GEORGETOWN — Imagine paying off your home in full and then finding out your property is in foreclosure, maybe even years after making that final payment. This is just one nightmare scenario homeowners face in light of the mortgage servicing scandal that resulted in a $25-billion settlement last year.
Most of the controversy surrounds use of the Mortgage Electronic Registration Systems, Inc., known as “MERS,” an electronic database set up by major banks to facilitate transfers of residential mortgage-backed securities outside the purview of county land records.
MERSCORP Holdings, Inc. owns MERS, which has no employees of its own. Instead, mortgage lenders and mortgage servicers sign MERS documents as officers of MERS although they are not, in fact, officers or employees of MERS.
The MERS national database was created at a time when many county clerks’ records were not available and/or accessible electronically, but the lack of a paper trail has compromised the integrity of public records and has led to questions of title and ownership as well as fraudulent foreclosures, according to Austin attorney David Rogers, who completed an audit last fall commissioned by Williamson County Clerk Nancy Rister.
Audit results confirm “robo” signed documents, illegal notarizations and fraudulent foreclosure documents in Williamson County’s archive of public records.
“MERS is something that should have been beta tested,” Rogers said in Commissioners Court earlier this month. “It was released to the general public before all the wrinkles were ironed out.”
A centralized national database, MERS did not take into account the laws of every state as to what must be recorded, he said, calling it illegal according to Texas local government code.
“What MERS does is transfer ownership of your notes and your deed of trust left, right and center, but they don’t report it in the county deed records. Local government code says they must,” Rogers said.
What this means is a homeowner’s note may be transferred from Bank A to Bank B to Bank C, and down the line, without the official record ever reflecting the change. In some cases, homeowners may not even be aware they are paying their mortgage to the wrong entity, Rister said.
Some homeowner relief came in the form of a 2012 settlement between the state attorneys general and the five leading bank mortgage servicers — Ally Financial, Inc., Bank of America Corp., Citigroup, Inc., J.P. Morgan Chase Co. and Wells Fargo Co.
The consent settlement resulted in monetary sanctions, some homeowner relief and changes to the servicing standards and represents the largest financial recovery obtained by the attorneys general since the tobacco settlement.
Remedies include loan modifications, payments to victims of unfair foreclosure practices and state-level foreclosure prevention programs, according to the Texas Attorney General.
Nearly a year after that settlement was granted, however, homeowners in Williamson County and across the county still may not even be aware of the negative effects on them personally.
Homeowners can protect themselves by ensuring public records in their name — such as the title, deed and note — are accurate, documenting all mortgage payments and obtaining legal counsel as necessary to clear up document issues, Rister said.
“What we’re specifically are trying to tell people is to not stop paying your mortgage,” she said. “Make sure you have a paper trail that you’ve made all your payments because, at some point, you may have to prove it,” Rister said.
Homeowners may start with an online search at www.wilco.org/CountyDepartments/CountyClerk for their public records related to their mortgage. From there, a homeowner may download and print documents or order certified copies.
It is essential that homeowners take up the charge of protecting themselves, she said.
“By law there’s nothing we can do,” Rister said. “We’re not the document police that go out and force them filing the proper documentation. That’s not what the law tells us to do. That’s why I’m trying to tell the homeowners.”
Rister said fraudulent documents are being filed in her office, and every county in the state and across the county, that are allowing lenders to illegally foreclose on properties, and owners will sometimes just walk away.
“…They don’t really fight for that house that they’ve invested so much money in and blood, sweat and tears, and the paperwork is fraudulent to begin with,” she said. “They should never have lost their home.”
Earlier this month, Rister’s office rolled out a new online fraud protection tool for county homeowners, which offers a link to the software that allows a person to register all iterations of their name to send an alert if paperwork is filed with the clerk’s office.
“It’s a method to make you more aware of what’s happening in your name,” Rister said.
Property Fraud Alert is an electronic notification service that alerts a subscriber via email or telephone every time a land records document is recorded with a requested name in a participating County Land Records Office. The subscriber must select a method of notification either by providing an email address or a phone number.
The Property Fraud Alert Service is offered, based on customer specifications at either no charge or a charge of a small fee.
For more information call the Williamson County Clerks office at (512) 943-1515.
More information on the multi-state settlement may be found at NationalForeclosureSettlement.com and on the website of the Texas Attorney General.
Consumers who believe they may be eligible for relief offered by the settlement should contact their respective mortgage servicer at the following telephone numbers:
•Ally Financial Inc. (800) 766-4622
•Bank of America (877) 488-7814
•Citigroup (866) 272-4749
•JPMorgan Chase Co. (866) 372-6901
•Wells Fargo Co. (800) 288-3212