BREAKING: AG Biden Suing Keepers of Mortgage Data Base, News-Journal Reports

Filed in National by on October 27, 2011

Good for him. The News-Journal is reporting that Delaware is filing suit against MERS (Mortgage Electronic Registration Systems). Here’s the lede to the News-Journal story:

Delaware joined what is becoming a growing legal battle against the mortgage industry today, charging in a Chancery Court suit that consumers facing foreclosure were purposely misled and deceived by the company that supposedly kept track of their loans’ ownership.By operating a shadowy and frequently inaccurate private database that obscured the mortgages’ true owners, Merscorp made it difficult for hundreds of Delaware homeowners to fight foreclosure actions in court or negotiate new terms on their loans, the suit filed by the Attorney General’s Office said.

Read the article and feel the bile rising in your stomach. This is one more example where the game has been rigged and the 99% have been screwed to line the pockets of the 1%.

I can’t resist quoting one more excerpt from Eric Ruth’s article:

Also known as MERS — Mortgage Electronic Registration Systems — the national registry was established by investors, banks and industry players in the 1990s to streamline the process of buying, selling and re-selling mortgages, a practice that grew ever more frenzied as the now-burst housing bubble expanded.

Yet the company — incorporated in Delaware and based in Reston, Va. — is actually an industry “front” that frequently fails to accurately track the ownership transfers or even enforce its own rules on members, leading to many cases where crucial legal documents were improperly “robo-signed” by employees at the various member banks, the suit said.

Attorneys General are increasingly on the cutting edge of fighting on behalf of the 99%. While I’ve been strongly critical of AG Biden for allowing Tony DeLuca and others of his (wait for it) ‘ilk’ to essentially get away with ripping off the state taxpayers, Biden has consistently challenged the big-money interests on behalf of the rest of us. Be it Bank of America, BC/BSD, and the rapacious mortgage industry, he is doing far more to promote the goals of OWS than any other elected official in Delaware.

I salute him for it and urge him to keep it up.

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  1. puck says:

    This is certainly a good thing… but isn’t MERS just a fall guy that can quickly go bankrupt, limiting the actual payouts and keeping the banks out of it? When I think of the villains here MERS is not what first comes to mind.

    It sounds like there are plenty of grounds for conspiracy/RICO charges against all the players, with actual documented victims. But I guess that’s a bridge too far.

    Bravo, Beau!

    (pssst… take a look at the credit reporting bureaus when you get a chance…)

  2. William Hudson says:

    That’s Joe’s Boy.

  3. Here’s the official release from the AG’s office:

    Biden: Private National Mortgage Registry Violates Delaware Law

    Attorney General files suit against MERS under the state’s Deceptive Trade Practices Act;

    Inaccurate and unreliable records harmed homeowners

    Wilmington, DE – Delaware Attorney General Beau Biden filed suit today against the shadow mortgage registry known as MERS that is at the center of the housing crisis. The complaint, filed in the Delaware Chancery Court, charges that MERSCORP and its subsidiary Mortgage Electronic Registration Systems, Inc. have repeatedly violated the state’s Deceptive Trade Practices Act.

    “Since at least the 1600s, real property rights have been a cornerstone of our society,” said Attorney General Biden. “MERS has raised serious questions about who owns what in America. A man or woman’s home is not just his or her largest investment, it’s their castle. Rules matter. A homeowner has the obligation to pay the mortgage on time, and lenders must follow the rules if they are seeking to take away someone’s house through foreclosure. The honor system won’t work.”

    MERS engaged and continues to engage in deceptive trade practices that sow confusion among homeowners, investors, and other stakeholders in the mortgage finance system, seriously damaging the integrity of the land records that are central to Delaware’s real property system, and leading to improper foreclosure practices. These deceptive trade practices fall into three broad categories:

    *MERS, through its private mortgage registry, knowingly obscures important information from borrowers and the information that MERS does provide to borrowers is frequently inaccurate. The opacity of MERS’ mortgage registration database makes it difficult for consumers to know of or challenge inaccuracies in the MERS System. This harms borrowers when MERS forecloses on borrowers in its own name, thus impairing a borrower’s ability to raise defenses. This also hampers the ability of borrowers to seek out the owner of their loan to pursue loan modifications or other loss mitigation relief.

