False Claims Act Lawsuits Say MERS' Mortgage Holder Status A Fraudulent Attempt To Dodge Payment Of Filing Fees, Taxes When Home Loans Are Assigned

In Reno, Nevada, The Reno Gazette-Journal reports:

• A Reno law firm has filed two lawsuits alleging fraud against a nationwide mortgage registration firm, and if those legal actions prevail, the firm and dozens of mortgage lenders could be liable to Nevada’s counties for billions of dollars in compensation and penalties.

• Law partners Robert R. Hager and Treva J. Hearne, with Reno attorney Mark Mausert, have filed a case in Nevada and one in California against Mortgage Electronic Registration Systems, which operates an electronic registry of mortgage loans in the United States. MERS serves as the mortgagee of record for lenders, investors and loan servicers in county land records, but doesn’t own any mortgages.

• By using the firm’s names on deeds and other paperwork, the lenders are able to avoid county recording fees, according to the firm. MERS has no financial interest in the loans, but is listed as actual owner or surrogate for the owner on millions of deeds of trust, even as individual mortgages are repeatedly traded and packaged inside of mortgage pools. The lawsuits argue that listing the firm as the owner of mortgages in which it has no interest in order to avoid filing fees and taxes that are legally required constitutes fraud.

• “We look forward to holding these financial institutions and foreclosure mills responsible for their actions that have deprived the states and counties of much-needed revenue,” said Hager.(1)

For more, see Mortgage registration firm sued for fraud, billions in penalties in Nevada, California.

(1) According to the story, the lawsuits, which were filed last year, removed from under seal this year and amended this month, are brought under a statute called the false claims act. That law allows citizens to file complaints concerning fraud and waste on behalf of governments. The lawyers filed the suits on behalf of individuals, the two state governments and Nevada and California counties. In Nevada, the false claims act allows for triple damages and penalties of $5,000 to $10,000 per individual offense. The governments would collect most of the damages if the suit is decided in favor of the plaintiffs and damages are assessed. Hager said taking the 5-year statute of limitations and other factors into account, MERS and its members face a potential judgment of $6 billion to $12 billion in Nevada alone, the story states. Reportedly, there are 47 lenders listed as co-defendants in the lawsuit, including Countywide Home Loans Inc., Bank of America, Citimortgage Inc., GMAC Mortgage, Wells Fargo, N.A. and J.P. Morgan Mortgage.