Southern Essex District Register of Deeds John O’Brien has petitioned Massachusetts Treasurer Steve Grossman to have Registry funds deposited at Bank of America moved to another bank because of Bank of America’s membership in the Mortgage Electronic Registration System (MERS). The registry deposits approximately $25 million into Bank of America as proceeds from recording fees.
The move is part of an ongoing campaign by the Register against MERS. MERS was founded in the mid-1990s by a consortium of large banks as well as Fannie Mae and Freddie Mac. The organization allows its members to have mortgages registered under MERS’ name, which are then transferred among MERS’ member institutions without re-recording the deed and without paying additional Registry fees.
O’Brien contends the set-up allows banks to fraudulently bypass legal deed recording requirements, and that MERS has cost the commonwealth millions in lost recording fees – according to his estimate, as much as $22 million in Essex County alone. For several months, he has been campaigning the attorney general’s office to investigate this issue.
The latest volley in the ongoing battle was inspired in part by an April 2 "60 Minutes" expose, the "Mortgage Paperwork Mess," covering the participation of big banks like Bank of America in robo-signing and other fraudulent practices.
"Perhaps when these lenders lose millions of dollars in deposits, they may begin to understand the seriousness of their actions. It seems to me that their business model which has been referred to as ‘fees for thee, not for me’ needs to be abolished," said O’Brien in a statement.
"Mr. O’Brien’s premise is unfounded," said Janis Smith, vice president of corporate communications for MERS. MERS "complements the county land records by providing information about mortgage loan servicing," and "is in compliance with the purpose and intent of the state recording acts."
Kevin Harvey, first assistant register for South Essex, said it is up to the treasurer to decide which bank the funds ought to be transferred. Fewer than 100 Massachusetts banks are among MERS’ 5,700 members, but among them are some of the state’s largest, including Boston Private Bank & Trust Co., Cambridge Savings Bank, Danversbank and Eastern Bank.
"If you take a look at the treasurer’s Move Money program, which he launched in February, he’s shifting the state cash deposits under his control to small regional and local banks which are willing to increase their small business loans. All we’re saying is, do the exact same thing. Have us be part of that same system, where we do not reward people affiliated with MERS to profit from the same people they’re abusing," said Harvey.
A spokesman for Grossman said the treasurer’s office has been in contact with O’Brien.
"We contacted Register O’Brien’s office [Tuesday] to let them know that there’s document on our website which allows any interested party to change their depositing bank," said Jon Carlisle, spokesman for Treasurer Grossman.
