Mortgage Electronic Registration Systems Inc. and lender U.S. Bank NA were sued by an Illinois man who claims they have contributed to a statewide degradation of real property records.
Charles E. Daniels, a homeowner in suburban Hoffman Estates, filed a complaint today in state court in Chicago, seeking an order that would block banks from using MERS in lieu of publicly recording loan-related documents.
MERS and its co-defendant and corporate parent Merscorp Holdings Inc. operate a privately-managed database through which lenders can convey mortgage interests without having to record a corresponding document with a public recorder’s office, where MERS may be listed as the lender’s “nominee.”
Daniels said he’s suing on behalf of all other state residents who have obtained a mortgage from the US Bancorp (USB:US) unit or any other member of the MERS system since 2002.
“As a result of the creation and maintenance of MERS, the public recording system is no longer a reliable source for tracking the chain of title for property,” according to Daniels’ complaint.
The Illinois homeowner accused the Reston, Virginia-based electronic records company, the Minneapolis-based bank and other MERS members of creating a public nuisance and of being unjustly enriched.
His lawyer, Larry D. Drury of Chicago, said in a phone interview that his client seeks the reconstruction of public title records by MERS and its constituents.
Jason Lobo, a spokesman for Merscorp, said the company doesn’t comment on pending litigation.
In July, Merscorp settled a suit brought by Delaware that accused it of deceptive practices by agreeing to conduct regular audits of its records for accuracy and maintaining a database that would allow homeowners to learn who owns their mortgage, state Attorney General Beau Biden said then.
Daniels claims MERS and its members deceptively created and filed inaccurate documents with Illinois recorders of deeds.
“The lawsuit is baseless and very similar to many cases filed against MERS across the country,” Tom Joyce, a U.S. Bancorp spokesman, said today in a phone interview. “We are quite confident in the outcome.”
The case is Daniels v. U.S. Bank N.A., 12-ch-43772, Cook County, Illinois, Circuit Court, Chancery Division (Chicago).
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