MERS and the problem of false agency

Posted on April 19, 2022 by Neil Garfield

Since the beginning of this century, The initial transaction with homeowners was the product of multiple layers of paperwork, most of which were neither identified nor accessed by consumers or their professional advisers.

Here is the deal:

As was typical during the “securitization” era, the application for a loan is received as the commencement of the transaction. It is not the “closing.”

From your perspective, you asked for a loan, and you were given false paperwork for you to read and sign. From the perspective of the disclosed counterparty to your transaction, the originator was merely paid a fee for the service of selling the transaction to you as a “loan.”

The funding for your transaction is an elaborate scheme unto itself. Once the paperwork is completed by the investment bank, the investment bank borrows the amount of money needed to pay homeowners at or near the time of closing. There is frequently a waiting period after what the homeowners perceive as a loan closing. This is the final check to make sure that there are not multiple entities named as Plaintiffs or beneficiaries on mortgages and deeds of trust respectively.

The loan from, for example, Credit Suisse, is collateralized by the impending sale of certificates to investors. The certificates do NOT represent any status as beneficiaries of a trust nor any status as a creditor to whom the homeowners ‘payments set forth on the homeowners’ note are payable.

Payments of money to the investors are discretionary but they usually are made by the investment bank regardless of whether or not any homeowner makes a scheduled payment on the schedule described in the promissory note issued by the homeowner. Investors were sold and contractually accepted the idea that they and no right, title or interest to any homeowner payment, legal debt, underlying obligation, note, or mortgage (or deed of trust).

So investors are paid not by homeowners but by various undisclosed intermediaries who have access to the funds paid by homeowners and access the funds generated by sales of certificates that are frequently mislabeled as Mortgage-Backed Securities. The fact the payments are frequently made as “Servicer advances” (as though the money came from companies who were named as “servicers” is the foundation for framing this deal — taken as a whole — as at least part of the PONZI scheme.

The sale of the certificates pays back the loan to Credit Suisse, plus a fairly large (e.g. 30%) profit partly directly arising from a yield spread premium (the difference between the amount of money paid by investors for unsecured IOUs from the investment bank and the amount paid to homeowners. Additional money is generated as the proceeds or revenue of either sale of the additional derivatives securities created and issued by the investment bank.

The problem for laypeople or even lawyers is that there is a choice between whether to analyze your transaction from the perspective of what you were seeking or whether to analyze the group of transactions from the perspective of the securitization scheme, without which there would have been no homeowner transaction. The consensus in the media and courtrooms is to simply analyze the transaction from the perspective of what the consumer wanted when he or she applied for a loan, regardless of where that is an accurate description of the transaction.

Contemporaneously with the origination of the transaction, several things are happening. In broad strokes, they are divided into the money trail and the paper trail. In the paper trail, none of the documents correctly identify or describe a transaction much less “memorialize” any transaction. Because everyone has received all the money they intended from participation in the “securitization” scheme the essential ingredient of a loan account receivable is eliminated thereby making nobody the “lender.”

Simply stated, since there isn’t anyone who maintains any record on the accounting ledger of an account receivable owed by you, there is no creditor. Nonetheless, in order for the securitization scheme to work (justifying more sales of certificates and other derivatives to investors), it must appear as though (a) an underlying obligation is created, owed to a specifically named lender and (b) that it has been transferred to a named business entity with caveats on the sale — namely that there is no warranty of title to the claims against homeowners.

When the origination cycle is complete, the status of the transaction is that there is no counterparty who has a stake in the viability or success of that transaction because nobody loses money if the homeowner does not make a scheduled payment — one that I maintain is simply not due to anyone. The absence of a lender — and all that entails under law — means there is no loan. The finance side of the transaction knows this but sets out to create a false paper trail to make it seem like “this is a standard mortgage loan” or ” this is standard foreclosure action.”

The financial community in coordination with lawyers willing to play the “game” used strategies and tactics to not only make it appear that the transaction was a loan but to actually have the court presume that the transaction was a loan and that the complaining party has hired counsel to seek a remedy. The status of such claims is always this: there is no obligation, loan account, or other claims for money allegedly due from the homeowner.

The primary tactic utilized by the financial community is the volume of paperwork. the thicker the pile of paperwork the more likely it is that a layperson sitting on the bench, will conclude that the transaction was real as a “loan.” And that is why we witnessed the birth of a major industry — creating false, fabricated, backdated documentation making it appear that several brand name institutions were trading, purchasing, and selling the “loans”. In reality, no such transactions existed, but the paperwork said the t transactions had occurred.

Considerable effort and coordination were devised by the financial sector to mislead the court system and they did so successfully in most cases. But even a casual look at your chain of title for the mortgage or deed of trust reveals inconsistencies in the paperwork especially when one realizes that the signature block one each document is on behalf of entities that (a) don’t exist at all, (b) exist but are irrelevant to the transaction and (c) are unclear from the face of the document.

Your case is almost certainly closely aligned with the typical playbook of strategies and tactics. Examining the document assignment of mortgage you find what is typical:

No consideration. the law requires that value be paid by the claimant before it can file suit to enforce the claim. But that law does not impact the ability of the foreclosure players to make false claims of authority to administer, collect or enforce in correspondence, notices, and statements.
“Corrective instruments” that correct nothing in order to establish more paper volume.
Execution of assignment by a business entity that has no right, title or interest in the alleged obligation. For example, MERS is used to launder titles.

People from FINTECH companies regularly access the main servers that are maintained by MERS for the sole purpose of getting themselves automatically appointed, without board resolution, as an officer of MERS.
MERS always is described as the nominee for the specifically named “lender” who is just an originator selling a financial product as described above. MERS is used as a cover-up. It effectively hides the title gap in plain sight.