    *MERS often acts as an agent without authority from its proper principal. Because the MERS System was both unreliable and frequently inaccurate, MERS often does not know the identity of its proper principal. Where the name of the owner of the mortgage loan recorded in the MERS System does not reflect the true owner, any action MERS takes on behalf of the purported owner is without authority.

    *MERS is effectively a “front” organization that has created a systemically important mortgage registry but fails to properly oversee that registry or enforce its own rules on its members that participate in the registry. Rather than maintaining an adequate staff to provide MERS’ services, MERS operates through a network of over 20,000 deputized non-employee corporate officers who cause MERS to act without any meaningful oversight from anyone who works at MERS. This has resulted in MERS recording so-called “robosigned” documents with country recorders of deeds and failing to follow its own rules regarding proper institution of foreclosure proceedings.

    MERS, which is incorporated in Delaware and based in Northern Virginia, was formed in 1995 to facilitate the growing mortgage finance market. Large banks, such as Bank of America and Wells Fargo, the quasi-governmental institutions Fannie Mae and Freddie Mac, and other participants in the mortgage-lending industry created MERS to bypass the county Recorders of Deeds offices throughout America. Unfortunately, there was little to no outside oversight of MERS’ murky registry or transparency for homeowners. MERS did not meaningfully audit its records and failed to even enforce its own rules governing members’ conduct.

    The complaint cites an example of a recent foreclosure in New Castle County in which MERS foreclosed on a loan in which it had no interest and without naming the real party in interest. In fact, the entity upon whose behalf MERS sought to foreclose had actually been dissolved months prior. MERS’ own records indicated numerous transfers in and out of MERS that were not reflected in the county records, as required by MERS’ own rules. The confusing path and inaccurate records associated with this mortgage are not an isolated instance of bad record keeping by MERS. Rather, this type of confusion is endemic to the entire MERS System.

    Specifically, the suit alleges that MERS violated Delaware’s Deceptive Trade Practices Act by:

    *Hiding the true mortgage owner and removing that information from the public land records.

    *Creating a systemically important, yet inherently unreliable, mortgage database that created confusion and inappropriate assignments and foreclosures of mortgages.

    *Operating MERS through its members’ employees, who MERS confusingly appoints as its corporate officers so that such employees may act on MERS’ behalf.

    *Failing to ensure the proper transfer of mortgage loan documentation to the securitization trusts, which may have resulted in the failure of securitizations to own the loans upon which they claimed to foreclose.

    *Assigning and foreclosing upon mortgages for which MERS did not possess authority to act because the mortgage loan was never properly transferred.

    *Initiating foreclosures in the name of MERS without authority to do so or without appropriate controls to ensure the actions were being carried out by the actual owner of the mortgage.

    *Allowing the entry and management of data by those MERS members who are identified as owners or servicers in the MERS System, instead of controlling entry and management itself.

    *Initiating foreclosure actions in which the real party in interest was hidden, thus preventing homeowners from ascertaining who owned their mortgage in order to challenge whether or not they had a right to foreclose and limiting their legal defenses.

    *Purporting to act as an agent without knowing the identity of its principal and therefore if it acted within the scope of its agency or not.

    *Encouraging reliance on the MERS System when MERS knew the system was unreliable and by allowing its members to cause MERS to act beyond the scope of its authority in reliance on such unreliable data.

    *Taking instructions from entities who, despite being listed as note holders in the MERS system, were not the proper principals to cause MERS to act under MERS’ rules.

    *Assigning mortgages without authority to do so where MERS purports to act for the wrong entity or where the requisite signature of a MERS signing officer is not actually executed by that officer.

