FRANKFORT, Ky. (Legal Newsline) - Kentucky Attorney General Jack Conway announced Wednesday that a Franklin Circuit Court judge ruled that his office properly alleged Consumer Protection Act violations against MERSCORP Holdings Inc.
In January, Conway's office filed a lawsuit against MERSCORP and its wholly-owned subsidiary, Mortgage Electronic Registration Systems Inc., for allegedly violating Kentucky's Consumer Protection Act by committing unfair or deceptive trade practices to save its members from paying more than $2 billion in state recording fees and to shorten the time it takes to pursue foreclosure actions. The lawsuit also alleged MERS generally committed fraud and unjustly enriched itself at the expense of the state and state residents.
MERS moved to dismiss all of the claims on various grounds, but the court found Conway sufficiently alleged unfair, misleading or deceptive practices and allegations of fraud and unjust enrichment. The only claim dismissed by the court was Conway's allegation that MERS violated the statute requiring recording of mortgage assignments.
"I appreciate the court's careful consideration on this matter, and I am pleased with the result," Conway said. "This ruling paves the way to allow my office to hold MERS accountable for its deceptive conduct, and we look forward to continuing our fight for Kentucky consumers."
MERS was created in 1995 to allow the mortgage industry to avoid paying state recording fees, to enable the rapid sale and securitization of mortgages and to shorten how long it takes to pursue foreclosure actions. More than 70 million mortgages were registered on the system. MERS shareholders include the Mortgage Bankers Association, Freddie Mac, Fannie Mae, Wells Fargo and Bank of America.
Other states filed similar lawsuits against MERS, including New York, Delaware and Massachusetts. Kentucky is the first state to move pass the motion to dismiss stage against MERS.