A federal ruling against the banking industry's mortgage registry could net Montgomery County (Pa.) $16 million or more, and lawyers are now contacting other counties around the country to drum up business.

Last month, a district court judge ruled that Mortgage Electronic Registration Systems (MERS) violated Pennsylvania law by using its members-only database to skirt around county recorder of deeds offices. The violation caused counties to lose fees, public records to be compromised, and home loans to be sold over and over without the knowledge of county recorders or homeowners.

The banking industry created MERS in the '90s to track mortgages and simplify sales.

Martin C. Bryce, Jr., a Ballard Spahr partner and litigator in Philadelphia, said that MERS's methods have been challenged many times, but this is the first case he can recall where a judge has agreed. "I just think this court misunderstood the way MERS works and is reading more into the Pennsylvania recordation statute than is there," said Mr. Bryce. He thinks the case will eventually go to the Third Circuit appeals court and be overturned. Until then, he said, this latest decision "has quite a bit of potential to upend the entire system."

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