A lawsuit filed by the county register of deeds in Guilford County, N.C. Tuesday claims mortgage documents in its records were 'robo-signed' in the name of Mortgage Electronic Registration Systems Inc. and wants a court to appoint a “Special Master” to determine which documents are fraudulent and require servicers to refile documents.
“Defendants created this mess in the public recording system, and it is only fair that Defendants bear the burden of cleaning it up,” the compliant, filed in county court by Guilford County Attorney Mark Payne and Deputy Attorney Matthew Turcola, on behalf of Jeff Thigpen, the county's register of deeds, reads.
The lawsuit is unique in that it doesn't assert many of the claims other county registers have made against MERS. Rather than focusing on the fees that land recorders claim MERS has helped promissory note holders avoid paying with its private loan registry, the Guilford County suit focuses on documents it claims were robosigned by agents of Lender Processing Services and its now-defunct DocX subsidiary, which allegedly signed foreclosure and other mortgage documents in the name of MERS for its mortgage servicer clients.
While focusing its claims on the allegedly robo-signed documents, the suit notes that “The practice of designating MERS Inc. as the mortgagee and keeping that designation in place notwithstanding transfers of the mortgage between lenders is a marked departure from the traditional practice, whereby the initial lender was accurately designated as the mortgagee, and any assignees regularly filed assignments or other appropriate documentation with the Register of Deeds, which put the public on notice of the actual holder of the mortgage.”
In addition to MERS and its parent company, Merscorp, the lawsuit names LPS, DocX, and 21 MERS members, including many of the nation's largest mortgage servicers.
In a prepared statement, Merscorp said the lawsuit “contains a lot of political rhetoric,” and misconstrues the role of the MERS System and repeats common allegations about MERS’ that are inaccurate.”
“MERS does not eliminate or replace county land records. Mortgages where borrowers appoint MERS as the mortgagee are recorded in the local land records and the fees are paid,” the statement reads. “MERS’ role is disclosed in plain language in the mortgage or deed of trust document signed by the borrower at closing.”
“Homeowners have access to servicer and investor information for their mortgage loans by calling a toll free number as well as using access provided through the MERS website,” it adds.
A spokesperson from LPS declined to comment because the company had not yet received the lawsuit.
The suit cites numerous instances of alleged robosigning by DocX and the MERS members, who signed documents that were filed in the Guilford land records as MERS “certifying officers,” which gave them the power to execute documents on MERS' behalf.
According to the complaint, Thigpen's office surveyed documents filed between August 2006 and April 2010 and identified approximately 6,100 mortgage documents filed by DocX during that time period, 4,519 of which were signed in the name of a known robosigner.
Names now made notorious by the robosigning scandal, including “Linda Green,” and “Christie Baldwin,” are cited in the lawsuit, including a dozen or more different written signatures for each of the two names.
In the suit, Guilford County asks for the defendants to pay for a “Special Master” to review the documents in the county recorders and pay to refile any documents that are deemed invalid.
In addition to its claims of robosigning, the lawsuit takes aim at the same allegations of quality control issues identified last year in a multiagency consent order Merscorp entered in with federal regulators.
“MERS is inherently unreliable as a source of record title. Reporting of transfers is voluntary among MERS members, MERS fails to maintain digital or hard copy records of transfers, MERS fails to check its members' filings for accuracy, and MERS itself claims the information it holds “does not constitute the official legal record,” the lawsuit reads. “As a result of the creation and maintenance of MERS, the public recording system is no longer a reliable source for tracking the chain of title for property, identifying the current beneficial owner of a mortgage, or determining the validity of any satisfaction.”
By contrast, Guilford County claims it serves as a “model register,” with electronic filing capabilities, auditing software and a Local Government Federal Credit Union Productivity Award from the North Carolina Association of County Commissioners for technological innovations, according to a county press release.