The execution of an assignment or corrective assignment presumes that it is acting as an agent for whoever is currently named as the current claimant, beneficiary, or Plaintiff. But no such agency exists in fact or at law.
The execution of a security instrument (mortgage or loan) by a self-proclaimed “servicer” (which performs no servicing duties with respect to receipts data processing and disbursement of money from homeowners) on behalf of a new entity appointed to be the claimant, beneficiary or Plaintiff. But the execution of the assignment by MERS on behalf of Countrywide after the collapse of countrywide. it does not exist.
And Bank of America did not acquire any ownership interest in any homeowner transactions because countrywide didn’t own any such interest.

So while Bank of America was a successor to Countrywide, the foreclosure team is relying on appearances — in order to get the court to presume that the merger created a transfer of the ownership of the unpaid nonexistent loan account receivable of the mortgage rights from Countrywide as originator to Bank of America.

In such mergers, there is no Mortgage Loan Schedule, nor any written assignment of mortgage. Since the law requires the assignment, the presumption that the transfer could occur without an assignment of mortgage is erroneous. But that fact will not stop foreclosure unless it is aggressively contested.
The document is supposedly executed by someone calling themselves an “assistant secretary.” But note that it does not say that the signor was the assistant sectary of MERS.

Every time there is mention of MERS it includes the phrase “its successors and assigns” such that it is unclear from the grammar utilized whether there is a successor to MERS or a successor for the principal in the agency agreement between MERS and the originator (Countrywide in this scenario).
But there is no succession to either one unless (a) someone bought or merged with MERS or (b) someone bought loan accounts receivable from Countrywide. Such a sale would’ve been impossible because, by the time of the merger, Countrywide had only reserved “servicing rights” which really only meant the claim to receive “servicer advances” upon liquidation of a foreclosed property. So there is no MERS successor and there is no Countrywide successor as it relates to either the actual pr presumed transfer of the alleged underlying obligation.

Any endorsements are undated. Under current law, this means that parole evidence must be offered to prove that the promissory note was transferred and delivered to the party named as claimant, beneficiary, or Plaintiff.
Documents requiring the signature of the homeowner are in most cases completely fabricated even if the homeowner did sign similar documents. This has been sued to change the fact relevant to execution and delivery of the promissory note that in approximately 95% of all cases is destroyed within days of the time of closing that transaction with the homeowner.

This becomes clearer when the homeowner is able to lay hands on the original note at least as an original, and when the original note contains coloration of signature or other marks that do not appear on the refabricated note made by electronic manipulation of images.

The foreclosure mill will often utilize such fabricated documents even when they contain glaring facially invalid errors. For example, where a parent was the owner of the property and signed the “mortgage” paperwork, the instructions received by the law firm are turned into correspondence, notes, statements, and pleadings that reflect the grantors under a deed of trust or the mortgagors under a mortgage instrument become the heirs or successors to liability under the note.

What is MERS?

What is MERS? MERS is the Mortgage Electronic Registration System and it is an electronic database that holds digitized mortgage loan documents. You can search the MERS Database here: The MERS Servicer ID to identify the servicer associated with a mortgage loan registered on the MERS System.

 

Bankers Association testified to THE FLORIDA SUPREME COURT (in CASE NO.: 09-1460) that the physical loan documents were deliberately destroyed to avoid any confusion upon their conversion to electronic files. CASE 09-1460 COMMENTS OF THE FLORIDA BANKERS ASSOCIATION

 

In other words, the Banksters deliberately destroyed the wet ink signature loan documents for millions of mortgages in MERS the Mortgage Electronic Registration System.

