[Updated at 1.30 p.m.] Attorney General Eric Schneiderman has filed a lawsuit against some of the nation’s largest banks charging that the use of a national Mortgage Electronic Registry System called MERS has led to deceptive and fraudulent foreclosure filings in New York state and federal courts, his office announced today.
The lawsuit alleges that, as a result of the system, employees and agents of Bank of America, JPMorgan Chase, and Wells Fargo have submitted court documents containing false or misleading information that made it appear that the foreclosing party had the authority to bring a case when it didn’t. The system has also made it impossible for the general public to reach property transfers through public records, as the information is now stored on a private database.
“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. 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. Our action demonstrates that there is one set of rules for all — no matter how big or powerful the institution may be.”
The financial industry launched MERS in 1995, Schneiderman’s office said, to avoid the hassle and paperwork of publicly recording mortgage transfers.
While representatives for Wells Fargo were not immediately available for comment, spokespersons for Bank of America and Chase said the companies declined to comment on the suit. — Katherine Clarke