A few counties have filed litigation against various securitization players (originators, servicers, MERS) for the underpayment of recording fees. Similarly, New York attorney general Eric Schneiderman filed a wide ranging suit against MERS and three banks that used it and settled it for $25 million (it included a mention of $2 billion in unpaid recording fees but we were skeptical of viability of his argument).
However, counties in Michigan have scored an important victory. Michigan law imposes a transfer tax on deeds recorded at the county office. Fannie and Freddie refused to pay that, claiming that they were part of the Federal government and hence exempt. That argument was clearly ridiculous and a Federal judge ruled against the GSEs.
This is going to be a boon for cash-starved Michigan counties and the state. The statue of limitations is six years, and the county treasurer estimates the damages will be $3 to $4 million to the county and between $10 and $20 million to the state. The treasurer has asked the state to allow him to keep the state’s portion of they money in his county to fight foreclosures. Good luck with that.
Other counties in Michigan have related actions underway, and I’d expect any one that does not have a case in progress to file an action modeled on the Oakland case. From the Detroit News:
Meanwhile, Ingham County filed a similar lawsuit and Genesee County is heading up a class-action suit. Macomb County is the first in the state to deny the lenders the exemption. Clerk/Register of Deeds Carmella Sabaugh and Treasurer Ted Wahby have partnered on that approach, which was implemented with the guidance of county attorneys.
Interest in local action to bring the big banks to heel seems to be heating up. Rachel Maddow discussed the efforts of local registers of deeds to straighten out the mess created by cavalier bank attitudes towards land records and other legal niceties. Her segment focus on Guiford County and includes an interview with register of deeds Jeff Thigpen, one of the first to audit his files and prove the existence of widespread errors Thigpen has filed suit against MERS and major banks to recover $1.3 million in unpaid recording fees.
Let’s hope these local actions start getting some momentum. With the Federal/state fix underway, it’s the last hope for throwing sand in the gears of the securitization doomsday machine.