Home > Mortgages > Delaware AG Sues Mortgage Registry

Comments 0 Comments

Delaware Attorney General Beau Biden today filed suit against Merscorp, Inc., overseer of a national mortgage database used by banks when buying and selling loans. According to a statement from Biden’s office, MERS allegedly engaged in “deceptive trade practices,” knowingly obscuring information from borrowers and providing them “frequently inaccurate” information.

Created by large banks, Fannie Mae and Freddie Mac, and others in the mortgage lending industry, the MERS registry allows institutions to exchange loan ownership without recording transfers with county Recorders of Deeds offices. In cases where a MERS member owns the note promising repayment, MERS acts as the lender’s nominee and remains the mortgagee of record, BusinessWeek explains.

[Article: Current on the Mortgage, but Delinquent on Property Taxes]

Biden’s office alleges that the database makes it difficult for consumers to recognize or challenge inaccuracies, and “hampers the ability of borrowers to seek out the owner of their loan to pursue loan modifications or other loss mitigation relief.”

Biden’s office also alleges that the system’s unreliability and frequent inaccuracy often results in MERS being unaware of the identity of its proper principal. “Where the name of the owner of the mortgage loan recorded in the MERS System does not reflect the true owner, any action MERS takes on behalf of the purported owner is without authority,” according to the AG’s statement.

[Featured Tool: Get your free Credit Report Card from Credit.com]

Merscorp responded with a statement from Janis Smith, Vice President for Corporate Communications. The company describes its business model as “straightforward and transparent” and argues that there is “no merit” to the Delaware AG’s deceptive practices claims. Likewise, “we refute claims that use of the MERS System caused confusion to borrowers or any other participants in the mortgage finance system,” according to the statement.

The company adds that borrowers’ customer relationships lie with loan servicers, and that its system provides homeowners with free access to their loan servicer at all times.

According to Dow Jones Newswires, previous lawsuits have resulted in some legal victories for MERS and some for its critics. The Delaware AG seeks a civil penalty of $10,000 and restitution for every willful violation of state deceptive-trade-practices act.  Additionally, it “seeks to stop MERS from initiating foreclosure actions in the state or taking any actions on Delaware-registered mortgages until it has audited them for accuracy and it has improved transparency,” Dow Jones Newswires reports.

[Featured Product: Shopping for secured credit cards?]

Image: anna_t, via Flickr.com

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Credit.com receives compensation for the financial products and services advertised on this site if our users apply for and sign up for any of them.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team