Attorney General Jack Conway announced today that his office filed a lawsuit in Franklin Circuit Court against MERSCORP Holdings, Inc., and its wholly owned subsidiary Mortgage Electronic Registration Systems, Inc. otherwise known as MERS for violations of Kentucky law.
The lawsuit alleges that MERS violated Kentucky law by not recording mortgage assignments with County Clerks when mortgages were sold or transferred from one bank to another.
Attorney General Conway stated Kentucky’s statute is clear, it requires assignments be recorded with County Clerks, and MERS directly violated that law by creating this system that provides no public record of sales or transactions and deliberately circumvents paying recording fees to states.
The lawsuit also alleges that since MERS’ creation in 1995, members have not paid over $2 billion in recording fees across the nation.
In response to Attorney General Conway’s announcement, officials stated that there is no merit to the allegations leveled at MERS by Kentucky Attorney General Jack Conway in during a news conference today.
Officials say all MERS mortgages are registered in the local land records and all recording fees are properly paid. The MERS® System's role in the mortgage industry has reduced chain of title issues, provided efficiencies through e-commerce, and resulted in lower mortgage borrowing costs.
Officials added that their business model is straightforward and transparent, and MERS role is clearly spelled out in the contract between borrower and lender.
Under Kentucky law, MERS may face up to $2,000 for every violation.
Other states have filed similar lawsuits against MERS, including Massachusetts, Delaware and New York.