A Few Facts about MERS

1. Mortgage Electronic Registration Systems (MERS) is incorporated within the State of Delaware.
2. Mortgage Electronic Registration Systems (MERS) was first incorporated in Delaware in 1999.
3. The total number of shares of common stock authorized by MERS’ articles of incorporation is 1,000.
4. The total number of shares of Mortgage Electronic Registration Systems (MERS) common stock actually issued is 1,000.
5. Mortgage Electronic Registration Systems (MERS) is a wholly owned subsidiary of MERSCorp, Inc.
6. MERS’ principal place of business at 1595 Spring Hill Road, Suite 310, Vienna, Virginia 22182
7. MERS’ national data center is located in Plano, Texas.
8. MERS’ serves as a “nominee” of mortgages and deeds of trust recorded in all fifty states.
9. Over 50 million loans have been registered on the Mortgage Electronic Registration Systems (MERS) system. (UPDATE 9/11/2011: 70 MILLION American Mortgages)
10. MERS’ federal tax identification number is “541927784”.
11. Mortgage Electronic Registration Systems (MERS) does not take applications for, underwrite or negotiate mortgage loans.
12. Mortgage Electronic Registration Systems (MERS) does not make or originate mortgage loans to consumers.
13. Mortgage Electronic Registration Systems (MERS) does not extend any credit to consumers.
14. Mortgage Electronic Registration Systems (MERS) has no role in the origination or original funding of the mortgages or deeds of trust for which it serves as “nominee”.
15. Mortgage Electronic Registration Systems (MERS) does not service mortgage loans.
16. Mortgage Electronic Registration Systems (MERS) does not sell mortgage loans.
17. Mortgage Electronic Registration Systems (MERS) is not an investor who acquires mortgage loans on the secondary market.
18. Mortgage Electronic Registration Systems (MERS) does not ever receive or process mortgage applications.
19. Mortgage Electronic Registration Systems (MERS) simply holds mortgage liens in a nominee capacity and through its electronic registry, tracks changes in the ownership of mortgage loans and servicing rights related thereto.
20. MERS© System is not a vehicle for creating or transferring beneficial interests in mortgage loans.
21. Mortgage Electronic Registration Systems (MERS) is not named as a beneficiary of the alleged promissory note.
22. Mortgage Electronic Registration Systems (MERS) is never the owner of the promissory note for which it seeks foreclosure.
23. Mortgage Electronic Registration Systems (MERS) has no legal or beneficial interest in the promissory note underlying the security instrument for which it serves as “nominee”.
24. Mortgage Electronic Registration Systems (MERS) has no legal or beneficial interest in the loan instrument underlying the security instrument for which it serves as “nominee”
25. Mortgage Electronic Registration Systems (MERS) has no legal or beneficial interest in the mortgage indebtedness underlying the security instrument for which it serves as “nominee”.
26. Mortgage Electronic Registration Systems (MERS) has no interest at all in the promissory note evidencing the mortgage indebtedness.
27. Mortgage Electronic Registration Systems (MERS)is not a party to the alleged mortgage indebtedness underlying the security instrument for which it serves as “nominee”.
28. Mortgage Electronic Registration Systems (MERS) has no financial or other interest in whether or not a mortgage loan is repaid.
29. Mortgage Electronic Registration Systems (MERS) is not the owner of the promissory note secured by the mortgage and has no rights to the payments made by the debtor on such promissory note.
30. Mortgage Electronic Registration Systems (MERS) does not make or acquire promissory notes or debt instruments of any nature and therefore cannot be said to be acquiring mortgage loans.
31. Mortgage Electronic Registration Systems (MERS) has no interest in the notes secured by mortgages or the mortgage servicing rights related thereto.
32. Mortgage Electronic Registration Systems (MERS) does not acquire any interest (legal or beneficial) in the loan instrument (i.e., the promissory note or other debt instrument).
33. Mortgage Electronic Registration Systems (MERS) has no rights whatsoever to any payments made on account of such mortgage loans, to any servicing rights related to such mortgage loans, or to any mortgaged properties securing such mortgage loans.
34. The note owner appoints MERS to be its agent to only hold the mortgage lien interest, not to hold any interest in the note.
35. Mortgage Electronic Registration Systems (MERS) does not hold any interest (legal or beneficial) in the promissory notes that are secured by such mortgages or in any servicing rights associated with the mortgage loan.
36. The debtor on the note owes no obligation to MERS and does not pay Mortgage Electronic Registration Systems (MERS)on the note.
37. Mortgage Electronic Registration Systems (MERS) is not entitled to receive any of the payments associated with the alleged mortgage indebtedness.
38. Mortgage Electronic Registration Systems (MERS) is not entitled to receive any of the interest revenue associated with mortgage indebtedness for which it serves as “nominee”.
39. Interest revenue related to the mortgage indebtedness for which Mortgage Electronic Registration Systems (MERS) serves as “nominee” is never reflected within MERS’ bookkeeping or accounting records nor does such interest influence MERS’ earnings.
40. Mortgage indebtedness for which Mortgage Electronic Registration Systems (MERS) serves as the serves as “nominee” is not reflected as an asset on MERS’ financial statements.
41. Failure to collect the outstanding balance of a mortgage loan will not result in an accounting loss by Mortgage Electronic Registration Systems (MERS).
42. When a foreclosure is completed, MERS never actually retains or enjoys the use of any of the proceeds from a sale of the foreclosed property, but rather would remit such proceeds to the true party at interest.
43. Mortgage Electronic Registration Systems (MERS) is not actually at risk as to the payment or nonpayment of the mortgages or deeds of trust for which it serves as “nominee”.
44. Mortgage Electronic Registration Systems (MERS) has no pecuniary interest in the promissory notes or the mortgage indebtedness for which it serves as “nominee”.
45. Mortgage Electronic Registration Systems (MERS) is not personally aggrieved by any alleged default of a promissory note for which it serves as “nominee”.
46. There exists no real controversy between MERS and any mortgagor alleged to be in default.
47. Mortgage Electronic Registration Systems (MERS) has never suffered any injury by arising out of any alleged default of a promissory note for which it serves as “nominee”.
48. Mortgage Electronic Registration Systems (MERS) holds the mortgage lien as nominee for the owner of the promissory note.
49. Mortgage Electronic Registration Systems (MERS), in a nominee capacity for lenders, merely acquires legal title to the security instrument (i.e., the deed of trust or mortgage that secures the loan).
50. Mortgage Electronic Registration Systems (MERS) simply holds legal title to mortgages and deeds of trust as a nominee for the owner of the promissory note.
51. Mortgage Electronic Registration Systems (MERS) immobilizes the mortgage lien while transfers of the promissory notes and servicing rights continue to occur.
52. The investor continues to own and hold the promissory note, but under the MERS® System, the servicing entity only holds contractual servicing rights and MERS holds legal title to the mortgage as nominee for the benefit of the investor (or owner and holder of the note) and not for itself.
53. In effect, the mortgage lien becomes immobilized by Mortgage Electronic Registration Systems (MERS) continuing to hold the mortgage lien when the note is sold from one investor to another via an endorsement and delivery of the note or the transfer of servicing rights from one Mortgage Electronic Registration Systems (MERS) member to another Mortgage Electronic Registration Systems (MERS) member via a purchase and sale agreement which is a non-recordable contract right.
54. Legal title to the mortgage or deed of trust remains in MERS after such transfers and is tracked by Mortgage Electronic Registration Systems (MERS) in its electronic registry.
55. Mortgage Electronic Registration Systems (MERS) holds legal title to the mortgage for the benefit of the owner of the note.
56. The beneficial interest in the mortgage (or person or entity whose interest is secured by the mortgage) runs to the owner and holder of the promissory note and/or servicing rights thereunder.
57. Mortgage Electronic Registration Systems (MERS) has no interest at all in the promissory note evidencing the mortgage loan.
58. Mortgage Electronic Registration Systems (MERS) does not acquire an interest in promissory notes or debt instruments of any nature.
59. The beneficial interest in the mortgage (or the person or entity whose interest is secured by the mortgage) runs to the owner and holder of the promissory note (NOT MERS).

