You might expect national home-loan giants Wells Fargo or Countrywide to top the list. But it is a mysterious company called MERS that routinely pops up in county property records around the Twin Cities as the owner of failing mortgage loans.
Trouble is, MERS doesn't own the loans.
Not a lender or loan servicer, Mortgage Electronic Registration Systems Inc. is a electronic loan record-keeping service owned by Vienna, Va.-based Merscorp Inc. The industry-backed registry was aimed at tracking ownership of America's home loans as they sailed through the securitization process, repeatedly changing hands between lenders, banks, servicers and investors. But a group of Hennepin County homeowners is now suing MERS and Hennepin County Sheriff Richard Stanek, accusing them of failing to list the entire chain of owners of loans in foreclosure in county records and foreclosure ads in newspapers, as Minnesota law requires.
"We have a situation now where we've got literally thousands of foreclosures and policymakers, nonprofits, community members - people who are trying to come together to solve this foreclosure crisis - we don't know who made these loans, who funded them, who traded them, who owns them now, because MERS is the record mortgagee," said Amber Hawkins, an attorney with the Legal Aid Society of Minneapolis. "MERS facilitates the anonymity of all the players in the securitization process."
A spokeswoman for Stanek said the sheriff's office was unaware of
the lawsuit and couldn't comment. An official at MERS wouldn't discuss the matter.
"We haven't even had a chance to digest the case yet," said MERS Executive Vice President Dan McLaughlin.
MERS shareholders include Countrywide Financial Corp., Wells Fargo Bank, and government-sponsored mortgage-buying giants Fannie Mae and Freddie Mac. The electronic registry now tracks some 50 million loans.
MERS is listed as the mortgagee of record in about 40 percent of foreclosures in the seven-county metro area, according to the lawsuit filed Friday in Hennepin County District Court by Jewelean Jackson, Ethylon and William Brown, Brenda Doane and David Williams. That would work out to about 9,500 loans in the last three years, based on the 23,869 homes that have been repossessed in sheriffs' foreclosure auctions in that period.
Attorneys are seeking class-action status, to halt MERS foreclosures already underway and stop new ones from starting and unspecified damages for homeowners who already have lost their homes in MERS foreclosures. If granted, there could be more than 10,000 class members.
One of the plaintiffs, Williams, did not realize he had two mortgages totaling $240,000 and that one was an adjustable-rate mortgage with a final balloon payment of $165,229, according to the complaint.
Williams, 52, of South Minneapolis, said in an interview that he has a learning disability that makes it difficult to read and write. He delivers newspapers for a living and cares for his elderly uncle. When he fell behind on his mortgage payments, he said he kept dealing with his loan servicer, Litton Loan Servicing. But he got nowhere, he said, and didn't understand why something called MERS took his house back when it was foreclosed on last fall. He and his uncle still live in the house, but will have to leave in April unless he can fix his mortgage.
"I think it's a rip-off," he said. "If I would have known who to get a hold of, I might have been able to get something done."
The record wave of foreclosures sweeping the country has led to several lawsuits against MERS centered on whether it has the legal standing to foreclose on homes. Courts have given mixed reviews, said Legal Aid's Hawkins.
Jennifer Bjorhus can be reached at firstname.lastname@example.org or 651-228-2146.