About The U.S. Court for the Western District of Kentucky, Paducah Division, has ruled in favor of Mortgage Electronic Registration Systems Inc. (MERS). The case was filed against MERS by the clerks of two Kentucky counties where they sought to collect the recording fees that the banks avoided by using MERS.
Kentucky law, like most other states specifies that when a loan is assigned the holder of the loan must record the assignment within 30 days. It appears to me that MERS did NOT comply with Kentucky law and may still face some consequences. But, the judge ruled that the county clerks had no standing in the case because the law was designed to protect the property owner, not the clerks.
First, the county clerks are not members of the class of persons the General Assembly intended to protect by the recording statutes cited by Plaintiffs. Here, the class of persons intended to be protected by Kentucky’s land recording system consists of existing lienholders seeking to give notice of their secured status; prospective purchasers and creditors seeking information about prior liens; and owners of property seeking release of liens once debts are paid off.
And:
The purpose of the statutes cited by Plaintiffs is to assure that liens are discharged when an underlying loan is paid off, to give subsequent purchasers and lenders notice of recorded liens, and to allow creditors to give notice of their secured interest in the property.
The suit was dismissed with prejudice.
Read more: http://nationalmortgageprofessional.com/news28486/legal-action-against-mers-dropped-kentucky
And the ruling: http://www.leagle.com/xmlResult.aspx?page=1&xmldoc=In%20FDCO%2020120221C28.xml&docbase=CSLWAR3-2007-CURR&SizeDisp=7