Wednesday, November 7, 2007

MERS Clipping Homeowners In Foreclosure With Inflated Legal & Appraisal Fees, Says Class Action Lawsuit

In a class action lawsuit originally filed in a Delaware Federal Court in September, with an amended complaint filed yesterday, two Missouri homeowners accuse Mortgage Electronic Registration Systems, Inc. ("MERS"), a home loan registration system allegedly controlled by an all star team of nine big time nationwide mortgage lenders, of overcharging borrowers for legal services in foreclosures. MERS reportedly charged borrowers for "attorney fees" of as much as $1,200 - $2,000 and upwards (see Lawsuit - page 18, paragraph 49) while MERS is only charged $400 - $500 by the attorney actually handling the foreclosure (see Lawsuit - page 15, paragraph 36).

The lawsuit also accuses MERS of charging borrowers appraisal fees ranging from $300 to $500 for appraisals that are (1) often times not done at all, or (2) done but some times are nothing more than "drive by" appraisals where the appraiser never actually gets out of his or her automobile (see Lawsuit - page 19, paragraph 52). In addition to MERS, the lawsuit names as additional defendants the following all star lineup of mortgage lenders who are allegedly the controlling shareholders of MERS:
  • Citigroup, Inc., Countrywide Financial Corporation, Fannie Mae, Freddie Mac, GMAC-RFC Holding Company, LLC, (doing business as GMAC Residential Funding Corporation), HSBC Finance Corporation, JP Morgan Chase & Co., Washington Mutual Bank, and Wells Fargo & Company.
Among other things, the lawsuit alleges that "MERS is grossly undercapitalized to cover the potential liability stemming directly from its role as primary mortgagee on tens of millions of Mortgage Notes." Because of this, the homeowners / borrowers also seek to hold the above listed all star lineup of mortgage lenders jointly and severally liable for damages as well as MERS (see Lawsuit - page 8, paragraphs 9(l) and 9(m)).

Representing the homeowners are Carmella P. Keener, of Rosenthal, Monhait, & Goddess, P.A., Wilmington, DE, Jeffrey M. Norton, of Harwood Feffer LLP, New York City, and Matthew S. Chase, University City, MO.


To view the lawsuit, see Trevino v. Merscorp Inc., et al..

For a media report which makes reference to this lawsuit, see Borrowers Face Dubious Charges in Foreclosures (subscription may be required; if no subscription, try here).

For another lawsuit with similar allegations against Countrywide Home Loans, see Class Action Sought Against Countrywide For Allegedly Squeezing Homeowners With Improper Fees When Servicing Mortgage Loans.

Go here , go here , and go here for posts on questionable mortgage servicing practices. foreclosure