Audit reveals at least $1 million loss in revenue for Williamson County

The results of a public records audit presented to the Williamson County Commissioners Court on Jan. 29 showed that the county has likely lost at least $1 million in revenue as a result of unfiled paperwork.

The audit targeted about 1,500 assignments and documents associated with Mortgage Electronic Registration Systems, a national electronic database for mortgage transfers, and said that mortgage changes and notices were frequently not reported to the county clerk's office, resulting in filing fees going unpaid.

According to a news release on the MERS website, "When a MERS member sells the loan to another MERS member, only the promissory note—and not the mortgage—transfers, because the mortgage is grounded in the name of MERS. Therefore, because the mortgage did not transfer, an assignment to record the transfer need not be filed."

State law requires a lender to notify the county when land is affected, such as when property is transferred from one lender to another, but there is no enforcement of that law, County Clerk Nancy Rister said.

Documentation issues

In October, Williamson County hired Dave Krieger of DK Consultants out of San Antonio to perform the audit. Krieger's team looked at records from 2010–12; the county performed its own internal audit of documents from 2004–12.

Rister's office estimated about $1 million in revenue loss during the eight years analyzed, while the internal audit suggested there could be millions of dollars in lost revenue to the county in the two years it examined.

The audit found hundreds of documentation issues, including alleged instances of "robo-signing," or fraudulent verification of documents and document fabrication.

"I think we're hitting the tip of the iceberg," Rister said.

The audit also said that the MERS business model causes improprieties in the chain of title of property records, which can at times create confusion for a property owner.

The county clerk's office said in a news release that residents are being victimized by the lack of accurate records, and in some cases, the loss of their home.

A news release from the MERS website defended its practices.

"All MERS mortgages are recorded in the public land records, and all required fees were paid," according the release.

Owners affected

Thousands of property owners in Williamson County may be affected by issues identified in the audit, Rister said, but not all homeowners are at risk of losing their home.

"You can look online at your records," she said. "And if the last person on the note is not who you're making your payment to, then you need to call your lender."

If the lender is unresponsive or unhelpful, Rister recommended that residents contact the Better Business Bureau for help.

While the revenue loss is a problem for the county, the integrity of the records is also affected, she said.

"If no one knows who owns the land, then taxes don't get paid," she said, adding that without tax revenue, the county government cannot function efficiently.

Finding the problem

Rister said the county first became aware of the document-filing issue at a public records industry association conference in September 2011. It was an awakening experience, she said.

After the conference, she and a team of employees reviewed county documents and found many discrepancies.

"We've been aware of the situation for two years and are very concerned," County Judge Dan Gattis said. "However, the problem is bigger than just Williamson County, and we will solicit other counties and the attorney general's office for their assistance."

Gattis said there was no doubt there has been some loss of revenue, but his concern is with property owners.

"Our real reason to be here is the cost of the loss to the landowners, the homeowners and so forth, and how they are not able to keep up with their business," he said. "That, to me, is the most important thing."

Residents may contact the Williamson County clerk's office for more information at