MERS as Holder

60. Mortgage Electronic Registration Systems (MERS) is never the holder of a promissory note in the ordinary course of business.
61. Mortgage Electronic Registration Systems (MERS) is not a custodian of promissory notes underlying the security instrument for which it serves as “nominee”.
62. Mortgage Electronic Registration Systems (MERS) does not even maintain copies of promissory notes underlying the security instrument for which it serves as “nominee”.
63. Sometimes when an investor or servicer desires to foreclose, the servicer obtains the promissory note from the custodian holding the note on behalf of the mortgage investor and places that note in the hands of a servicer employee who has been appointed as an officer (vice president and assistant secretary) of MERS by corporate resolution.
64. When a promissory note is placed in the hands of a servicer employee who is also an Mortgage Electronic Registration Systems (MERS) officer, Mortgage Electronic Registration Systems (MERS) asserts that this transfer of custody into the hands of this nominal officer (without any transfer of ownership or beneficial interest) renders Mortgage Electronic Registration Systems (MERS) the holder.
65. No consideration or compensation is exchanged between the owner of the promissory note and Mortgage Electronic Registration Systems (MERS) in consideration of this transfer in custody.
66. Even when the promissory note is physically placed in the hands of the servicer’s employee who is a nominal Mortgage Electronic Registration Systems (MERS) officer, Mortgage Electronic Registration Systems (MERS) has no actual authority to control the foreclosure or the legal actions undertaken in its name.
67. Mortgage Electronic Registration Systems (MERS) will never willingly reveal the identity of the owner of the promissory note unless ordered to do so by the court.
68. Mortgage Electronic Registration Systems (MERS) will never willingly reveal the identity of the prior holders of the promissory note unless ordered to do so by the court.
69. Since the transfer in custody of the promissory note is not for consideration, this transfer of custody is not reflected in any contemporaneous accounting records.
70. Mortgage Electronic Registration Systems (MERS)is never a holder in due course when the transfer of custody occurs after default.
71. Mortgage Electronic Registration Systems (MERS) is never the holder when the promissory note is shown to be lost or stolen.

MERS’ Role in Mortgage Servicing

72. Mortgage Electronic Registration Systems (MERS) does not service mortgage loans.
73. Mortgage Electronic Registration Systems (MERS) is not the owner of the servicing rights relating to the mortgage loan and Mortgage Electronic Registration Systems (MERS) does not service loans.
74. Mortgage Electronic Registration Systems (MERS) does not collect mortgage payments.
75. Mortgage Electronic Registration Systems (MERS) does not hold escrows for taxes and insurance.
76. Mortgage Electronic Registration Systems (MERS) does not provide any servicing functions on mortgage loans, whatsoever.
77. Those rights are typically held by the servicer of the loan, who may or may not also be the holder of the note.

MERS’ Rights To Control the Foreclosure

78. Mortgage Electronic Registration Systems (MERS) must all times comply with the instructions of the holder of the mortgage loan promissory notes.
79. Mortgage Electronic Registration Systems (MERS) only acts when directed to by its members and for the sole benefit of the owners and holders of the promissory notes secured by the mortgage instruments naming Mortgage Electronic Registration Systems (MERS) as nominee owner.
80. MERS’ members employ and pay the attorneys bringing foreclosure actions in MERS’ name.

MERS’ Access To or Control over Records or Documents

81. Mortgage Electronic Registration Systems (MERS) has never maintained archival copies of any mortgage application for which it serves as “nominee”.
82. In its regular course of business, Mortgage Electronic Registration Systems (MERS) as a corporation does not maintain physical possession or custody of promissory notes, deeds of trust or other mortgage security instruments on behalf of its principals.
83. MERS as a corporation has no archive or repository of the promissory notes secured by deeds of trust or other mortgage security instruments for which it serves as nominee.
84. Mortgage Electronic Registration Systems (MERS) as a corporation is not a custodian of the promissory notes secured by deeds of trust or other mortgage security instruments for which it serves as nominee.
85. Mortgage Electronic Registration Systems (MERS) as a corporation has no archive or repository of the deeds of trust or other mortgage security instruments for which it serves as nominee.
86. In its regular course of business, Mortgage Electronic Registration Systems (MERS) as a corporation does not routinely receive or archive copies of the promissory notes secured by the mortgage security instruments for which it serves as nominee.
87. In its regular course of business, Mortgage Electronic Registration Systems (MERS) as a corporation does not routinely receive or archive copies of the mortgage security instruments for which it serves as nominee.
88. Copies of the instruments attached to MERS’ petitions or complaints so not come from MERS’ corporate files or archives.
89. In its regular course of business, Mortgage Electronic Registration Systems (MERS) as a corporation does not input the promissory note or mortgage security instrument ownership registration data for new mortgages for which it serves as nominee, but rather the registration information for such mortgages are entered by the “member” mortgage lenders, investors and/or servicers originating, purchasing, and/or selling such mortgages or mortgage servicing rights.
90. Mortgage Electronic Registration Systems (MERS) does not maintain a central corporate archive of demands, notices, claims, appointments, releases, assignments, or other files, documents and/or communications relating to collections efforts undertaken by Mortgage Electronic Registration Systems (MERS) officers appointed by corporate resolution and acting under its authority.

