Williamson County is on the cusp of the unfolding drama of forged land records and potentially illegal foreclosures that could affect thousands of homeowners here and hundreds of thousands across the U.S.
County Commissioners on Tuesday heard the results of an audit of land records kept in the office of County Clerk Nancy Rister and will decide in coming weeks whether to join an existing lawsuit or perhaps file a new one.
Rister said audit results reveal alleged “robo” signed documents, illegal notarizations and fraudulent foreclosures as lenders and mortgage service companies worked to avoid county recording systems when filing property deeds and other land records.
Over the last several decades, Rister said, a rush to secure mortgages under the guise of mortgage-backed securities has led to sloppy practices in the processing of the legal paperwork at whatever cost, she said.
“These lenders and mortgage servicers have violated not only state law, but people’s property rights by recording alleged forged and fraudulent documents which now cloud the titles of millions of unsuspecting [homeowners].”
Much of the brewing legal storm revolves around electronic filing and records management, primarily what is known as the MERS System.
The MERS database is owned and operated by MERSCORP Holdings, Inc., which calls the system, “...a national electronic registry system that tracks the changes in servicing rights and beneficial ownership interests in mortgage loans that are registered on the registry.”
Originally created to streamline paperwork associated with mortgages when counties records were not available electronically, MERS was implemented nationwide, but is at odds with laws in many states, according to Pflugerville attorney David Rogers, who wrote the opinion letter for the county records audit.
“The laws of every state are different as to recording,” Rogers said. “According to state law, the MERS business model is illegal in Texas.”
MERS is involved in more than 70 million mortgages in the United States, he said.
In Williamson County, more than 50 percent of land records could be affected, according to David Kreiger, a legal analyst for Dallas attorney Wade Kricken, and much more than $1 million may have been lost in revenue.
Three of the five commissioners on the court could even be affected, Kreiger said, as he explained results of the $12,500 audit that was commissioned last October.
Signature variations on documents, as well as the testimony of some notaries, Kreiger said, point to notary fraud and forgery of documents that has led to illegal foreclosures and chain of title issues.
Dallas County has filed suit, Krieger said, and Texas joins other states in seeking a legal remedy to these fraudulent activities.
“The main thing is the public is really being hurt by this,” County Judge Dan Gattis said. Gattis suggested further review of audit results and said the court would consider pursuing litigation or could join one of the existing lawsuits.
“This is bigger than Williamson County,” Gattis said.