Bank of America Corp. must face lawsuit claims brought by a Texas county over government fees it avoided by using Merscorp Inc. to track property transactions, a federal judge ruled.
U.S. District Judge Nelva Gonzales Ramos in Corpus Christi said the case should go to trial over most of Nueces County’s claims that the bank and other members of MERS, the electronic mortgage tracking system, have created “chaos” in the local property records system by naming MERS as the beneficiary in thousands of mortgage transactions.
Nueces County, which includes Corpus Christi, claims it was cheated out of fees it should have earned each time a deed was recorded after a property changed hands. The county alleges that properties bundled into mortgage securities may have traded dozens of times within the MERS system without the county being notified of any change in ownership.
The county’s allegations sufficiently detail “the who, what, where, when and how of a scheme to circumvent Texas recording law, which resulted in the allegedly fraudulent filing of hundreds or potentially thousands of documents,” Ramos said in yesterday’s ruling. She allowed claims against the bank and MERS for fraudulent misrepresentation, unjust enrichment and damages of as much as $10,000 for each violation.
“This court cannot simply bend the laws of Texas to fit the MERS system, no matter how ubiquitous it has become,” Ramos said. She rejected the bank’s argument that she should “turn a blind eye to the fact this process does not comply with the law” because MERS is involved in 50% of the county’s residential mortgages.
Jumana Bauwens, Charlotte, N.C.-based Bank of America’s spokeswoman on MERS-related litigation, declined to comment on the ruling.