Matt Weidner – Fighting For The American People

Posts Tagged ‘azize’

From the beginning of our nation’s history real property ownership was very simple.  If you owned a property or held a mortgage on a property, the deed or mortgage was recorded with the county clerk.  Anyone wanting information about that property or any owner or holder of a mortgage need only go to the county and obtain copies of that recorded interest and ownership or debt was conclusively and clearly established.  A lender seeking to foreclose could quickly obtain his mortgage, file that with the court and that lender could usually proceed quite quickly with his foreclosure.

MERS- The Shifty, Shady, Smoky Backroom Dealer of Mortgages

Although the local system of property recording and ownership worked well for hundreds of years and continues to function quite well even today, this system grew out of favor with a group of major lenders and investors.  The primary reasons were the system was open and accessible to the public and the local clerks and courts were very attentive to important details like making sure the mortgages were properly recorded.  Rather than work within the system a group of major lenders got together in 1998 and formed MERS, the Mortgage Electronic Registration System.  According to the MERS website:

MERS is an innovative process that simplifies the way mortgage ownership and servicing rights are originated, sold and tracked. Created by the

real estate finance industry, MERS eliminates the need to prepare and record assignments when trading residential and commercial mortgage loans.

Cutting right to the chase this “innovative process” means the mortgage and banking industry found a nifty way to sell, trade, steal, manipulate and mismanage the mortgages held on virtually every homeowner’s home in America.  Although “eliminating the need to prepare and record assignments” sounds efficient, the problem is the purpose of preparing and recording assignments of mortgages in the county where the property is located is to confirm and insure proper and legal ownership of the mortgage debt.  The MERS system is about to collapse as courts around the country, circuit courts, federal courts and federal bankruptcy courts have called into question the legitimacy of the MERS system.

Two Cases That Call Into Question the Long Term Viability of MERS- Kessler and Azize

There are a volume of cases from across the country that are calling into question the long term viability of MERS and its processes, but I will focus on two here today.  One from Kansas (Kesler v. Landmark) and one from right here in good old Pinellas County, Mortgage Electronic Registration v. Azize) 965 So. 2d 151 (Fla. Dist. App. 2007)

Kesler is a nifty opinion because in it, the Kansas Supreme Court found that because MERS did not own the mortgage in that case (MERS doesn’t own any mortgages), it was not a necessary party to a foreclosure and had no rights in the foreclosure case….

• MERS had no right to the underlying debt repayment secured by the mortgage; MERS did not even act as the servicing agent to receive the payments and remit them to the lender. MERS’s right to act to enforce the mortgage was strictly limited: if “necessary to comply with law or custom,” MERS could foreclose the mortgage or enter a release of the mortgage. MERS certainly could not act at odds to its principal, the lender. Its role fits the classic definition of an agent: one “‘authorized by another to act for him, or intrusted with another’s business.’” In re Tax Appeal of Scholastic Book Clubs, Inc., 260 Kan. 528, 534, 920 P.2d 947 (1996) (quoting Black’s Law Dictionary 85 [4th ed. 1968]).

• Only one Kansas case has discussed the meaning of nominee in any detail. In Thompson v. Meyers, 211 Kan. 26, 30, 505 P.2d 680 (1973), the court noted that the meaning of the term may vary from a pure straw man or limited agent to one who has broader authority.  But whatever authority the nominee may have comes from the delegation of that authority by the principal. In its ordinary meaning, a nominee represents the principal in only a “nominal capacity” and does not receive any property or ownership rights of the person represented. See, e.g., Cisco v. Van Lew, 60 Cal. App. 2d 575, 583-84, 141 P.2d 433 (1943); see also Applebaum v. Avaya, Inc., 812 A.2d 880, 889 (Del. 2002) (referring to nominees “as agents of the beneficial owners”). The Millennia mortgage does not purport to give MERS any greater rights than normally given a nominee. The mortgage says that MERS acts “solely as nominee for Lender.” There is no express grant of any right to MERS to transfer or sell the mortgage or even to assign its duties as nominee. Nor does MERS obtain any right to the borrower’s payments or even a role in receiving payments.

