US official sues banks in foreclosure effort
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US official sues banks in foreclosure effort

Last Updated: Saturday, February 04, 2012, 11:54
 
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US official sues banks in foreclosure effort
Albany: New York's attorney general on Friday accused some of the largest US banks of deceit and fraud in using an electronic mortgage registry that he said puts homeowners at a disadvantage in foreclosures.

Eric Schneiderman sued Bank of America, JP Morgan Chase and Wells Fargo over their use of the Mortgage Electronic Registration Systems Inc, or MERS, claiming the banks submitted court documents containing false and misleading information that appeared to provide the authority for foreclosures when there was none.

The lawsuit also names the registry operator, MERSCORP Inc. of Virginia.

Schneiderman claims the MERS system has eliminated homeowners' ability to track property transfers through traditional public records.

He said the electronic system now stores that data and is plagued by inaccuracies.

There was no immediate comment from the banks.

"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 on 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."

Last month, President Barack Obama announced a new Justice Department fraud-fighting unit to bring together 55 prosecutors and federal and state investigators focusing on one of the contributing causes behind the financial crisis the collapse of residential mortgage-backed securities.

Obama named Schneiderman as co-chairman to pull together state and federal probes into the bubble that led to the market crash.

Delaware officials have said MERS has sown confusion among consumers, investors and other stakeholders in the mortgage finance system.

Officials claim the company has damaged the integrity of Delaware's land records system and lead to unlawful foreclosure practices.

MERS was set up by banks to rapidly package and sell mortgages as securities without recording each transaction in county records offices.

Complaints allege among other things that homeowners have trouble responding to foreclosure actions and mortgage inaccuracies because MERS makes it difficult to find out who owns the mortgages.

PTI




First Published: Saturday, February 04, 2012, 11:54


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