Management and Supervision

91. In preparing affidavits and certifications, officers of Mortgage Electronic Registration Systems (MERS), including Vice Presidents and Assistant Secretaries, making representations under MERS’ authority and on MERS’ behalf, are not primarily relying upon books of account, documents, records or files within MERS’ corporate supervision, custody or control.
92. Officers of Mortgage Electronic Registration Systems (MERS) preparing affidavits and certifications, including Vice Presidents and Assistant Secretaries, and otherwise making representations under MERS’ authority and on MERS’ behalf, do not routinely furnish copies of these affidavits or certifications to MERS for corporate retention or archival.
93. Officers of Mortgage Electronic Registration Systems (MERS) preparing affidavits and certifications, including Vice Presidents and Assistant Secretaries, and otherwise making representations under MERS’ authority and on MERS’ behalf are not working under the supervision or direction of senior Mortgage Electronic Registration Systems (MERS) officers or employees, but rather are supervised by personnel employed by mortgage investors or mortgage servicers.

This should be a pretty good start for those of you faced with a foreclosure in which Mortgage Electronic Registration Systems (MERS) is falsely asserting that it is the owner of the promissory note. Whether Mortgage Electronic Registration Systems (MERS) is or was ever the holder is a FACT QUESTION which can be determined only by ascertaining the chain of custody of the promissory note. When the promissory note is lost, missing or stolen, Mortgage Electronic Registration Systems (MERS) is NOT the holder.

By William A. Roper, Jr. Excerpted from the MSFraud Forum thread “Facts about MERS / MERS Unmasked”

Is Your MERS Mortgage Status Designated Inactive?

Many homeowners find out their existing mortgage is listed as “inactive.” An inactive status can refer to the transfer of their mortgage to another loan servicer, or to a few other factors as noted below.

The difference between having an inactive or an active MERS (Mortgage Electronic Registration System) loan may determine if the property owner has any improved or worsened home equity, or a truly saleable asset.

What is MERS?

MERS functions as a centralized electronic registry of mortgages, and it was supposed to track the ownership of these mortgages, which are typically sold multiple times during the loan’s life. MERS potentially affects upwards of 70 million residential mortgage loans nationwide, and almost completely crashed the U.S. housing market by itself because of so many problems with the packages.

MERS was created by lenders and title insurance companies, so it would be easier to transfer the beneficial interests to other secondary market lenders. Yet, some mortgages ended up significantly discounted due to packaging problems, which made them inactive.

Where’s the “IOU” for the mortgage debt?

The MERS Scandal

Missing documents, notary fraud, and “robo-signing” led the way.

There was a lot of chaos involved with MERS mortgage packets, which contained no original promissory notes (the “IOU” for the mortgage debt) in these same MERS files.

Knowledgeable homeowners were able to completely stop their home foreclosures by pointing out that the foreclosing entity, such as the mortgage servicing company, didn’t have a legal right to foreclose on their homes, since they didn’t have all of their valid mortgage paperwork in their files.

These questionable ownership interests in the mortgages led to foreclosure moratoriums, court settlements, and inactive statuses.

There were a large number of allegations of notary fraud in which real or fake notaries such as “Linda Green” were allegedly part of the massive “Robo-Signing Scandal” nationwide.

It has been suggested that promissory notes, deeds of trust or mortgages, and other loan or title documents were forged, left blank, or illegally assigned to numerous mortgage investors. Since MERS was set up to become as paperless, speedy, and efficient as possible, there was not enough third party oversight to check whether these documents were valid.

Questionable Beneficial Interests

“No Note = No Debt” became the mantra for homeowners who were in the midst of their own foreclosures due to the weaker U.S. economy. Some savvy property owners were able to legally void their existing mortgage debt altogether by proving that the foreclosing mortgage company had no valid beneficial interests in the existing mortgage, and thus had to legal right to collect any payments.

Other homeowners were able to show that their MERS files had fraudulent notary signatures signed on behalf of both owners and lenders, which moved their file designations over to “inactive” as well.

Mortgage lenders that have collapsed or imploded since the official start of the Credit Crisis back in 2007, such as Countrywide, Indy Mac, Lehman Brothers, World Savings, Downey Savings, and Washington Mutual still figuratively exist by way of their asset or beneficial interest transfers to the “strawman” named MERS.

MERS may pay no taxes or employ anyone. Without the proper assignment of these MERS mortgages, these same imploded mortgage companies’ loans could have ceased to exist.

The Shadow Inventory & MERS

Instead of upwards of 60 million residential MERS mortgages becoming inactive or possibly even completely voided and worthless, many of the largest banks and mortgage service companies worked closely with the U.S. government to create the National Mortgage Settlement in early 2012. This insanely small $25 billion settlement is but a mere fraction of the potentially trillions of dollars of MERS mortgages nationwide.

The National Mortgage Settlement of 2012 and MERS Scandal were two of the primary reasons why home listings nationally dropped dramatically.

There were potentially millions of Shadow Inventory homes (mortgage payments are more than 90 days late), which may not have valid promissory notes, or other mortgage or title instruments or documents, in the files. The lack of listed home inventory led to a rapid increase of home prices between 2011 and 2013 (also partly due to the record low mortgage rates).

The “Inactive” MERS Designation

An inactive MERS designation may relate to the loan having been refinanced or paid off, discounted, or completely voided due to the invalid mortgage documents in the file. Or, the mortgage loan was assigned out of the MERS system to a completely new mortgage servicing company.

A property owner with a MERS mortgage can find the status of their loan by searching for their 18-digit Mortgage Identification Number (MERS MIN). Then, the same person may search online for the MERS Servicer ID system in order to check the status of their mortgage.

