Friday, November 11, 2011
On October 27th, Delaware Attorney General Beau Biden filed a verified complaint asserting that MERSCORP, Inc., a Delaware corporation, has repeatedly violated the state's Deceptive Trade Practices Act. Delaware asserts that MERS's deceptive trade practices fall into three main categories:
1. Through its opaque registry of mortgages and assignments, MERS knowingly obscures important information from borrowers. This harms consumers because many borrowers do not know the true identity of the holder of their mortgage, which impairs their ability to raise defenses in a foreclosure action. It also makes it more difficult for borrowers to identify their lender to seek a modification.
2. MERS often acts as an agent without authority from its proper principal, in part because it "often" does not know the identity of its property principal.
3. "MERS is effectively a 'front' organization that has created a systemically important mortgage registry but fails to properly oversee that registry or enforce its own rules on its members that participate in the registry." The de-centralized structure of MERS has contributed to the robo-signing scandal and similar systemic breakdowns.
I have written about MERS before and am not a fan. You can download a copy of the Delaware complaint, an explanatory press release, and obtain other information at the Delaware Attorney General's website.