Matt Weidner – Fighting For The American People

Posts Tagged ‘azize v. MERS’

Some Key Excerpts From The Now Sure to Be Worldly Famous Case No. 5595.  I just got off the phone with Nye and he’s quite amazed at all this…amazed that it took the world so long to wake up to what he’s been screaming about for years.

Like every other whistleblower or advocate who has ever stood up for consumers and the Rule of Law, Nye has been attacked, persecuted, bullied, and yes, attacked again.

Nye has always been a tireless champion for honesty, integrity and the Rule of Law.  Just last week, Nye provided to me the Smoking Gun I needed in a case that I’m taking to trial next week.  He shared with me an affidavit of fraud that is mind blowing.

I’m so glad that this American hero is finally getting the credit he deserves.

I find it most interesting, but not at all surprising, that Pinellas County judges are featured prominently in this report.  Think about it, there are untold tens of thousands of judges all across this country that have presided over millions of foreclosure cases, but a good judge long, long ago in Pinellas County first warned that all of this was going to come back to bite us all in the end.  Some of the best foreclosure scholarship in the entire nation comes out of the thoughtful jurisprudence of Pinellas County.  These judges are tough as nails, and even after all these years and all these motions years after years, they grab each file, and carefully examine each motion and each case, then rule as if each case was the most important one on their crammed docket.

Now, some keys from the report.  Keep in mind here that this is just the tip of the iceberg.  The thing that people won’t get is how those in power keep wanting to ignore all of this…to keep kicking the cow chip down the field. But sooner or later the cow chip breaks apart on your foot.

And now from the report:

Two Florida trial courts recently have criticized MERS for false pleadings in
foreclosure proceedings. Mr. Lavalle apparently approached judges in two Florida counties with
sufficient information to prompt the judges to call extraordinary hearings.

In MERS v. Cabrera, the judge started an extraordinary show cause hearing
regarding nine foreclosure cases by reading portions of inquiries from Mr. Lavalle and his
mother, Ms. Pew.47 MERS counsel was forced to concede that the complaints contained
inaccurate allegations regarding its interests in promissory notes.48 The complaints allege that
MERS is the “holder and owner” of promissory notes when neither is true. This allegation hides
the relationships of the parties who will benefit from the foreclosure and masks a serious legal
issue. The judge was troubled that MERS changed its stance after filing “thousands and
thousands of cases” stating that it owns the note.49

A second judge (who took the time to observe the hearing) criticized MERS for
routinely filing lost note affidavits and counts to reform the promissory notes. It appears the
notes are not lost but lawyers or servicers find it easier and quicker to claim the notes cannot be
found. The judge pointed out the inconsistency of the affidavit to the MERS complaint, asking:
Where is it at the time it is lost in all of these myriad hundreds of cases which alleged that it’s inour possession at the time it was
lost or destroyed?5o

The judge accused MERS of filing “false affidavits” and questioned whether foreclosures should
be allowed to go forward. 51 MERS’ attorney made the concession that “My understanding is lost
note affidavits and lost note counts are routinely filed by mortgagees and note holders … ,,52 He
acknowledged the practice should be “modified.,,53

In an order of dismissal dated September 28,2005, the court dismissed four
foreclosures as a “sham and/or frivolous pleading,” but dismissed them without prejudice so that
the true owners and holders of the notes could file their own foreclosure actions.54
The court also criticized MERS’ practice of certifying servicers’ employees as
certifying officers, saying: “[t]he use of designating employees of the servicer as officers of
MERS in order to circumvent the ‘technical’ requirement of law is transparent.,,55 He called the
practice a “charade.,,56

A judge in the Pinellas County, Florida, circuit court issued an order dismissing
20 MERS foreclosures for essentially the same reasons. Judge Logan noted the false allegations,
stating:

“The standard allegation in the Complaint alleged that … ‘Plaintiff
now owns and holds a mortgage note and mortgage … ‘ The Court
never found that allegation which is contained in all of the MERS
Complaints to be supported by a review of the documents within
the Court file. ,,57

Fannie Mae does not authorize attorneys to represent that MERS holds or owns promissory
notes. The Servicing Guide states “MERS will have no beneficial interest in the mortgage, even
if it is named as the nominee for the beneficiary in the security instrument. ,,58

We conclude that foreclosure attorneys in Florida are routinely filing false
pleadings and affidavits regarding the plaintiffs – MERS or servicers – interest in the
proceedings and regarding lost, missing or destroyed promissory notes. The practice could be
occurring elsewhere. It is axiomatic that the practice is improper and should be stopped. Fannie
Mae has not authorized this unlawful conduct. As a result of the MERS hearings in Florida,
Fannie Mae recognizes the issue and is taking action to correct it.

