What is MERS? MERS is an acronym for Mortgage Electronic
Registration Systems Inc. It was created in the late 1990s by Fannie
Mae, Freddie Mac, and most of the big banks and lenders. The stated
and practical purpose of MERS is to avoid the requirement to record
mortgage assignments when loans are sold between entities.
What is wrong with the MERS system?
Under Illinois law, any "instruments relating to or affecting
title to real estate, shall be recorded in the county in which such
real estate is situated." (55 ILCS 5/28) When a mortgage
interest is sold or assigned, a document should be recorded
evidencing that transaction.
Why does Logan County care?
Working with Logan County Recorder Sally Litterly, it was discovered
that since 2000 there have been over 1,582 loan instruments listing MERS as the "Nominee for Lender." A typical mortgage interest will
be sold or assigned at least three times. This means that on at
least 4,746 occasions, by using the MERS system, banks have been
able to avoid paying recording fees to Logan County. At a standard
rate of $50 per recording of a document, the loss is roughly
$237,300.
Are other counties pursing claims against MERS?
Recently, a number of counties in various states -- including
Texas, Pennsylvania, Ohio, Michigan, Florida, Illinois and Kentucky
-- have filed actions against MERS, seeking to collect recording
fees that would have been due each time a mortgage loan interest was
effectively assigned. In Illinois the counties of Union, St. Clair
and Macon have filed suits. Some have filed individually and some as
a class action.
[to top of second column] |
![](../images/ads/current/jan-2012-revolving-ad
.gif)
![](http://archives.lincolndailynews.com/2010/Jan/07/images/ads/current/guzzardo_lda022609.png) What can Logan County do?
A class action suit can be filed listing Logan County as a
plaintiff on behalf of itself and the other 101 counties in the
state of Illinois. All 102 Illinois counties are
governed by the same statutory scheme, and recording fees must be
paid in all counties. Although there is a class action on file for
Union County, it is believed that the firm bringing the claim and the
size of the representative county make it worthwhile for Logan
County to enter into this suit to help steer and control the
litigation, as well as reap monetary benefit for our county.
What will this cost Logan County?
The discussion of litigation cost
should be directed to the state's attorney. Macon County has
obtained the firms of:
-
Adam Levitt of
Wolf. Haldenstein. Adler, Freeman & Herz LLC (Chicago)
-
Eric Holland of
Holland, Groves, Schneller & Stolze LLC (St. Louis)
-
Chris Ellis of Bolen, Robinson & Ellis,
LLCS (Decatur)
Their agreement is that the firms advance all costs, and fees are
to be approved by the court. The understanding is that these firms
are taking no fee for their work.
[Text from file received] |