Ingham County Register of Deeds Curtis Hertel Jr. and Branch County Register of Deeds Nancy Hutchins have filed a new lawsuit in the 30th Circuit Court of Michigan, against Mortgage Electronic Registration Systems (MERS). The lawsuit alleges that MERS has avoided paying state and county transfer taxes that would have been due on multiple property deeds filed within the last decade. The transfers usually took place shortly following sheriff’s sales on foreclosed homes.
“This is another case we’ve found, where the state’s residents have been shortchanged by questionable bank practices,” Hertel said. “This is money that is intended for public education funds on the state level, and money that the county could have used for local programs like health and police. The law requires that transfer tax is paid on the value of a property, whenever that property is transferred on a document such as a deed. The big banks have found multiple ways of dodging those taxes.”
The lawsuit was filed as a class-action, which means that other counties around Michigan are free to join the suit. Ingham County and Branch County are the two current plaintiffs. Hertel is hoping that other Registers from Michigan’s 83 counties will join the action.
“It’s time for this nonsense to stop,” Hutchins said. “These organizations need to step up to the plate, pay the transfer tax that is due and stop claiming exemptions that by law they are not entitled to.”
“MERS has transformed the entire mortgage industry into a giant shell game,” Hertel said. “The current servicer of a mortgage is no longer a matter of public record, and once a property is foreclosed, the real games begin, as deeds and other paperwork are filed in such a way as to avoid transfer taxes at every step. Property ownership is clouded, and the simple task of collecting transfer tax has been turned into this legal battle, largely because of the involvement of MERS.”
The lawsuit also lists many of the country’s largest banks, including Bank of America, JPMorgan Chase & Co., Wells Fargo Bank, and CitiMortgage Inc., as well as individual officers of MERS, as defendants in the case. Because MERS has represented and acted in the stead of dozens of different banks in property transactions, Hertel and Hutchins are hoping that the court action will bring clarity to the issue of these delinquent taxes.
In addition, the registers are suing eTitle Agency Inc., 1st Choice Title Services Inc. and Attorneys Title Agency LLC f/k/a Warranty Title Agency Inc. The complaint alleges that these title agencies “made, executed, issued and/or delivered the assignments and other transfer instruments which are the subject of this litigation, when they knew or should have known that the documents/instruments transferring real property instruments were not in conformity with the County Real Estate Transfer Tax Act and the State Real Estate Transfer Tax.” It also alleges that the instruments did not include proper reasons for exemption from taxes due under the acts and included inapplicable statutory exemptions from the real estate transfer taxes.