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MERS_Design or Unwitting Accomplice

MERS_Design or Unwitting Accomplice

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Published by TA Webster
John Gault's Blog MERS: Design or Unwitting Accomplice? by John Gault | 2011/03/24 | A discussion of the machinations of the MERS' machine, the devolvement of its role as deed of trust placeholder, and the legally skewed actions of its members. John Gault's Blog :: I don't think in the final analysis it really matters if MERS intended to be a bad actor or to participate in unlawful actions by its members or not.
John Gault's Blog MERS: Design or Unwitting Accomplice? by John Gault | 2011/03/24 | A discussion of the machinations of the MERS' machine, the devolvement of its role as deed of trust placeholder, and the legally skewed actions of its members. John Gault's Blog :: I don't think in the final analysis it really matters if MERS intended to be a bad actor or to participate in unlawful actions by its members or not.

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Published by: TA Webster on Apr 18, 2011
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 john gault's BlogMERS: Design or Unwitting Accomplice?by john gault| 2011/03/24 |
A discussion of the machinations of the MERS' machine, the devolvementof its role as deed of trustplaceholder, and the legally skewed actions of its members.
I don't think in the final analysis it really matters if MERS intended to be a bad actor or to participate inunlawful actions by its members or not. Intent is not required as a matter of law for culpability.The whole MERS concept is absurd. I'm not yet clear that it started out that way or devolved. I think theoriginal idea to have members use its computer system as a data base for entries of sales of notes mightnot have been so tweaked and damaging had they stopped there. If there were any form of diligence orways to assure proper and complete entries by members, which there isn't, and most of which entriescalled for recordation of assignments of the deed of trust in land records when the beneficial interest in thenote was transferred to a non-member like a trust had been followed, it wouldn't have been so bad, nor beindicative of actual intent.Because the thing there is that the whole reason MERS alleged it was going to be useful to its memberswas to accomodate quick sales of promissory notes in the secondary market. The secondary marketinvolves trusts and securitization, so really how did the data base accomodate anything other thanultimately hiding the owners of the notes? The assignments to non-members weren't recorded. Does thisnot undermine any argument that MERS was not complicit by design?If one looks at MERS' membership rules and terms and conditions, etc. one sees that its isms are actuallyaddressed more to servicers than anyone else. One of the big reasons I can think of for this is because theactual noteowners are not MERS' members. So what's MERS doing issuing memo's about propertyinterests it's not even remotely connected to? Unless MERS' real corporate officers are deaf, dumb, andblind, they know these notes generally are securitized.It appears to me MERS at some point collaborated in a scheme to allow the alleged servicers to run theshow, with very little if any regard for the actual owners of the notes. Most of what I have seen of MERS'material concentrates on assignments of servicing rights and its memo's are directed toward servicers, notnote owners.Why do I say the system is absurd? For one reason because there is no governance of the voluntaryentries made solely by the members into the MERS' data base. There is no diligence and can be nodiligence. Entities with no real tie to someone's home can nonetheless make off with it. Might we pause amoment to consider what the big rush was to trade these notes multiple times, such a rush thatrecordation of the assignments in land records would thwart , even be the alleged death knoll for thebusiness plan? It just doesn't read. In fact, it's lame.Does this not point to intent and collusion among these players?If ABC noteowner sells the note to XYZ, and ABC makes no (voluntary) entry in the computer data base ofthat sale, who would know? If XYZ sells the note into a pool but doesn't make an entry of the sale, whowould know? Unfortunately, no one. "Garbage in, garbage out." Ish. There isn't even any interface withPSA's. I've actually seen one servicer tender a copy of a PSA in discovery wherein it purported to identifythe subject loan only by loan amount and zip code. That same loan could have been sold into 5 trusts withthat kind of 'identification', and actually, this is true even if notes are properly identified in PSA's, REMIC's,SAMI''s, whatever. The point is, no one knows or can know if sales of notes are entered by the membersor not. It's just difficult to believe that a system which could accomodate such a vast amount ofshenanigans does so incidentally and not willfully.The second reason I use the word 'absurd' is that MERS states in the deeds of trust or other collateraldocument that it is the nominee and also that it is the beneficiary. Which is it? If MERS had not planned tobe conplicit in its members' actions, why call itself the beneficiary in the deed of trust? MERS wasoriginally to act as a 'placeholder' to avoid recordation of the deeds of trust when sales of notes are made
