Following on the heels of a similar lawsuit by Dallas County Texas, late last week, Geauga County Ohio filed a class action lawsuit against MERSCORP and a number of financial institutions. The suit suggests that MERS and its members wrongfully avoided recording mortgage assignments and as a consequence, they have adversely affected the accuracy of Ohio’s land records and deprived Ohio counties of recording fees. Among other remedies, the suit seeks declaratory relief that would effectively end the practice of using MERS to freeze mortgages.
The action was filed by the Geauga County Prosecuting Attorney on behalf of all eighty-eight Ohio counties.
The lawsuit claims that Ohio’s recording statutes require mortgage assignments to be “recorded in proper county recording offices” and “County recorders are required to collect nominal fees” for the service. The County further contends that, by failing to record intervening assignments, MERS and its members have “violated … Ohio’s statutory recording requirements,” they have “systematically broke[n] chains of land title throughout Ohio,” and as a consequence, they have “eviscerated the accuracy of Ohio counties’ public land records.”
In the suit, the County has requested a number of remedies, including a declaration that MERS’ business model and practices violate Ohio law. Additionally, the County has asked the trial court to order MERS and its members “to correct their failure to record each and every prior and future … mortgage assignment” and have them “pay attendant recording fees.”
As with any lawsuit of this nature and magnitude, we can expect that any examination of the merits will be preceded by lengthy and robust litigation of a number of procedural and jurisdictional issues. During this phase, we should learn more about the factual and legal basis of the County’s case. Be that as it may, at this point, there is little doubt that this lawsuit amounts to a direct challenge of the MERS model.