Massachusetts Attorney General Martha Coakley will soon seek documents filed by Reston-based Mortgage Electronic Registration Systems as part of an ongoing investigation into unlawful foreclosure practices, she wrote in a letter to state registers of deeds Monday.
MERS, which was created by the mortgage industry in the 1990s, has saved financial firms millions of dollars by allowing them to reassign loans without the time and expense of filing mortgage documents and paying local fees each time a loan changes hands. The company’s motto: “Process loans, not paperwork.”
But the legality of the MERS system has been challenged across the country, especially in the wake of revelations last fall about widespread foreclosure paperwork problems and questions about who actually owns the homes being foreclosed upon.
Coakley’s inquiry comes as a 50-state coalition of attorneys general continues to negotiate a multi-billion dollar settlement with the nation’s largest banks over shoddy foreclosure practices. Coakley isn’t the only attorney general who has been reluctant to grant banks broad immunity from future lawsuits as part of that settlement.
“We have made clear that Massachusetts will not sign on to any global agreement with the banks if it includes a comprehensive liability release reguarding securitization and the MERS conduct,” she wrote in Monday’s letter. “We strongly believe that these investigations must continue and responsible parties must be held accountable in order to fully protect homeowners and return to a healthy economy.”