to members, not an intended beneficiary with any real interest in the note and deed of trust. MERS startedoff ostensibly as the 'nominee', and to hold that status as long as the note was owned by one member oranother to obviate the need to record the changes in the land records by way of assignments of the deedsof trsut.This, however, gave MERS no cognizable interest in the deeds of trust - it was just a 'placeholder'. No jibberish can change that. If it had stayed the course and only acted as that placeholder for its members,not that bad, if one doesn't consider the lost revenue to recorders.But, not satisfied with that, its members, who do everything regarding assignments and foreclosures (notrue MERS' officer or employee -there are NO employees fyi -actually does any of that) in the name ofMERS by way of their 'straw' certifying officers, saw 'opportunuty', got bolder yet, and decided to assertthat MERS actually did have an interest in the deeds of trust by being named as nominee of thebeneficiary (and as beneficiary itself, simultaneously) in the deed of trust. In other words, a systemoriginally designed allegedly to have MERS be a placeholder to obviate the need for recordation ofassignments to members, somewhere along the road allowed its members to assert MERS actually had acognizable interest in the deeds of trust /mortgages.This allowed servicers, also parties with no real interest in the notes and deeds of trust, to foreclose in thename of MERS without having to deal with the actual ownership of the notes and deeds of trust. In otherwords, people who had done no or sloppy paperwork – at a minimum - avoided their duties to properlydemonstrate the chain and to foreclose, by hiding behind "MERS". For years these servicers or otherentities foreclosed with impunity in the name of MERS, never having to produce anything, not evenevidence they were the servicer. And, again, let's not forget that MERS computer records show only thatwhich any member bothered entering. Whether or not what was entered had any basis in reality can onlybe speculative. No one would know. It isn't like MERS has some records to go compare its members'entries with - it doesn't. I don't know for sure yet how this deal devolved to members foreclosing in MERS'name. But at some point MERS acquiesced. They no doubt received more fees.So, as I understand it, as it 'devolved', when a member wanted to foreclose in MERS' name, the memberwas to make some kind of entry in the MERS' computer system and pay the fee. As long as the membershowed as the servicer (hopefully the records should have at least shown that member as the servicer, butremember that carte blanche thing) and paid the fee, MERS did not interfere. And as I also understand it, itdidn't matter who owned the note. And as I further understand it, in order to foreclose in MERS' name, theservicer was tacitly implying to "MERS" that the member was in possession of the promissory noteendorsed in blank, relying on an interpretation of the UCC that possession of a 'bearer' note providedlegitimate right to enforce, with which I wholeheartedly disagree. The reason the servicer had to tacitlyiimply possession of the note is because the servicer had an employee who was a straw / certifying officerof MERS; this, to MERS, equated possession by MERS of the note allegedly endorsed in blank and so thegospel according to MERS said MERS could foreclose, i.e., its member could foreclose in MERS' name.By the way, when a note is proferred which does not have all the endorsements on it, it is not a true andcorrect copy of the note unless enforcement is sought by the original payee on the face of the note,because when someone other than the original payee is attempting to enforce, there is necessarily at leastone endorsement. And sometimes a note is produced with no endosements and then later, usually much,another note (copy) is produced now showing endorsments. It's never possible for a homeowner to tell ifthe endorsements are actually on his or her own note because when you only see a copy, the 'back' sideof the last page, the one with the endorsements, is not attached other than with a staple to the copy of thenote, and could easily be the back of John Smith's note for all we know.The servicer may have had (but likely did not have) possession of the note, but the servicer had nointerest in the note and was not really entitled to enforce it in this writer's opinion, but that's another storyfor another day.MERS would have no way of knowing if the member possessed the note or not, however. If servicersactually had possession of the notes, one might ask why. Notes are supposed to be held by the custodianof the trust, properly (key word) endorsed. Many notes were not properly endorsed . That's one reason'they' don't want to produce them, even if they COULD locate them, and this is why I opine vigorously thatdeed of trust trustees are not being given proper evidence of anyone's right to foreclose.