Defendants in MERS recording fee case file motion to dismiss

As defendants in a suit filed last year by the St. Clair County State's Attorney's office, Mortgage Electronic Recording System (MERS) and others claim the county lacks standing to sue.

State’s Attorney Brendan Kelly sued MERS and several major banks last May, alleging they created a shadow mortgage recording system that effectively eliminated the ability to track the purchase and sale of properties through the traditional public records system.

A joint motion to dismiss was filed Feb. 15 by MERS, Bank of America, Wells Fargo Bank, CCO Mortgage Corporation, EverHome Mortgage Company, Regions Bank, First Collinsville Bank, FirstCo Mortgage Corporation, First County Bank, Commerce Bank, UMB Bank, Midland States Bank, Citi Mortgage, Suntrust Mortgage, MERSCORP, Inc., HSBC Finance, Bank of O’Fallon, SunTrust Mortgage, Mid America Mortgage Services of Illinois, Peoples National Bank and Mortgage Services.

According to the motion, the county's complaint is based on the "erroneous notion" that the defendants violated Illinois law by not recording mortgage assignments. Illinois law has held for more than 125 years that recording is optional, the defense motion states.

The motion goes on to say that St. Clair County seeks fees it would have collected over a 15-year period, had the defendants had created and recorded mortgage assignments when home loans were sold from one defendant to another.

It states that the plaintiff lacks the standing to sue, as Illinois law bars public entities from receiving fees for services they have not performed.

The county admits it did not perform services, because defendants did not record assignments of mortgages, the defense motion states. It also states that by its own pleading, the plaintiff has not suffered a cognizable injury needed to maintain the suit.

All of the plaintiff’s purported causes of action fail to state cognizable claims for additional reasons, the motion states.

In its complaint, the county claims the defendants’ method of recording – kept in a private database maintained by MERS – is “unreliable and inaccurate.”

The suit claims 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.

St. Clair County Circuit Judge Vincent Lopinot is assigned to the case.

Paul Slocomb, special assistant state’s attorney, represents the plaintiff.

Rhiana A. Luaders of Bryan Cave in St. Louis submitted the motion for the defendants.

St. Clair County Case Number 12-L-267.