Before attempting to pay off a MERS loan, it’s very important to find out if all of the mortgage payments have been properly applied to the account. The vast majority of MERS mortgages have been assigned to multiple mortgage investors over the years, so it is very important to check your own payment history over the years in order to determine if all of your payments have been credited to every mortgage servicing lender’s accounts.

It’s imperative that the owner pays off the correct amounts, which may mean more money back to the owner and much less money for the current mortgage loan servicer. As such, a little research and loan analysis by a property owner on their personal payment histories can save them a lot of money and headaches.

Here is some additional information on MERS:

• MERS Is Dead
• MERS Admits NO Interest in Mortgage and No Loss on Default

• New York’s U.S. Bankruptcy Court Rules MERS’s Business Model Is Illegal

• Consent Order for MERSCORP and Mortgage Electronic Registration Systems, Inc. (MERS)

 

Take action right now and get the FACTS and HELP that you need to gain the legal remedy that the law entitles you to, and that you deserve!

MERS Is Dead

MERS Is Dead: Can Be Sued For Fraud: WA Supreme Court

Countdown to banks forcing Congress to protect MERS in 3,2,1…

State Court Ruling Deals Body Blow to MERS

(Reuters) - The highest court in the state of Washington recently ruled that a company that has foreclosed on millions of mortgages nationwide can be sued for fraud, a decision that could cause a new round of trouble for the nation’s banks.

The ruling is one of the first to allow consumers to seek damages from Mortgage Electronic Registration Systems, a company set up by the nation’s major banks, if they can prove they were harmed.

Legal experts said last month’s decision from the Washington Supreme Court could become a precedent for courts in other states. The case also endorsed the view of other state courts that MERS does not have the legal authority to foreclose on a home.

“This is a body blow,” said consumer law attorney Ira Rheingold. “Ultimately the MERS business model cannot work and should not work and needs to be changed.”

Banks set up MERS in the 1990s to help speed the process of packaging loans into mortgage-backed bonds by easing the process of transferring mortgages from one party to another. But ever since the housing crash, MERS has been besieged by litigation from state attorneys general, local government officials and homeowners who have challenged the company’s authority to pursue foreclosure actions.

A spokeswoman for MERS said the company is confident its role in the financial system will withstand legal challenges.

The Washington Supreme Court held that MERS’ business practices had the “capacity to deceive” a substantial portion of the public because MERS claimed it was the beneficiary of the mortgage when it was not.

This finding means that in actions where a bank used MERS to foreclose, the consumer can sue it for fraud. If the foreclosure can be challenged, MERS’ involvement would make repossession more complicated.

On top of that, virtually any foreclosed homeowner in the state in the past 15 years who feels they have been harmed in some way could file a consumer fraud suit.

“This may be the beginning of a trend,” says Elizabeth Renuart, a professor at Albany Law School focusing on consumer credit law.

The company’s history dates back to the 1990s, when banks began aggressively bundling home loans into mortgage-backed securities. The banks formed MERS to speed up the handling of all the paperwork associated with recording the filing of a deed and the subsequent inclusion of a mortgage in an entity that issues a mortgage-backed security.

MERS allowed the banks to save time and money because it permitted lenders to bypass the process of filing paperwork with the local recorder of deeds every time a mortgage was sold.

Instead, banks put MERS’ name on the deed. And when they bought and sold mortgages, they just recorded the transfer of ownership of the note in the MERS system.

The MERS’ database was supposed to keep track of where those loans went. The company’s motto: “Process loans, not paperwork.”

But the foreclosure crisis revealed major flaws with the MERS database.

The plaintiffs in the Washington case, homeowners Kristin Bain and Kevin Selkowitz, argued that the problems with the MERS database made it difficult, if not impossible; to determine who really owned their loan. It’s an argument that has been raised in numerous other lawsuits challenging the ability of MERS to foreclose on a home.

“It’s going to be very easy for consumers to say they were harmed because it’s inherently misleading,” says Geoff Walsh, an attorney with the National Consumer Law Center. If consumers can’t identify who owns their loan, then they don’t know whom to negotiate with, and can’t even be certain of the legitimacy of the foreclosure.

In a statement, MERS spokeswoman Janis Smith noted that banks stopped using MERS’ name to foreclose last year. She added that the opinion will “create confusion” for homeowners in the state of Washington while the trial courts consider its effect on pending cases.

Meanwhile, MERS is attempting to remake itself. The company has a new chief executive and a new branding campaign. In Washington D.C. federal lawmakers have recognized the need to create a national mortgage-recording database that would track all U.S. mortgages. MERS is lobbying to build it.

The case is Bain (Kristin), et al. v. Mortg. Elec. Registration Sys., et al., Washington Supreme Court, No. 86206-1.

Lack of Standing to Foreclose

The requirements set forth in the pooling and servicing agreements were not followed, and they were not followed in the following way.

The pooling and servicing agreements says that when the notes are transferred to the trust there needs to be an endorsement in blank to the trust, as well as a complete chain of endorsements for all proceeding transfers.

That means that the originator of the loan has to have a specific endorsement transferring it from the securitization sponsor, the sponsor to the depositor, and then the depositor in blank to the trust.

What I am told is that in the majority of the cases that chain of endorsements is not there. There is simply a single endorsement in blank. That creates a problem because it does not comply with the trust documents.

That is a severe problem because most pooling and servicing agreements are trust that are governed by New York law, and New York law says that if you are not punctilious in following the trust documents for a transfer, the transfer is void.

It doesn’t matter if you intended it or not, it’s void.

That transfer is void even if that transfer would have otherwise complied with law.

And if the transfer is void that would mean that the trust does not own the mortgages, and therefore lacks standing to foreclose.

It’s axiomatic that in order to bring a foreclose action the plaintiff must have legal standing.

Only the mortgagee has such standing.

