Macon Cnty v. MERSCORP, Inc.

In a previous suit, an Illinois county claimed that a mortgage services company (MERSCORP) and banks doing business with it violated an Illinois statute that requires every mortgage to be recorded with the county in which the property is located. MERSCORP operates an online system for registration and assignment of mortgages by banks. Although MERSCORP becomes the mortgagee of record for purposes of recording, the assignments are not substantive. The purpose is to enable repeated assignments of the lender’s promissory note to successive holders. These assignments are not recorded in the county land registries. Only MERSCORP pays a recording fee. Subsequent “assignees” do not have a mortgage to record because they are assignees, not of the property interest that secures the homeowner’s debt, but only of the promissory note. The Seventh Circuit rejected the county’s claim that the defendants were unjustly enriched by using system to claim the valuable protection of recording, using MERSCORP as a placeholder mortgagee and a legal fiction that mortgage transfers are not assignments. The court affirmed the district court’s subsequent dismissal of a similar suit, by another county, again noting that the system is not unlawful.View "Macon Cnty v. MERSCORP, Inc." on Justia Law