Matt Weidner – Fighting With The American People

Posts Tagged ‘Mortgage Electronic Registration System’

Too many practitioners lose site of the fact that a foreclosure case is based on two separate and distinct documents, the Promissory Note or the agreement to repay an amount borrowed and the Mortgage which secures that promise against the piece of property.  Both documents are separate and each has its own distinct set of rules that govern how they are exchanged between parties from closing of the  loan transaction until a foreclosure is filed.  These same distinct set of rules govern how the documents are presented and entered into evidence in the actual foreclosure case.

Quite simply, one set of rules applies to the Note part of the foreclosure equation and an entirely different set applies to the mortgage component.  Understanding these rules is a key component in drafting Motions to Dismiss and fighting Summary Judgment.  Thanks to Foreclosure Fraud Fighter George Gingo for “sharing with the class”.  For an excellent foreclosure defense attorney in the Brevard/321 area, contact George directly at ggingo@yahoo.com.

Read the following appeal for an excellent discussion of these issues along with all relevant case law.  taylorappeal

An issue I’ve been fighting in court long before the foreclosure crisis began is the issue of “Capacity”, which in layman’s terms means, tell me who this Plaintiff that is suing my client is so that I can first determine if they have the legal ability to sue my client. Then we’ll get to work on determining whether they in fact have the right to collect anything from my client. (Despite what the paperhangers and robosigners have produced, these plaintiffs have no clear right to foreclose.)

It’s an amazing thing that in the vast majority of foreclosure cases, no-one has any idea who the plaintiff suing the homeowner is.  Not the Plaintiff’s attorney, not the homeowner, not the defense attorney and unfortunately, not even the judge.  I say no one has any idea because capacity is not even plead or alleged in the complaint…it’s just not part of their word processor program it they apparently don’t want to go through the effort to plead it.  You see, basic rules of legal pleading require the parties in a lawsuit to be properly identified so we know exactly who is before the court.  Correct pleading would look something like this:

“Plaintiff XYZ Bank is a Federal Bank Chartered under the National Banking Act with it’s principal place of business in Des Moines, Iowa.”

Problem is you’ll never see this proper pleading in the typical foreclosure mill complaint….as a result it is not at all clear who the Plaintiff is in the litigation…and therefore it is not clear that the Plaintiff has even properly invoked the jurisdiction of the court.  There are a whole range of other issues that flow from this…such as the cases where the Plaintiff makes an ex-parte motion to substitute party plaintiff, or when the certificate of title is assigned or substituted for another party.  All of this is totally improper but it goes on all the time.. Some judges get it, (see my published case from Pinellas County Judge Anthony Rondolino, Wachovia v. Matacherro) where the judge required that the plaintiff properly identify themselves as a condition of proceeding with the case.

The unregulated, unregistered, unknown shadow entities that are filing foreclosures across the country (i.e. Deutsche Bank as Trustee for the IXIS trust) raise real questions that must be answered….who are they?  Where are the registered?  Who are the real parties in interest?  Other questions that flow from these questions is why the judges, Florida Attorney General, Florida’s Chief Financial Officer and Florida Governor (and their counterparts in every state) are allowing unregistered, unregulated, unknown entities take title to bajillions of dollars worth of property in this state without even bothering to give us an address to send their checks to….think about it…we don’t even have a proper address to mail them a thank you letter.

If we’ve learned anything about the collapse of the economy and issues like the Bernie Madoff scandal, the power players play by an entirely different set of rules and our government institutions and leaders lack the will to challenge their power. There is something terribly amiss when judges are taking their neighbors homes and with a stroke of a judicial pen granting it to some shadow entity that no-one can identify and who were not sure plays by any sort of rules.  Another practical consideration is, as a title attorney, the properties that are taken back through foreclosure cannot be properly conveyed without proper identification of the trust that purported to own it….at the time of filing the complaint.

There are two recent Supreme Court cases that address some of the issues surrounding capacity, (Watters v. Wachovia and Cuomo v. Clearinghouse) but the following links take you to sites that offers a complex explanation of why these cases and why capacity is so important….read on and here

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

I attach here a copy of an Order signed by Judge Charles Roberts in Sarasota on February 26, 2010.  Please take time to read it carefully.  In it, the judge makes specific findings of fact that the Plaintiff:

1. Failed to show it was entitled to foreclose;

2. Failed to show it was the holder of the note and mortgage;

3. Failed to establish any admissible evidence to show that it validly held the note and mortgage.

Caught one Stinking Fish….How Many Got Away?

