clerks on behalf of the Commonwealth of Kentucky.
“Kentucky’s statute is clear. It requires assignments be recorded with County Clerks, and MERS directly violated that law by creating this system that provides no public record of sales or transactions and deliberately circumvents paying recording fees to states,” General Conway said. “The process makes it difficult for consumers to access data to find out who owns their loans, and the Commonwealth is ripped off when it comes to recording fees.”
MERS was created in 1995 to enable the mortgage industry to avoid state recording fees, allow for the rapid sale and securitization of mortgages, and shorten the time it takes to pursue foreclosure actions. Its corporate shareholders include, among others, Bank of America, Wells Fargo, Fannie Mae, Freddie Mac, and the Mortgage Bankers Association.
Currently more than 6,500 MERS members pay for access to the private system. More than 70 million mortgages have been registered on the system. The lawsuit alleges that since MERS’ creation in 1995, members have avoided paying more than $2 billion in recording fees nationwide.
Hundreds of thousands of Kentucky loans are registered in the MERS system. As a result of not publicly recording the mortgage assignments and paying the required fees, the lawsuit alleges that MERS violated Kentucky’s Consumer Protection Act by committing unfair, false, misleading or deceptive conduct. Under Kentucky law, MERS could be fined up to $2,000 for every violation.
source: kentucky.gov© 2010-15 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.