New York State commenced an Action in the Supreme Court, Kings County, against a number of lenders, Merscorp, Inc. and MERS, the Mortgage Electronic Registration Systems, Inc. The State alleges that the Defendants, by failing to record transfers of mortgages in the public records and in their handling of foreclosures, engaged in repeated fraudulent or illegal acts in violation of Executive Law Section 63 ("Department of Law; General Duties") and in deceptive acts and practices in violation of General Business Law Section 349 ("Deceptive acts and practices unlawful"). The Complaint asserts, among other things, that MERS often lacked standing to foreclose, representations that MERS held the promissory notes secured by the mortgages being foreclosed "were often false and deceptive," and the creation and use of MERS has "resulted in a myriad of fraudulent, deceptive and illegal acts and practices." The Complaint seeks declaratory and injunctive relief, monetary damages, and an Order "directing Defendants to take all actions necessary to cure any title defects and clear any improper liens resulting from the fraudulent and deceptive acts and practices alleged" in the Complaint.
It has since been reported on the Firedoglake and HousingWire websites that Bank of America, Citigroup, J.P. Morgan Chase, Wells Fargo and Ally Financial have settled certain of the claims in the lawsuit in exchange for their collectively paying $25,000,000 to the State of New York.