The fact that these major issues were caught is good.  The problem is, how many tens of thousands? tens of hundreds of thousands? millions? of judgments of foreclosure have been signed across the country when the Plaintiff:1. Failed to show it was entitled to foreclose 2. Failed to show it was the holder of the note and mortgage 3. Failed to establish any admissible evidence to show that it validly held the note and mortgage.

I believe there are tens of thousands, maybe hundreds of thousands of judgments entered across the state (millions across the country?) where this is the case. I believe depositions of key employees at document preparation mills and foreclosure mills is going to reveal assembly line document fabrication which purports to give Plaintiffs a basis for forecloure, when no proper evidentiary basis exists.  At some point in time in the foreclosure files that the mills have rushed through are going to be carefully examined..if not by defense attorneys what about junior lienholders, certificate holders, bondholders, investment firms….when that happens now we’re talking major problems.

What happens when the assignments of mortgage were improper/fraudulent on their face?

What happens when the note and mortgage and allegations contained within the pleadings are all inconsistent, yet Final Judgment was entered based on “facts” that are of record that do not support that judgment?

And now my final question of the post….WHY ARE PLAINTIFF’S FIRMS/LENDERS BOTHERING TO GET ASSIGNMENTS OF MORTGAGES AT ALL? If Johns v. Gillian and the law as it exists is that lenders do not need an assignment of mortgage, why bother with word processing hundreds of thousands of assignments of mortgages in law firms and document mills all across the country?  In many cases, lenders are coming to the table with original notes. Ignore for the moment how they got them and what entity purports to hold them.  Ignore for the moment that the endorsements/allonges are sloppy/inconsistent/questionable on their face.  Even if a proper lender couldn’t come up with a note, they could still re-establish the note through a copy and there would be no need whatsoever (if the whole “mortgage is but an incident to the debt” argument remains valid) to have an assignment of mortgage.

Why are document mills and foreclosure mills working weekends and around the clock to spit out assignments that purport to transfer mortgages out of MERS and other lenders/entities and into other entities that we no nothing about?

How are we allowing tens of hundreds of millions of dollars to be transferred into things like “The IXIS 2006 Certificateholder, Asset Backed Trust”?

Do judges/courts have any idea who these entities are?  (I’ll answer that one, the answer is no.)

Why are courts across the country transferring bajillions of dollars into alphabet soup entities that no one has any idea who controls or where they are located or what rules apply?

Why Are Courts in Florida Continuing to Rely on Legal Reasoning That Existed in 1938?

Remember that the Johns v. Gillian “mortgage is but an incident to the debt” reasoning applied in tiny little town where parol documentation and other evidence existed that supported the foreclosing lender’s claim to ownership of both the note and the mortgage. Remember Johns v. Gillian is a 1938 case! The judge probably knew everyone in his courtroom (he probably knew the lawyers since they were snot nosed kids running around town kicking cans.  He probably walked past or rode a horse past the property in question each day.  And remember the Johns reasoning applied decades before MERS was even conceived of….Johns simply cannot stand true in the MERS environment…here is Greg Clark’s splitting/Kessler v. Landmark reasoning….Johns only applies when the mortgage and note were not separated right from the very beginning.…How can the Johns reasoning apply in the MERS environment?

Consider all the cases, including WM Specialty v. Saloman and Chemical Residential v. Rector….assignments were of record in those cases and other evidence existed to support claims of ownership.  There is almost no additional evidence of ownership or interest in the cases that are being shoved through courts other than a few questionable documents…..but again the burning question….

Why The Assignments of Mortgage?

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!

SUE THE USA FOR THE MORTGAGE MESS!

Wow!  Every once in a while I read something truly mind blowing…totally off the wall and completely revolutionary.  I found that just a few minutes ago in a lawsuit filed by private citizen Paul L. Muckle and suing Barack Obama, George Bush, Timothy Geithner, Henry Paulson, Sarah Palin and the governors of all fifty states…that’s ballsy!

All 106 pages of this masterwork can be found here. Although it is drafted by a layperson, it really is brilliant and lays out quite remarkably a variety of causes of action that could (on a longshot) and probably should be pursued against all the elected and appointed leaders who were complicit from the very beginning in the financial fraud that brought this country to its knees.  As this crisis continues (and the truth of the matter is its quietly getting worse), we owe it to ourselves to read this lawsuit and at least understand some of the allegations.

Fraud, lies, conspiracy and treason!

The mess that is our current financial, banking and mortgage system is more than even the most sophisticated person can possibly comprehend.  I spend ten hours a day working on this problem and the deeper you dig, the more complex, convoluted and mysterious it becomes.

Take a moment to read it….staggering.