Reston, Virginia Feb. 25, 2011—MERS has not received any direct legal communication regarding Mr. O’Brien’s February 22, 2011 announcement. The use of MERS is in compliance with the purpose and intent of the state recording acts. MERS intends to fully defend itself against these unfounded allegations.
It is not the case that recording fees are somehow owed or outstanding. All MERS mortgages are recorded in the public land records, and MERS members pay recording fees when the mortgage is recorded. Fees are paid for a service performed, and if a document is eliminated because it is no longer necessary, no fee is due because there is nothing to record. We believe it is wrong and unethical to seek money for services that were never rendered, and in fact, MERS greatly reduces the workload of county recorders, resulting in lower operating expenses for the county recorder’s office. Moreover, it would be the borrower who ultimately pays the costs of recording assignments, either directly or indirectly.
When MERS is the mortgagee, the mortgage is recorded at the county land records, thereby putting the public on notice that there is a lien on the property. The MERS® System also complements the county land records by providing additional information that was never intended to be recorded at the county level, namely the information about the mortgage loan servicer, and now, with the addition of MERS® InvestorID, the name of the investor.
O’BRIEN CALLS ON MERS TO COME CLEAN AND PAY UP: SAYS ESSEX COUNTY OWED $22 MILLION DOLLARS
Essex South Register of Deeds John O’Brien announced today that he will be seeking over $22 million dollars from the Mortgage Electronic Registration System, “MERS” which represents several major banking conglomerates. O’Brien bases the $22M number on the fact that the Salem registry has recorded over 148,663 MERS mortgages since 1998. After a careful review of a number of these mortgages O’Brien said it became very clear to him that MERS had assigned mortgages to other entities at least twice without paying a recording fee. Based on this information the taxpayers have been defrauded out of $22,299,450 in Southern Essex County alone. It is quite possible that in some cases they may have assigned the notes more than twice resulting in even greater loss of revenue. O’Brien called MERS “one of the greediest schemes ever perpetrated on the American people. They have compromised the integrity of the public land recordation system and in doing so, have wreaked havoc on our economy”.
Last week MERS announced a major policy change conceding that assignments should be recorded in the various Registries across the country and “assignments out of MERS’s name should be recorded in the county land records, even if the state law does not require such a recording.” In addition MERS instructed its members to “not foreclose in MERS name”. O’Brien further states “MERS has now finally acknowledged that their business model was flawed, and they didn’t adhere to the legal requirement that all assignments of a mortgage must be recorded at the local Registry of Deeds.” “If they had followed the law the public would know who was buying and selling their mortgage, and it would have been an open, honest and transparent process. The fact that they deliberately chose to create a for-profit private cyber Registry of Deeds whose only purpose was to avoid paying the same fees as everyone else and keeping the public in the dark as to who was the rightful owner of the mortgage clearly demonstrates to me that this was a scheme of epic proportions.” “When Wall Street and these major lenders joined together in creating MERS, they plunged us into a housing nightmare with little or no regard for their actions. It’s obvious that their only motivation was to manufacture huge profits off the backs of homeowners and taxpayers. They should all be ashamed of themselves and step up to the plate and do the honorable thing and make the taxpayers’ whole,” O’Brien said.
The Essex South Registry of Deeds is one of 21 Registries in Massachusetts which have recorded MERS mortgages .O’Brien estimates that based on his conservative estimate of two assignments per mortgage the Commonwealth may be owed statewide upwards of $200 million dollars in lost recording fees. Nationwide, the amount of revenue lost could be in the billions. O’Brien is calling on MERS to come clean and inform the registers of deeds across the country as to the number of times they assigned mortgages to other entities. Only then will we get a true picture of the economic impact that this fraud has had on our country.
O’Brien, who in November, 2010, notified Massachusetts Attorney General Martha Coakley about MERS, will now be forwarding to her this additional information. “We need to act quickly to recover these funds,” O’Brien said.
They did such a good job depressing the housing market and sending the economy into a tailspin, why not trust the banking cabal with keeping track of all property titles?
John O’Brien, the Essex County register of deeds, isn’t buying it, and neither should you.
O’Brien, of Lynn, is in the forefront of a national effort to challenge the policies and practices of the Mortgage Electronic Registration Systems Inc. (MERS). The agency was established in 1995 by a group of banking conglomerates including Bank of America, Countrywide Home Loans and Wells Fargo, to keep track of loans issued against property titles — a task previously performed by the public registries of deeds.
