Southern Essex District Register of Deeds John O’Brien has moved approximately $25 million in Registry funds deposited at Bank of America to Medford-based Century Bank because of Bank of America’s membership in the Mortgage Electronic Registration System (MERS). The registry deposits are proceeds from mortgage recording fees.
The move is part of an ongoing campaign by O’Brien against MERS. MERS was founded in the mid-1990s by a consortium of large banks as well as Fannie Mae and Freddie Mac. The organization allows its members to have mortgages registered under MERS’ name, which are then transferred among MERS’ member institutions without re-recording the deed – and without paying additional Registry fees.
O’Brien contends the set-up allows banks to fraudulently bypass legal deed recording requirements, and that MERS has cost the commonwealth millions in lost recording fees – according to his estimate, as much as $22 million in Essex County alone. For several months, he has been lobbying the attorney general’s office to investigate this issue.
The latest volley in the ongoing battle was inspired in part by an April 2 “60 Minutes” expose, the “Mortgage Paperwork Mess,” covering the participation of big banks like Bank of America in robo-signing and other fraudulent practices.
“Perhaps when these lenders lose millions of dollars in deposits, they may begin to understand the seriousness of their actions,” O’Brien said in a statement. “It seems to me that their business model, which has been referred to as ‘fees for thee, not for me,’ needs to be abolished.”
“Mr. O’Brien’s premise is unfounded,” said Janis Smith, vice president of corporate communications for MERS. MERS, she said, “complements the county land records by providing information about mortgage loan servicing,” and “is in compliance with the purpose and intent of the state recording acts.”
Moving the funds required permission from the State Treasurer’s office, since it oversees funds generated by state agencies. The Treasury maintains a form on its website which allows any interested party to change their depositing bank, said Jon Carlisle, a spokesman for Treasurer Steve Grossman.
Fewer than 100 Massachusetts banks are among MERS’ 5,700 members, but among them are some of the state’s largest, including Boston Private Bank & Trust Co., Cambridge Savings Bank, Danversbank and Eastern Bank.
Kevin Harvey, first assistant register for South Essex, said that the Register had selected Century Bank to receive the funds after receiving assurances from the bank’s president and CEO, Barry Sloane, that Century was not involved with MERS.
“We’re grateful. There’s a process, and we’re happy to be part of that process,” said Sloane. Century Bank has never been a MERS member, he said, because they’ve always kept the mortgage they originated on their own books.
“We have never done a transaction with [MERS],” said Sloane, “we’ve always held our mortgage loans in our own portfolio. We think that’s in the best interest of our customers.”
