Beau Biden, Delaware Attorney General, Sues Big Banks' Mortgage Registry

Delaware Attorney General Beau Biden sued a private national mortgage registry on Thursday, citing a slew of deceptive trade practices that prevent homeowners from effectively fighting off foreclosure.

The lawsuit in state court alleges that Mortgage Electronic Registration Systems Inc. deceived borrowers by knowingly obscuring important information, acting as an agent of the true owners of mortgage loans without authority, and failing to properly oversee the registry or enforce its own rules for foreclosure proceedings.

Major mortgage industry players -- including Bank of America, Wells Fargo, Fannie Mae and Freddie Mac -- formed MERS in 1995 to bypass county records offices and facilitate the then-booming mortgage-backed securities market. That market's collapse helped bring about the 2008 Wall Street meltdown that sparked the Great Recession.

In a statement outlining the lawsuit, Biden's office said that MERS "engaged and continues to engage in deceptive trade practices that sow confusion among homeowners, investors, and other stakeholders in the mortgage finance system, seriously damaging the integrity of the land records that are central to Delaware's real property system, and leading to improper foreclosure practices."

Homeowner confusion arose from the fact that MERS assumed title to the mortgage instruments associated with the loans that its member organizations were bundling and selling off as securities. Yet MERS, according to the complaint, failed to ensure proper transfer of the mortgages, leading it to foreclose upon houses without the authority to do so. Homeowners trying to fight off foreclosure were hampered by the convoluted chain of title -- in other words, it wasn't clear who was actually foreclosing on them.

Over the past summer, both Biden and Massachusetts Attorney General Martha Coakley announced investigations into MERS. In the wake of those announcements, MERS revised its rules to forbid its members from foreclosing on houses in the registry's name, according to a Reuters report.

The case of State of Delaware v. MERSCORP Inc. has been filed in the Wilmington division of the Delaware Chancery Court.

Comments

[big man 33]

01:03 PM on 12/07/2011

everything beau Biden talks about the banks where doing happen to me to a T. with E. M. C. MORTGAGE. .

[Terri Skau]

01:13 PM on 11/06/2011

I'm so happy he's doing this...Because I want to know how this Business Mers with only 50 employees was going to handle 30 million mortgages...

[Siebenstein]

09:27 PM on 11/01/2011

Beau, you go !

[sandcanyongal]

10:12 PM on 10/30/2011

Pres. Obama& Shaun Donovan (housing/urban), pressured Eric Schneiderman, Atty Gen. of NY to sign off on a financial settlement for mortgage lenders who falsified mortgage records to the courts, then was fired from the committee for wanting to be able to investigate and prosecute BofA & others. A settlement is their get out of jail pass. Why are they pushing so hard? What else don't the banks want the people or anyone else to find out? Would the pitchforks come out if more devious corruption and criminal act were found? Thank you, Eric Schneiderman and Mr. Beau Biden for standing up to those crooks. Let's stop Donovan from giving the banks "TOO BIG TO JAIL" status. Enough.

[Karen Roberts]

11:10 AM on 11/06/2011

How do you know Obama was involved I don't believe you know that Sandcanyongal. Show me the proof?

[Sandra Stevens-miller]

06:59 AM on 10/29/2011

Unfortunately, when these changes took place in 1995, no one was paying close attention and many cover-ups, with regards to open and full disclosure, took place. This practice has been going on for years and the corruption is widespread throughout the finance industry. Thank you, Mr. Biden, for holding those who have committed crimes accountable for many individuals are homeless, not because they are slackers, but because the systems we had in place failed them.

[Diane Treider]

09:34 PM on 11/06/2011

I simply cannot love this comment anymore! I want to see people in JAIL. I don't care what letter is in parenthesis next to their names.

[cadawa]

01:21 PM on 10/28/2011

Good for him. Now if his father would just find his conscience, we might see some justice done Let's see now, where did he leave it? Oh I know, Delaware is home base for a lot of financial institutions because of their loose charter laws more than generous corporate tax structure. It's hiding in his campaign war chest.

