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1. Which MERS are we dealing with? 2. What s the bond the bank was suppose to produce? Pg 26 3. Look at short-sale practices as devaluing your property” Pg 27 4. Short sales as frauds? Pg 27 5. Check this out:
To make matters worse, the loan servicers who MERS claimed they had the legal right to foreclose on behalf of wrote down the losses on their books while the investors who actually held the securitized notes and mortgages in the form of asset-backed securities got nothing. Did you get that? “The pretender lenders made the money”, says Garfield, “The investors who actually owned the notes and mortgages did not.”
6. Servicers collect fees first:
The author likes Garfield’s term “pretender lender”, because even though mortgage loan servicers may collect your monthly payments, they may not have advanced any loan proceeds. It is now well known (not even arguably) that non-performing loans generate more revenue for the servicing lenders. All the late fees and “other” fees tacked onto to delinquent homeowners’ accounts push struggling homeowners deeper into despair.
7. Lack of full discovery pg 28
No homeowner ever knew who actually owned his note, because it was never disclosed to him. No lender ever told the homeowner the course that his note and mortgage would take, flowing into the stream of securitized portfolios and collateralized debt obligations. In essence, neither the homeowner nor the investors who actually owned the securitized bonds were involved in the creation of these portfolios.
8. Tranch buyer as liable holder? Pg 29
When the borrowers began to default, the pretender lenders and their foreclosure mills of attorneys who were well-prepared with all the contractual tricks of the trade began seizing homes in record numbers and liquidating them in short sales and if that didn’t work, in foreclosure sales. Once the pretender lenders collected on the proceeds, it is assumed that they put the profits in their pockets. There is some argument going on that these proceeds represent taxable income as a capital gain. This is still in dispute. The investors were left holding worthless bonds, with absolutely no recourse whatsoever (at that time). Yet unknown to these investors, if the loans they funded actually made it into the “pools”-”tranches”, they became liable to the homeowner as the true holders in due course. The courts had no idea that the level of fraud reached so deep because the foreclosure paperwork in possession of the lender was so superficial.
those seminars ended up going nationwide. As it turned out.9. the time limit for enforcement has passed. and claims that there is appraisal fraud in almost all of the loans he reviews in addition to lender liability issues. what are CLE courses? Florida requiring paperwork ?? PG 31 In late 2009. (2) attacking the lender after the default occurs [foreclosure defense by filing a countersuit]. lenders’ attorneys chose to ignore it. and (4) attacking the lender or the third-party debt collection agency in the phase of deficiency judgment. Jacksonville Business Journal reporter Kimberly Morrison was one of many area reporters who began covering Charney’s procedural exploits. as Charney extolled her methodologies in foreclosure defense. who eluded to the fact that homeowners just need to figure out what their potential strategies are. Still. Charney was doing and she ended up holding seminars in various parts of the state. resulting in 3 convictions and more on the way. District Attorney’s office for the Eastern District of North Carolina has set up its own Mortgage Fraud Task Force to deal with similar issues. 12. Appraisal fraud “There are plenty of other options. In short order. If the lender was the “duck”. He downplays loan auditors because most of the time audits are conducted. 10. 15. Bradford runs a website called mortgagefraudexaminers. Four scenarios being explored: There are four scenarios being explored in this work: (1) attacking the lender before the default actually occurs [foreclosure offense through quiet title actions and other strategies]. MERS wasn’t walking and quacking like a “duck”. Lines of attorneys extended around the corners of the conference centers and hotels she held seminars in.” according to Bradford. the Florida Supreme Court came out with new rules that drastically slowed the rash of foreclosure filings by requiring lenders to have all their paperwork in order. Attorneys in Florida started paying attention to what Ms. Prosecutions begin: Pg 32 The U. 11. 14. 13. Look up April Chaney: April Charney’s efforts to shut down mortgage foreclosures initiated by MERS in Florida drew attention to her tactics because she proved to the court that MERS was only a record keeping database and not given any actual power to stand in the lenders’ stead as a nominee.S. fraud claims (as hard as they are to prove) make up the bulk of lawsuits against lenders. Multiple commitment of assets: .com. Page 29. (3) attacking the lender postforeclosure in the filing of a wrongful foreclosure claim and a quiet title action.
