The Dallas County District Attorney filed suit Tuesday against Mortgage Electronic Registration Systems, its parent Merscorp Inc. and others alleging MERS acts as a shadow recording system to avoid county recording fees. District Attorney Craig Watkins told HousingWire that MERS cost Dallas County taxpayers $50 million to $100 million in mortgage transaction filing fees. The suit also names as defendants Stewart Title Guaranty Co., Stewart Title Co., Bank of America (BAC), and Aspire Financial doing business as TexasLending.com. “We are looking at it from the standpoint that because this entity was created, they were able to shirk this responsibility to pay the filing fees that are associated with a mortgage transaction,” Watkins said. “When a document is filed with the county, there is a fee that is associated with it, but because of MERS these fees have not been paid,” he said. MERS declined to comment. Other defendants couldn’t immediately be reached for comment. BofA is named in the suit in connection with loans that it originated secured by deeds of trust recorded in Dallas County listing MERS as the mortgagee or beneficiary. BofA should have known that would result in the Dallas County Clerk’s Office improperly listing MERS as grantee in the deeds record index, the lawsuit said. “Upon information and belief, many of the notes and mortgages securing such notes, or the servicing rights thereto, have been sold, assigned, or transferred without notice of such sales, assignments or transfers being recorded in the deed records of Dallas County, Texas,” the lawsuit alleges. Stewart is named in connection with the preparation and filing of deeds that name MERS and the underwriting of title insurance. The suit asks the court to consider Stewart a shareholder in MERS. Aspire is named as an originator of loans secured by deeds of trust recorded in Dallas County that list MERS as mortgagee or beneficiary. Watkins estimates 250,000 property transfers were inadequately handled in Dallas County because of the way mortgages were registered with MERS electronically during the securitization process. Watkins quotes extensively from both the Financial Crisis Inquiry Commission in the suit, and also includes an April letter from the Guilford County, N.C., register of deeds and the Southern Essex District of Massachusetts register of deeds that was sent to Iowa Attorney Tom Miller. Miller is leading a 50-state attorneys general investigation into questionable practices by the mortgage servicing industry. That letter lays out “grave concerns” about the role of MERS and asks Miller, as part of a settlement in the case, to require “MERS assignments of deeds of trust/mortgages be filed in local recording offices throughout the United States.” Watkins hasn’t been one to shy away from controversial issues as Dallas County’s DA. Shortly after being elected in 2007, he oversaw, in conjunction with the Innocence Project of Texas, the review of hundreds of criminal cases that has resulted more than 20 people being freed for wrongful convictions. His actions have garnered national media attention. MERS has also been in the news as the defendant in multiple lawsuits across the nation with many of those over the issue of its legal standing as mortgagee, or agent of the note holder with some of those won and others lost. Write to Kerri Panchuk.
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