Florida Clerk Sues MERS For Using Invalid and Inaccurate Filings in Miami Foreclosures

The clerk of courts in Jacksonville and the attorney general in Delaware have sued MERS — Mortgage Electronic Registration Systems, Mortgage Servicing News is reporting.

MERS is an entity created by the nation’s major banks to record and track residential mortgage assignments. This is a private, limited-access system that banks deemed necessary so they could keep up with the influx of purchases and sales that were moving too quickly for the public system.

But it has been exposed in recent years by foreclosure defense lawyers in Miami and elsewhere for having many problems. Foolishly, banks relied on MERS when filing foreclosures in Miami, even though those figures, dates and other information wasn’t the official information gathered by the clerk of courts where the house is located.

In this case, according to the news article, the lawsuit in Florida alleges that MERS doesn’t comply with state property laws and has cost cities and counties millions in unpaid recording fees. The lawsuit seeks class status, meaning that all 67 counties in the state, including Miami-Dade, could join the lawsuit.

One of the biggest problems with MERS is that when a mortgage is sold, the information is put into the system, but no assignment is recorded. This has come to light in recent years because if a homeowner faces foreclosure, county clerk records likely won’t say that the bank, a trust of investors or another lender altogether actually owns the note on the house.

Banks make money off the interest that homeowners pay, but they also make money by bundling mortgages together and selling them to investors so those investors can reap the benefit of the interest paid. In many cases, banks haven’t been able to tell who actually owns the mortgage when they file a foreclosure on a house.

Duval County Clerk Jim Fuller sued Merscorp Inc. on Oct. 31 alleging civil conspiracy, unjust enrichment and fraudulent and negligent misrepresentation. The lawsuit requests that MERS not be used in Florida and a court hearing to determine if MERS properly tracks note transfers in its system.

Merscorp responded that a promissory note has never been required to be disclosed in the public record and that the MERS system isn’t a replacement for public land records. A spokeswoman said the system isn’t competing or hiding records from what is filed publicly.

A few days earlier, Delaware Attorney General Beau Biden, son of U.S. Vice President Joe Biden, sued MERS claiming that it engages in deceptive trade practices. That lawsuit claims that MERS records and records from 100 foreclosures in a Delaware county in 2010 have large disparities.

It’s obvious that MERS has its issues and that banks have relied on this private, unofficial system for trying to take away people’s homes. These mistakes can be used to the homeowner’s advantage, however. Showing that lenders have made critical mistakes and are using inaccurate information in support of a foreclosure is one of the best defenses to keeping a person in his or her home.

Lenders have made many critical mistakes throughout the housing crisis and foreclosure debacle. As they say, the best offense is a good defense, and proving the banks have tripped up is the best way to overcome them trying to take away a person’s house.

If you’re battling foreclosure in Miami or the surrounding areas, contact Jacobs Keeley for a confidential appointment to discuss your rights. Call (305) 358-7991.

More Blog Entries:

MERS Taking Hits, But May Stick Around to Haunt Miami Foreclosures, Legal Analysts Believe: July 10, 2011
Miami Foreclosure Dilemma Shows Need for Land Title System Overhaul: June 17, 2011
Additional Resources:

Florida Clerk, Delaware AG Sue MERS, by Austin Kilgore, Mortgage Servicing News