Mortgage Recording Firm Accused of Illegal Shortcuts to Speed Foreclosures

MINNEAPOLIS, Jan. 25 /PRNewswire-USNewswire/ -- As the economy continues to
suffer from fall-out from subprime mortgage foreclosures, Mortgage Electronic
Registration Systems, Inc. (MERS) is accused of skipping legally required
steps to remove people from their homes in Minnesota. Today a group of
Hennepin County homeowners with subprime mortgages filed a class action
lawsuit to stop illegal foreclosures by MERS, a Virginia-based company.

The suit alleges that MERS, which handles 40% of the foreclosures in the
seven-county metropolitan area, violates Minnesota law by expediting
foreclosures without following mandatory procedures. Some states require
mortgage lenders to file a lawsuit before they can foreclose. In Minnesota,
lenders have an alternative that is often called 'foreclosure by
advertisement' because it allows a party to foreclose after publishing a
notice of foreclosure in the newspaper. For lenders, it is faster, easier,
and less expensive than going to court. However, the law requires the
foreclosing party to meet certain basic requirements before forcing homeowners
out of the home.

"Foreclosure by advertisement is a privilege, not a right," said Amber
Hawkins, an attorney for the Legal Aid Society of Minneapolis, one of the law
firms representing the plaintiffs. "If a mortgage lender wants to use a quick
and easy process to take someone's house, at the very least they should have
to follow the steps that Minnesota law requires."

The central issue is whether MERS routinely initiates foreclosures without
listing all loan "assignments" - that is, all changes in ownership that occur
with the mortgage in question, since mortgages often go through a chain of
"assignees." A basic requirement on Minnesota's books is that mortgage
assignments must be recorded with the county if the mortgage is no longer held
by the original lender. Additionally, assignments must also be listed in the
Notice of Mortgage Foreclosure Sale, published in the newspaper. and delivered
to the homeowner prior to the sale.

The lawsuit alleges that MERS systematically ignores these requirements and
routinely forecloses upon mortgages that have been assigned without recording
those assignments or listing them in the published foreclosure notice.
Ironically, MERS was established for the very purpose of tracking loan
assignments privately, rather than recording them with government officials.

In the midst of the subprime foreclosure crisis, this case highlights the lack
of accountability among subprime lenders, who often aggressively marketed
subprime loans without properly underwriting them, then avoided assuming any
risk by selling the loan to investors. The result is that homeowners can be
left homeless, but all too often it is difficult to even ascertain who is
responsible for the mortgage. Among the families MERS seeks to remove without
taking proper steps include single mothers and a man who is caring for a
family member with terminal cancer.

According to Eric Halperin, director of the Washington office of the Center
for Responsible Lending, "When lenders or other foreclosing parties neglect to
identify the entities that support bad loans, the public is deprived of
critical information about who the real players are in this foreclosure mess.

The attorneys representing the plaintiffs are from the Legal Aid Society of
Minneapolis, the Center for Responsible Lending, and Crowder Teske, PLLP. For
more information, contact Kathleen Day at the Center for Responsible Lending,
(202) 349-1871.

Minnesota Homeowners who are being or have been foreclosed upon by MERS can
call the following number for more information: (612) 746-3740. If an
interpreter is needed, please call (612) 332-1441.

SOURCE Center for Responsible Lending

Kathleen Day of the Center for Responsible Lending, +1-202-349-1871