Azize is a fantastic case for consumers and foreclosure defense in general, but you’ve got to dig a little deep into it to figure out and understand why.  (The full opinion can be found here.) A few years back here in good old Pinellas County a beloved judge, Judge Logan became infuriated at the number of foreclosure cases filed in his circuit with “MERS” as the Plaintiff.  Problem was MERS would file these cases then attorneys would appear in his courtroom and have no idea who the real owner or party in interest in the mortgage was or who had any entitlement to to collect the debt.  Judge Logan became infuriated and consolidated 20 pending MERS cases and directed that attorneys from MERS come into his courtroom to explain how MERS was the Plaintiff in all these foreclosures when they had no ownership interest in the cases.  The attorney’s explanation reads like a script from Alice in Wonderland but the net result was Judge Logan determined that MERS had no interest and he dismissed all the MERS cases that were currently pending in Pinellas County.  Now the problem is Judge Logan’s Azize opinion was subsequently overturned by the Second District Appellate Court.  Great news for MERS right? MERS can get right back in the business of filing their suits again right?  MERS will cite this appellate court decision to support their continued practice right?

WRONG!  and Here’s why….

The Azize opinion is almost never cited by the banks or lenders and their attorneys because the opinion contains a footnote that points to an even bigger problem….

Here, MERS’s counsel explained to the trial judge at the hearing that, in these transactions, the notes are frequently transferred to MERS for the purpose of foreclosure without MERS actually obtaining the beneficial interest in the note.

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 was not 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.

And that’s the key, because MERS does not allege how or why they came to be the owner and holder of the underlying note, they cannot properly plead a cause of action!

One more fun thing before I go….if you want a peek behind the MERS curtain, go here to their website and you can track their own information about who owns or services a note.  It’s nifty information when they come before the court asserting one party “owns and holds” a note when their own website shows another!

MERS, the Mortgage Electronic Registration System has emerged as a major player in the mortgage meltdown and coming foreclosure showdown.  When a note is lost, or an assignment of mortgage is issued in a foreclosure case, there is a pretty good chance MERS has been involved.

Judges across the country have expressed great skepticism regarding this industry-created black market, star chamber shadow organization.  One of the earlier judicial challenges to the hidden and problematic nature of MERS came right out of Pinellas County and the Sixth Judicial Circuit by Judge Walt Logan in a case called, MERS v. Azize.  At that time, MERS was a Plaintiff in thousands of foreclosure cases in Pinellas County.  Judge Logan consolidated all the MERS cases that were filed in this county and demanded that their attorneys come into is courtroom for a smackdown.

The line of questioning Judge Logan pursued was a skeptical inquiry about the actual ability of MERS to be a Plaintff in any courtroom because they do not own or have a financial interest in any of the loans they seek to foreclose.  In response to the Alice in Wonderland explainations given by MERS about their legal capacity and nature, he dismissed all the MERS cases pending in this county.  The Second District Appeals court subsequently overruled his decision, but MERS has not filed any cases (at least in this circuit) since then.  MERS is rearing is shadowy head again, this time playing a back room role in creating fradulent documents for other “shell plaintiffs” to submit to courts across the country in an effort to take American’s homes.  Some Interesting Facts About MERS.

Basic Corporate Information

•MERS is incorporated within the State of Delaware.
•MERS was first incorporated in Delaware in 1999.
•The total number of shares of common stock authorized by MERSʼ articles of incorporation is 1,000.
•The total number of shares of MERS common stock actually issued is 1,000.
•MERS is a wholly owned subsidiary of MERS Corp, Inc.
•MERS principal place of business at 1595 Spring Hill Road, Suite 310, Vienna, Virginia 22182
•MERS national data center is located in Plano, Texas.
•MERS serves as a “nominee” of mortgages and deeds of trust recorded in all fifty states.
•Over 55 million loans have been registered on the MERS system.
•MERS federal tax identification number is “541927784″.

The Nature of MERSʼ Business

•MERS does not take applications for, underwrite or negotiate mortgage loans.
•MERS does not make or originate mortgage loans to consumers.
•MERS does not extend any credit to consumers.
•MERS has no role in the origination or original funding of the mortgages or deeds of trust for which it serves as “nominee”.
•MERS does not service mortgage loans.
•MERS does not sell mortgage loans.
•MERS is not an investor who acquires mortgage loans on the secondary market.
•MERS does not ever receive or process mortgage applications.
•MERS is simply named as a nominee and its parent company MERS Corp Inc., maintains an electronic registry, tracks changes in the ownership of mortgage loans and servicing rights related thereto.
•MERS© System is not a vehicle for creating or transferring beneficial interests in mortgage loans.
•MERS is not named as a beneficiary of the alleged promissory note.

