Saturday, April 28, 2012

Pike County Included In Lawsuit

Ashland, Kentucky}...Fourteen counties, including Floyd, Johnson, Letcher, Magoffin and Pike contend in a federal lawsuit that Mortgage Electronic Registration System, a mortgage-recording service and financial institution, has schemed to avoid paying Kentucky counties millions of dollars in fees. The lawsuit, which lists two dozen defendants, including the U.S. government-sponsored lenders Freddie Mac and Fannie Mae, was filed April 19th in federal court in Ashland by House Speaker Greg Stumbo and Lexington attorney Sandra Spurgeon. The lawsuit says that, in addition to depriving the counties of money, the conspiracy has shortchanged a fund used to make grants and loans for low-income housing. The lawsuit says that under state law, when one company transfers or sells a mortgage to another, the company receiving the interest has to pay a recording fee at the county clerk's office, and the act of bundling mortgages and selling them as securities, which became common in the 1990s, results in several such transfers, or assignments. The lawsuit alleges shareholders set up the MERS system in the 1990s to avoid paying the required fees to record such assignments among financial institutions, and, while those transactions are recorded in the private MERS system, they were not recorded with county clerks as required by state law, saving its members $77 to $200 million annually nationwide.

The counties involved in the lawsuit are Boyd, Breathitt, Carter, Christian, Clark, Floyd, Franklin, Greenup, Johnson, Letcher, Magoffin, Mason, Pike and Warren.