The Public Interest Law Center prepared an amicus brief in an appeal to the Pennsylvania Supreme Court by several counties and county recorders of deeds who are challenging the legality of the MERS private system of mortgage records. This is the third amicus brief the Law Center has filed since becoming involved in litigation against the MERS system by local governments in Pennsylvania in 2011. The brief was submitted in support of Pennsylvania counties and recording officials who are appealing a Commonwealth Court decision in MERS favor, and the Law Center was joined by five Amici who represent consumers and homeowners in Pennsylvania.
MERSCORP, Inc. operates a system of mortgage record keeping that allows for financial transactions involving the transfers of mortgage ownership to occur while MERS maintains nominal ownership. The MERS system therefore allows financial institutions to trade mortgages without filing records with local governments for these transactions and without paying the fees associated with filing such records with county recorders of deeds. A Commonwealth Court ruled that mortgage assignments do not have to be filed publicly. The amicus brief filed by the Law Center challenges to this ruling, arguing that the private system of mortgage records maintained by MERS violates not only Pennsylvania real estate and financial law but also harms consumers and the public at large.
In the amicus brief, we argue that the MERS system violates longstanding Pennsylvania financial and real estate law, because it separates the monetary debt a homeowner owes to a mortgage owner and the property interests of a mortgage owner in a homeowner’s property. We believe that the MERS system results in a degradation of public land records that has damaged the public interest. Federal and state law requires servicers of mortgages to identify the owners of a mortgage upon the mortgagor’s request. Weargue that even if MERS allowed homeowners to review all of the information in its database, which it does not, still no complete picture of the ownership history of the mortgage would emerge because MERS records are incomplete and unreliable. The brief cites an example of a Chester County woman who was unable to sell their home because her mortgage had been assigned to MERS and the mortgage ownership records were unavailable.
The MERS system also reduces the revenue to the civil legal service organizations, who are in part funded by the fees associated with filing records with county recorders of deed. We argue that the MERS system was created to evade these fees, and has therefore harmed the public by reducing the funds available to civil legal service organizations throughout the Commonwealth.
We hope the Pennsylvania Supreme court will accept the appeal of county record offices, and we stand unwavering in support of the organizations affected by the actions of MERSCORP, Inc.