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New York's attorney general sued the nation's three largest banks for fraudulent use of a mortgage registry system.
NEW YORK — New York Attorney General Eric T. Schneiderman sued JP Morgan Chase & Co., Bank of America Corp., and Wells Fargo Corp. for fraudulently using a mortgage database system for foreclosure filings, the Wall Street Journal reported.
The lawsuit against the country’s three largest banks, and MERSCorp., owner and operator of the Mortgage Electronic Registration Systems, was filed in the New York Supreme Court in Brooklyn.
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“The mortgage industry created MERS to allow financial institutions to evade county recording fees, avoid the need to publicly record mortgage transfers and facilitate the rapid sale and securitization of mortgages en masse,” Schneiderman said, Reuters reported.
According to Schneiderman’s complaint, MERS allegedly eliminated the public’s ability to track property transfers since they are maintained in the private registry instead of in the local county clerk’s office, the WSJ reported. He alleges the system is filled with inaccuracies, which makes it very difficult to verify the chain of title for a loan or a current noteholder for many properties.
“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, Bloomberg reported. “Once the mortgages went sour, these same banks brought foreclosure proceedings en masse based on deceptive and fraudulent court submissions.”
Delaware Attorney General Beau Biden sued MERS last year for allegedly running deceptive trade practices, Bloomberg reported. According to the WSJ, more than 70 million loans nationally have been registered in MERS. About 30 million of them are currently active, Schneiderman said.
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