Bank of America, MERS Ask Court to Dismiss Texas Counties’ Mortgage Suit

Mortgage Electronic Registration Systems Inc. and Bank of America Corp. asked a court to dismiss a lawsuit brought by Texas counties accusing MERS of filing false claims in property records.

The counties allege Merscorp Inc.’s MERS was established by lenders including Bank of America to avoid paying filing fees as well as to ease mortgage transfers. The Texas Legislature approved of MERS’s appearance as a mortgagee in filings in county land records, the defendants said in a filing March 9 in federal court in Dallas.

No false, fraudulent or otherwise wrongful activity occurred by filing security instruments naming MERS as beneficiary or mortgagee,” MERS and the bank said in their motion to dismiss. “There is no duty to record assignments, or other documents, since Texas’s property recording system is permissive not mandatory.”

MERS tracks servicing rights and ownership interests in mortgage loans on its registry, allowing banks to buy and sell loans without recording transfers with counties. Dallas County claimed that this system has cost it as much as $100 million in unpaid fees. The county initially sued in September, alleging that MERS cheated it out of uncollected filing fees.

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