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Washington, DC – The Campaign for America’s Future welcomes the announcement that New York Attorney General Eric Schneiderman has initiated a lawsuit against the Bank of America, J.P. Morgan Chase, and Wells Fargo regarding their use of “MERS.”
Statement from Richard Eskow, Senior Fellow at the Campaign for America’s Future:
“We welcome the announcement by New York Attorney General Eric Schneiderman that his office has initiated a lawsuit against Bank of America, J.P. Morgan Chase, and Wells Fargo regarding their banks' use of “MERS.” As the Campaign for America's Future reported in October of 2010, “MERS’ is a shell corporation that has been widely used to avoid paying registration fees or filing title information with local authorities when mortgages are bought, sold, or traded.’
“Banks were able to avoid revealing the true holder of a mortgage note by holding them in the name of the MERS Corporation, then appointing its own employees as `officers’ of that corporation for court filings. This legal fiction resulted in a situation in which a company with less than fifty employees had thousands of vice presidents and assistant secretaries, as a MERS executive acknowledged in a deposition.
“MERS has made a mockery of longstanding legal principles, including the right of states and municipalities to collect taxes and record property holders and the right of borrowers to know and communicate with the holder of their loan. MERS also played a central role in the bundling and selling of mortgage-backed securities without proper review or disclosure, a process that led to the financial crisis of 2008. This feature was advertised in the company's materials as `ease of delivery into secondary markets.’
“Our review of internal MERS documents showed that some of the features, which the organization featured in its advertising materials resemble, at least superficially, some of the allegations in Mr. Schneiderman's lawsuit. `No recording or re-recording of documents,’ read one sales slide. `No chain-of-title issues.’ Other materials note that MERS allows its users to avoid paying local taxes.
“In a reflection of the corporate culture reflected by the organization, a dummy computer screen used to train its staff features a fictional borrower named `Harry Homeowner’ residing at `One Poverty Lane’ in foreclosure-plagued Jacksonville, Florida. The tragedy faced by millions of Americans appears to have been a source of humor for the staff, management, and thousands of artificial `officers’ of the MERS Corporation.
“There can be no resolution of our nation's ongoing mortgage crisis without aggressive action to address MERS abuses and the executive actions that lay behind them. The American people deserve justice, and they deserve to know more about the abuses that created a financial disaster for millions of people while unjustly enriching a few.
“We welcome this lawsuit. We applaud Mr. Schneiderman and his staff for their efforts on behalf of New York state residents and bank customers throughout the nation.”
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