Trouble for MERS Keeps Mounting
By Greg Hunter’s USAWatchdog.com (revised)
In Guilford County, North Carolina, the Register of Deeds, Jeff Thigpen, is questioning if his county was cheated out of more than a million dollars real estate fees because banks did not file proper chain of ownership documents with his office.
Instead, the banks used a Virginia based company called MERS. It bypassed the local Register of Deeds office, not just in Guilford but all counties across the U.S.
MERS stands for Mortgage Electronic Registration Systems. It manages a centralized electronic property data base that is a critical tool in securitization, or bundling, of mortgages into securities (mortgage-backed securities). About 60 % of all mortgages, or 65 million U.S. homes, are tracked in MERS. Yesterday, the Greensboro News and record reported Thigpen said,
“As register of deeds I have two primary responsibilities in land records,” Thigpen wrote in the release. “A sworn duty to protect the chain of title and a fiduciary responsibility to collect recording fees. Quite frankly, MERS has undermined both. Through their own ‘private-for-profit’ Register of Deeds mortgage tracking office, MERS has created a dangerous centralization of power whose sole purpose is to protect and serve the interests of major banking conglomerates and undermine public recording officers.” (Click here to read the complete News and Record article.)
MERS was established by big banks, and many contend it is nothing more than an electronic shell company with no employees. (Click here to find out more about MERS.) Financial institutions such as Wells Fargo, Bank of America, JP Morgan, Citi and others all use MERS. Mr. Thigpen alleges MERS may have made false statements since 2005 to avoid fees in his county that he says add up to more than $1.3 million. To get an idea of how much of a problem this is for MERS and the banks, consider this probably happens in every single county in America! The MERS website says it is not paying county fees because, “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.” (Click here to go the the MERS website.)
A California lawsuit alleges it is owed between $60 and $120 billion in unpaid recording fees. The industry is not going to go down without a fight according to a Florida defense lawyer blog. It reported late last year,
“Lobbyists for the lending industry are seeking legislation that would validate the legality of MERS. If the lobbyists were successful, all of the suits in which MERS is a defendant would immediately become moot. This would effectively end the lawsuit pending in California against MERS in which the State of California is seeking between $60 billion and $120 billion from MERS for unpaid recording fees.” (Click here to read the full report from Florida Foreclosure Defense Lawyers Blog.)
Legitimizing documentation for foreclosures from MERS is meeting heavy resistance. Two months ago, homeowners won a landmark victory in the Massachusetts Supreme Court. The Huffington post reported,
“The Supreme Judicial Court affirmed a lower court judge’s ruling invalidating two mortgage foreclosure sales because the banks, in their capacity as trustees for mortgage securities, did not prove that they actually owned the mortgages at the time of foreclosure.” (Click here to read the complete Huffington Post story.)
Other states have had similar rulings questioning the legal standing of MERS. States such as Arizona are about to make it much harder for the paperless MERS to foreclose on delinquent homeowners. Bloomberg reported recently,
“The legislation, which is headed to the House after being approved 28-2 in the Republican-dominated Senate, would allow foreclosure sales to be voided if lenders that didn’t originate the loan can’t produce the full chain of title. . . . Lawmakers in states including New York, Oregon and Virginia also have proposed legislation to address concerns among consumer advocates that lenders or mortgage servicers are using incomplete or false paperwork to repossess properties in default. The attorneys general of all 50 states are jointly investigating how the mortgage-servicing industry operates.” (Click here for the complete Bloomberg story.)
This type of legislation is decidedly anti-MERS, and looks like it is becoming a national trend. But regardless of legislation, just the unpaid fees to cash strapped counties across America pose a huge problem to MERS and the banks that own it. Last year, a former hedge fund manager, Shah Gilani, said,
“If suits against MERS and all its members are successful, unpaid recording fees and fines (that can be as much as $10,000 per incident) would make every one of them insolvent.” (Click here to read the full story.)