[roxyratfink]

12:29 PM on 10/28/2011

The kind justice our democracy administers is the important point here. If powerful rich entities, such as banks and corporations get protection from legal scrutiny, that is a bad sign for our country.
The rich and powerful must not have any special ability to override justice. If deceptive trade practices lead to fraudulent foreclosures, I cheer for that kind of justice. The pledge of allegiance says, "Liberty and Justice for all." The means the 99 percent of us too! Go Beau Go!

[OldTulsan]

12:13 AM on 10/29/2011

Honored to be your first fan.

[InisLass]

10:39 AM on 10/28/2011

He was on Rachel Maddow's show last night and gave a terrific explanation about what he is pursuing and gave credit to others on his team as well. There is finally hope that something will legally be done about the horrors too many Americans have had to go through.

[Jose Hill]

10:32 AM on 10/28/2011

Anyway that we can force these big monoliths to shrink the size of their influence is alright with me. That's why I love my homestate of Delaware and Beau Biden.

[HLL]

10:26 AM on 10/28/2011

Thank you, DA Biden. This is so important. Please keep going!! And thank you DAs Eric T. Schneiderman of NY and Martha Coakley of MA. The Wall Street gangsters and banksters must not be allowed to get away with tanking the U.S. and world economies, and making Americans needlessly homeless. Go get 'em ☮

[altollew]

08:09 PM on 10/28/2011

and let's not forget Chris Dodd and Barney frank as well as all thebhighly paid leadership at frannie and freddie

[calloy]

10:00 AM on 10/28/2011

i hope biden prevails in this effort, because it will be another tool to make the banks renegotiate these predatory loans still clogging things up.

[patters85]

03:35 PM on 10/28/2011

Renegotiate my A$$. Someone has to go to jail. That's why the DOJ has been dragging their feet. Renegotiate what? Most of the mortgages were written by front companies like Novastar and Countrywide. If my paper is lost why should I agree to pay money to a third party that has no legal grounds to ask me for money. If we have to follow the law. Damit. So do they. Prove you have the original note or turn the home over to the real investor. The homeowner. I wish my original note was lost. I would tie them up in court for the life of the mortgage.

[Terri Skau]

01:22 PM on 11/06/2011

I agree with you. They have no clue where the orginal note is....and how many times it's been sold.

[scott7841]

09:38 AM on 10/28/2011

If BOA has anything to do with it you can bet there are plenty of unanswered questions. Look up the HVCC however and see what happened the last time an AG got involved in the name of helping people. He helped special interest groups that he had associations with(Appraisal Management Companies) become a 2.8 billion dollar a year business all being paid for by the borrower in higher appraisal fees. Good appraisers have gone out of business because they refuse to work for $200.00 and allow the AMC to make nearly as much and sometimes more than they do for doing nothing more than acting as a middle man between banks and appraisers. They have no responsibility for the quality of the appraisal and most have $10.00 / hr help going down a checklist of things to look for in the appraisal that has nothing to do with the value. After all, how in the hell could an AMC in California know wether or not the comps and values used in an appraisal in Virginia is accurate and reasonable? I hope that he does what he should with this and cleans up their treacherous practices but will withhold my judgement about his motives until I see if he agrees to drop the suit in exchange for yet another creation of a special interest regulatroy group that he has ties to as Cuomo of NY did with the HVCC.

[fineartgalaxy]

09:34 AM on 10/28/2011

John Lennon said many years ago. We are ruled by maniacs for maniac reasons. Most of us did not believe JL at the time. I now understand where he is coming from.

[stroses]

09:13 AM on 10/28/2011

What are the other AG's doing? I'm still waiting in Virginia.

[Zapp384]

09:01 AM on 10/28/2011

Thank you Beau, Your Dad can be proud of you.