Delaware Attorney General Beau Biden filed suit yesterday against the shadow mortgage registry known as MERS, citing the company has continuously deceived homeowners facing foreclosure in the state.


    Delaware Attorney General Beau Biden filed suit yesterday against the shadow mortgage registry known as MERS, citing the company has continuously deceived homeowners facing foreclosure in the state.

    The complaint, filed in the Delaware Chancery Court, charges that MERSCORP and its subsidiary Mortgage Electronic Registration Systems, Inc, have repeatedly violated the state’s Deceptive Trade Practices Act.

    “MERS has raised serious questions about who owns what in America,” said Biden in a statement Thursday. “A man or woman’s home is not just his or her largest investment, it’s their castle. Rules matter. A homeowner has the obligation to pay the mortgage on time, and lenders must follow the rules if they are seeking to take away someone’s house through foreclosure. The honor system won’t work.”

    The suit alleges that MERS knowingly obscures important information from borrowers and the information the company does provide to borrowers is frequently inaccurate. The opacity of MERS’ mortgage registration database makes it difficult for consumers to know of or challenge inaccuracies in the MERS System.

    “This harms borrowers when MERS forecloses on borrowers in its own name, thus impairing a borrower’s ability to raise defenses,” a statement from the Department of Justice read Thursday. “This also hampers the ability of borrowers to seek out the owner of their loan to pursue loan modifications or other loss mitigation relief.”

    The suit also states that rather than maintaining an adequate staff to provide MERS’ services, MERS operates through a network of more than 20,000 deputized non-employee corporate officers who cause MERS to act without any meaningful oversight from anyone who works at MERS.

    MERS, which is incorporated in Delaware and based in Virginia, was formed in 1995 to facilitate the growing mortgage finance market. Large banks, such as anBank of America d Wells Fargo, the quasi-governmental institutions Fannie Mae and Freddie Mac, and other participants in the mortgage-lending industry created MERS to bypass the county Recorders of Deeds offices throughout America, according to the Department of Justice.

    Since 2008, MERS has filed more than 1,600 foreclosures actions in Delaware, the suit claims. Thousands of the state’s homeowners hold mortgages with MERS listed as the owner, but with no way to determine the true owner.

    The suit cites an example of a recent foreclosure in New Castle County where MERS foreclosed on a loan of which it had no interest and without naming the real party in interest. It was discovered the entity upon whose behalf MERS sought to foreclose had actually been dissolved months prior.

    In a statement released by MERSCORP Thursday, the company refuted the Attorney General’s claims and said it complies with state and county laws.

    “There is no merit for the Delaware attorney general’s allegation of deceptive practices,” stated Janis Smith, MERSCORP’s vice president for corporate communications. … “The company “has reduced chain of title issues, provided efficiencies through e-commerce and resulted in lower mortgage borrowing costs to consumers.”

    The state is seeking up to $10,000 for each willful violation of the Deceptive Trade Practices Act, restitution to borrowers who were harmed by the violations, as well as imposed sanctions on MERS, including requiring it to audit its records to ensure accuracy, stop foreclosing on homes without divulging the true owner of the mortgage and correct records filed with the county Recorder of Deeds that do not list the entity that owns the mortgage.