New York Attorney General Eric Schneiderman filed a lawsuit Friday against three of the nation's biggest banks and Mortgage Electronic Registration Systems over allegedly fraudulent foreclosure actions.

In the complaint, Schneiderman said the creation of MERS led to a system that resulted in homeowners and public servants being unable to track their own mortgages.

MERS, in response, said that is not operating outside the law and that pass judgement will exonerate the validity of the electonic registry's actions.

Schneiderman, who also named Bank of America (BAC), JPMorgan Chase (JPM) and Wells Fargo (WFC) as defendants, said the banks "created the MERS system as an end-run around the property-recording system." He said 13,000 foreclosures in the state, where MERS is listed as plaintiff, contain various degrees of misrepresentation.

The lawsuit alleges the system of recording mortgages electronically resulted "in a wide range of deceptive and fraudulent foreclosure filings in New York state and federal courts, harming homeowners and undermining the integrity of the judicial foreclosure process."

Schneiderman joins Massachusetts AG Martha Coakley in their actions against big banks for their use of the MERS system. Coakley's lawsuit charges the same defendants in the New York suit, as well as Citigroup (C) and Ally Financial (GJM).

The New York lawsuit comes just days before a Monday deadline for a robo-signing settlement between state AGs and the top-five servicers worth roughly $25 billion. The suit does include MERS.

"MERS' indiscriminate use of nonemployee certifying officers to execute vital legal documents has confused, misled, and deceived homeowners and the courts and made it difficult to ascertain whether a party actually has the right to foreclose," the New York complaint said. "MERS certifying officers have regularly executed and submitted in court mortgage assignments and other legal documents on behalf of MERS without disclosing that they are not MERS employees, but instead are employed by other entities, such as the mortgage servicer filing the case or its counsel."

A MERS spokeswoman said the company complies with laws, including county and state recording statutes and mortgage regulations.

"Federal and state courts around the country have repeatedly upheld the MERS business model, and the validity of MERS as legal mortgagee and nominee for lenders," spokeswoman Janis Smith said in a email. "We refute the attorney general's claims and will defend the case vigorously in court."

Spokesmen for Bank of America, JPMorgan Chase and Wells Fargo declined to comment.

The New York AG's office seeks $5,000 for each violation, as well as damages paid to aversely affected homeowners. The complaint also asks MERS to admit wrongdoing, cure any title defects and clear any improper liens resulting from "fraudulent and deceptive acts and practices."

MERSCORP, the parent company of MERS, has faced numerous legal challenges over its filing practices, including an October suit from Delaware AG Beau Biden.