Massachusetts Attorney General Martha Coakley told the state's Register of Deeds Association that she will not sign a multistate settlement with large mortgage servicers that includes a widespread release of liability for claims against the Mortgage Electronic Registry Systems (MERS).Responding to a letter from Massachusetts’s 13 county and eight state-run regional registries, Coakley said her office continues to investigate whether servicers and investors conducted unlawful foreclosures with their reliance on MERS, the system used to track promissory note ownership of the majority of U.S. residential mortgages.
“In the next week, we plan to send civil investigative demands (CID) to Registers in order to gather critical information to our investigation,” Coakley’s letter said.
The letter references an upcoming Aug. 11 meeting Coakley will have with the Massachusetts Register of Deeds Association to discuss the group’s concerns regarding MERS and the impact of the ongoing settlement negotiations between all 50 state attorneys general and many of the country’s largest mortgage servicers.
“We have made clear that Massachusetts will not sign on to any global agreement with the banks if it includes a comprehensive liability release regarding securitization and the MERS conduct,” the letter said. “We strongly believe that these investigations must continue and responsible parties must be held accountable in order to fully protect homeowners and return to a healthy economy.”
In a statement on its website, MERS’ parent company Merscorp, says its practices have been upheld by a pair of federal bankruptcy court decisions in the state, as well as by a U.S. District Court ruling, also decided in Massachusetts.
“The assertions about MERS are without merit. We will cooperate with the investigation and look forward to the opportunity to respond to the Massachusetts Attorney General's request,” said a Merscorp spokeswoman in a press statement. “The use of MERS has been litigated in Massachusetts courts, and judges have upheld the legality of the MERS business model in the Commonwealth.”
Despite the rulings seemingly in favor of MERS, Massachusetts politicians have criticized the practice, claiming the use of MERS has robbed the land registries of revenue and created clouded chains of title for borrowers. A protest from John O’Brien Jr., register of deeds for the Southern Essex District Registry of Deeds, went so far as to request the Commonwealth’s treasurer close its accounts at Bank of America in favor of a non-MERS member depository.
In an interview that appeared in a recent edition of ASR sister publication Mortgage Technology magazine, O’Brien called for the end of MERS, dismissing claims that the system is needed to support the secondary mortgage market.
“MERS went along and said the registries are back in the Dickens days. They’ve got quill pens, they’ve got oil lamps, their computer systems can’t handle this. That’s all baloney,” O'Brien said. “We can do anything MERS can do 100 times better.”