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COMMENTARY AND THE 9TH CIRCUIT COURT OF APPEALS DECISION IN CERVANTES - SEPT 2011

COMMENTARY AND THE 9TH CIRCUIT COURT OF APPEALS DECISION IN CERVANTES - SEPT 2011

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Published by 83jjmack
The 9th Circuit Court of Appeals (Federal) has issued a decision in Cervantes that will no doubt be cited by pretender lenders all across the country. BUT, if you read the decision carefully, you can see that there were errors in pleading perceived by the Court. Correcting those errors might change the result completely.
Beth Findsen, Esq., one of the foremost scholars and legal writers of the country believes that the decision points the way to a successful action against the use of MERS. “There is some helpful language among the detritus here,” she said. “The legality of MERS’ role as a beneficiary may be at issue where MERS initiates foreclosure in its own name, or where the plaintiffs allege a violation of state recording and foreclosure statutes based on the designation. Para. 7″. The obvious point here is that if MERS is the forecloser or if the homeowner alleges that the designation of MERS violates state recording statutes or alleges a violation of state foreclosure statutes, the analysis would clearly be different.
She points out that the Court thought it important to state that “The plaintiffs’ allegations do not call into question whether the trustees were agents of the lenders. Para. 8″.

The only other thing I would point out is that we may be missing the forest for the trees. Why do we assume the original mortgage represents a perfected lien? We know that the money came from an undisclosed creditor, we know that the creditor was not named or even described, and we know that the creditor was given a bond with many more terms than the note itself.
If you want a satisfaction of mortgage, you need to get it from the party who is the one to whom the money is owed — not some self-appointed agent. And if the self-appointed agent is claiming agency rights, then they must show the documents supporting that contention AND the facts to show that the documents were followed with respect to the conditions and restrictions for transfer of the loans. We already know that wasn’t done, and so we know that the claim of agency cannot be true. Thus the placeholder at the closing of the loan was merely that and no more. It can’t claim agency and it wasn’t the lender. Somebody explain to me how that could result in a perfected lien!
The 9th Circuit Court of Appeals (Federal) has issued a decision in Cervantes that will no doubt be cited by pretender lenders all across the country. BUT, if you read the decision carefully, you can see that there were errors in pleading perceived by the Court. Correcting those errors might change the result completely.
Beth Findsen, Esq., one of the foremost scholars and legal writers of the country believes that the decision points the way to a successful action against the use of MERS. “There is some helpful language among the detritus here,” she said. “The legality of MERS’ role as a beneficiary may be at issue where MERS initiates foreclosure in its own name, or where the plaintiffs allege a violation of state recording and foreclosure statutes based on the designation. Para. 7″. The obvious point here is that if MERS is the forecloser or if the homeowner alleges that the designation of MERS violates state recording statutes or alleges a violation of state foreclosure statutes, the analysis would clearly be different.
She points out that the Court thought it important to state that “The plaintiffs’ allegations do not call into question whether the trustees were agents of the lenders. Para. 8″.

The only other thing I would point out is that we may be missing the forest for the trees. Why do we assume the original mortgage represents a perfected lien? We know that the money came from an undisclosed creditor, we know that the creditor was not named or even described, and we know that the creditor was given a bond with many more terms than the note itself.
If you want a satisfaction of mortgage, you need to get it from the party who is the one to whom the money is owed — not some self-appointed agent. And if the self-appointed agent is claiming agency rights, then they must show the documents supporting that contention AND the facts to show that the documents were followed with respect to the conditions and restrictions for transfer of the loans. We already know that wasn’t done, and so we know that the claim of agency cannot be true. Thus the placeholder at the closing of the loan was merely that and no more. It can’t claim agency and it wasn’t the lender. Somebody explain to me how that could result in a perfected lien!

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Published by: 83jjmack on Sep 09, 2011
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9th CIRCUIT AFFIRMS MERS WITH INSTRUCTIONS ON HOW TODEFEAT FORECLOSURE
 Posted on September 8, 2011 by Neil Garfield, ESQ., MBA on his LivingLiesWeblog.
HOW CERVANTES COULD HAVE BEEN DECIDED THE OTHER WAY
 
SIGNIFICANT QUOTES FROM CERVANTES CASE, 9TH CIRCUIT:
 1.
 
“In the event of a default on the loan, the lender may initiateforeclosure in its own name, or may appoint a trustee toinitiate foreclosure on the lender’s behalf. However, to havethe legal power to foreclose, the trustee must have authority toact as the holder, or agent of the holder, of both the deed andthe note together. See Landmark Nat’l Bank v. Kesler, 216 P.3d158, 167 (Kan. 2009).” 16985
 2.
 
“The deed and note must be held together because the holderof the note is only entitled to repayment, and does not have theright under the deed to use the property as a means of satisfying repayment.” 16986
 3.
 
