The St. Clair County State’s attorney’s office is asking St. Clair County Circuit Judge Vincent Lopinot to deny a motion to dismiss a suit accusing major banks of a fraudulent mortgage recording scheme.
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.
The State's Attorney's Office sued the 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.
Paul Slocomb, acting as special assistant state’s attorney, filed an opposition to the defendant’s motion to dismiss March 18.
The banks claim the county lacks standing to sue.
According to Slocomb’s document, the defendants’ scheme harms the public by allowing mortgage industry members to record false and misleading statements about mortgages, circumvent the mandatory recording of mortgage assignments and avoid paying the accompanying fees.
Prior to MERS, the recording indexes of Illinois counties provided a transparent public record that promoted open and vibrant commercial activity by enabling home purchasers and businesses to know with certainty whether they could obtain clear title to land, something that is no longer true, according to Slocomb.
Currently, prospective buyers, current homeowners, and the public cannot effectively determine their actual or future interest in a parcel of land, he wrote.
He also wrote that the defendants’ recording system is not available to the public, making a comprehensive accurate property search impossible.
Slocomb also asserts that the St. Clair County State’s Attorney has the authority to commence the action to enforce state law in which the defense of the property, the revenue of the county and public interest are at issue.
Although MERS members are supposed to update the MERS system to reflect the information, MERS relied on its members to voluntarily register transactions and did not take sufficient steps to ensure its members did so or that the MERS system was current and accurate, Slocomb claims.
The defendants appreciated the benefits of their scheme by failing to pay for benefits of the recording system and deprived Illinois counties of millions of dollars in lost recording fees, the county claims.
St. Clair County case number 12-L-267.