Home > Avid Law Center > NY AG Sues Banks Over MERS

NY AG Sues Banks Over MERS

New York’s Attorney General Eric Schneiderman, on Friday filed a lawsuit against Bank of America, J.P. Morgan Chase and Wells Fargo over their use of the Mortgage Electronic Registration Systems Inc. (MERS), claiming the banks submitted court documents containing false and misleading information that appeared to provide the authority for foreclosures when there was none.

According to the Wall Street Journal, Schneiderman accused the banks of deceit and fraud in their use MERS that puts homeowners at a disadvantage in foreclosures, eliminating homeowners’ ability to track property transfers through traditional public records. The Wall Street Journal reports that he said that the data is stored in an electronic system that is plagued by inaccuracies and what the lawsuit calls “faulty and sloppy document preparation and execution practices.”

“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 Friday. “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.

By creating this bizarre and complex end-around of the traditional public recording system, banks achieved their primary goal — over 70 million mortgage loans, including millions of subprime loans, have been registered in the MERS system and the industry has saved more than $2 billion in recording fees,” according to the lawsuit.”

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