WASHINGTON (Legal Newsline) - Five of the nation's largest banks have agreed, in a federal court filing this week, to pay the state of New York $25 million to settle claims over their use of a private national mortgage electronic registry system.
The banks include Ally Financial Inc., Bank of America Corp., Citigroup Inc., JPMorgan Chase and Co., and Wells Fargo and Co.
Last month, New York Attorney General Eric Schneiderman sued Bank of America, JPMorgan and Wells Fargo for their use of MERS.
In his Feb. 3 lawsuit, the attorney general charges that the creation and use of the registry system resulted in a "wide range of deceptive and fraudulent" foreclosure filings in New York and federal courts, "harming homeowners and undermining the integrity of the judicial foreclosure process."
Schneiderman's suit asserts that employees and agents of Bank of America, JPMorgan and Wells Fargo, acting as "MERS certifying officers," repeatedly submitted court documents containing "false and misleading information" that made it appear that the foreclosing party had the authority to bring a case when in fact it may not have.
In addition to the three banks, the attorney general's suit names Virginia-based MERSCORP Inc. and its subsidiary, Mortgage Electronic Registration Systems Inc.
Ally and Citigroup are not named in the MERS suit.
According to the eight-page agreement filed in the U.S. District Court for the District of Columbia Tuesday, the five banks agreed to pay a total of $25 million to the state allocated as follows:
- Bank of America and BAC Home Loans Servicing LP will pay $5,937,500;
- JPMorgan, Chase Home Finance LLC and EMC Mortgage Corp. will pay $5,937,500;
- Wells Fargo and Wells Fargo Home Mortgage will pay $5,937,500;
- Citigroup, Citibank and CitiMortgage Inc. will pay $5,937,500; and
- Ally, GMAC Mortgage LLC and Residential Capital LLC will pay $1,250,000.
Though the deal prevents New York from seeking penalties of $5,000 for each violation in exchange for the banks' payout, Schneiderman's office said it still plans to pursue damages incurred by homeowners.
"We intend to aggressively litigate this case to finally prohibit the widespread illegal and deceptive practices of the banks set forth in our complaint," spokesman Danny Kanner told Bloomberg.
The five banks, which neither admit nor deny the allegations in the MERS suit, have already agreed to a $25 billion settlement with 49 state attorneys general and the federal government to resolve claims of "robosigning" and other abusive foreclosure practices.
That deal, reached in February between federal officials, the attorneys general and the banks after many months, only covers those mortgages held by the five banks, not Fannie Mae or Freddie Mac.
From Legal Newsline: Reach Jessica Karmasek by email at firstname.lastname@example.org.