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Forum Post: Kiss The Foreclosure Settlement Goodbye: Bank of America, Wells & JP Morgan Are Sued Over Use Of MERS

Posted 12 years ago on Feb. 4, 2012, 10:27 a.m. EST by MonetizingDiscontent (1257)
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Kiss The Foreclosure Settlement Goodbye: Bank of America, Wells And JP Morgan Are Sued Over Use Of MERS

http://www.zerohedge.com/news/kiss-foreclosure-settlement-goodbye-bank-america-wells-and-jp-morgan-are-sued-over-use-mers

-02/03/2012-

A little over a year since the day that the world first learned about robosigning and the broader problem of fraudclosure, which is merely the functional equivalent of infinite rehypothecation of an underlying asset between a daisy-chain of lien holders, we get the first legal incursion into this farce. From Bloomberg we learn that:

BANK OF AMERICA, WELLS FARGO, JPMORGAN SUED BY NEW YORK OVER MERS

NY AG SUIT CITES FRAUDULENT FORECLOSURE FILINGS

In other words, kiss that foreclosure settlement goodbye. In the meantime, the electronic momos keep taking BAC ever higher even as this news confirms that the bank is about to suffer a multi-billion impairment shortly.

From the Attorney General's office:

A.G. SCHNEIDERMAN ANNOUNCES MAJOR LAWSUIT AGAINST NATION’S LARGEST BANKS FOR DECEPTIVE & FRAUDULENT USE OF ELECTRONIC MORTGAGE REGISTRY**

Complaint Charges Use Of MERS By Bank Of America, J.P. Morgan Chase, And Wells Fargo Resulted In Fraudulent Foreclosure Filings Servicers And MERS Filed Improper Foreclosure Actions Where Authority To Sue Was Questionable
Schneiderman: MERS And Servicers Engaged In Deceptive and Fraudulent Practices That Harmed Homeowners And Undermined Judicial Foreclosure Process

NEW YORK – Attorney General Eric T. Schneiderman today filed a lawsuit against several of the nation’s largest banks charging that the creation and use of a private national mortgage electronic registry system known as MERS has resulted in a wide range of deceptive and fraudulent foreclosure filings in New York state and federal courts, harming homeowners and undermining the integrity of the judicial foreclosure process. The lawsuit asserts that employees and agents of Bank of America, J.P. Morgan Chase, and Wells Fargo, acting as "MERS certifying officers," have repeatedly submitted court documents containing false and misleading information that made it appear that the foreclosing party had the authority to bring a case when in fact it may not have.

The lawsuit names JPMorgan Chase Bank, N.A., Bank of America, N.A., Wells Fargo Bank, N.A., as well as Virginia-based MERSCORP, Inc. and its subsidiary, Mortgage Electronic Registration Systems, Inc.

The lawsuit further asserts that the MERS System has effectively eliminated homeowners' and the public's ability to track property transfers through the traditional public records system. Instead, this information is now stored only in a private database – which is plagued with inaccuracies and errors – over which MERS and its financial institution members exercise sole control.

Additional defendants include BAC Home Loans Servicing, LP, Chase Home Finance LLC, EMC Mortgage Corporation, and Wells Fargo Home Mortgage, Inc.

“The banks created the MERS system as an end-run around the property recording system, to facilitate the rapid securitization and sale of mortgages. 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,” said Attorney General Schneiderman. “Our action demonstrates that there is one set of rules for all – no matter how big or powerful the institution may be – and that those rules will be enforced vigorously. Only through real accountability for the illegal and deceptive conduct in the foreclosure crisis will there be justice for New York’s homeowners.”

The financial industry created MERS in 1995 to allow financial institutions to evade local county recording fees, avoid the hassle and paperwork of publicly recording mortgage transfers, and facilitate the rapid sale and securitization of mortgages. MERS operates as a membership organization, and most large companies that participate in the mortgage industry – by originating loans, buying or investing in loans, or servicing loans – are members, including JPMorgan Chase, Bank of America, Wells Fargo, Fannie Mae, and Freddie Mac. Over 70 million loans nationally have been registered in MERS System, including about 30 million currently active loans.

Through their membership in MERS, these companies avoided publicly recording the purchase and sale of mortgages by designating MERS Inc. – a shell company with no economic interest in any mortgage loan – as the "nominal" mortgagee of the loan in the public records. Instead, MERS members were supposed to log mortgage transfers in the MERS private electronic registry. The basic theory behind MERS is that, because MERS Inc. serves as a "nominee" (or agent) for most major lenders, it remains the "mortgagee" in the public records regardless of how often the loan is sold or transferred among MERS members. Thus, although MERSCORP has only about 70 employees, MERS Inc. serves as the mortgagee of record for tens of millions of loans registered in the MERS System.

MERS has granted over 20,000 “certifying officers” the authority to act on its behalf, including the authority to assign mortgages, to execute paperwork necessary to foreclose, and to submit filings on behalf of MERS in bankruptcy proceedings. These certifying officers are not MERS employees, but instead are employed by MERS members, including JPMorgan Chase, Bank of America, and Wells Fargo.

MERS' conduct, as well as the servicers’ use of the MERS System, has resulted in the filing of improper New York foreclosure proceedings, undermined the integrity of the judicial process, created confusion and uncertainty concerning property ownership interests, and potentially clouded titles on properties throughout the State of New York. In fact, several New York judges have questioned the standing of the foreclosing party in cases involving MERS loans and the validity of mortgage assignments executed by MERS certifying officers.

