Schneiderman, banks agree on $25 million MERS deal
The nation's five biggest banks will pay $25 million to the New York attorney general's office to settle certain claims related to the use of Mortgage Electronic Registration Systems.
The agreement with New York Attorney General Eric Schneiderman releases Bank of America (BAC), Citigroup (C), JPMorgan Chase (JPM), Wells Fargo (WFC) and Ally Financial from certain claims of robo-signing foreclosure documents.
Schneiderman sued Bank of America, JPMorgan and Wells Fargo, as well as MERS, in early February. The AG's office said in the complaint the banks "created the MERS system as an end-run around the property-recording system."
MERS is not involved in the agreement, and a company spokeswoman declined to comment.
The banks did not admit or deny any allegations contained in the New York MERS suit, according to court documents. The AG's office reserves claims for consumer damages, but notes that the AG won't seek to vacate any foreclosure judgments.
Each bank will pay roughly $5.9 million, aside from a $1.25 million payment from Ally.
The New York agreement comes in addition to the nationwide $25 billion settlement with the five banks filed in court Monday, as well as other side agreements with states. The settlement does not release MERS or the banks' use of the system from future suits, and explicitly exempts MERS-related cases filed by attorneys general in Delaware, Massachusetts and New York.
Delaware Attorney General Beau Biden, in return for $2.5 million, agreed to release the five banks from any statutory damages related to MERS. The banks are not named in the Delaware suit against MERS, but the agreement does not preclude future inclusion, according to Biden spokesman Jason Miller.
The Delaware attorney general's office filed a response Friday to MERS' motion to dismiss the suit, Miller said. A court hearing is scheduled for May 30.
The five banks also received dismal of two claims related to robo-signing and loan modifications in a suit filed by Massachusetts Attorney General Martha Coakley, as well as a $2 million cap on penalties per bank. Claims against MERS and the banks' use of the system remain in the suit, as well as any potential injunctive relief.
"This agreement allows our office to continue our claims, seek damages and pursue injunctive relief against the banks for initiating illegal foreclosures in our state and corrupting our land court system," said Brad Puffer, a spokesman in Coakley's office.
Spokespeople for Bank of America, JPMorgan, Citi and Ally declined to comment on the New York agreement. A representative at Wells Fargo did not immediately respond to a request for comment.