DFW Paralegal Service
Call (800) 758-4882 | Fax: (800) 758-4882
DA wants millions in Mortgage Fees

Clearinghouse denies it improperly avoided paying transfer levies

By Jennifer Emily, Staff Writer, Dallas Morning News, August 9, 2011

Dallas County District Attorney Craig Watkins said Monday evening that he is exploring possible legal action against the Mortgage Electronic Registration System for tens of millions in fees not paid to the county for more than a decade.

Watkins said that MERS -- founded by Fannie Mae, Freddie Mac and several large U.S. banks in 1995 -- acted as a clearing house for the buying and selling of mortgages by lenders and sidestepped the county by not recording transfers by those lenders when the mortgages changed hands.

"These banks and corporations have gotten around paying the necessary fees that goes directly to how counties operate," Watkins said in an interview. "This is not 100 percent. This is going to be a fight. We're going up against Wall Street.

"It looks like this is going to be a fight worth going after."

The DA's office is scheduled to brief county commissioners Tuesday about how the county is not being paid the fees. Watkins said he hopes that in coming weeks, commissioners will approve exploring legal action against MERS.

But a vice president for MERS' owner, MERSCORP, said appropriate fees are already paid to the county when MERS records and reports a mortgage transfer. Janis Smith said that when "servicing changes from one lender to the other, there is no servicing recorded" because MERS retains the mortgage and only the lender has changed. "It's not required by law," Smith said. Smith said the MERS remains the holder of the mortgage when it is transferred from "one MERS member to another."

When MERS transfer the mortgage to a non-MERS member, she said, the transaction is recorded with the county and fees are paid.

Smith said MERS' business model is legal in every state.

"This is a nonissue -- counties aren't entitled to fees for work they didn't do or that the law didn't even require them to do," Smith said. "MERS has been recording and tracking mortgages since the late 1990s, but these arguments weren't raised until recently."

Watkins said that all mortgage transactions should be recorded and that any related fees should be paid according to state law. Watkins said recording every mortgage transaction -- even within MERS -- is the only way to prove who has ownership of a property.

Experts in real estate law say there is no requirement for companies to record a transaction with the county when a mortgage is sold.

Patrick A. Randolph, a real estate law specialist, said that if MERS had been required to record the mortgage every time it changed hands, the clearinghouse wouldn't have worked. The mortgages changed hands too fast to constantly update the counties about changes.

Randolph said that had recording been required within MERS when changing lenders, mortgages could not change owners so many times because the process would be too expensive.

"If recording was required, they couldn't have done it at the speed they were," said Randolph, a law professor at the University of Missouri-Kansas City School of Law. "Some might argue that would have been a good thing."

Several states have announced inquiries into MERS' foreclosure practices, but Watkins did not suggest that his office is looking at those. "But it relates," he said.

The DA's office estimates that MERS "attempted to track" more the 60 million mortgages in the country, and 250,000 in Dallas County, since it began operation.

The Dallas County clerk lists real estate fees from $26 to $41. There are smaller additional fees associated with the filings.

Typically, mortgages change hands multiple times and those changes are typically recorded with the county, real estate law expert said. But MERS changed the way business was done by creating a clearinghouse to efficiently speed up the exchange of mortgages among lenders who are MERS members.

Watkins said that if Dallas County were successful in recouping money, other jurisdictions would probably follow with their own efforts to seek compensation.

Call DFW Paralegal Service Now at (800) 758-4882
with Your Paralegal Service Needs
Disclaimer: DFW Paralegal Service is not an attorney or law firm and does not provide legal advice. Nothing in this information is intended nor should it be considered legal advice. Each legal matter is unique and specific; as such DFW Paralegal Service encourages every individual and business to seek guidance from legal counsel concerning their specific legal matter. DFW Paralegal Service provides paralegal services only. "We are not attorneys licensed to practice law in Texas and may not give legal advice or accept fees for legal advice."

The information contained in this website is provided as a service to the community, and does not constitute legal advice. We try to provide quality information, but we make no claims, promises or guarantees about the accuracy, completeness, or adequacy of the information contained in or linked to this website and its associated sites and we make no claim that any of the information, articles, free forms, i.e. complimentary forms contained in this website are appropriate for your particular needs. As legal advice must be tailored to the specific circumstances of each case, and laws are constantly changing, nothing provided herein should be used as a substitute for the advice of competent counsel.

By using content and information from this website you agree to the following:
(1) You agree you will not rely on any information contained in this website without personally consulting an attorney. (2) You agree that the information, articles, handbook, free forms i.e. complimentary forms contained in this website may not be appropriate for your particular needs and are offered for informational purposes only. (3) You agree that any viewing and/or use of the information, articles, handbook, free forms, i.e. complimentary forms contained in this website by you is used at your own risk. (4) You agree that DFW Paralegal Service does not guarantee or warranty any of the information, articles, handbooks, free forms i.e. complimentary forms contained in this website. (5) You agree to indemnify and hold DFW Paralegal Service, its affiliates, agents, employees, officers, directors, notaries, harmless from any claim, litigation, damages and defense related to any viewing and/or use of the content and information of this website including but not limited to the viewing and/or use of the information, articles, handbook, free forms i.e. complimentary forms. (6) No attorney/client relationship is created between you and DFW Paralegal Service by your viewing and/or use of any information, articles, handbooks or free forms contained in this website. (7) DFW Paralegal Service is not an attorney licensed to practice law in Texas and may not give legal advice or accept fees for legal advice. (8) If for any reason you do not agree to all the terms and conditions contained herein, you should leave this website immediately, do not download, copy, view or use any content, information, articles, handbooks and free forms contained within this website.

"Serving Clients Across the United States"
"Se Habla Espanol"  -  Sirviendo clientes en los Estados Unidos

Copyright 2004 - 2014 DFW Paralegal Service - All rights reserved.
No part of this website may be reprinted or reproduced in whole or in part without permission
from DFW Paralegal Service
Executive Offices: Fort Worth, Texas

(800) 758-4882 / Fax: (800) 758-4882 - info@dfwparalegalservice.com