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Servicing

North Carolina county sues MERS, banks and LPS

The Guilford County Register of Deeds in North Carolina is suing the nation's big banks, Mortgage Electronic Registration Systems and Lender Processing Services, hoping to force them to address issues in the county's property recording system.

Jeff Thigpen, register of deeds for Guilford County, N.C., claims in a lawsuit filed Tuesday that alleged robo-signing at mortgage technology firm LPS, and its subsidiary DocX, led to the production of fraudulent mortgage records within the county's registry of deeds.

In addition, Thigpen claims MERS' electronic registry disrupted title chains, making it harder for homeowners to rely on the county recording system to verify property titles.

Thigpen wants the defendants to cover the cost of hiring a special servicer to review all of the documents and repair issues found. Other defendants named in the case include Wells Fargo (WFC), Chase Home Finance (JPM), American Home Mortgage Servicing, Bank of New York Mellon Trust, Citi Residential (C) and more than a dozen other financial firms. 

"The practice of designating MERS Inc. as the mortgagee and keeping that designation in place notwithstanding transfers of the mortgage between lenders is a marked departure from the traditional practice, whereby the initial lender was accurately designated as the mortgagee, and any assignees regularly filed assignments or other appropriate documentation with the register of deeds," Thigpen alleged in the suit.

A spokesperson for LPS could not immediately comment on the case. Janis Smith, vice president of communications for MERS, defended the registry's role in the mortgage space. 

"The complaint filed today in Guilford County, N.C., contains a lot of political rhetoric," Smith said. "The complaint misconstrues the role of the MERS system and repeats common allegations about MERS that are inaccurate."

Thigpen also goes after LPS, and its subsidiary DocX, claiming his office found 4,519 documents handled by DocX in the registry that were signed by a well-known robo-signer. The suit contends that "the fraudulently executed and notarized mortgage documents are invalid," and impair the chain of title for properties located in Guilford County.

Several counties across the nation have filed lawsuits against MERS, including the Dallas County District Attorney's office. Bloomberg news reported this week that Harris County, the county seat of Houston, and Brazoria County in Texas, obtained court approval to join the Dallas County lawsuit against MERS. 

Both Bank of America and MERS asked the court this week to dismiss the MERS cases out of Texas, according to Bloomberg-Businessweek. 

MERS has obtained some notable dismissals of cases against it. The U.S. Court for the Western District of Kentucky found in the Christian County Clerk v. MERS case that county clerks lack standing to sue MERS over recording fees on mortgage assignments. The case was similar to the suit out of Dallas.

kpanchuk@housingwire.com

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