Mortgage Electronic Registration Systems Inc. (MERS) has responded to a lawsuit filed by Kentucky Attorney General Jack Conway against MERSCORP Holdings Inc. for violations of Kentucky law. The suit alleges that MERS violated Kentucky law by not recording mortgage assignments with County Clerks when mortgages were sold or transferred from one bank to another.
“There is no merit to the allegations leveled at MERS by Kentucky Attorney General Jack Conway in today's news conference. All MERS mortgages are registered in the local land records and all recording fees are properly paid. The MERS System's role in the mortgage industry has reduced chain of title issues, provided efficiencies through e-commerce, and resulted in lower mortgage borrowing costs. Our business model is straightforward and transparent, and MERS role is clearly spelled out in the contract between borrower and lender. MERS System data is not used by servicers to make loan modification, refinance or foreclosure decisions," said a statement by MERS.
MERS Residential is a national database that provides free public access to servicer information for registered home mortgages, complementing public land recording systems that have their origins in centuries old real property laws. MERS acts as mortgagee in the county land records for the lender and servicer. Any loan—where MERS is the mortgagee—registered on the MERS System is inoculated against future assignments because MERS remains the mortgagee no matter how many times servicing is traded.
"In Kentucky, all foreclosures are judicial foreclosures and as such are processed by the court system. MERS’ standing as mortgagee has been upheld in–In re Jessup, No. 09-5229 (Bankr. E.D. KY 2010)," continued MERS in the statement. "MERS and CitiMortgage’s Motion for Summary Judgment was granted and the court held that 'the language in the Lender’s own instrument is sufficient to identify MERS as [the mortgagee].'"