In a Nov. 18 letter to Attorney General Martha Coakley, O’Brien alleged that MERS “has failed to pay the proper recording fees required under Massachusetts statute when a lender assigns a mortgage to another entity.” And this week Coakley announced that she will join her colleagues in several other states in an investigation to see whether MERS is skirting laws regarding such transactions.
Attorney General Martha Coakley is trying to determine whether a lender-created company that tracks mortgage loan data has failed to pay millions of dollars in property recording fees in Massachusetts.
Coakley is taking aim at the little-known but powerful Reston, Va., company whose members include Bank of America Corp., JPMorgan Chase, and other major lenders.
The company, Mortgage Electronic Registration Systems Inc., oversees a database of about 31 million mortgages, about half of the active loans in the United States.
As concern about foreclosure practices mounts across the country, Mortgage Electronic Registration Systems is increasingly being questioned by regulators, lawyers, and housing advocates about the way it operates.
Essex County’s register of deeds, John L. O’Brien Jr., last month asked Coakley to investigate the company, known as MERS. He said that by using its own database for property transfers, MERS does not pay recording fees or disclose the transactions, as Massachusetts law requires.
O’Brien estimated that in Essex County alone, $10 million was lost over the past decade because MERS failed to pay a $75 fee each time a mortgage was transferred between lenders.
“They created their own registry of deeds,’’ he said. “They have to record these assignments. The taxpayers deserve these fees.’’
A spokeswoman for Coakley said her office is looking at the issues O’Brien raised.
Secretary of State William F. Galvin plans to submit a bill next month that would force Massachusetts mortgage lenders to get court approval before seizing homes, in an effort to protect homeowners and address concerns about how foreclosures are conducted.
Galvin said he will revive a proposal that state lawmakers rejected two years ago because of new questions about the validity of titles for foreclosed properties — an issue housing specialists say is hampering the state’s real estate market.
“Unless we do something to clean up the titles in these properties we are going to have a big continued problem,’’ Galvin said. “You aren’t going to straighten out the economy of the state until this housing thing gets figured out.’’
Massachusetts is one of 27 states that do not require foreclosures to be reviewed by a judge.
Eyes and Ears Mortgage Specialist and ShametheBanks.org Founder
Posted: November 29, 2010 01:31 PM
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About a week ago, John O’Brien, Register of Deeds in Essex County Massachusetts, sent a letter to Massachusetts Attorney General Martha Coakley asking that she look into whether MERS (Mortgage Electronic Registration Systems, Inc.) failed to pay legally required recording fees in Massachusetts when a MERS-mortgage is assigned to another entity, like a trust or a bank.
MERS has seen a lot of attention of late because of the number of robo-signing cases popping up at banks and mortgage servicers. MERS has no employees, it simply assigns and designates an estimated 20,000 unpaid VPs and officersrecent testimony before Congress. around the country as certifying officers to sign off on mortgage transfers, foreclosures, and assignments, according to R.K. Arnold, President and CEO of Mortgage Electronic Registration Systems, Inc., in a
The recording fees Essex County has missed out on as a result of MERS purportedly bypassing normal recording channels was O’Brien’s primary concern.
In his November 18 letter to Attorney General Coakley, O’Brien wrote, “I am writing to ask that you investigate and provide me with an official opinion as to whether or not the Mortgage Electronic Registration Systems, Inc. (MERS) has failed to pay the proper recording fees required under Massachusetts statute when a lender assigns a mortgage to another entity.”
In response to questions regarding the letter from Essex Co. (Mass.) Register of Deeds John O’Brien to the Hon. Martha Coakley, Attorney General for the Commonwealth of Massachusetts, MERS has not seen the letter nor have we been contacted by the Massachusetts attorney general. We will fully cooperate with any inquiries from appropriate authorities.
It is not the case that recording fees are somehow owed or outstanding. MERS pays recording fees when the mortgage is recorded. Fees are paid for a service performed, and if a document is eliminated because it is no longer necessary, no fee is due because there is nothing to record. In fact, MERS greatly reduces the workload of county recorders, resulting in lower operating expenses for the county recorder’s office. Moreover, it would be the borrower, and not the lender, who ultimately pays the costs of recording assignments, either directly or indirectly.