** But the pointhere the way I see it is that MERS allowed foreclosure in its name in return for fees, with no evidence thatthe straw certifying officer at the servicer's actually had such possession. Fortunately, albeit extremelybelatedly (years, in fact), MERS has abandoned this baloney, i.e., allowing foreclosures in its name.This whole MERS' schematic begged abuse if it weren't just plain collusive and abusive itself, which itappears to be. Maybe the MERS' president who recently retired wanted to do some sailing, or maybe hehad enough of this and the attendant exposure. Retirement won't save him, however, if MERS ever faces
charges for actions taken on his watch.MERS started out as the 'nominee' placeholder in lieu of proper recordation. MERS, rather its members,then became emboldened further and claimed MERS was their agent. There are two forms of agency-expressed and implied. Clearly the alleged 'agency' isn't expressed in any contract. MERS deliberatelyavoided that word and chose 'nominee' instead. An automatic assumption that nominee = agent is errant.I believe there were 2 reasons for this. One, agency comes with liability. Second, on info and belief, MERSwhen originally formulated perhaps had no intent or idea its members would use MERS to foreclose.MERS was just to be a placeholder in the deeds of trust to avoid recordation, right? There was no reasonto allege an agency until members starting doing things, like foreclosing in MERS' name. I don't believethat MERS' "implied' agency would be found in the governing documents, no way, no how. If it is, I haven'tfound it yet."Courts may look to intent in the formation of a contract", and as stated, I find no indication of agencyintent in the MERS' contract; therefore it is not likely agency is implied.Had MERS intended to be an 'agent,. it coud have used that word. Mostly only attorneys who practicecertain areas of law, generally contract law, understand 'agency', and so far, none of those attorneys haveaddressed this issue to my knowledge. When we don't use info learned years ago, we have a tendancy toforget it, and apparently this applies to judges, too. That's one way to look at some adjudications,anyway..........Which brings me to the second reason MERS is absurd. Attorneys for MERS', which are by and large thesame attorneys representing the servicers in the same litigation and thus actually make the arguments forMERS, have alleged in different litigations that MERS is the nominee one day, the agent another, and thebeneficiary yet another. There does seem to be real potential for conflict of interest between MERS andmembers who have taken certain actions in MERS' name, so it is somewhat surprising that MERS and itsmembers are still sharing counsel.But let's assume arguendo that MERS is an agent of its members. That makes the member its principal,right? "Agency 101". Generally, in the principal - agent relationship, it is the agent who contractually 'doesthings' in the name of its principal or may bind its principal. Like a listing agent on a house, say. In the'illusion' that is MERS, it is actually the members, or principals, who act in the name of the agent! It is themembers who execute assignments of deeds of trust and command foreclosure in the name of the agent,MERS. This is not a cognizable relationship. It's bass ackwards. And members are actually assigningdeeds of trust to themselves by using their own employees (or foreclosure mills) slash MERS straw / certifying officers to execute the assignments in the name of MERS.Additionally, I have seen members actually allege to be the agents of MERS, in which caseTHE PRINCIPAL PURPORTS TO BE THE AGENT OF ITS AGENTSay what?One way or another, when members take actions in the name of MERS, THE PRINCIPAL IS ACTING INTHE NAME OF ITS ALLEGED AGENT.This is LEGAL FICTION.So did MERS willfully design this mockery of the law? Or was it just an unwitting accomplice?The fat lady isn't singing on MERS' complicity by and of its initial 'plan', which is to say there are factorssupporting different conclusions, but surely the writing is on the wall as to a zillion subsequent actions.** Posted here as "Trustees, Fiduciary, and Breach of Fiduciary"

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