Thus various problems like false or faulty affidavits, as well as back dated mortgage assignments, and altered or wholly counterfeited notes, mortgages, and assignments all relate to the evidentiary need to prove standing.

Why You Should Never Make an Admission to a Contract of Indebtedness

 

We understand the operating documents of the Pooling and Servicing Agreement and if the security evidence by the mortgage security instrument, conveyed with the tangible note negotiation, before the cut off data of the REMIC.

We are absolutely familiar with how you would sit down and break down a true sale from party A from party B to convey the security and to maintain the fiduciary duty under the Common Law Deed of Trust to release and reconvey, release and reconvey, to maintain clear and marketable title.

So, we know the foundation under the UCC for that.

Then, we also understand the underlying arguments that the banks and their attorneys use against people making securitization foreclosure defense arguments, which may have done a proper statement of fact as to what’s required to accomplish a true sale between all these parties and maintain perfection over the lien.

However the banks and their attorneys are going to succeed by not having a Chain of Title, by stating that they negotiated the note in Bearer Form under Article UCC 3205 Sub section B with no payee named as a bearer instrument.

This essentially gives them a purported temporary perfection of the original holder, while they physically transfer the instrument, by daisy chain, which doesn't require for them to maintain a Chain of Title, until the instrument is specially endorsed.

This is how the banks and their attorneys beat almost everybody from New York to California on standing, and whether or not they had a secured interest over the lien; because nobody has a the way to argue against whether or not they made the instrument of bearer paper and physically negotiated it, because they weren’t required to maintain a Chain of Title in that aspect.

So that’s how the banks and their attorneys are able to win nine times out of ten. Because what they're saying is that in the negotiation under 3205 B, the security followed the note, whenever the custodian of record received the instrument prior to the cut-off date, making the note and the security securing trust property before the cut-off date.

That's how the banks and their attorneys are able to beat you.

So let’s reverse engineer this, let's take that note all the way back to the closing, and reverse the whole concept and transaction.

What you have to be able to show is that you have one purported transaction, concealing the realistic transaction.

Did the lien’s beneficial interest maintain perfection, and was it therefore eligible to be negotiated with the note in that capacity, as statutorily required?

However what that would require that you were the actual creditor and that you actually made that note as a maker issuer, for the purposes of being the beneficiary of the debt that was created.

This is what the banks and their attorneys want you to believe in the matter of equity:

1. That your signature was as a maker issuer and therefore created value to the instrument
2. You negotiated with the party that you sat down at closing with
3. They accepted the instrument by negotiation
4. They were a federal reserved depository institution that could accept article three instruments by deposit
5. They gave you consideration in the form of cash, not Ultra Vires, for your promise to pay instrument executing an underlying indebtedness contract

 

Well in an IRC 1031 Like Kind Exchange, Table Funded Securitized Mortgage Loan Transaction that didn't happen. That did not happen; that negotiation, acceptance and consideration is not what a table funded securitization transaction is!

 

So the money is not created from your signature, negotiated and then the note negotiated between state to state physically, that doesn’t happen in a table funded transaction. Rather it's in direct reverse engineer - the money was created from the sale of the certificates and the special deposit, special purpose vehicle on Wall Street.

They take the certificate holders funds to the securities to special deposit the pool of assets. That pool of assets is used in the SPV alternative investment opportunity through the warehouse line of credit, and that's what the sponsor bank is using as the table funding credit in the transaction itself.

So yes, we would have some arguments like robo-signing and the improper negotiation, transfer, and delivery of the mortgage loan contract all the way through the securitization scheme, as part of the material defects found in the transactional scheme itself - but what we don't want to do is provide any language as an admission to you being the account debtor.

You also want to make sure you understand what is meant by using terms like the “alleged debt”, because you're going to piss the Judge off, really badly; a lot of people do it. Because, they don't know how to speak to the transaction as it relates to what that means.

So let me give you the perspective that the Judge is going to have. The Judge is only looking at the intent of the contract. So all the little details, the semantics of this right now, the first thing the Judge is going to do, is look at it from a cursory equity standpoint.

Q: Did you intend to get a home

A: Yes

Q: Are you in a home?

A: Yes

Q: Okay, so you're in the collateral.

A: Yes

Q: Okay and did you intend whenever you went to go get the home to get an obligation or a loan associated to that.

A: Yes

Okay, yes that's obvious or else you wouldn't be in the collateral

Q: Okay so you're in the collateral - an obligation exists - and you also pledged a lien to encumber your property to secure that obligation, so that if you couldn't perform on the contractual payment obligation the holder of the obligation would have the lien to enforce, do a foreclosure sale to enforce an ultimate means of collection.

A: Yes.

Okay. So just looking at the intent of the contract, you are in the collateral, you know that you signed something at the closing- there's an obligation – and it's in default.

The institutions claiming to be the holder of that obligation and to be the secured party of record via an assignment of the security instrument perfected in public record.

Are there any other parties that are involved in this transaction?

No!

And if some other financial institution was holding an obligation and saw that deed of trust or signed with a deed of trust recorded on public record, they would immediately file to acquire the title and they would be there defending their right to the obligation and the collateral itself.

So because there's no other financial institution showing up claiming to be the holder and to having a subsequent assignment of deed of trust or mortgage recorded for enforcing through a foreclosure action - than nine times out of ten - the Judge is going to give the party holding the obligation the benefit of the doubt as a matter of the intent of the contract.

So, in terms of the intent of the contract, this is where it becomes so viable for you to understand, what your capacity into the transaction is.

When the judge ask you:

“Did you sign the note - in the effort to get the collateral?”