When servicing rights or promissory notes are sold for loans where MERS is not the mortgagee, the usual practice is for the seller to execute and record an instrument assigning the mortgage lien to the purchaser (commonly referred to as an “assignment”). In general, the primary reason assignments are recorded (in cases where MERS is not the mortgagee), stems from the need of servicers to be in the land records to fully administer the loan on behalf of the mortgage loan owner. In which case, the servicer will be assigned the mortgage lien (thus becoming the mortgagee) in order to receive the service of process related to that mortgage loan. When Mortgage Electronic Registration Systems, Inc. is the mortgagee (i.e., holds the legal title to the mortgage lien), there is no need for an assignment of the mortgage lien between its members because MERS remains the mortgagee holding legal title to the mortgage as the common agent for them. It is not the case that the assignments are now being done electronically through the MERS® System instead of being recorded in the land records. The need for an assignment is eliminated because title to the mortgage lien has been grounded in MERS. Moreover, transfers of mortgage notes and servicing rights are not recordable transactions (and have never been reflected in the land records) because they are not a conveyance of an interest in real property that is entitled to be recorded; only the transfer of the lien is a conveyance. The only reason servicers needed to appear in the county land records before MERS was so they could receive legal notices pertaining to the property. Now, MERS as their common agent receives the legal notices. The chain of title starts and stops with Mortgage Electronic Registration Systems, Inc. as the mortgagee. MERS, as the agent for the note-owner, holds legal title for the note-owner in the land records.
The use of MERS is in compliance with the statutory intent of the state recording acts. When MERS is the mortgagee, the mortgage is recorded at the county land records, thereby putting the public on notice that there is a lien on the property. The MERS® System also complements the county land records by providing additional information that was never intended to be recorded at the county level, namely the information about the mortgage loan servicer, and now, with the addition of MERS® InvestorID, the name of the investor.
It has been brought to my attention that a number of states have alleged in court filings that MERS intentionally failed to pay recording fees and failed to disclose the transfer and assignments of interest in property, solely to avoid and decrease the recordation fees owed tot he counties and the state.
NEW YORK – It used to be that every time a bank sold a mortgage, the county land recording office received a fee. It wasn’t much – $30 or so – but then real estate boomed in the 1990s and banks pooled millions of mortgages into securities that investors bought and sold.
One mortgage transaction became a dozen or more, and the tab grew ever larger. So the banks came up with a way around the fees. And now they are fighting to avoid perhaps tens of billions of dollars in penalties that have added up over the years.
In 1997, when the banks’ burgeoning business in mortgage securities was clashing with the unwieldy nature of written forms, the industry created its own alternative, an electronic system that would track the ever-changing ownership of home loans.
The banks formed a private company called Mortgage Electronic Registry Systems Inc., or MERS. Its motto: “Process loans, not paperwork.” It has registered more than 65 million loans, three out of every five on the market.
MERS’ owners are all the big mortgage companies, including Bank of America, Citigroup, Wells Fargo, JPMorgan Chase and GMAC. They are all facing a foreclosure fraud investigation launched by all 50 state attorneys general.
Counties complained about the lost revenue after MERS was implemented, but they rarely tried to challenge the new way of doing business. Now, three years after the housing crash and two months after allegations that some banks submitted fraudulent documents to foreclosure courts, every aspect of the nation’s mortgage machine is under scrutiny.
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Two lawyers in Reno, Nev., have filed suit in 17 states alleging that banks cheated counties out of billions of dollars. In Virginia, a lawmaker has asked the state’s attorney general to investigate MERS over its failure to pay recording fees. And everywhere elected officials and class-action lawyers turn, the back-office procedures of MERS are being called into question.
The lawsuits challenge MERS’ authority to act on behalf of banks or other investors that own a mortgage. With so many loans registered to MERS, it’s a claim that goes to the heart of the mortgage-fraud scandal.
With MERS ostensibly keeping track of who owns what, counties still get their paperwork and fees the first time a mortgage is filed. Typically, that county fee is rolled into the closing costs homeowners pay when they buy a home.
MERS is “an admitted fee-avoidance scheme,” says Robert Hager, the Nevada lawyer who, along with his partner Treva Hearne, is filing the suits against MERS and its bank owners, including the government-backed mortgage- finance companies Fannie Mae and Freddie Mac. Fannie and Freddie provide a low- cost flow of funding to the nation’s mortgage markets by buying mortgages from lenders, packaging them into securities and then selling them to investors.
The suits were filed in California, Nevada and Tennessee and 14 undisclosed states where the cases are still under court seal. Hager and Hearne chose the states because their laws allow what are called false claims suits, in which citizens can take legal action against companies that may have cheated the government.
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