Neon Notary (photo: Jeremy Brooks/flickr)

All I can say is it’s about damn time somebody in Illinois stepped up to the plate to hold banks accountable for their criminal activities! St. Clair County Recorder Mike Costello and State’s Attorney Brendan Kelly on May 21st filed a civil suit for fraud and deception against 22 banks for allegedly using MERS to “sidestep recording fees” and creating “a scheme to evade county fees and shield property transfer records from the public.” As State’s Attorney, Mr. Kelly works with and advises government at the county level, while the Attorney General provides the same services at the state level. Additionally:

We have been hearing from deputy recorders that kept having questions raised by individual home owners doing title searches,” he said. “With MERS it is very difficult to ascertain who owns what with any given piece of property.”

“It turns out that the replacement system is very inaccurate with very little oversight,” he said.

He said Illinois law is “clear and strong” regarding recording laws, but that MERS is in violation of various statutes including unjust enrichment, consumer fraud and deceptive trade practices.

Considering that St. Clair County was one of twelve Illinois counties contacted by Illinois Attorney General Lisa Madigan in July 2011 regarding an investigation into MERS that she was starting, they must feel that AG Madigan’s investigation is either going nowhere, or was dropped once she signed onto the 49-state “settlement” earlier this year. AG Madigan was one of the main negotiators for that “settlement”, but apparently had no intention of actually prosecuting the banks for their criminal activities leading up to and after the housing bubble broke. The 12 counties contacted were asked to research and submit documents listing MERS as one of the parties to a property. Each county has different guidelines as to what and how documents are recorded, so some counties have nothing more than an electronic record and others have paper copies. The other 11 counties are Champaign, Dupage, Lasalle, Madison, Kankakee, McHenry, Rock Island, Sangamon, Vermillion, Whiteside and Winnebago.

Since I live in Dupage County, I had occasion to speak to that County Recorder’s office about AG Madigan’s investigation in early February this year. They said her office had been in contact with them as late as that week, and that they were in regular communication regarding this issue. The week I spoke to them was in between the SOTU and when the 49-state “settlement” was announced. In addition to the MERS investigation, we discussed the documents in their possession and what they were doing toward any fraud involved (it should be noted that Dupage County only keeps electronic files). I was pretty shocked at their answer to my fraudulent document question since they don’t feel it is their responsibility to “make a judgment call as to the validity of any documents in their possession.” Basically, they have no idea if they possess any fraudulent documents unless the court informs them of that fact. While I could not find an estimated loss amount for St. Clair County, Dupage County is very conservatively estimating their loss of recording fees at $20 million.

Though St. Clair County has apparently been considering this for months, the timing for filing this civil suit is also interesting because the Illinois Supreme Court’s Mortgage Foreclosure Committee (established in April 2011 and discussed here) is in the middle of their Public Hearings to “update” the Illinois Mortgage Foreclosure Law. This is not something that has been widely published, so their April 27th Practice and Procedure Subcommittee’s hearing attracted mostly the bank’s foreclosure law firms and MERS to testify, with only 1 or 2 token law firms that represent homeowners. The written testimony is quite interesting, not to mention illuminating, and though the Committee’s initial suggestions to “improve” the law appear to be innocuous, it is not unreasonable to believe that they will make changes based on what is suggested at these hearings. There were no homeowners or homeowner advocacy groups included as members of this Committee, which is reprehensible – but not surprising – considering the serious nature of foreclosures and how those negatively affect not only the families, but the neighbors and communities where they are located.

I urge everyone to go to their website and read the suggested changes to the law, as well as the April 27th testimonies. The next Public Hearing on June 8th is for the Loss Mitigation Subcommittee’s recommendations – but how that relates to the Illinois Mortgage Foreclosure Law is not apparent since there is no corresponding text now. Though it’s possible that loss mitigation language is being considered for insertion into the current law, is it intended to be a new clause or to replace a currently existing clause?

The upcoming June 8th hearing is the last one scheduled before the law is revised, and though the deadline for submission of testimony and addition to the speaker’s list is this Friday, there is time to organize a protest so the Very Important People know that the people of this state don’t want banks/Wall Street and their foreclosure mill attorneys to write or revise our laws!