Billion-Dollar Mortgage Lawsuit Cites Peterson Research

Since the current economic downturn began, in 2008, University of Utah S.J. Quinney College of Law Professor Christopher Peterson has become known as one of the nation’s most widely cited authorities on mortgage lending. On September 20, Peterson’s reputation received an additional boost when Dallas County, Texas sued MERSCORP for tens of millions in unpaid recording fees, plus billions in statutory penalties. In its complaint, the County extensively quotes an article Peterson published in the William and Mary Law Review.

“This is a big new front,” Peterson told the Bloomberg News. “This case is scary because if Dallas wins then there are a lot of other counties around the country that are going to follow.”

According to the Bloomberg News article, “MERS, operating since 1997, has registered more than half of all U.S. home mortgages. The company came under scrutiny last year after attorneys general in all 50 states began investigating claims that banks and loan servicers used faulty documentation in foreclosures.” In February, the company said it will propose a rule change to stop members from foreclosing in its name.

A Public Citizen blog further stresses the case’s importance, predicting that, “this lawsuit has the potential to effectively reassert the traditional mortgage and deed of trust theory that MERS effectively ignored. This case, and others like it, are likely to determine whether elected county recorders will remain a relevant in coming generations. The courts adjudicating these cases are going to be forced to confront whether property records will be maintained in transparent legally authoritative public systems maintained by democratically elected local officials or in a secret database maintained by a profit oriented corporation that is owned by banks.”