Multnomah County board votes to sue Mortgage Electronic Registration Systems, Inc. for unpaid recording fees

Monday, 11/19/12 - 11:40 am

The Multnomah County Board of Commissioners authorized the county attorney to file a lawsuit against banks belonging to the Mortgage Electronic Registration Systems, Inc. to potentially recoup millions in recording fees.

The Multnomah County Board of Commissioners authorized the county attorney to file a lawsuit against banks belonging to the Mortgage Electronic Registration Systems, Inc. to potentially recoup millions in recording fees.

Commissioners, who unanimously approved the action in a 5-0 vote at their meeting Thursday, heard compelling public testimony from foreclosure victims, a bankruptcy attorney and lawmakers who all lauded commissioners for taking on the privately held company.

MERS serves as the registry to electronically track ownership of mortgage loans nationally for the ease and convenience of large financial institutions. The company allows these institutions to transfer loans by circumventing public recording offices.

The county argues that MERS has illegally skirted paying recording fees to the county by transferring loans without notifying the county of each exchange, which costs the county revenue that would support health and human services and support vulnerable residents.

Chair Jeff Cogen said that anyone who buys or sells a home in the county is affected, because people often don’t know who owns their mortgages.

“It’s clear that the MERS system and the foreclosures and the economic crisis we’ve had has had a devastating impact on our community and on communities across the country,” Cogen said. “And it’s also clear that MERS has led to filing fees not being paid to Multnomah County, and it’s led to a significant corruption of our public records system which can no longer be accurately relied on.”

Kent Snyder, a bankruptcy attorney for 30 years, said he was pleased that the county was taking on the case. He added, “I don’t have a client here, I don’t have a dog in this fight, other than I’m here as a citizen and as somebody who has been involved in representing people in this mess for many years.”

Snyder said some of the motivations in establishing MERS were to streamline transactions and avoid paying county recording fees.

“I think there’s a human side of this for the individuals who have been caught up in this mess -- I always refer to it as the MERS Mess,” Snyder said. “There’s also the economics. The counties have been short changed.”

Angelah Hill, a mother of two children, provided a picture of how individuals are affected. Hill, who lost her home, said she was a victim of an unjust system. When she wasn’t home, a locksmith showed up to change her locks forcing her to return with an 80-year-old pastor, his grandson and her young children to move their belongings from the home.

“I’m just hurt by everything that is going on,” Hill said, “and it can be at your door next.”

State Sen. Chip Shields, D-Portland, said the “stars had aligned” for the county to take on the case, particularly because of other rulings against MERS as well as a local and national law firm stepping up to represent the county. The outside counsel will work on a contingency basis and will pay for a portion of legal fees.