A reverse bail-out, governments file flury of lawsuits against lenders

In a relentless flury of lawsuits, federal state and now county governments are filing lawsuits against lenders alleging both novel and old causes of action. Most recently, the lawsuits are reviving the the three-year-old “MERS produce the note” argument, only now the plaintiffs are governments as opposed to homeowners. Most every judge in big citys and small towns alike, have ruled on dozens if not hundreds of these mortgage litigation cases filed by homeowners over the past few years. However, this time its different. Federal, state and county governments will be taken more seriously by federal, state and county judges- even if they allege identical claims.

Bank of America Corp. is among a group of lenders that may face a wave of new lawsuits claiming the system they’ve used for more than a decade to register mortgages cheated cash-strapped counties out of millions of dollars.

Dallas County District Attorney Craig Watkins said state attorneys general and county officials across the U.S. have expressed interest in his lawsuit against Mortgage Electronic Registration Systems Inc. and Bank of America, filed in Texas state court on Sept. 21. Dallas County could be owed as much as $100 million in filing fees, he said.

The lawsuit also seeks a court order preventing the defendants from filing anything in deed records that identified MERS or anyone as a beneficiary who doesn’t have an interest in the secured note. The county said Bank of America “knew or should have known” the MERS system would cause improper filing.

A MERS California case was dismissed when the court determined the purported whistleblower didn’t meet filing standards. A Nevada court said state law didn’t require recording the assignment of a mortgage.

What everyone needs is a major Supreme Court ruling on these issues to give the local judges guidance. Until that time, the lower court will be shooting in the dark.

Leave a Reply