Washington, February, 04: Three of the largest US banks have been sued for deceptive foreclosure practices, including illegally seizing houses of thousands of homeowners in the state of New York.
On Friday, the New York Attorney General's Office launched suits against JP Morgan Chase, Bank of America and Wells Fargo over their use of the private electronic mortgage registry, the Mortgage Electronic Registration Systems (MERS).
“The banks created the MERS system as an end-run around the property recording system, to facilitate the rapid securitization and sale of mortgages,” New York Attorney General Eric Schneiderman said in a statement.
“Once the mortgages went sour, these same banks brought foreclosure proceedings en masse based on deceptive and fraudulent court submissions.”
The lawsuit also includes Merscorp, a “shell company” and the owner of the registry which was used as a dumping ground for poorly documented and mishandled mortgage records.
Schneiderman added that these banks created Merscorp to conduct improper foreclosures and resale of mortgages while not owning the promissory notes at the time of the foreclosures, and to avoid using public registry.
“These false and defective assignments have often masked gaps in the chain of title and the foreclosing party's inability to establish its authority to foreclose, and as a result have misled homeowners and the courts,” Schneiderman said.
The lawsuit seeks to compensate homeowners, as well as to impose civil penalties against the banks and Merscorp.
Two other state attorneys general in Delaware and Massachusetts have also filed suits against Merscorp over similar allegations.
Merscorp has denied the allegations and pledged to defend itself in court.
---Agencies
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