St. Clair County Associate Judge Vincent Lopinot on Aug. 24 granted 22 banks until Sept. 7 to respond to a lawsuit over the recording of mortgages.

St. Clair County State's Attorney Brendan Kelly's office sued the banks in May for allegedly engaging in fraud and deception by evading requirements to file documents with the county's recorder of deeds when home loans were bought and sold by lending institutions. Banks and lending institutions created Mortgage Electronic Registration Systems (MERS), a holding company, which according to the lawsuit, resulted in a shadow recording system.

The lawsuit was filed on behalf of St. Clair County against: Bank of America, CCO Mortgage Corp., CITI Mortgage, Corinthian Mortgage Corp., Everhome Mortgage Co., GMAC Residential Funding Corp., Guaranty Bank, HSBC Finance Corp., Suntrust Mortgage, Wells Fargo Bank, WMC Mortgage Corp., Bank of O'Fallon, Compass Mortgage, First Collinsville Bank, FirstCo Mortgage Corp., First County Bank, Mid America Mortgage Services of Illinois, Mortgage Services III, Midland States Bank, Peoples National Bank, Commerce Bank, Regions Bank and UMB Bank.

SunTrust Mortgage, Inc. wrote in its request for more time to respond that with the numerous defendants in the lawsuit and with legal and factual complexities involved, SunTrust and its counsel needed additional time to thoroughly review and analyze the complaint, and prepare an appropriate response.

In other recent action in the case:

- The Bank of O'Fallon filed a motion to dismiss Aug. 1, asserting that the plaintiff failed to state a cause of action. The bank also stated the plaintiff never informed it before filing suit of its interpretation of Illinois law or the allegation that Bank of O'Fallon was violating Illinois law.

Bank of O'Fallon requested that "the allegations of wrongful conduct of Defendant Bank of O'Fallon be made more definite and certain as to specific acts or omissions attributable to Defendant Bank of O'Fallon.

"It is alleged that Defendant Bank of O'Fallon is unjustly enriched by avoiding the expense of recording assignments.

"Recording expenses have no impact upon Defendant Bank of O'Fallon's profits. Recording expenses are passed on by the Defendant Bank of O'Fallon to its customers. It is the consumer who has been spared this expense and benefitted through lower interest rates arising from the serialization of mortgages. The Defendant Bank of O'Fallon has not been enriched by reason of the alleged acts or omissions."

- Defendant Mid America Mortgage Services on July 11 also filed a motion to dismiss, stating the lawsuit fails to state a cause of action.

"The plaintiff fails to allege with any specificity what Mid America Mortgage Services of Illinois has done to violate the act, and where and when any such violations have occurred," it states.

- Defendant Regions Bank on Aug. 2 requested the case be reassigned from Judge Robert Lechien to another judge. Its request was granted Aug. 9.

According to the lawsuit, "The MERS System effectively eliminated the homeowners' and the public's ability to track the purchase and sale of properties through the traditional public records system. Instead this information is stored in a private database maintained by MERS. However, the MERS database is unreliable and inaccurate."

The system set up by MERS allows financial institutions to avoid transparency in transfer of property and to evade county recording fees which every other citizen has to pay, according to Kelly.

More News