New York Attorney General Eric Schneiderman today filed a lawsuit against Bank of America, JPMorgan Chase, and Wells Fargo charging that using Mortgage Electronic Registration Systems' (MERS) electronic mortgage registry has resulted in a wide range of deceptive and fraudulent foreclosure filings in New York state and federal courts.
The lawsuit asserted that employees and agents of the three banks, which have acted as "MERS certifying officers," have repeatedly submitted court documents that have false and misleading data. The information in these documents made it appear that the foreclosing party had the authority to bring a case when in fact it might not have.
The lawsuit named JPMorgan, BofA, Wells Fargo as well as Virginia-based MERSCORP and its subsidiary, MERS.
The lawsuit further asserts that the MERS System has removed homeowners' and the public's ability to track property transfers via the traditional public records system. This data instead is now stored only in a private database, which is beset with inaccuracies and errors, over which MERS and its financial institution members have sole control.
The other defendants in the suit are BAC Home Loans Servicing, Chase Home Finance, EMC Mortgage Corp., and Wells Fargo Home Mortgage.
“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 stated. "Once the mortgages went sour, these same banks brought foreclosure proceedings en masse based on deceptive and fraudulent court submissions, seeking to take homes away from people with little regard for basic legal requirements or the rule of law.”
He added that the suit showed that "there is one set of rules for all" regardless of how powerful the institution might be. Those rules, Schneiderman said, will be enforced vigorously. "Only through real accountability for the illegal and deceptive conduct in the foreclosure crisis will there be justice for New York’s homeowners,” he said.
The release from Schneiderman's office regarding the suit stated that MERS has granted more than 20,000 “certifying officers” the authority to act on its behalf. The power includes the authority to assign mortgages, execute the paperwork necessary to foreclose, and submit filings on behalf of MERS in bankruptcy proceedings. These certifying officers are not employees of MERS, but are employed by MERS members such as three banks named in the suit.
According to the attorney general, MERS' conduct as well as the servicers’ use of the MERS System has resulted in the filing of improper New York foreclosure proceedings as well undermined the integrity of the judicial process. This act also created confusion and uncertainty about property ownership interests and possibly clouded titles on properties throughout the New York state.