“Now serving the next customer in line to sue Bank of America.” While not exactly what you expect to hear from the teller at your local Bank of America (BofA) branch, Bloomberg yesterday warned that the besieged bank is among a group of lenders that may face a new slew of lawsuits.
According to the report, mortgage providers may face a glut of litigation alleging the Mortgage Electronic Registration Systems Inc. (MERS) mortgage registration system they’ve used for more than a decade bilked broke counties out of millions.
The MERS system was developed by the mortgage industry to simplify the mortgage process by using electronic commerce, thereby eliminating paper. It also seeks to register every mortgage in the nation on its system, and acts as nominee in the county land records for the lender and servicer.
Bloomberg wrote that Dallas County District Attorney Craig Watkins said that state attorneys general and county officials across the U.S. have reached out to him regarding his lawsuit against MERS and BofA (Dallas County v. Merscorp Inc., CC-11- 06571-E), filed in Texas state court on Sept. 21. Watkins told Bloomberg that Dallas County could be owed as much as $100 million in filing fees.
“This is a big new front,” Christopher Peterson, associate dean and professor at the University of Utah S.J. Quinney College of Law, told Bloomberg. “This case is scary because if Dallas wins then there are a lot of other counties around the country that are going to follow.”
MERS told Bloomberg that the lawsuit’s claims were “without legal of factual merit.” While BofA declined to comment in the story, Peterson told Bloomberg that its liability in the case could exceed $1 billion.
For more, read the full Bloomberg story.