Your answer is “Yes.” - But you need to be able to specify the answer to yes as “well yes your honour but I’m not the account debtor. I signed into this transaction as an accommodation party or guarantor. The party that I signed as a guarantor for, made available the obligation through a securitization transaction without my knowledge and purportedly negotiated the security evidence by the deed of trust/mortgage lien that I pledged to them, uniquely, to secure these receivables in this transaction as well.

What I need to know your honour is does my lien secure the tangible contractual obligation or does it secure the receivables?”

The answer to the receivables is no. You cannot attach article 9 to the UCC receivables (securities) to enforce a lien on real property. A lien on real property under revised article nine is not secured by a lien on real property, so article nine does not fit the common law argument that the transfer of an obligation carries the beneficial interest of the lien and the lien itself.

Here is the lie that the banks almost always defeat homeowners with.

"Here's a copy of the note your honour, the security follows the obligation we all know that."

Yes, that’s accurate, under common law and U.S. Supreme Court. Carpenter v. Longan (1872) the note and mortgage are inseparable; the former as essential, the latter as an incident. An assignment of the note carries the mortgage with it, while an assignment of the latter alone is a nullity.

Furthermore under revised article 9 of the Uniform Commercial Code (UCC) the banks do not necessarily have to record each transfer of the mortgage loan contract in public records; all they have to do is, in essence, be in possession of the note and they can claim rights to enforce it.

Therefore you need to be able to be able to explain (and prove) how your capacity is to the obligation. “Your honour I am not the account debtor. I was a guarantor to this party. I am not a guarantor to everybody else that claims to be the holder of the obligation"

And it’s their capacity of an accommodated party to the certificate holders on Wall Street. They're not the real creditors. Their job is to put the certificate holders into funds associated to your payment string.

All of this is predicated on laying the proper order of operations, in line with statutory capacities, that clearly part and parcel and separate the root question of: Does revised article nine and liens on real property secured defaulted receivables in a securitization transaction?

That's your root question.

You just have to be able to have it all put in the proper sequence in statutory capacities, as it relates to your state, and what took place in order to defend the lien itself the property.

 

How have you been harmed?

 

In pre-foreclosure it's not so much that you've actually been harmed, it's whether or not they have clean hands in the transaction. So this, at its root is an Equitable Estoppel issue. In the like kind exchange transactional scheme there is a senior secured party and a junior secured party – the originator of the loan (named on the note as the lender) is the senior secured party, and the trustee for the REMIC trust is the junior secured party.

But it's one transactional scheme, its one organism, so you have to be able to show that they - in the race of diligence - that the junior secured party made sure that the originator recorded that underlying security of trust, so they could perform the rest of the transaction. But ten years later upon default of the receivables, to cause an assignment of the beneficial interest of evidence about your underlying security instrument, that security instrument doesn't maintain perfection from now, until infinity. You can lose perfection over that lien.

So, having the proper capacity, order of operations, and then statement of facts of how they lost perfection, and to show that it is inequitable for the holder of the receivables to attempt to cause an assignment of the underlying security instrument, because they were only negotiated the receivables, with unclean hands. That’s what you have to show that they don't have an equitable claim to.

Hypothecation is a third party pledging collateral on your behalf. So, let's say for instance, if you pledged the real property to the originator party on the ten thirty one exchange transaction scheme you specifically gave legal title to that party. Not to the trustee under that instrument, and the beneficiary of the security instrument. The beneficiary of the security instrument then in turn pledged a separate and subsequent value - which is the proceeds of the real property.

Let me give you an example. Consider a wheat field. The land is the real property, but the Wheat and the Harvest are the proceeds of the real property.

In this securitization transaction the original secured party is granting the proceeds, the actual required collateral to the real property and hypothecating that proceed as the payment intangible, which is the transferable record on the obligation.

So, you have to be able to show that it's under revised article nine; it does not apply to liens on real property. It may apply to title loans, student loans, and unsecured obligations, but it does not apply to liens on real property.

Remember, it's either you sold the contract in its entirety to a successor and interest through a true sale; or you sold the underlying tangible value of the contract.

Remember when people paid off their loans and they received their notes and their deed back, and they would have deed burning parties?

That doesn't happen anymore because that transactional scheme where that was your note, that you made and negotiated with a bank that could accept it, deposit it, and give you real money for a loan so you could purchase the property. That’s the savings and loan model.

In that transaction the bank you contracted with actually risked giving you real money, and was going to hold that thirty year instrument until its full rate of return. Its portfolio division wanted to buy that obligation and they underwrote you as your credit worthiness and they gave you the loan. You had skin in the game, you qualified financially and they were willing to take a risk on you. That was a real contract between you and the bank.

But what happened with the securitization bubble is they lifted the Glass–Steagall Act and the Gramm Bliley Leach Act and they made way for this transactional scheme were they could divert the risk of creating the money, which was done by lying and cheating the certificate holders through a perspective supplement which was pre-fabricated on the yield spread of those securities, under the nineteen thirty three, thirty four Security and Exchange act.

So they went to Standards & Poor’s and they got all those credit enhancements and they pre-sold those securities. Well that’s what the special deposit is for the REMIC trust, the trust vehicle; the special purpose vehicle. So, through special deposit, they generated those funds with the sale of the securities, that’s what makes the credit swaps available for the sponsor bank, to work with the originator to the table fund transaction.

Once you’re able to understand the blue print of the transaction and then you set the order of operations in place, and then you couch the interested parties, and then couch their capacity, and then what are they negotiating and what’s its statutory intangible interest, and what governs that, and once you set the mouse trap in place, and it can follow the order of operation it’s not that complicated.

To get to the root question you just have to be able to see all of that and to be able to understand the root question.

The root question is “in what capacity did you sign the note (as maker/issuer) or as an (accommodation party/guarantor)?