One of the issues that has recently attracted attention (and litigation) in the wake of the global financial crisis is the use of the MERS recording system used by certain banks in connection with the securitization of mortgages. The MERS system has been attacked by some as a way of avoiding recording fees, and in a case that was just appealed to the Sixth Circuit, county recorders have sought to reclaim those funds, Christian County Clerk v Mortgage Electronic Registration Systems, Inc. In this case, various county clerks in Kentucky filed a putative class action seeking recovery against MERS and a series of bank defendants related to the alleged lost recovery of the recording fees. The district court made short work of the case, dismissing it because the relevant statutes under which the clerks sued did not provide a right of action for the clerks. Despite a number of creative arguments advanced by the clerks, the court ultimately rejected each of these and concluded that the statute was not drafted for their benefit. The clerks have now set their sights on the Sixth Circuit, which has recently been confronting a number of mortgage foreclosure cases. We will continue to monitor the progress of this case as it works its way through the system.
