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IOWA CITY, Iowa (AP) — A judge has dismissed a lawsuit brought by Iowa counties who claimed that banks failed to pay millions in recording fees when they transferred the ownership of mortgages to create profitable but risky financial instruments.
U.S. District Judge Mark Bennett dismissed the lawsuit brought by Plymouth County against companies that own a national registry tracking ownership interests for home loans.
The lawsuit claimed the registry allowed mortgage companies to transfer loans to other banks to be pooled into mortgage-backed securities to sell to investors. It claimed the system violated Iowa law because they did not record each transfer of ownership, and pay required fees.
Bennett ruled that Iowa law does not contain such a recording requirement and dismissed the lawsuit, which was seeking class-action status on behalf of 99 counties.