Legal Problems of Wells, Chase and Bank of America Mount as New York Sues
Eriic Schneiderman, the New York Attorney General, filed a lawsuit on Friday against the Big Three of the banking industry, namely, Bank of America, J.P. Morgan Chase and Wells Fargo, over the use of an electronic mortgage database, which played a major role in financing the historic housing bubble of the nation.
The New York Attorney General, who got additional clout last month when he was named by President Obama as co-chairman of a federal mortgage-crisis unit, sued Wells Fargo, Bank of America and J.P. Morgan Chase, in the New York State Supreme Court.
A media outfit revealed Friday that the suit alleges that the database, called the Mortgage Electronic Registration System (MERS), resulted in misleading and unlawful practices, which including bogus documents that were used in foreclosure proceedings.
Schneiderman, said, “The mortgage industry created MERS to allow financial institutions to evade county recording fees, avoid the need to publicly record mortgage transfers and facilitate the rapid sale and securitization of mortgages en masse. By creating this bizarre and complex end-around of the traditional public recording system,” the banks saved themselves $2 billion in recording fees.”
The latest lawsuit comes while the banking industry is in the process of seeking to achieve a national foreclosure settlement, which now appears to be looking increasingly unlikely.