Big, big news yesterday:
Oct. 27 (Bloomberg) — The Delaware attorney general’s office sued Merscorp Inc., which runs a national mortgage registry used by banks, saying its practices are deceptive and hide information from borrowers.
The MERS database, which tracks ownership interests in mortgages, obscures information from borrowers and impeded their ability to fight foreclosures, Delaware Attorney General Beau Biden said in a complaint filed today.
“MERS engaged and continues to engage in a range of deceptive trade practices that sow confusion among consumers, investors and other stakeholders in the mortgage finance system, damage the integrity of Delaware’s land records, and lead to unlawful foreclosure practices,” Biden said.
MERS tracks servicing rights and ownership interests in mortgage loans on its electronic registry, allowing banks to buy and sell loans without recording transfers with individual counties. MERS acts as the lender’s nominee and remains the mortgagee of record as long as the note promising repayment is owned by a MERS member.
Banks and investors have the true economic interests in the loans, and the ownership of the mortgage notes is purportedly recorded in the MERS registry, to which the public has limited access, according to Biden. Biden said the system is “frequently inaccurate.”
Yeah, I guess you could say that.