Fraudulent filing of financing statement: § 37. the Justice of the Peace ruled against the lender because she couldn’t find proof of ownership. FRAUDULENT FILING OF FINANCING STATEMENT. let alone service of process. 75th Leg. § 10.Unfortunately. 189. The county is cooperating to get to the bottom of this mess because the second JP’s actions were at best “questionable”. ch. in which event the offense is a state jail felony. The real estate brokerage company also put the foreclosed home under contract. In so doing. GMAC Mortgage issued a moratorium on thousands of foreclosures in all the judicial states because of apparent “fraud” in the way affidavits and assignments by one of its “officers” (41-year-old Jeffrey Stephan. Bank of America’s attorneys have admitted in pleadings that loan portfolios might have been double. Added by Acts 1997. In the first unlawful detainer hearing. 16. in which event the offense is a felony of the second degree. as they were trying to sell it over the top of a lis pendens lien that was filed at the time of suit. called in by the county’s risk manager. Robo Signing:Pg 34 At the time this writing was released. This isn’t over yet. Lis Pendens as lien?? There are eleven defendants in this action to date. A subsequent Justice of the Peace used the listing at the appraisal district to evict the Plaintiff three weeks later. eff. Bank of America and others want a piece of that pie. An offense under Subsection (a)(2) or (a)(3) is a Class A misdemeanor. May 21. 18. 19.101.and even triple-pledged as collateral AT THE SAME TIME! Bank of America and others want a look at the documents now in possession of the bankruptcy court and Freddie Mac’s attorneys filed an objection to their request to examine what it considers confidential material pertinent to resolution of its claims. which prompted motion for a temporary restraining order to be filed.. or (3) is groundless. unless the person commits the offense with the intent to defraud or harm another. a graduate from Penn State who . Risk Management?? In this case. unless it is shown on the trial of the offense that the person had previously been convicted under this section on two or more occasions. (a) A person commits an offense if the person knowingly presents for filing or causes to be presented for filing a financing statement that the person knows: (1) is forged. a county Justice of the Peace is the Plaintiff’s star witness. 1997. (2) contains a material false statement. (b) An offense under Subsection (a)(1) is a felony of the third degree. The Errors & Omissions attorney for the county is now involved. 17.
like foreclose on or convey assets from one party to another. any attorney wishing to depose MERS for the purpose of gleaning any kind of evidence is going to have to sort through the “layering” of all the corporations. 23. Mers appointed employees?? Pg 35 ”. liabilities. What is known however from this deposition. particularly the membership application to be a MERS member. Again. you’d have another potential hurdle to climb over in establishing (1) whether the person signing your documents that are recorded in the courthouse were actually certified to sign those documents (by way of a “signing agreement”). The first MERS entity was apparently created in October of 1995 and ended June 30. the . It appears that every time a major case ruling comes down against MERS. by Hultman’s own admission. and (2) whether or not the company this “officer” worked for was a MERS member or not. which transitioned into the second MERS entity. for the purposes of control only. It also obfuscates MERS’ abilities to do certain things. Each MERS entity transitioned into the next subsequent entity. thus separating the lender and MERS into distinct parts: one that owns the asset and one that doesn’t. assets it clearly does not own. not just one. as the corporation itself progressed. 1999. MERS as bankruptcy remote (no assets): Pg 35 21. MERS governing documents?? This also further complicates the issues with MERS when you start researching into which set of applicable “governing documents” were in effect and being utilized by MERS and its affiliates and their assigns at the time your mortgage loan was closed. 1998 (taking over for the first MERS entity) and then after more “agendas” and “discussions” the third MERS evolved and went into operation on January 1.admitted to attorneys in two separate depositions that he only had three weeks of training in foreclosure processing when he joined the company in 20. Also significant is the fact that this “evolution” of companies further complicates discovery because any attorney suing MERS would have to delineate which “MERS” did what and when. income or expenses). is that the “MERS #3” entity had to be known as a “bankruptcy remote” entity (meaning an entity that could NOT go bankrupt because it held no assets. its governing documents are updated. there were actually THREE MERS entities. which incorporated on June 30. performed something that was finitely different to enhance the performance of the subsequent MERS entity. This clearly has much to do with just how significantly clouded your title to property would be (as the “agency relationship” with someone NOT holding an asset could claim that it had authority to foreclose on any given homeowner could be attacked as deficient). This clearly fits when you compare this to the defined parameters of Restatement of Mortgages (Third). each MERS entity. As confusing as all of that may seem. 1998. This means that as a Plaintiff in a suit against MERS. As one could glean from excerpts of the April 2010 deposition of Hultman however. 22.