The lawsuit specifically charges that the defendants have engaged in the following fraudulent and deceptive practices:

  • MERS has filed over 13,000 foreclosure actions against New York homeowners listing itself as the plaintiff, but in many instances, MERS lacked the legal authority to foreclose and did not own or hold the promissory note, despite saying otherwise in court submissions.

  • MERS certifying officers, including employees and agents of JPMorgan Chase, Bank of America, and Wells Fargo, have repeatedly executed and submitted in court legal documents purporting to assign the mortgage and/or note to the foreclosing party. These documents contain numerous defects, including affirmative misrepresentations of fact, which render them false, deceptive, and/or invalid. These assignments were often automatically generated and "robosigned" by individuals who did not review the underlying property ownership records, confirm the documents’ accuracy, or even read the documents. These false and defective assignments often masked gaps in the chain of title and the foreclosing party's inability to establish its authority to foreclose, and as a result have misled homeowners and the courts.

  • MERS' indiscriminate use of non-employee "certifying officers" to execute vital legal documents has confused, misled, and deceived homeowners and the courts and made it difficult to ascertain whether a party actually has the right to foreclose. MERS certifying officers have regularly executed and submitted in court mortgage assignments and other legal documents on behalf of MERS without disclosing that they are not MERS employees, but instead are employed by other entities, such as the mortgage servicer filing the case or its counsel. The signature line just indicates that the individual is an "Assistant Secretary," "Vice President," or other officer of MERS. Indeed, these documents often purport to assign the mortgage to the certifying officer's own employer. Moreover, as a result of the defendants' failure to track the designation of certifying officers and the scope of their authority to act, individuals have executed legal documents on behalf of MERS, such as mortgage assignments and loan modifications, when they were either not designated as a MERS certifying officer at the time or were not authorized to execute documents on behalf of MERS with respect to the subject loan.

  • MERS and its members have deceived and misled borrowers about the importance and ramifications of MERS' role with respect to their loan by providing inadequate disclosures.

  • The MERS System is riddled with inaccuracies which make it difficult to verify the chain of title for a loan or the current note-holder, and creates confusion among stakeholders who rely on the information. In addition, as a result of these inaccuracies, MERS has filed mortgage satisfactions against the wrong property.

The lawsuit seeks a declaration that the alleged practices violate the law, as well as injunctive relief, damages for harmed homeowners, and civil penalties. The lawsuit also seeks a court order requiring defendants to take all actions necessary to cure any title defects and clear any improper liens resulting from their fraudulent and deceptive acts and practices.

The matter is being handled by Deputy Bureau Chief of the Bureau of Consumer Frauds & Protection Jeffrey K. Powell, Assistant Attorney General Clare Norins, and Assistant Solicitor General Steven C. Wu, under the supervision of First Deputy Attorney General Harlan Levy.

New York Attorney General COMPLAINT:

(((Scribd))): http://www.scribd.com/doc/80390257/NYAG-Complaint

6 Comments

6 Comments


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[-] 2 points by freewriterguy (882) 12 years ago

alright good post, hopefully these who dug a pit for their neighbor will be the ones to fall into that pit as stated in scriptures.

[-] 2 points by MonetizingDiscontent (1257) 12 years ago

:::::::::: JPMorgan, BofA Sued by New York Over Use of Mortgage Database ::::::::::

http://www.bloomberg.com/news/2012-02-03/bank-of-america-jpmorgan-chase-wells-fargo-sued-by-new-york-over-mers.html

-Feb 4, 2012-

JPMorgan Chase & Co., Bank of America Corp. and Wells Fargo & Co. were sued by New York Attorney General Eric Schneiderman... http://topics.bloomberg.com/eric-schneiderman/ ...over the use of a mortgage database that the state said led to improper foreclosures.

The banks’ use of the database, known as MERS, misled homeowners, undermined foreclosure proceedings and created uncertainty about ownership interests in properties, the state said in the complaint filed yesterday in New York State Supreme Court in Brooklyn. http://topics.bloomberg.com/brooklyn/

“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 in a statement. “Once the mortgages went sour, these same banks brought foreclosure proceedings en masse based on deceptive and fraudulent court submissions.”

The lawsuit came three days before a Feb. 6 deadline for states to join a proposed multistate agreement over foreclosure practices said to be worth as much as $25 billion. Last week, Schneiderman was selected by the Obama administration to help lead a state-federal group probing misconduct in the packaging and sale of residential mortgage-backed securities......

(((Continue Reading this article to learn more))) http://www.bloomberg.com/news/2012-02-03/bank-of-america-jpmorgan-chase-wells-fargo-sued-by-new-york-over-mers.html


[-] 2 points by gestopomillyy (1695) 12 years ago

about time!

[-] 1 points by RepublicanForSinglePayer (8) 12 years ago

The settlement was a big joke. The mortgages should be written off because the banks got their money when they were bailed out.

[-] 1 points by Middleaged (5140) 12 years ago

Yes, I think the settlement amounted to $1000 per mortgage. Obviously the damage was a lot bigger.

[-] 1 points by jomojo (562) 12 years ago

Justice, is not sweeping the dirt under the rug. The penalty should fit the crime. These networks of traders, corporations, banks, politicians, judges, and lawyers should be punished in a fashion that will prevent future crime.

Their fortunes should go to their victims. Who should get their jobs?