Abbott asked to consider suing mortgage company
HOUSTON (Legal Newsline) - The Texas county that includes Houston said Tuesday it planned to ask state Attorney General Greg Abbott to consider suing Mortgage Electronic Registration Systems Inc. over allegedly unpaid filing fees.
Harris County Judge Ed Emmett said in an interview that a plan by lawyers for the county to hire outside attorneys to sue MERS for as much as $100 million in allegedly unpaid filing fees was postponed due to too many questions, including concerns over contingency fees to outside counsel.
"If this is something that affects county government all over the state, why isn't the state attorney general pursuing it?" Emmett said, according to Bloomberg.com.
MERS tracks servicing rights and ownership interests in mortgage loans on its electronic registry, allowing banks to buy and sell loans without recording transfers with individual counties.
Lawyers in Harris County said they were considering a lawsuit similar to one filed last month against MERS by Dallas County. The Dallas suit claimed MERS cheated the county out of tens of millions of dollars in mortgage-filing fees. Dallas County District Attorney Craig Watkins said his county may be owed as much as $100 million.
"We've said it could be $10 million to $100 million (at stake for Harris County)," Emmett told Bloomberg.com. "If so, my concern is we'd be paying outside attorneys $2.5 million to $25 million and that's money that otherwise would come back to the taxpayers."
MERS acts as the lender's nominee and remains the mortgagee of record as long as the note promising repayment is owned by a member of MERS.
Dallas County alleges this allows banks that own stakes in MERS to buy and sell loans without properly recording transfers with counties and paying the fee.
The clerks of Kentucky's Christian and Washington counties have already sued MERS, JPMorgan Chase & Co.'s Chase Home Mortgage Corp., Citigroup Inc.'s CitiMortgage, Wells Fargo & Co., Bank of America and others in federal court in Louisville over unpaid mortgage filing fees, alleging the banks used MERS to avoid paying the fees.
Geauga County, Ohio, Washington County, Pa., and Branch County, Mich., all have filed similar lawsuits involving MERS.
"If this gets the traction it should get, and probably will get, many, many counties in many states will file in the next 90 days," Stephen Malouf, an attorney who represents Dallas, told Bloomberg.com.
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