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JPMorgan Chase & Co
Bank of America Corp
Minnesota’s Ramsey and Hennepin counties sued Mortgage Electronic Registration Systems Inc. and a dozen financial institutions, claiming the use of MERS to avoid paying mortgage-assignment filing fees violates state law.
JPMorgan Chase & Co. (JPM), Bank of America Corp (BAC). and Citigroup Inc. (C) are among the co-defendants. The counties, which include Minnesota’s capital of St. Paul and its most-populous city, Minneapolis, filed the lawsuit in state court this month on behalf of all of the state’s counties. The case was moved yesterday to federal court in St. Paul.
MERS, a unit of co-defendant Merscorp Holdings Inc., files mortgages as the lenders’ assignees or nominees to eliminate the need to record assignments of the notes securing those loans when they’re sold.
The banks’ use of MERS “hid the many assignments defendants made electronically and simply failed to create or record in the proper Minnesota county recorders’ offices,” violating state law, the counties alleged.
“In other instances, defendants simply failed to record any mortgage assignments at all -- regardless of how many times each mortgage loan had actually been assigned,” according to the complaint, circumventing other state laws by avoiding the payment of filing fees of about $46 per assignment.
MERS, a closely held company based in Reston, Virginia, describes itself on its website as a member-based organization comprising about 3,000 lenders, loan servicers, investors and government institutions.
The counties, accusing the defendants of creating a public nuisance by obscuring note holders’ identities and of unjust enrichment, seek a court order recognizing their right to sue as a class. They also want every mortgage and assignment in the state be recorded in the county where the underlying property is located, plus restitution.
“Use of the MERS system is legal in all 50 states and MERS complies with Minnesota property recording statutes,” Merscorp said in a statement this month upon the filing of the case, which it said lacked merit.
Jennifer Zuccarelli, a spokeswoman for New York-based JPMorgan, and Danielle Romero-Apsilos, a spokeswoman for New York-based Citigroup, each declined to comment on the allegations. Lawrence Grayson, a spokesman for Charlotte, North Carolina-based Bank of America, also declined to comment.
The case is County of Ramsey v. Merscorp Holdings Inc., 13- cv-474, U.S. District Court, District of Minnesota (St. Paul).
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