Delaware AG Sues MERS

(4 pm. – promoted by ek hornbeck)

This is how foreclosure fraud should be handled on the federal level and is not. It’s not that hard.

New York Attorney General Eric Schneiderman has received a lot of the headlines for his no-holds-barred investigations against the banks, but he’s had a partner in Delaware’s Beau Biden. Because New York and Delaware were where most of the securitization trusts were originated, having a united front on this issue of fraud is vital, and despite the family ties with the White House, Biden has been uncompromising. His latest salvo is a lawsuit against MERS, the electronic registry owned and funded by the banks, which they used to evade the public land transfer system and save money on county recorder fees:

“    The Delaware attorney general’s office sued Merscorp Inc., which runs a national mortgage registry used by banks, saying its practices are deceptive and hide information from borrowers.

   The MERS database, which tracks ownership interests in mortgages, obscures information from borrowers and impeded their ability to fight foreclosures, Delaware Attorney General Beau Biden said in a complaint filed today.

   “MERS engaged and continues to engage in a range of deceptive trade practices that sow confusion among consumers, investors and other stakeholders in the mortgage finance system, damage the integrity of Delaware’s land records, and lead to unlawful foreclosure practices,” Biden said. “

(Reuters) – MERS, the electronic mortgage registry used by the banking industry, was sued by Delaware on Thursday and accused of deceptive practices that led to unlawful shortcuts in dealing with the foreclosure crisis.

New York’s attorney general also took action against MERS, subpoenaing the registry this week for information about how it is used by major banks and a foreclosure law firm, a person familiar with the matter said on Thursday.

The suit and subpoena were part of a joint New York-Delaware mortgage probe, the person told Reuters.[…]

Schneiderman’s subpoena also seeks information on Amherst, New York, foreclosure law firm Steven J. Baum, which the attorney general has been probing since at least last spring.

Lauren Passalacqua, a spokeswoman for the New York attorney general’s office, declined to comment.

   The damages sought are substantial, $10,000 per violation. Since MERS is a tiny company, with under 50 employees and many of its operations outsourced (and no reason for it to maintain a substantial balance sheet), success in court would almost certainly mean bankruptcy for MERS. In theory, a new consortium or private investors could buy the database out of bankruptcy, but how would one structure its operations so as to not run afoul of the law? Yet with so many mortgages recorded in the MERS database (the registry has claimed over 60 million) the banks will need to find a way to keep it going and operate it more in line with the law […]

   Unless MERS gets injunctive relief, these two provisions effectively stop foreclosures in MERS’s name in Delware. MERS has repeatedly said it does not hold any interest in the property or note in depositions. And the mortgage registry system had also quietly put out a notice to members months ago telling members to stop foreclosing in the name of MERS. Not allowing MERS members (servicers, banks, and their foreclosure attorneys) to assign mortgages out of MERS will stop the foreclosure apparatus cold. This is a legitimate legal strategy to get a foreclosure freeze and force the servicing industry to the table to negotiate a much bigger fix.