Two MI Counties File Class Action Suit against MERS and Banks for Being Tax Cheats

Two MI County Registers of Deeds–Curtis Hertel of Ingham (Lansing’s county) and Nancy Hutchins of Branch–have filed a class action suit against MERS, seeking the taxes the banks should have been paying to counties and the state every time they transfer property, plus penalties.

Plaintiffs are seeking money and punitive damages, tax penalties, costs, and attorney fees in the return of unpaid taxes, interest and penalties to Plaintiffs as class representatives of the 83 counties of the State of Michigan.

In addition to MERS, BoA, Chase, Wells Fargo, and Citi, the suit cites parts of the state’s biggest foreclosure mills, eTITLE, 1st Choice Title, and Attorney’s Title and Fannie Mae. The suit argues that the defendants had a duty to record the real value of property transferred in the state, and by failing to do so, they cheated counties out of the taxes on those property transfers.

Defendants, as grantors, makers, executors, issuers and deliverers of deeds or instruments conveying an interest in real property under MCL 207.507, had a DUTY to declare the true value of the property and full consideration given/received on the face of each and every property transfer documents in Exhibit 2, as well as all those other similar filings made by Defendants; or in the alternative Defendants had a DUTY to attach an affidavit to the deeds and instruments stating the true value of the property. Defendants had these same DUTIES with regard to all those other deeds and instruments filed by them in all 83 counties of the State of Michigan over the last 15 years.

Defendants made, executed, issued and/or delivered for recording with the Registers of Deeds in all 83 counties in Michigan, assignments and other real property transfer documents transferring all or part of an interest in real property without stating the actual and true value of the property on the face of the instrument; and without alternatively attaching an affidavit stating the true value of the property interest being transferred. MCL 207.504/MCL207.525(2).

As a direct consequence of Defendants’ failure to properly make, execute, issue, and/or deliver real property transfer deeds, assignments, and other documents recorded in the 83 counties of the State of Michigan transferring property and security interests, neither County nor State Real Estate Transfer Taxes have been paid on thousands of real property transfers filed by/for Defendants across the counties of the State of Michigan as required by law.

When Hutchins filed a similar suit covering just Branch County–a rural county with a population of 45,000–in August, she estimated the county had lost $100,000 in the last 5-10 years. Even in Ingham County alone, with its population of over 250,000, that number is going to be much higher. Add in the state taxes, and the money will start to add up.

But the principle will be even more important: the banks have been cheating counties and states with this MERS scheme. It’s time they finally paid taxes like the rest of us.

Register of Deeds Curtis Hertel: “If you or I committed this kind of fraud, we’d go to jail.”

In Lansing today, Ingham County (Lansing Area) Register of Deeds, Curtis Hertel and State Rep Jim Ananich presented a bill to introduce judicial foreclosure in MI.

As part of the press conference, homeowner Bill Donahue described how he almost lost the home he has lived in for 25 years because Fannie Mae, which had not claim to his loan, foreclosed on him as he was being processed for a HAMP modification (which he ultimately got).

Last May, he applied for a HAMP modification. After submitting a second round of paperwork in June, he was told in July he was in underwriting, which might take six months. During that period, Bank of America’s collection people kept harassing Donahue and his wife. By late summer, they received a foreclosure notice from Fannie Mae, which explained it was just a formality since he hadn’t made a payment in so long. BoA told him to ignore it, but it turned out his house was sold in a sheriff’s sale. In December, he got the HAMP modification, which cut their payment in half. Nevertheless, this April, a process server came to his house with a foreclosure notice. When Donahue showed him the document proving he had a mod, the process server congratulated him for being of the 5% or so who actually got mods. The server took copies. But in May, Fannie Mae sent a packet giving him 3 days to contest a foreclosure. Finally, by early June, Fannie dismissed the foreclosure. (I hope to have video from Donahue later.)

In his presentation explaining the importance of replacing MI’s current foreclosure by advertisement with judicial review, Hertel explained,

You can literally walk into my office and tell me you’re committing a crime and there is nothing I can do to stop you except report it. I still have to submit the documents.

Hertel later elaborated on this, revealing among other details that he recently received an FBI subpoena relating to foreclosures.

There were a few people at the press conference (including my own county clerk) who complained about the cost of instituting a judicial foreclosure system. Representative Ananich had the best response to those questions:

Due process isn’t a system that only works when it’s affordable or it’s convenient.

It’s nice to hear that sentiment from a few public figures.

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