A suit filed last year by the St. Clair County State’s Attorney’s office against banks and Mortgage Electronic Recording System (MERS) over a "shadow" mortgage recording system should be dismissed with prejudice, the defendants say.
State’s Attorney Brendan Kelly sued last May alleging the defendants' recording system effectively eliminates 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.
A reply brief supporting the motion to dismiss was filed April 8, saying the Illinois Supreme Court more than a century ago rejected a plaintiff theory that Illinois law contains a mandatory duty to record mortgage assignments.
Bryan Cave attorney Rhiana Luaders, who filed the defense brief, argues that recording statutes are "permissive."
Luaders also wrote the county is not a MERS member or a party to its rules, and the county lacks standing.
“Finally, plaintiff claims that there is a duty to record assignments in Illinois," the brief states. "Plaintiff’s arguments in this regard are again unfounded, because the Illinois Supreme Court held otherwise and its decision is binding on this Court.
“Defendants demonstrated that the Court should dismiss the complaint, because the recording statutes do not contain a right of action allowing the County to sue about failure to record mortgage assignments.”
The defendants' motion to dismiss also states that Illinois law bars public entities from receiving fees for services they have not performed. It further states that the county admits it did not perform services, because defendants did not record assignments of mortgages. It states that by its own pleading, the plaintiff has not suffered a cognizable injury needed to maintain the suit.
The county maintains that 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 county.
St. Clair County Case Number 12-L-267.