A county recorder out of Pennsylvania will be able to pursue her county recording fee case against the Mortgage Electronic Registration Systems, the U.S. District Court for the Eastern District of Pennsylvania ruled this week.
The judge allowed a class-action suit filed on behalf of Pennsylvania county recorders to move forward on the grounds that state law requires the recording of all property conveyances and the legislature intends for plaintiffs to possess the right to try and enforce the statute.
“In addition to claiming that MERS’s failure to record assignments violated the recording statute, the plaintiff also asserted claims for civil conspiracy, unjust enrichment, and declaratory and injunctive relief,” added a client note from law firm Ballard Spahr.
The decision handed down by the U.S. District Court for the Eastern District of Pennsylvania is similar to other county recording fee cases filed in multiple states.
The court for the most part upheld the plaintiffs right to pursue MERS in court for making electronic property assignments without paying local county recording fees.
The U.S. District judge is allowing the plaintiff, Montgomery County, to sue for quiet title and unjust enrichment, but threw out the civil conspiracy claim.
A spokesperson for MERS said: “We will continue to defend this suit. We believe that we will prove that the MERS business model does comply with Pennsylvania law.”
Nancy Becker, the recorder of the deeds in Montgomery County, filed the lawsuit last November, claiming MERS helped financial firms and parties involved in mortgage securitization avoid payment on multiple mortgage assignments. Becker argued that “the avoidance of recording fees both deprives her office and Montgomery County of revenue needed to support vital public functions,” the U.S. District Court wrote in its opinion.
Ballard Spahr said if Becker prevails, she will be able to “collect the recording fees on any past, present, and future mortgage assignments MERS would be compelled to record.”
In other jurisdictions, recording fee cases against MERS have been dismissed, but the cases clearly hinge on the court’s interpretations of state statute. A U.S. district court in Arkansas recently said state law does not require mortgage assignments to be recorded.
A U.S. District Court in Texas held that homeowners facing foreclosure have no standing to sue MERS for not recording mortgage assignments since they, themselves, are not the injured party.
kpanchuk@housingwire.com
