The head of a county land registry in Massachusetts is requesting his office close its deposit account with Bank of America in protest of the bank's affiliation MERSCorp Inc., which runs the Mortgage Electronic Registry System.
John O'Brien Jr., register of deeds for the Southern Essex District Registry of Deeds in northeastern Massachusetts, publicly requested state Treasurer Steven Grossman remove his department's funds out of Bank of America accounts and deposit them in a "local, non-MERS bank that follows the Massachusetts Land recordation rules."
The Southern Essex District Registry claims it is owed $22 million in lost revenue from mortgage assignment transfers that were not recorded because MERS was listed as the mortgagee in public land records. By not using B of A for its depository business, the registry hopes to impact the bank's nonmortgage business to force a change in business practices, Kevin Harvey, the first assistant register for the office, told National Mortgage News.
"We believe and we feel very strongly about this, that in Massachusetts, the law is very specific: If you sell a property, if you sell a mortgage note to another entity, you're required to file an assignment," Harvey said. "We believe very strongly that MERS has violated that and the banks, the shareholders of MERS, have violated that."
Harvey said the registry's account typically holds approximately $25 million, but has been as high as $40-$45 million.
The MERS System tracks changes in promissory note ownership, allowing mortgage investors to bypass the county-level land recordation process. While possession of the note may changes hands, MERS remains the listed as the holder of the mortgage document that serves as proof of the borrower's home as collateral in the public record.
MERS proponents claim this process saves time and alleviates workload for county land recording offices burdened by a paper-intensive process. Critics claim the process lets mortgage investors avoid paying fees when promissory notes and mortgages change hands.
"We look forward to discussing the issue with Mr. O'Brien and explaining to him Bank of America's process for recording mortgages and the use of MERS," a spokesperson for Bank of America said in an e-mail to National Mortgage News.
"Mr. O'Brien's premise is unfounded," said Janis Smith, MERS vice president of corporate communications, in a prepared statement. "As we have said before, all MERS mortgages are recorded in the public land records, and MERS members pay recording fees when the mortgage is recorded."
