Three banks sued by New York State over unreliable and inaccurate mortgage registry

Eric Schneiderman with Eric Holder announcing DOJ investigation of foreclosure fraud
Daylife/Getty Images used by permission

Bank of America, Wells Fargo, and JPMorgan Chase were sued by New York Attorney General 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 today in New York State Supreme Court in 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 comes 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, he 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…

The state’s complaint…states that MERS eliminated the ability of the public and homeowners to track the purchase and sale of properties through the traditional public records system. That information is stored in the MERS private database, which Schneiderman called unreliable and inaccurate. The mortgage industry has saved more than $2 billion in recording fees with the system, according to the complaint.

Banks’ use of the registry, coupled with “faulty and sloppy” document preparation, has resulted in foreclosures being filed against New York homeowners where the foreclosing party lacked the authority to sue, Schneiderman said.

By relying on legally invalid mortgage assignments using MERS, foreclosure judgments have been obtained “through fraudulent and illegal means,” according to the complaint.

Go get ’em, Eric!

2 thoughts on “Three banks sued by New York State over unreliable and inaccurate mortgage registry

  1. E Trams says:

    There is a female politician and her consort in Santa Fe New Mexico who I believe sought to steal a house by displacing an elderly gentleman from his house. I believe after the displacement a series of fraudulent mortgage related events happened. The woman is a liar and her consort obviously a drug using drunk but I think the couple managed to keep the house even though there was a long long long court battle – that of course the taxpayers had to pay for when it came to Judges, court personel etc.

    This politician has been in, I believe, 40 plus lawsuits with her consort. I think she is running for office once again to make a living off campaign contributions. She has lost in at least four races so far. Almost everytime she is in a political race, hyjinx gets reported. Usually it involves her getting caught in a lie or being involved in a fraud.

    She apparently is above the law and continues to chalk up victim after victim after victim.

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