Counties Coming After Recording Fees

Ritholtz:

In all of the market mayhem of last week, this article may have slipped by unnoticed: Merscorp, Bank of America Sued by Dallas District Attorney.
We’ve discussed Mortgage Electronic Registration Systems (aka MERS) repeatedly over the years, including its quasi-legal standing and how it illegally failed to pay lawful recording fees to states and counties. (Back in March ’11, we discussed that County & State Litigation vs MERS was coming soon).
The Dallas DA action may be the largest major City/County litigation versus MERS. This may break open the flood gates for other such suits by counties and states around the country.
The politics of this are quite fascinating: The bankers may own the corrupt US Congress, and they may have intimidated or bought off many of the more cowardly State Attorneys General, but there simply are too many counties and District Attorneys representing local interests throughout the country to all be bought off. Buying/intimidating/controlling all of the local country District Attorneys may be like herding cats — nearly impossible.
I am going to stand by my original prediction: The early litigants may get something, but the latter lawsuits will likely result in bankrupting MERS.

This is going to be really intriguing.  The banks managed to avoid recording fees by creating MERS, but they were in such a hurry to shovel the shitty mortgages out the door that they didn't properly keep traceable records within MERS.  Now they can't show clear title to properties, and they are being sued by a county who wants its recording fees.  Back in the 2001-2003 recession, counties were jacking up their recording fees to make up for tax revenue losses, just as the housing bubble and refinancing booms were kicking off.  As Barry notes, the first couple counties will win, then MERS will file bankrupcy.  I think in the end, either the counties or the investors in MBS securities will sue the banks into bankruptcy.  I think enough evidence will end up leaking out via whistleblowers that the banks will be charged with fraud.  The big 4 banks were so deep into this mortgage mess that they definitely did some really crooked stuff, and somebody who didn't want to be labelled a "rogue" loan agent or something, will have kept documentation for personal protection.  The walls will eventually fall down, the question is, will it be in the courts or in the coming double dip?