According to articles in the Boston Globe and Bloomberg this morning, Massachusetts State Attorney General Martha Coakley will not sign on to any foreclosure settlement that offers a broad releases of liability to banks. She was quoted in the Globe as saying:
“We want to be clear we are not prepared to give a release of liability on any broad scope of MERS [Mortgage Electronic Registration Systems] issues. We intend to complete the investigation.”
A little background: MERS is an electronic system designed to make it easier to bundle and securitize mortgages. It also may have allowed banks using MERS to avoid various transfer and recording fees typically charged by the county offices where property transfers traditionally took place. As of now there are varying court opinions as to whether this is legal or not.
According to the article, Coakley intends to ask Massachusetts county registers to see if MERS is violating Massachusetts laws when seizing foreclosed properties. She is also asking them to look into whether or not MERS allowed lenders to abrogate state recording laws.
One Register of Deeds in Massachusetts, John O’Brien of South Essex County, says that his county missed out on as much as $22 million worth of recording fees as a result of MERS. He recently commissioned an audit of property assignments made in South Essex County in 2010 and found that more than 3/4 of them may be invalid as a result of MERS.
Several other state attorney generals have expressed reservations about signing onto the proposed foreclosure settlement, including New York AG Eric Schneiderman and California AG Kamala Harris. Investigations into the foreclosure mess have also been started in Nevada, Delaware, and possibly Arizona.
With each passing week, more and more cracks are appearing in the facade of the proposed foreclosure fraud settlement. It pleases me that these attorney generals are showing the willingness to complete their own investigations, especially since the joint investigation seemed to be particularly lacking when it comes to doing any actual investigation.
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