“the holder of the deed alone does not have a right torepayment and, thus, does not have an interest in foreclosingon the property to satisfy repayment” 16986
 
The 9th Circuit Court of Appeals (Federal) has issued a decision inCervantes that will no doubt be cited by pretender lenders all acrossthe country. BUT, if you read the decision carefully, you can see thatthere were errors in pleading perceived by the Court. Correctingthose errors might change the result completely.Beth Findsen, Esq., one of the foremost scholars and legal writers of the country believes that the decision points the way to a successfulaction against the use of MERS. “There is some helpful languageamong the detritus here,” she said. “The legality of MERS’ role as abeneficiary may be at issue where MERS initiates foreclosure in itsown name, or where the plaintiffs allege a violation of staterecording and foreclosure statutes based on the designation. Para.7″. The obvious point here is that if MERS is the forecloser or if thehomeowner alleges that the designation of MERS violates staterecording statutes or alleges a violation of state foreclosurestatutes, the analysis would clearly be different.
 She points out that the Court thought it important to state that “Theplaintiffs’ allegations do not call into question whether the trustees wereagents of the lenders. Para. 8″. This is an important signal from the Court of Appeals. They see the point. If the Trustees were agents of the putativelenders, then the analysis would also be different. How? Because if thetrustees were agents of the pretender lenders who initiated the foreclosure,it would obviously mean two things: (a) the trustees did not qualify astrustees because they were not serving in the capacity designed by the
 
legislature to protect borrowers and (b) the more direct point would be thatthe implication would clearly point to the fact that the pretender lenders areforming entities for the purpose of designating themselves as trustees(through nominees — there is that word again).Findsen also points out that the Court seemed to think it was importantthat”The plaintiffs have not alleged violations of Arizona recording andforeclosure statutes related to the purported splitting of the notes anddeeds. Para. 8.” Here again. The Court is signalling us as to where to go withthis. See the briefs and filings of Ron Ryan and Beth Findsen in connectionwith this issue. It relates to the UCC Article 3 and Article 9 which requiresthe OWNER of the obligation to be the one claiming the right to foreclose,not some holder or other agent. Lawyers have shied away from the Splittingthe note and mortgage” under the simplistic notion that the general rule isthat the note follows the mortgage and vica versa. It doesn’t actually workthat way and the appellate court here is telling us just that. What is clearlyhappening is that the pretenders are foreclosing on the mortgage without(a) perfecting the lien in the first place and (b) without even asserting thatany money is due them from the borrower. There are virtually no decisionsanywhere that support such a notion.To have the legal power to foreclose, Findsen says, the trustee must haveauthority to act as the holder, or agent of the holder, of both the deed andthe note together. She’s right and the 9th Circuit says she is right. Thedeed and note must be held together because the holder of the note is onlyentitled repayment, and does not have the right under the deed to use theproperty as a means of satisfying repayment. Conversely, the holder of thedeed alone does not have a right to repayment and, thus, does not have aninterest in foreclosing on the property to satisfy repayment.
EDITOR’S NOTE: The only other thing I would point out
 
is that wemay be missing the forest for the trees. Why do we assume theoriginal mortgage represents a perfected lien?
 
We know that themoney came from an undisclosed creditor, we know that the creditorwas not named or even described, and we know that the creditorwas given a bond with many more terms than the note itself.
 
If you want a satisfaction of mortgage, you need to get it from theparty who is the one to whom the money is owed — not some self-appointed agent. And if the self-appointed agent is claiming agencyrights, then they must show the documents supporting thatcontention AND the facts to show that the documents were followedwith respect to the conditions and restrictions for transfer of theloans. We already know that wasn’t done, and so we know that theclaim of agency cannot be true.
 
Thus the placeholder at the closingof the loan was merely that and no more. It can’t claim agency and itwasn’t the lender.
 
Somebody explain to me how that could result ina perfected lien!
 
 
FOR PUBLICATION
UNITED STATES COURT OF APPEALSFOR THE NINTH CIRCUIT
 
O
LGA
C
ERVANTES
, an unmarriedwoman; C
ARLOS
A
LMENDAREZ
, amarried man; A
RTURO
M
AXIMO
, amarried man, individually and onbehalf of a class of similarlysituated individuals,
Plaintiffs-Appellants,
v.C
OUNTRYWIDE
H
OME
L
OANS
, I
NC
., aNew York corporation; M
ORTGAGE
E
LECTRONIC
R
EGISTRATION
S
YSTEMS
,I
NC
., a subsidiary of M
ERSCORP
,I
NC
., a Delaware corporation;
M
ERSCORP
, I
NC
.; F
EDERAL
H
OME
L
OAN
M
ORTGAGE
C
ORPORATION
, aforeign corporation, AKA FreddieMac; F
EDERAL
N
ATIONAL
M
ORTGAGE
A
SSOCIATION
, a foreigncorporation; GMAC M
ORTGAGE
,LLC, a Delaware corporation;N
ATIONAL
C
ITY
M
ORTGAGE
, aforeign company and a division of National City Bank, a foreigncompany; J.P. M
ORGAN
C
HASE
B
ANK
, N.A., a New Yorkcorporation; C
ITIMORTGAGE
, I
NC
., aNew York corporation;
16977

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