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Lost Fees Litigated

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Much of the litigation being filed against the Mortgage Electronic Registration Systems Inc. and its members has challenged the ability of servicers using the registry to foreclose. But a growing number of cases seek to collect lost recording fees. In yet another twist, an Alabama probate judge has taken MERS to court in a class action lawsuit.

Barbour County, Ala., Probate Judge Nancy O. Robertson sued MERSCORP Inc. and MERS in state court claiming that it failed to record certain assignments of interests in mortgages.

The probate judge has to maintain an accurate grantor-grantee index, plaintiffs’ attorney Christopher Boyce Hood said in a telephone interview with Mortgage Daily. The MERS model systematically frustrates those laws, he added.

MERS has filed a motion asking to be dismissed from the Alabama case. A motions hearing is scheduled for June 25.

But, a federal judge in Dallas on May 23 denied a request to dismiss Bank of America and MERS from a Texas lawsuit. In Dallas County v. MERSCORP Inc., the judge said the plaintiffs had provided enough evidence to allow the case to move forward.

The suit was filed by Dallas County on Sept. 21, 2011, alleging that MERS was established by banks to avoid paying filing fees as well as to ease transfers of mortgages. The case was expanded to a class action representing in October.

MERS and other defendants in the case have said that they followed Texas law and that, under the Lone Star state’s laws, there is no duty to record assignments.

In, Christian County Clerk et al v. Mortgage Electronic Registration Systems Inc. et al., a Notice of Appeal was filed on March 2. Judgment was entered on Feb. 21, 2012. The U.S. Court for the Western District of Kentucky dismissed the lawsuit with prejudice after deciding that county clerks lack standing to sue or collect damages.

MERS has called the ruling in this case “significant and precedent-setting.”

In Boyd County et al v. MERSCORP Inc., a summons was returned unexecuted on April 26. In that case, 14 Kentucky counties contend in a federal lawsuit that they were deprived of recording fees and that a fund used to make grants and loans for low-income housing was shortchanged under the MERS model.

MERS is also fighting a class action lawsuit filed on behalf of Geauga County, Ohio. The case was remanded on May 23. In State of Ohio ex rel. David P. Joyce v. MERSCORP, the plaintiff filed a motion on April 23 to certify the lawsuit as a class action with Geauga County as the class representative.

The plaintiff is attempting to bring all 88 of Ohio’s counties into the lawsuit. Violations of Ohio state law are alleged because assignments weren’t recorded.

A lawsuit filed on May 21 on behalf of St. Clair County, Ill., against 22 lenders alleges that the defendants used MERS to skirt fees and eliminate the public’s ability to track the purchase and sale of mortgages, The Madison St. Clair Record reported. Defendants include Bank of America, CCO Mortgage Corp., CitiMortgage, Corinthian Mortgage Corp., Everhome Mortgage Co., GMAC Residential Funding Corp., Guaranty Bank, HSBC Finance Corp., SunTrust Mortgage, Wells Fargo Bank, WMC Mortgage Corp., Bank of O’Fallon, Compass Mortgage, First Collinsville Bank, FirstCo Mortgage Corp., First County Bank, Mid America Mortgage Services of Illinois, Mortgage Services III, Midland States Bank, Peoples National Bank, Commerce Bank, Regions Bank and UMB Bank

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