From the Star Tribune Online:
Ramsey, Hennepin counties suing mortgage registry company for lost fees, recording failure
Article by: KEVIN DUCHSCHERE , Star Tribune
Ramsey and Hennepin counties are suing a Virginia-based national mortgage registry, alleging that they’ve lost potentially millions because the company failed to record mortgage assignments with the counties as required, they claim, under state law.
Ramsey County Attorney John Choi said that the 69-page civil action, filed Friday in Ramsey County District Court on behalf of all Minnesota counties, sends a clear message that MERS — Mortgage Electronic Registration Service, Inc. — “can no longer do this at the public’s expense.”
Choi said that MERS, a private entity set up by large national lenders to make it easier to buy and sell mortgages, has damaged the integrity of county property records and siphoned off fees that would otherwise go to the county to record transactions.
Choi did not say just how much revenue the counties have lost, but he cited a study that suggests states and counties nationally have lost as much as $7.2 billion to MERS.
Other local governments around the country have initiated similar lawsuits, he said.
Choi said that Minnesota for most of its history has required mortgages and assignments to be recorded in counties where the real estate is located. The state has set a $46 fee for each transaction.
But MERS has subverted that system, Ramsey County Board Chair Rafael Ortega said, making it hard for counties to track property changes and robbing it of revenue that the county reinvests in problem properties to put them back on the tax rolls.
“It almost sets up an invisible part of government when we don’t have the information to know what’s going on,” Ortega said.
In a statement, Hennepin County Attorney Mike Freeman said that “the public never consented to a system in which some pay recording fees while others do not, and where some property record information is transparently maintained … while other data is in a privately-run database.”
The counties have enlisted a New York City law firm and former Ramsey County Attorney Tom Foley, now a private St. Paul attorney, to handle the case on a contingency fee basis.
A spokesman for MERS could not be immediately reached for comment.