NORRISTOWN – A federal district judge in Philadelphia ruled June 30 that Mortgage Electronic Registration Systems Inc. and MERSCORP Holdings Inc., together referred to as MERS, violated a Pennsylvania statute by not recording mortgage assignments with the Montgomery County Recorder of Deeds, according to a press release distributed Thursday at the county commissioners’ meeting.
Nancy Becker, the county’s recorder of deeds, who is the lead plaintiff in the class action lawsuit, said the ruling give the county the momentum to go forward with the lawsuit in trial, which is not scheduled yet.
‘The next steps are to send an official court notice to the other recorders in the commonwealth explaining the lawsuit and then a trial,’ Becker said.
Becker said the recorder of deeds office has been able to work on the lawsuit without spending any taxpayer money. The accountants, attorneys, consultants and researchers involved in the case are working on a contingency, she said.
Bill Beckmann, president and CEO of MERSCORP, based in Reston, Va., issued a statement Wednesday after hearing of the ruling. The statement was emailed to The Times Herald after a request for comment on Thursday.
‘MERSCORP Holdings Inc. disagrees with the District Court’s interpretation of the Pennsylvania Recording Statute as well as how it applies to Mortgage Electronic Registration Systems Inc.,’ the statement said. ‘We believe strongly that it is the wrong interpretation of Pennsylvania law and are currently pursuing all options available to us in the legal process. Similar legal actions have been brought in multiple states and MERS has consistently prevailed in these cases.’
Becker said, however, the county has Pennsylvania law on its side, and recording of deeds is a nationwide problem.
‘Not every state has so defined that these things have to be recorded,’ she said.
MERSCORP Holdings Inc. runs the national mortgage electronic registry system that banks have filed with rather than with the recorder of deeds’ offices in the commonwealth. Becker said not only has the county not been able to collect the registration fee because of this, but residents of Montgomery County are not aware when their mortgages are sold to another bank.
Historically, she said, after a mortgage was filed, it stayed with the bank that issued it. Beginning in the late 1990s, the mortgages have been sold repeatedly to other financial institutions, she said.
After a mortgage is sold, the new owner of the mortgage may begin the process of foreclosing on a home if they are not being paid, even though the resident of the home may have never been notified that the mortgage was sold and may be making payments to the bank where they took out the mortgage.
‘It’s the integrity of the public record that we really want to protect,’ Becker said. ‘To make sure that at any given time, that a person can look at a property and find out not only who owns it but who is holding the paper on it. If they have paid their mortgage or have attempted to pay their mortgage they should not be foreclosed on. It’s about preserving our residents’ right to maintain their homes.’
If the bank that issues the mortgage does not file it with the recorder of deeds’ office, there is no way of knowing a mortgage has been sold. Rather than filing with the county, many banks have been filing with MERSCORP Holdings Inc., Becker said.
Becker estimated that her office is missing out in about $15 million in unpaid fees. Mortgages are often sold up to six times on average, she said, and banks are supposed to be file the sale with the recorder of deeds’ office every time a mortgage is sold to a new institution.
‘We are going to do everything we possibly can to get every one of those dollars back into Montgomery County,’ Becker said.
Becker said she met with one of the principals of MERS who tried to find his own home in the system, and it took him five minutes to find his own mortgage.
‘It was not an easy process for folks, where in the county office, it is a very easy process,’ she said.
After a notice is put out to the recorders of deeds in other counties in Pennsylvania, the suit will go to trial in Federal District Court in Philadelphia. A trial has not yet been scheduled.