Ownership of Promissory Notes or Mortgage Indebtedness

•MERS is never the owner of the promissory note for which it seeks foreclosure.
•MERS has no legal or beneficial interest in the promissory note underlying the security instrument for which it serves as “nominee”.
•MERS has no legal or beneficial interest in the loan instrument underlying the security instrument for which it serves as “nominee”
•MERS has no legal or beneficial interest in the mortgage indebtedness underlying the security instrument for which it serves as “nominee”.
•MERS has no interest at all in the promissory note evidencing the mortgage indebtedness.
•MERS is not a party to the alleged mortgage indebtedness underlying the security instrument for which it serves as “nominee”.
•MERS has no financial or other interest in whether or not a mortgage loan is repaid.
•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.
•MERS does not make or acquire promissory notes or debt instruments of any nature and therefore cannot be said to be acquiring mortgage loans.
•MERS has no interest in the notes secured by mortgages or the mortgage servicing rights related thereto.
•MERS does not acquire any interest (legal or beneficial) in the loan instrument (i.e., the promissory note or other debt instrument).
•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. The note owner appoints MERS to be its agent to only hold the mortgage lien interest, not to hold any interest in the note.
•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.
•The debtor on the note owes no obligation to MERS and does not pay MERS on the note.

MERSʼ Accounting of Mortgage Indebtedness / MERS Not At Risk

•MERS is not entitled to receive any of the payments associated with the alleged mortgage indebtedness.
•MERS is not entitled to receive any of the interest revenue associated with mortgage indebtedness for which it serves as “nominee”.
•Interest revenue related to the mortgage indebtedness for which MERS serves as “nominee” is never reflected within MERS bookkeeping or accounting records nor does such interest influence MERS earnings.
•Mortgage indebtedness for which MERS serves as the serves as “nominee” is not reflected as an asset on MERS financial statements.
•Failure to collect the outstanding balance of a mortgage loan will not result in an accounting loss by MERS.
•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.
•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”.
•MERS has no pecuniary interest in the promissory notes or the mortgage indebtedness for which it serves as “nominee”.
•MERS is not personally aggrieved by any alleged default of a promissory note for which it serves as “nominee”.
•There exists no real controversy between MERS and any mortgagor alleged to be in default.
•MERS has never suffered any injury by arising out of any alleged default of a promissory note for which it serves as “nominee”.

MERSʼ Interest in the Mortgage Security Instrument

•MERS is named on the mortgage as nominee for the owner of the promissory note.
•MERS, in a nominee capacity for lenders, claims that it merely acquires legal title to the security instrument (i.e., the deed of trust or mortgage that secures the loan).
•MERS claims that it holds legal title to mortgages and deeds of trust as a nominee for the owner of the promissory note.
•MERS claims that it immobilizes the mortgage lien while transfers of the promissory notes and servicing rights continue to occur.
•The lender or 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.
•MERS claims that one of the advantages of its paperless systems is that the mortgage lien becomes immobilized by 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 MERS member to another MERS member via a purchase and sale agreement which is a non-recordable contract right.
•MERS claims that the legal title to the mortgage or deed of trust remains in MERS after such transfers and is tracked by MERS in its electronic registry.

Beneficial Interest in the Mortgage Indebtedness

•MERS claims to hold legal title to the mortgage for the benefit of the owner of the note.
•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.
•MERS has no interest at all in the promissory note evidencing the mortgage loan.
•MERS does not acquire an interest in promissory notes or debt instruments of any nature.
•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

