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Political Economy
Posted at 09:41 AM ET, 07/27/2011

Delaware, Mass. investigate mortgage clearinghouse MERS


(CHRIS RANK - BLOOMBERG NEWS)
Mortgage Electronic Registration Systems — the electronic database that is listed as the owner of millions of mortgages nationwide — said it is cooperating with a Delaware investigation of its business practices, a Reuters report said Tuesday.

The Washington Post reported in June that the firm had received a subpoena from office of Delaware Attorney General Beau Biden.

The privately run electronic database, which allows financial firms to trade mortgages, is also under investigation in Massachusetts. On Monday, Attorney General Martha Coakley said that her office was looking into the company’s business practices, The Washington Post reported. Coakley is asking questions about whether the Reston-based company violated Massachusetts state laws on property seizure and is concerned that the company did not pay government fees.

A 50-state coalition of attorneys general is negotiating a multibillion-dollar settlement with the nation’s largest banks over their foreclosure practices. Coakley said that Massachusetts will “not sign on to any global agreement with the banks if it includes a comprehensive liability release regarding securitization and the MERS conduct.”

The Post reported that courts across the country are trying to determine the validity of foreclosures already in process. In addition to Delaware and Massachusetts, the firm is also under investigation by the New York attorney general’s office. Earlier this year, a Michigan court of appeals ruled against MERS, saying state law requires a foreclosing party to have a stake in the loan itself, which the firm did not.

The firm also faced setbacks after rulings in cases from courts in Maine, Kansas and California. But it has also won scores of other cases. Minnesota legislators passed a law stating that MERS explicitly has the right to undertake foreclosures.

In June, a New York appellate court ruled that the company did not have the right to foreclose on a property or assign a mortgage it didn’t own. The New York decision came just a day after a an appeals court in California ruled that MERS did have the right to act for lenders.

By  |  09:41 AM ET, 07/27/2011

Tags:  Housing

 
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