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New York Reaches $25M Settlement Over MERS Actions

New York Attorney General Eric Schneiderman secured $25 million from three of the nation's top servicing shops after filing a ""lawsuit"":http://dsnews.comarticles/new-york-ag-sues-three-largest-lenders-over-mers-2012-02-03 early last month regarding foreclosures he says were improperly processed through Mortgage Electronic Registration System (MERS).

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Bank of America, JPMorgan Chase, and Wells Fargo will each pay the state of New York $5.9 million, according to settlement documents obtained by ""_Reuters._"":http://www.reuters.com/article/2012/03/14/us-banks-mortgages-idUSBRE82D0A620120314

While Schneiderman will drop some of his claims in response to the settlement, he will continue to pursue other claims on behalf of borrowers who suffered damages due to MERS actions.

Additionally, despite the fact that Schneiderman targeted just three banks and MERS in his lawsuit, five banks have agreed to pay penalties. In addition to Bank of America,

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JPMorgan Chase, and Wells Fargo - the banks Schneiderman targeted - Citigroup and Ally Financial are also offering to pay fines for their use of MERS in New York.

Citigroup will pay $5.9 million, the same amount as the three defendants in the case, and Ally Financial will pay $1.25 million, according to information obtained by _Reuters_.

MERS has foreclosed on approximately 13,000 properties in New York, according to Schneiderman, who calls into question the system's authority to foreclose.

""MERS assignments have numerous defects, including affirmative misrepresentations of fact, which render them false, deceptive, and/or invalid,"" Schneiderman stated in his court filing against the three servicers and MERS.

MERS itself has faced a number of lawsuits regarding its participation in the foreclosure process, and results have been mixed from state to state.

According to a statement from MERs, when Schneiderman first began pursuing his suit last month, ""The MERS System is an important part of the mortgage industry and the MERS business model has been consistently validated in all 50 states.""

""We are confident that as people understand more about MERS and the role we play, they will see that MERS adds great value to our nation's system of housing finance in ways that benefit not just financial institutions, the broader economy and the government, but-most of all-homeowners,"" MERS stated.

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