It is axiomatic that the practice of submitting false pleadings and affidavits is unlawful. With his complaint, Mr. Lavalle has identified an issue that Fannie Mae needs to address promptly. For some time, the Legal Department has been working on a proposal for a new computer system to communicate better with and control attorneys working on Fannie Mae litigated matters. As a result of the Florida cases, the Legal Department is formulating a more immediate solution for the issues raised in those cases, including a directive to attorneys and Servicers in Florida directing corrective action.

Mr. Lavalle’s claim that large numbers of foreclosures – tens of billions of dollars
worth – could be unwound as a result of this misconduct likely overstates the risk to Fannie Mae.
Courts are unlikely to unwind foreclosures unless borrowers can demonstrate that the foreclosure
would not have gone forward with the correct pleadings, which is a difficult burden for most
borrowers to meet. Even the Florida judges who were very angry about the false pleadings ordered that the foreclosures could go forward with correct pleadings and the proper plaintiff.

Civil lawsuits would have a similar burden; the plaintiffs would have to demonstrate damages
arising from the false statements. Mr. Lavalle has not presented evidence that the borrowers
were improperly placed in default. Nevertheless, the issues Mr. Lavalle raises should be
addressed promptly in order to mitigate the risk of exposure to lawsuits and some degree of
liability.

Prior to the creation of MERS, the borrower could look to the land records to
follow the chain of servicers. If a mortgage is registered with MERS, however, MERS is the
mortgagee of record. Fannie Mae does not require lenders to register mortgages they sell or
service for Fannie Mae with MERS.

Mr. Lavalle questions whether Fannie Mae has adequate
procedures in place to keep track of 15 million promissory notes that it has in its possession or is
held for its account. 155 Mr. Lavalle claims that the endorsement-in-blank policy leads to trillions
of dollars of missing or lost negotiable paper. 156 Mr. Lavalle bases his claim that the problem is
widespread by extrapolating from routine filing of lost note affidavits in Florida foreclosure
proceedings. 157 He acknowledges that every entity operating in the secondary mortgage market
has the same policy.158 According to his calculations, about $6 trillion worth of bearer paper
exists due to this practice. 159 Since these notes are negotiable instruments, Mr. Lavalle contends
borrowers face dire consequences from their mishandling. 160 A holder in due course, for
instance, can recover even when the maker has defenses or has paid the note in full.

80495799-Confidential-Report

Greg Clark is a brilliant Clearwater, Florida attorney who has been a practicing title attorney for 30 years.  For hundreds of years, a title attorney’s job was to examine all of the records that related to a property and then issue an attorney’s opinion of title or title insurance policy confirming that if his client purchased the property or lent money against the property, they were doing so free of any claims by another other person or party who might claim an interest in the property.  I say that the job “used to be” because after the development of the Mortgage Electronic Registration System or MERS, no attorney can tell you what other party might claim an interest in the property because that information is locked away deep inside a private company…MERS.  A mortgage is recorded in the county public records, but who owns it and who may have any rights to that mortgage is a closely held secret.

Kessler, Azize, New Millennial, BAC Funding The Cases That Crack MERS

A good example of what goes wrong in the secret system is a case called JP Morgan v. New Millennial, a Pinellas County case that was decided correctly by Judge Douglas Baird, who was unfortunately reversed by the Second District Court of Appeal.  I’m going to write a full post on this case later, but it is an important case to know and understand so I post the entire case here. Support for Greg’s important argument is found in a Kansas Supreme Court case, Kessler v. Landmark, which is found here.  A fascinating thing about the Kessler opinion out of way far away Kansas is that it cites another Pinellas County Case, Azize v. MERS, found here.  Now here’s what’s fascinating about the Azize opinion.  MERS “won” that case…the Second DCA found that they could proceed with the foreclosure cases they had filed, but even though they “won” the case, neither MERS nor lenders cite that case or want courts to pay attention to that case.  The reason why is found in footnote number 2:

Although the complaint does not allege how or why MERS came to be the  owner and holder of the note, the trial court’s dismissal wasnot based on this deficit.Since the trial court did not base its ruling on this issue,we offer no opinion as to whether the complaint fails to
properly plead a cause of action without this information being alleged.

By now everyone’s read the BAC Funding case, so I won’t waste time with the opinion, what I will share is the appellate brief that most people haven’t read.  The brief answers many of the questions that are not adequately explained in the Order, and the brief is the important, “secret” information…the “secret” brief can be found here.  This brief should be provided to every judge who hears foreclosure cases to help them apply the BAC opinion to cases in their courtroom that match the facts described in the BAC brief.

What do we know about secrets when they relate to public policy? What place do secrets have in our of public court systems?

