MERS Must Face Trial Over Pennsylvania Mortgage Records

Merscorp Inc., the operator of an electronic mortgage registry known as MERS, must face a trial to determine how much it owes Pennsylvania counties for shortchanging them on mortgage recording fees, a judge ruled.

Merscorp and its Mortgage Electronic Registration Systems Inc. unit violated state law by failing to properly record home loans that were sold or transferred, U.S. District Judge J. Curtis Joyner ruled today in Philadelphia. The conduct misled homeowners facing foreclosure and created uncertainty about property ownership in the state, he said.

As a result, the company must face trial on damages and on claims that it was unjustly enriched, the judge ruled.

The ruling comes as Merscorp battles scores of lawsuits and state probes challenging its business model and the legality of its filings in county courthouses throughout the U.S. MERS documents the ownership and resale of about half of U.S. home loans. Its biggest customers are also owners: Fannie Mae, Freddie Mac and Bank of America.

The company last year persuaded judges in Texas and Minnesota to dismiss counties' lawsuits over filing fees, a reliable revenue source in the past.

The Pennsylvania case was brought by the recorder of deeds in Montgomery County on behalf of other recorders in the state. From 2000 to 2012, documents recorded by MERS steadily increased in the state with a corresponding decrease in recording fees collected by the counties, Joyner said in his ruling, citing a survey by the Philadelphia Department of Records. Montgomery County lost more than $15 million in recording fees, according to court documents.

Merscorp's conduct violated Pennsylvania's recording statutes making it mandatory to create and record documents memorializing the transfers of promissory notes secured by mortgages on real estate, Joyner wrote.

Bill Beckmann, Merscorp's president and chief executive officer, didn't immediately return a phone call seeking comment on the ruling.

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Comments (6)
The only honest comment here is the first comment. Period!!!!!!!Not one person has been harmed by MERS. People were foreclosed on for not making payments. True, many should not have been made loans in the first place, but that is another story. During refinance booms when people could not close on homes because County Recorders were so backed up, FNMA/FHLMC others, designed a faster better less expensive modern day process. All the other comments are fantasy!!!
Posted by ROBERT R | Monday, July 07 2014 at 3:02PM ET
MERS "could" have been a great idea if it was created to benefit the LANDOWNER, and not the Members of the BARS, the GSE's (which are NOT govt agencies, but were created by Congress under Charters which have been violated), municipalities (local/state govt operating as Corporations instead of de jure "government") and a HOST of enterprising Capitalists who failed to Disclose the RISK of securitization and the sale of Unregistered Securities. MERS basically recreated the NY Bucket Shops which led to the FIRST Depression. MERS and it's co-conspirators is, and has always been, a National Security Threat to the Lawful LAND OWNERS of American-Titled (DEEDED) private property. It circumvented Due Process as well as the necessity to OYEZ OYEZ OYEZ...
Posted by JANE DOE S | Wednesday, July 02 2014 at 5:25PM ET
In between the two comments above is the sweet spot for a compromise. The major problem caused by MERS is that a corporation holds the key to information on all non recorded subsequent transfers of the mortgage and presented huge problems in the foreclosure fiasco. Certainly states are free to require recording of all mortgages, assignments and transfers. MERS gets paid large amounts of money by all the lenders it serves. MERS facilitated rapid and multiple transfers in the MBS market. Whether or not you believe in the importance of MBS and the marketplace it serves,state recordng requirements would present a significant hurdle for it. On the other hand, MERS could choose to work with States and provide/report the information to recorders office's and make a payment that may be much less. States could revise their legislation and work with MERS, if MERS and the States wish to do so. States may choose instead to pass new laws which may limit MERS right to do what they are doing.
Posted by | Wednesday, July 02 2014 at 3:15PM ET
I am amazed that MERS has gotten away with not obeying laws that require payment of fees for recording assignments so far. Like it or not, you have to obey the laws of the counties and states. I surely would change a lot of them but I am smart enough to know I can't circumvent them. It may be that the lenders are also liable if someone chooses to sue them.
Posted by John C | Wednesday, July 02 2014 at 2:10PM ET
MERS was set up by the GSE's and Too Big to Fail Banks for their own nefarious purposes.....and they use MERS to commit fraud on a daily basis, fabricating documents as needed....they should be prosecuted criminally.....not just pay a small fine!
Posted by john k | Wednesday, July 02 2014 at 9:56AM ET
This is outrageous. A company in the United States , working with two major quasi governmental agencies , substantially improves a process, speeds it up and reduces it's coste , thus making the county recorders offices obsolete, helping the end consumer , so they get blackmailed by their government? God help this Nation against it 'a corrupt governments at all levels.
Posted by ROBERT R | Wednesday, July 02 2014 at 8:47AM ET
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