New York AG files lawsuit against three largest lenders over MERS

For all those who walked the streets since mid-September: your voice was finally heard! We don’t need the imminent foreclosure settlement, as it won’t bring relief and it has long forgotten its real aim: to hold the banks accountable.

Instead we have somebody, who talks little, and takes action on large scale and his name is Eric Schneiderman, New York Attorney General.

He is the man who finally fulfills what the 99% want: Eric Schneiderman sued the nation’s three largest lenders charging that their use of the MERS has resulted in deceptinve and fraudulent foreclosure filings throughout New York’s state and federal courts.

According to the lawsuit documents, “employees of Bank of America, JPMorgan Chase and Wells Fargo who acted as ‘MERS certifying officers’ submitted court documents containing false and misleading information that made it appear they has the right to foreclose when the may not have”.

Also, the lawsuit mainly targeting the three aforementioned banks, names MERS (Mortgage Electronic Registration Systems Inc.) and its parent company Merscorp, Inc (which was created in the mid ‘90s by the banks) as defendant.

Schneiderman takes Dallas DA’s action to its state blasting MERS with a lawsuit that brings MERS’ fraudulent activity into spotlight. And now the whole country is watching New York AG’s lawsuit. MERS eliminated homeowners’ and the public’s ability to track property transfers through the traditional public recording system, by introducing the electronic registration system. This move placed the information into a private database, which is plagued with inaccuracies and errors and it is controlled solely by MERS and its members. And the members are: the banks.

“The banks created the MERS system as an end-run around the property recording system, to facilitate the rapid securitization and sale of mortgages,” Schneiderman said in a press statement. “Once the mortgages went sour, these same banks brought foreclosure proceedings en masse based on deceptive and fraudulent court submissions.”

Now Schneiderman points out to the rotten roots of MERS: it operates as a membership organization and its members are only the mortgage industry players the entities that originate, buy or invest in loans. Over 70 million loans nationally have been registered in MERS, and currently there are 30 million active loans.

The system is set up in such way that members can designate MERS as the mortgagee of the loan. It does not matter how many times the loan was transferred , MERS still remain as mortgagee of the loan. Now Schneiderman asks: how come a company with 70 employees serve as the mortgagee of record for tens of millions on loans registered through the system?

New York AG highlights in his lawsuit that MERS has granted over 20,000 “certifying officers” the authority to act on its behalf, which means these officers can assign mortgages, execute paperwork for foreclosure and submit filings for bankruptcy proceedings.

What Schneiderman emphasizes is the use of MERS led improper foreclosures  in New York, which undermined the whole judicial process and potentially clouded titles on properties throughout the State of New York.

According to his data, MERS has filed over 13,000 foreclosure actions in the city, listing itself as the plaintiff when in many cases it lacked the legal authority to foreclose.

MERS replied to Schneiderman’s allegations saying that the company was authorized by the note holder to bring foreclosure action in its name. In addition, the company found perfectly legal to appoint signing officers to act on MERS’ behalf, as – according to their findings – there is now law in NY, that forces them to disclose whether it is their employee or another’s. This means appointed officers are authorized to sing their own names using the titles vice president and assistant secretary of MERS.

Schneiderman seeks a declaration from court that the aforementioned practices are against the law, as well as injunctive relief, damages for harmed homeowners and civil penalties, as well as defendants to cure the titles and clear any improper liens as the result of their illegal actions.