3/8/2012
A sweeping lawsuit filed last year by two Kentucky county clerks against MERS, the lending industry organization that allows the trading of mortgages among secondary market investors, has been dismissed by a federal judge in Paducah.
In April, Washington and Christian county clerks filed a lawsuit against Mortgage Electronic Registration Systems, Inc., or MERS, as well as several banks involved in MERS, such as JPMorgan Chase, Wells Fargo and the Bank of America.
However, according to a ruling made by Chief Judge Joseph H. McKinley Jr. of the U.S. district Court in Paducah, the clerks did not have any legal authority to bring the action.
It was alleged by the clerks that since the 1990s, MERS has allowed the selling of mortgages by lenders to secondary market investors without recording properly the transfer of ownership in the offices of the county clerks throughout the state of Kentucky. A class-action status was sought by the clerks to represent all one hundred twenty Kentucky county clerks.
According to its website, MERS was established by the mortgage banking industry to eliminate the need to prepare and record assignments when trading residential and commercial mortgage loans.” MERS allows the trading of mortgages among its members while it remains as the nominee on record in the offices of county clerks.
Attorney General Jack Conway has issued a subpoena to MERS earlier this month in a separate investigation as to whether the industry group is in violation of a Kentucky law by avoiding the filing of mortgage transfers in the offices of the county clerks.
In the case of the federal lawsuit, McKinley ruled that state law concerning the recording of liens in the offices of the county clerks is intended to protect lien-holders, creditors, prospective buyers and land owners.
