Merscorp Failed to Record Loan Sales, Kentucky Says
Merscorp Holdings Inc. was sued by Kentucky Attorney General Jack Conway over loan assignments that the state says weren’t properly recorded with counties when home loans were sold or transferred.
Conway, in a lawsuit filed today in Franklin Circuit Court in Frankfort, alleges that hundreds of thousands of Kentucky loans are registered with the company’s Mortgage Electronic Registration Systems Inc. unit. Because the mortgage assignments weren’t recorded, homeowners having trouble paying their mortgages struggled to find out who owned their loans, making it difficult for them to request a loan modification or avoid foreclosure, Conway said in a statement on his website.
Massachusetts, Delaware and New York have filed similar lawsuits against Merscorp, Conway said. MERS, as the unit is called, created the system to unjustly enrich and pad its bottom line at the expense of consumers and the state, he said.
“There is no merit to the allegations leveled at MERS by Kentucky Attorney General Jack Conway,” Reston, Virginia-based Merscorp said in an e-mailed statement. “All MERS mortgages are registered in the local land records and all recording fees are properly paid.”
MERS data isn’t used by servicers to make loan- modification, refinance or foreclosure decisions, the company said.
Conway seeks court orders to block MERS from assigning mortgages after the start of a foreclosure proceeding, record documents to correct the chain of title for MERS mortgages, pay recording fees and $2,000 in civil penalties for each violation of Kentucky recording law, and provide restitution to affected borrowers.
The Massachusetts case against MERS was dismissed last year, Jason Lobo, a company spokesman, said in an e-mail.
The case is Kentucky v. Merscorp, 13-CI-00060, Franklin Circuit Court, Frankfort, Kentucky.
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