Secrets are bad news in almost every context, but they’re especially bad when it comes to matters of public policy and our court systems.  So anyway, Greg Clark makes a brilliant argument that the MERS system is a total violation of real property laws that have existed for literally hundreds of years and that the consequences of this system that violates the law are going to be catastrophic.  Greg posted a comment to my recent questions about the MERS system….I struggled with his argument at first, but as he explains below, the problem is not all that complex and the fundamental violations of law are pretty clear:

Let me give you the short answer to your question of “why the MERS assignments”, if Johns Gillian and its progeny applies: IT DOESN’T and the higher ups, who didn’t want to spend $10.50 (to our clerks of court) to do just one extra assignment, know it.

You see, the original introduction of MERS was post closing, that is, the note and mortgage were, at inception, put into the name of the original lender so you had compliance with the rule of common law, of unity of title of the note and mortgage into one holder. It was after that that the unenforceable attempt at splitting the note from the mortgage, by assignment, occurred, which assignment Florida law holds as a nullity (see Vance, Sobel, etc.).

So the assignment being invalid simply means that you go back “revert’ to the original transaction which was clean and unified in one holder, thus John/Gillian would have applied.

But now it doesn’t because of that extra $10.50 the lenders and mers wanted to pocket. Almost immediately after they started the post closing assignments lenders saw that $10.50 expense and decided to instead split the note and mortgage at the closing, AT INCEPTION, and, in essence, keep the money for themselves (ah, multiplied by 50 or 60 million loans that works out to 5 or 6 billion dollars if my math is right). Problem is that Florida law, which follows the common law of almost every state in the union states that bifurcation of the mortgage from the note renders the mortgage unenforceable, a nullity, was ignored.

This basic principal against note/mortgage splitting was reiterated in the U.S. Supreme court in the Carpenter case a long time ago, even before Johns/Gillian.  To date their exists no statutory or case law abrogating this fundamental concept of property law, which we inherited from English common law, unmodified.

MERS and the foreclosing lender proxies simply hoped (and still hope) they can moonwalk away from the scene of this title failure with these invalid assignments hoping no one notices the fact that an assignment can rise no higher in dignity that the failure of title upon which it is based.

Whats more, even poetic, is that the “MERS mortgage” (even if the court wants to ignore this fundamental failure of title at inception) contains no right, in the grant of the mortgage, allowing MERS to assign its duties as NOMINEE or to transfer or otherwise assign the mortgage.

They have painted themselves into a legal corner.

I’ve been practicing dirt law for some 30 years, writing title, crafting grant language, and chaining ownership, etc. and I understand that most if not all judges were former litigators who simply have no knowledge beyond their law school years in this subcategory of transactional practice and procedure, other than rubber stamping SJs presuming the plaintiffs bar will not lead them into error. (see and read the recent BAC Funding case out of our 2d DCA)

Its the same reason most people sit down and sign closing papers without thinking or reading them: because we have (or had) a solid and fair system or real property law in place for nearly a thousand years behind it each and every one of those deals.

It is now in great doubt whether it is fair or solid or even legal, with the disabling injection of the MERS mortgage and invisible lender lien holder now clouding our record titles.

Anyhow, what mystifies me most is why they took such a big chance. You would have thought that they would have at least tried to adopt nationwide recording/title law changes to allow the MERS mortgage splitting concept. I mean, they undertook the UCC article 9 changes which passed the 50 states to allow the securitization of debt, but they forgot to include the MERS configuration into the changes. They just assumed the real estate mortgage would simply tag along like a caboose into article nine. They rolled the bones that they could circumvent each states legislature and do a private deal with MERS. They likely feared the states would object to the degradation of their record title statutes and the evisceration of their public recording systems, not to mention the loss of recording fee revenue.

MERS, by the way is a privately owned company funded and financed by the big box lenders and, guess who else? The major title insurance companies and ALTA (American Land Title Association). This conflict of interest relationship does not allow for the independent accounting or transparency the public should have when it comes to the biggest investment of our lives. A guy like me who wants to investigate title to make sure my client gets a clean and clear deed or new mortgage can’t determine by relying on the public title records who owns the old mortgage loan that needs to be paid off. We simply run into the MERS strawman and have to hope they give us true and accurate info – if they give us any info at all – as to who to payoff to free title.

MERS is not a government agency looking out for the interests of the public. MERS is a profit driven closely held corporation. They openly seek to privatize all of our public records as they relate to real estate mortgages. Absolute power through control of information.

Absolute power, vested in the hands of private corporate interests.

Hardly egalitarian in a free democracy and open economy.

And this is why note/mortgage splitting, something that is already in derogation of our common law, should not be allowed.

Its just bad business.

JEDTI

G.

http://www.gregorydclarklaw,com