Deschutes County’s coffers may have been cheated of mortgage filing fees in recent years, but suing to collect them could be counterproductive.
That’s because the collection effort could slow recovery of the housing industry. The region — including government bank accounts — has more to gain from a healthy real estate market than from a lawsuit about filing fees.
The complaint is that Mortgage Electronic Registration Systems, known as MERS, has transferred ownership of millions of home loans without filing them with county governments and paying relevant fees.
An appellate court ruling has largely stalled foreclosures in Oregon because of the MERS filing issue, preventing the marketplace from clearing that inventory so the housing industry can recover.
Additional legal action relating to the possible uncollected fees could further delay resolution of the MERS issue, slowing economic improvement.
Deschutes County commissioners and legal counsel considered the problem of unpaid fees Wednesday, discussing the possibility of joining a planned Multnomah County suit or filing one of its own. Multnomah has authorized but not yet filed its suit, which alleges that county lost $3 million to $24 million in unpaid recording fees. Lane County is also concerned about lost fee income.
Deschutes doesn’t yet know if or how much it has lost, so action is at least six months away, according to Commissioner Tony DeBone. Deschutes collects a $48 fee, plus $5 per additional page on every mortgage document filed. Commissioner Tammy Baney said Deschutes may have lost money, with MERS listed as the beneficiary on thousands of county homes between 2002 and 2007.
The Oregon Court of Appeals ruling related to the legality of a Clackamas County foreclosure proceeding involving MERS. The court agreed with a homeowner, who argued MERS could not act as a beneficiary because it had no financial interest in the home. The case is now before the Oregon Supreme Court.
Deschutes County’s approach of researching while watching what happens in the courts seems a wise approach. When decision time comes, commissioners should give serious consideration to the benefits of speedy economic recovery versus collection of possible missed fees.