New York Foreclosure Lawsuit Filed by NY Attorney General

February 25, 2012

The state's attorney general has announced that he will sue several of the country's largest banks, claiming that they lied to court officials and homeowners in filing New York foreclosure documents that were either fraudulent or flawed when using an electronic mortgage database registry.

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The lawsuit, filed in the state's supreme court in Brooklyn, names J.P. Morgan Chase, Wells Fargo and Bank of America. Also named is the Mortgage Electronic Registration System, known as MERS, and the parent company, MERSCORP.

Our New York City foreclosure defense attorneys know that the economic meltdown was spurred by some banks that carried on irresponsible practices, leaving millions of Americans underwater on their homes and deeply in debt.

Unfortunately, despite certain government regulations meant to address those issues, banks have continue to conduct shady business. This step by Eric Schneiderman, the state's attorney general, will hopefully bring us one step closer to national economic stability.

MERS is essentially a database that is used to track millions of loans across the country. Almost all banks use MERS to transfer mortgages and keep track of them. But when the housing market crashed, some banks were reportedly using the electronic system to speed up the foreclosure process and essentially bypass the courts.

According to The Washington Post, officials both locally and across the state say that MERS is a company created to circumvent state and national property laws. Schneiderman's lawsuit alleges that when the mortgages went south, the banks flooded MERS with foreclosures that they were not legally cleared through the courts. This has meant that some people had their homes pulled out from under them by an institution that had no right to do so.

In moving forward, the attorney general also alleges that the electronic database is filled with misrepresentations, inaccuracies and countless documents that have been "robosigned," or in other words rubber stamped on a virtual assembly line of foreclosures that weren't appropriately analyzed on a case-by-case basis. This made it tough for anyone - including the courts - to figure out who, if anyone, actually had the right to foreclose on a property.

The lawsuit is after damages for homeowners who were caught in the middle. It also seeks to force the database and the banks to go back and fix some of the ongoing documentation issues.

Banks that were named in the suit didn't want to issue a comment on the matter, though MERS operators did respond that they stand by their practices, which they contend are in compliance with both federal and local laws.

All of this proceeded a recent $25 billion deal signed off on by 49 states' attorneys general - including Schneiderman - to have the banks pay restitution for their contribution to the housing crisis. That deal, while heralded by a number of government officials, would only break down to about $2,000 a piece for those people whose homes were illegally seized due to improper bank practices. Some critics, however, have asserted that amount isn't likely to cover moving expenses, let alone offer much recompense for pain and suffering.

The Law Offices of Ira S. Newman can help with a foreclosure or mortgage in New York City, Long Island, Great Neck and throughout the area. Call 516-487-7375 or contact us through the website.

Additional Resources:
New York sues Reston firm over foreclosure documents, By Brady Dennis, The Washington Post

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