States long imposed fees to record documents in land records.
The Mortgage Electronic Registration Systems loan registry system, created in the mid-1990s, meant lenders no longer needed to record security interest assignments in county land records each time they transferred a promissory note.
As a result, many counties sued MERS to force MERS members to record future security interest assignments and recover fees they claimed were “lost” because MERS members stopped recording assignments. MERS won the large majority of these cases.
[Note: Read HousingWire’s extensive chronicle of MERS proceedings, 600+ pieces of content, by clicking here.]
Connecticut tried a different tack to recover these alleged “lost” fees: it amended the state’s land records statute to impose higher fees on mortgages for loans registered with MERS. MERS filed suit to challenge the constitutionality of the statue, but in a February 2016 decision captioned MERSCORP Holdings, Inc. v. Malloy, the Connecticut Supreme Court upheld the trial court’s ruling and the validity of the higher fees.
[This blog discusses the decision and its possible impact in other states. The opinions are the author’s alone.]