Jessamine County is mulling over signing onto a possible class-action lawsuit against the organization known as Mortgage Electronic Registration Systems, Inc. (MERS), which could possible recoup thousands of dollars of fees owed.
The county was approached by attorney Sandra Spurgeon of Spurgeon & Tinker, PSC, which, along with The Bolog firm, currently represents 14 counties in Kentucky that are suing MERS, including Boyd, Franklin, Pike and several other counties.
The basis of the litigation is an effort to seek compensation for lost mortgage assignment fees allegedly withheld because of the actions of MERS over the past several years.
MERS is a private third party that buys and sell mortgages between banks.
According to the lawsuit, MERS would buy and sell the same mortgage between as many as three banks. Every time a mortgage is bought or sold, there is an assignment fee owed to county clerk’s office where the mortgage originated.
The cost of the required assignment fee per mortgage transaction is $12 per three-or-more pages, which may not be a lot, but with hundreds or thousands of mortgage transactions, per year, it can add up.
Buying and selling mortgages through several banks is a common practice and not illegal — it’s the unpaid assignment fees to the counties for those transactions that the lawsuit stipulates damaged Kentucky counties.
The lawsuit also alleges that it was these business practices by MERS was a major cause for the economic and housing crash in later part of the past decade.
County Attorney Brian Goettl said that he plans to make a recommendation to join the lawsuit to the Jessamine County Fiscal Court during its next regular meeting Tuesday.
Goettl said the plaintiffs wish to turn the lawsuit into a class action that encompasses all 120 Kentucky counties.
An estimate of what Jessamine County could recoup in the lawsuit if it is successful is difficult to calculate at this time, Goettl said.
The suit seeks a total of $5 million, 25 percent of which would be retained by the litigating firms.
Jessamine County has “nothing to lose” by joining the lawsuit since there will be no cost and they will not be required pursue the litigation itself, Goettl said.
The only other requirement is that county clerk Eva McDaniel’s office make its records available to the litigating firms and waive the department’s usual printing fees.
McDaniel said she is more than happy to waive the cost and go after MERS since it is technically her office that lost the most by not getting the mortgage assignment fees.
Currently the lawsuit is pending in the Eastern District of Kentucky, as more and more counties are expected to join.
Kentucky is not the only state to sue MERS. Michigan, Florida, California and Texas have also sued in an effort to recoup losses from MERS mortgage buying and selling business practices.