Madison Record-
St. Clair County Circuit Judge Vincent Lopinot has denied a motion to dismiss Mortgage Electronic Recording System (MERS) and 20 lenders from a suit that alleges the defendants conspired in a shadow mortgage system set up to avoid transparency and evade county recording fees.
State’s Attorney Brendan Kelly sued in May 2012 alleging the defendants’ recording system effectively eliminates the ability to track the purchase and sale of properties through the traditional public records system, in violation of state statute. The five-count complaint also alleges unjust enrichment, civil conspiracy, deceptive trade practices and consumer fraud.
Kelly hailed Lopinot’s decision.
“Banks are an essential part of our system of credit that sustains the economy, but they shouldn’t be above the law,” he said in a statement. “A line has to be drawn and if this is where it must be drawn so be it.”
(Specifically, the complaint alleges: When a MERS member makes a home loan to a borrower, the MERS member obtains from the borrower a promissory note naming the lender as promisee and a mortgage instrument naming MERS as the mortgagee. In the mortgage, the borrower assigns his right, title and interest in the property to MERS, and the mortgage instrument is then recorded in the local land records office with MERS as the named mortgagee. When the promissory note is sold (and possibly re-sold) in the secondary mortgage market, the MERS database purports to track that transfer. As long as the parties involved in the sale are MERS members, MERS remains the mortgagee of record. Designating MERS as the mortgagee of record purportedly excuses MERS members from publicly recording mortgage assignments between themselves and, thus, from paying recording fees required by statute).
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