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Servicing / The Ticker

Arkansas judge throws out recording fee case against MERS

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A district court judge in Arkansas threw out a recording-fee lawsuit filed against the Mortgage Electronic Registration Systems this week, saying state laws do not require mortgage assignments to be recorded.

U.S. District Judge Susan Hickey of the U.S. District Court for the Western District of Arkansas in Hot Springs dismissed the class action suit – known as Brown v. MERS – after the plaintiff claimed MERS failed to pay required recording fees on mortgage transfers in Arkansas counties. 

The suit was brought on behalf of Hot Spring County originally and transformed into a class action case that tied in other Arkansas counties.

The claim stated the same legal construction as other MERS cases – like those out of Dallas County and Harris County in Houston – with the plaintiffs alleging mortgage assignments were made without transfer fees paid to the counties.  A U.S. District Court in Iowa threw out a similar case in August.

"As clearly described in this ruling, recording statutes are intended to give subsequent purchasers and lenders notice of recorded liens and to allow creditors to give notice of their secured interest in the property," said Janis Smith, vice president for corporate communications for MERSCORP, the parent of MERS.  "Use of the MERSSystem to register mortgage loans fulfills the purpose of the recording statutes.  MERS mortgages are recorded in the public land records and MERS members pay recording fees when the mortgage is recorded."

kpanchuk@housingwire.com

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