    # # #

    Something tells me that Beau won’t be celebrity guest-hosting on business-friendly CNBC any time soon. Another big plus in my book.

  4. cassandra_m says:

    MERS is a front for the banks who own it.

    One other thing I’d be interested in is whether MERS property recorded mortgages and refinancings in the proper government offices here. If they didn’t, lots of county recorders offices are out of fees they should have had.

    This is really good news from the AG’s office.

  5. It looks like one of the reasons these banks created MERS was precisely to avoid those recorders of deeds offices:

    “Large banks, such as Bank of America and Wells Fargo, the quasi-governmental institutions Fannie Mae and Freddie Mac, and other participants in the mortgage-lending industry created MERS to bypass the county Recorders of Deeds offices throughout America. Unfortunately, there was little to no outside oversight of MERS’ murky registry or transparency for homeowners. MERS did not meaningfully audit its records and failed to even enforce its own rules governing members’ conduct.”

    This scam gets more unbelievable each time I read the release. Hope Biden nails their asses to the wall.

  6. cassandra_m says:

    I hope he nails their butts too. And I hope more AGs join him — the current status of a settlement on this business is a joke. Just the fact that there are homeowners out there who have no idea if they’ve clear title ought to mean Perp Walks For Everybody.

    One thing I do hope happens — if enough AGs join this action — is not just a big money settlement, but a wind down of MERS that clarifies mortgage and title status for all of the homeowners involved.

    Wonder if something could be done legislatively to make MERS-processed documentation not legal (or at least really hard) here in DE.

    ps. It might be worthwhile to cross-post this over at dKos.

  7. skippertee says:

    Way to go, Beau!

  8. I read an article, I’m trying to find it as we speak, about how many AGs really are the public officials who are leading the fight against the corporatocracy. Will post if I can find it.

  9. Another Mike says:

    People are blinded by hate because of his last name, but Beau is a credit to his office.

  10. Here’s an article about a similarly-bold AG going after Jack Markell’s favorite bank:

    http://www.dailykos.com/story/2011/10/20/1028561/-Kamala-Harris-Putting-The-Screws-To-BofA?via=search

    ‘Let bygones be bygones’ my ass!

  11. cassandra_m says:

    And Yves Smith at Naked Capitalism is already reporting on this.

    This is going to get interesting. This action raises the embarrassment level and political risk of any state signing on to the so-called 50 state attorney general mortgage settlement. It also points out the degree to which the Federal bank regulator eight week investigation into mortgage securitizations and subsequent actions have been a cover-up. There were plenty of legal theories the Feds, HUD, and the DoJ could have used to apply pressure to get real reform and fix a broken securitization model. But that was never the intent of this exercise. I hope readers will write Biden’s office and thank him for his action at Attorney.General@State.DE.US

    Naked Capitalism has been documenting the atrocities of MERS for quite some time, making her blog pretty vital in tracking the status of all of this nationwide.

  12. AG Biden is supposed to be on TRMS tonight to talk about this.

  13. Here’s the article on Biden and some of the other Democratic Attorneys General:

    http://www.politico.com/news/stories/1011/65004.html

    Biden has the opportunity to be a transformative figure in Delaware policy and politics. I’m intrigued and encouraged.

  14. anonone says:

    Biden has made some terrible horrible mistakes as AG, but his star is rising with his work on the crimes of the banksters. I hope he keeps up the pressure.

  15. Aoine says:

    @Nancy – say it louder – AG BIDEN IS TO BE ON THE RACHEL MADDOW SHOW TONIGHT ON THIS ISSUE!!

  16. John Manifold says:

    Can you imagine Ferris Wharton doing this?

  17. I’m not sure I could have imagined Biden doing this just a couple of years ago. We really didn’t know what we had during the bulk of his first term.

    He’s now made his mark on this office, and has established himself as a crusader for those who may still not know what hit them.

    Speaking of imagining, could you imagine Beau Biden going for the Carper senate seat? I’m starting to…

  18. Aoine says:

    ON Maddow next!!! GO BEAU

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