Posts filed under “Foreclosures”

Counties (Finally) Suing MERS Over Recording Fees

“This is a big new front. This case is scary because if Dallas wins then there are a lot of other counties around the country that are going to follow.”

-Christopher L. Peterson, associate dean and professor at the University of Utah S.J. Quinney College of Law.


In all of the market mayhem of last week, this article may have slipped by unnoticed: Merscorp, Bank of America Sued by Dallas District Attorney.

We’ve discussed Mortgage Electronic Registration Systems (aka MERS) repeatedly over the years, including its quasi-legal standing and how it illegally failed to pay lawful recording fees to states and counties. (Back in March ’11, we discussed that County & State Litigation vs MERS was coming soon).

The Dallas DA action may be the largest major City/County litigation versus MERS. This may break open the flood gates for other such suits by counties and states around the country.

The politics of this are quite fascinating: The bankers may own the corrupt US Congress, and they may have intimidated or bought off many of the more cowardly State Attorneys General, but there simply are too many counties and District Attorneys representing local interests throughout the country to all be bought off. Buying/intimidating/controlling all of the local country District Attorneys may be like herding cats — nearly impossible.

I am going to stand by my original prediction: The early litigants may get something, but the latter lawsuits will likely result in bankrupting MERS.

An interesting legal question is whether the banks that created MERS — Bank of America, Countrywide, Fannie Mae, Freddie Mac, et. al. — can be reached beyond the corporate shield. Unless someone can demonstrate intentional fraud by design, I tend to doubt it.

Stay tuned . . .


Merscorp, Bank of America Sued by Dallas District Attorney
Businessweek, September 21, 2011, 5:46 PM
Margaret Cronin Fisk and Thomas Korosec

BofA Case May Be Followed by More Mortgage Suits by Counties Margaret Cronin Fisk and James Sterngold
Bloomberg, September 23, 2011

See also:
Craig Watkins Makes Good on Threat to Sue Mortgage Processor Over “Tens of Millions”
Robert Wilonsky
Dallas Observer, Sep. 20 2011

Dallas County DA Sues MERS, Says Shadow Recording System Confused Title and Cost Money
Martha Neil
ABA Journal, Sep 20, 2011

Homeowners’ Rebellion: Could 62 Million Homes Be Foreclosure-Proof?
Ellen Brownposted
Yes Magazine Aug 18, 2010


On a related note, this embarrassing WSJ article — Niche Lawyers Spawned Housing Fracas — was not their finest moment . . .

Category: Foreclosures, Legal, Real Estate

Banks Still Fabricating Docs, Commiting Foreclosure Fraud

As hard as it may seem to believe, the largest mortgage servicers are still fabricating documents for use in foreclosures. That’s according to an article in American Banker, titled Robo-Signing Redux: Servicers Still Fabricating Foreclosure Documents. Key points: • The practice continues a year after the companies were caught in the robo-signing scandal, even as…Read More

Category: Foreclosures, Regulation

US Foreclosures: Kicking the Can Down the Road…

click for ginormous graphic > Today’s WTF data point is how long it will take to work through the backlog of foreclosures at the current pace: “In New York State, it would take lenders 62 years at their current pace, the longest time frame in the nation, to repossess the 213,000 houses now in severe…Read More

Category: Foreclosures

Zombie Idea: Defaulters’ Retail Spending Spree ?

In April 2010, we discussed the false meme that defaulting homeowners were about to cause a surge in retail spending (Are Defaults Really Driving Retail Spending?). That blessedly data free idea turned out to be wrong. But as the backers of Supply-Side economics will tell you, its hard to keep a bad idea down. Thus, the…Read More

Category: Analysts, Consumer Spending, Foreclosures, Real Estate, Really, really bad calls

FDIC: Regulatory Actions Related to Foreclosure Activities

Regulatory Actions Related to Foreclosure Activities by Large Servicers and Practical Implications for Community Banks FDIC Supervisory Insights Bulletin May 2011

Category: Foreclosures, Regulation, Think Tank

No end in sight to foreclosure quagmire

Horrifying, shocking story of abuse and deception by banks regarding modifications:

The NBC News/ special report on the foreclosure crisis is now posted on the website.

The posting includes four Lisa Myers video reports.

Read More

Category: Foreclosures, Video

GAO: Judicial and Nonjudicial Foreclosure Processes Notice of

In our Think Tank, you will find a fascinating GAO document on Mortgage Foreclosures, titled Documentation Problems Reveal Need for Ongoing Regulatory Oversight. Its chock full of great charts and insights: > Flow of Payments in a Basic Securitized Transaction Typical Judicial and Nonjudicial Foreclosure Processes

Category: Credit, Foreclosures, Real Estate


MORTGAGE FORECLOSURES Documentation Problems Reveal Need for Ongoing Regulatory Oversight GAO Mortgage Foreclosure Report Hat tip naked capitalism

Category: Foreclosures, Think Tank

The Destruction of Economic Facts

Fascinating discussion in BusinessWeek from renowned Peruvian economist Hernando de Soto. As we have discussed previously (here and here), de Soto has identified the property record keeping — he calls them “public memory systems” — as one of the major advantages of Western Capitalism. The recording, rule-bound, certified, and publicly accessible registries, titles, balance sheets,…Read More

Category: Bailouts, Credit, Foreclosures, Legal, Real Estate, Really, really bad calls

California Dings MERS

California bankruptcy court Denies US Bank as trustee relief from stay; Court says recording is required BEFORE foreclosure, not after. Order Br Cally So Dist Salazar vs Us Bank Denying Mfrs Mers 4 11 2011

Category: Foreclosures, Legal, Think Tank