North Carolina County May Sue MERS Over Recording Fees

The Mortgage Electronic Registration System (MERS) has been at the center of various foreclosure/robo-signing lawsuits over the past several months.  MERS is an electronic system that was designed to allow mortgage originators to more easily securitize mortgages and package them into mortgage backed securities.  It also enabled those using the system to avoid many of the transfer fees charged by county offices under the system of transferring real estate that has existed for hundreds of years in this country.  There are many ongoing lawsuits that seek to determine whether or not this system is legal, with some courts ruling that transfers and foreclosures through MERS are legal, and others ruling that they are not.

Recently the Registrar of deeds in South Essex County, Massachusetts announced its intentions to sue MERS, over $22 million worth of recording fees that the county feels they illegally lost due to MERS.  This morning I learned from Yves Smith’s Nakedcapitalism blog that the Register of Deeds in Guilford County, North Carolina is considering a similar lawsuit (click here to see original press release).

Jeff Thigpen, the Register of Deeds for Guilford County said in the release:

“As Register of Deeds, I have two primary responsibilities in land records: a sworn duty to protect the chain of title and a fiduciary responsibility to collect recording fees.  Quite frankly, MERS has undermined both.  Through their own “private-for-profit” Register of Deeds mortgage tracking office, MERS has created a dangerous centralization of power whose sole purpose is to protect and serve the interests of major banking conglomerates and undermine public recording offices.”

“For me, the question is clear.  Do we want land records in America to be governed by major banking conglomerates on Wall Street or the people and the laws of the United States of America?”

According to the press release, MERS was listed as a beneficiary in more than  47,000 deeds of filed in Guilford County since 2005.  Officials conservatively estimate that Guilford County has missed out on between $600,000 – $1,300,000 worth of recording fees due to MERS.  Guilford County officials are examining court rulings in Arkansas, Maine, Missouri, Kansas, and California to determine if they have cause to sue MERS for unjust enrichment and try to recoup lost recording fees.

In many ways, the issue goes way beyond recording fees and is really a question about the rule of law in the United States, as Thigpen notes:

“To me these issues with MERS are simple.  Are major banking conglomerates going to tell the truth or not; and are we going to choose to have two standards of justice in America: one for Big Money and the other for the rest of us?”

I feel that Thigpen really cuts to the heart of the issue with this statement.  They say “the smallest worm will turn, being trodden on.”  I think that is what we are seeing here.  Stay tuned.