• MERS is never the holder of a promissory note in the ordinary course of business.
•MERS is not a custodian of promissory notes underlying the security instrument for which it serves as “nominee”.
•MERS does not even maintain copies of promissory notes underlying the security instrument for which it serves as “nominee”.
•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. This technique is used by attorneys who purport to be representing MERS to feign standing by MERS to foreclose the mortgage by claiming that MERS is the holder of the promissory note. When in fact MERS, by its inventors design is never the holder of the promissory note.
•When a promissory note is placed in the hands of a servicer employee that employee will then assume the position as a MERS officer de jour and pretend that this transfer of custody of the note into the hands of this nominal officer (without any transfer of ownership or beneficial interest) renders MERS the holder.
•No consideration or compensation is exchanged between the owner of the promissory note and MERS in consideration of this transfer in custody. MERS is a bankruptcy remote corporation, and does not have any assets.
•Even when the promissory note is physically placed in the hands of the servicers employee who is, at best, a nominal MERS officer, MERS has no actual authority to control the foreclosure or the legal actions undertaken in its name.
•MERS will never willingly reveal the identity of the owner of the promissory note unless ordered to do so by the court. Nor will the law firms who pretend to represent MERS.
•MERS will never willingly reveal the identity of the prior holders of the promissory note unless ordered to do so by the court. Nor will the law firms who pretend to represent MERS.
•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. MERS does not hold any loans nor pay any legal fees to foreclose any loans. MERS is essentially a shell.
•MERS is never a holder in due course when the transfer of custody occurs after default.
•MERS is never the holder when the promissory note is shown to be lost or stolen.
•So-called “certifying officers” of MERS have submitted thousands if not tens of
•thousands of affidavits in Court proceedings falsely claiming that MERS was the holder of the promissory note or that the note had been lost.
•An increasing number of courts have learned of the fast and loose practice of various foreclosure attorneys preparing and the submitting affidavits signed by “certifying officers” of MERS wherein the statements contained in these affidavits are “disingenuous and/or outright misrepresentations”
•Courts which have actually scrutinized the statements contained in these certifying officers affidavits have determined that these affidavit statements were not admissible because they were signed by people who had no personal knowledge of the facts
•contained in the affidavits. They were therefore not competent to testify to the alleged facts.
•The Hon. Linda B. Riegle, U.S. Bankrutpcy Judge, recently took issue with several affidavits that had been filed in support of several Motions for Relief from Stay by attorneys purporting to represent MERS. Judge Riegle refused to accept the affidavits of people claiming to be “Certifying Officers of MERS” which were submitted by attorneys purporting to represent MERS in an attempt to feign standing by pretending to be a holder of notes. Hawkins 2009 WL 901766 (Bkrtcy-D.Nev. March 31, 2009) The Court found that the affiants were not competent to testify concerning the underlying loans. “Ms. Mechs bald assertion that she has “reviewed the loan file” is inadequate to show that she is personally knowledgeable of the facts”.
•Similarly the Hon. Terry L. Meyers, U.S. Chief Bankruptcy Judge, recently rejected a post hearing submission of an affidavit sign by a lawyer purporting to represent MERS in motion to lift stay. Judge Meyers enumerated six (6) reasons that he was rejecting the affidavit which had been submitted in a last ditch attempt by legal counsel purporting to represent MERS to establish standing for MERS by claiming MERS was the holder of the underlying promissory note. Judge Meyers found the affidavit statements by counsel claiming to represent MERS was inadmissible because the lawyer as a witness was not competent to testify regarding various documents and a note the lawyers sworn statements “appeared to be based nit on the affiants (counsel) personal knowledge button the assertions of someone else . . . . the proffer of this “new” note as the “original” note directly contradicts MERSʼ prior representations that the Note attached to the Motion was true and correct and the operatice document in this matter”

MERSʼ Role in Mortgage Servicing

•MERS does not service mortgage loans.
•MERS is not the owner of the servicing rights relating to the mortgage loan and MERS does not service loans.
•MERS does not collect mortgage payments.
•MERS does not hold escrows for taxes and insurance.
•MERS does not provide pr perform any servicing functions on mortgage loans, whatsoever.
•Those rights are typically held by the servicer of the loan, who may or may not also be the holder of the note.

MERSʼ Rights To Control the Foreclosure

•MERS Corp. must all times comply with the instructions of the holder of the mortgage loan promissory notes.
•MERS Corp. 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 MERS as nominee owner.
•MERS Corp. members employ and pay the attorneys bringing foreclosure actions in MERS name.

MERS Access To or Control Over Records or Documents

•MERS has never maintained archival copies of any mortgage application for which it serves as “nominee”.
•In its regular course of business, 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.
•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.
•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.
•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.
•In its regular course of business, 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.
•In its regular course of business, MERS as a corporation does not routinely receive or archive copies of the mortgage security instruments for which it serves as nominee.
•Copies of the instruments attached to MERS petitions or complaints do not come from

MERS corporate files or archives

•In its regular course of business, 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.
•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 MERS officers appointed by corporate resolution and acting under its authority.

Management and Supervision

•In preparing affidavits and certifications, nominal officers of 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.
•Officers of MERS preparing affidavits and certifications, including Vice Presidents and Assistant Secretaries, and otherwise making representations under MERS authority and on MERS behalf, as a matter of routine do not furnish copies of these affidavits or certifications to MERS for corporate retention or archival.
•Officers of 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 MERS officers or employees, but rather are supervised by personnel employed by mortgage investors or mortgage servicers.

For more information, visit my website at

www.mattweidnerlaw.com