This meant a lawsuit had to be filed. MERs files member maintained. In the case of the credit bureaus. the same former owner was involved. contain errors. Pg 41 Like the credit bureau system.rules of membership that MERS members have to abide by and especially the procedures manual (which could include instructions for how to foreclose on a borrower). Ohio. Most of these rulings state that MERS was nothing more than an opaque shield for lenders to maintain their electronic dealings in the derivatives markets. numerous courts in Kansas. 24. take it up with the creditor and not them. MERS not a beneficiary. Pg 41 Vice President William Hultman. Pg 42 While you as a homeowner may be evaluating the legal condition your property is in. Foreclosure mill case: pg 44 There is a defined SCOTUS case in Jerman v. and installment contract state) came out with of their own set of rulings. admitted that indeed. prior to this deposition. Foreclosure sale as fraud due to clouded title. 29. any lender who has a relationship with a given file is allowed to enter that electronic file and make changes to it at random. Experian and Trans Union all claim that if you’ve got a beef with the trade line item. In the author’s case. MERS was only a nominee and not a beneficiary. why are they allowed to report as subscribers? According to MERS. Vermont and Arkansas (and now Montana. if the reporting creditor is not the one that advanced the loan proceeds. covered by a title company policy until he removed the “clouds” from the titles. These depositions certainly merit further consideration if you are considering MERS as a defendant in any of your cases (if you’re an attorney). Florida. As the author discovered. This MERS lender-maintained system pairs similarly to the way creditor/subscribers report trade line item information to the credit bureaus. he could not sell his “acquired” property with a Warranty Deed. the author had good reason to write this book. the MERS system of lender-maintained files could also contain errors as well. so one suit covered both tracts that were “clouded”. In fact. Equifax. caused by the tax deed sales. 27. MERS process of certifying officers: Wooten’s deposition also brought into question the process used by MERS to “certify” its officers. The author has purchased “seized” property before and has successfully won quiet title actions in court. 26. thus deriving no profit or loss from the transfer. The subsequent deposition of Hultman in 2010 also touched on that process. 28. 25. Nebraska. Carlisle et al (Decided April 21. Strategies pg 45 . 2010) that addresses the issues covering foreclosure mills under the Fair Debt Collection Practices Act. sale or foreclosure of real property.
1. Of late. MERS and its “agents” then remove the trustee of record (in Deed of Trust states) and in both judicial and non-judicial states. 7. is that suit to foreclose was filed BEFORE the actual assignment was recorded. if the case gets that far. What has been evidenced in foreclosure actions or actions involving bankrupting debtors has been outrageous behavior on the part of lenders and their attorneys. they will attempt to do a loan modification (again. There is a 40-point checklist in Section 7 to refer to as to how to spot whether these documents are properly prepared. as MERS did not advance any loan proceeds and collects no monthly payments. Nine times out of ten. See U.S. indorsements proving agency or the original note with the new lender’s name properly affixed to it. In many instances. They’ll offer loan modifications to homeowners to step outside of a Chapter 13 bankruptcy in an effort to do an “end run” around the homeowner and foreclose on them before they know what hit them. In many instances. where the judge orders the lender to produce other assignments. the lender lacks standing to do a loan modification because they don’t own the note! They can’t modify something they don’t own! While some entities like Chicago Title on its Connecticut website claim that MERS can do loan modifications. the lenders attorneys do not have the note. Most of the cases the author has been brought into to analyze have found (much to the amazement of attorneys looking at these cases). MERS has been more aggressive in getting itself named as an “assignee”. More times than not. an assignment is drafted and executed which is then filed in the local county courthouse. they also generally lead to a problem for the “pretender lender” in court. MERS demands to . they will attempt to settle and pay off the borrower’s attorneys never to sue them again. allonges. or many times. 8. 6. whether it has a real interest or not. The author believes that Chicago Title does NOT want to “expose” itself any more than it has to. 3. This brings a “stall” to the case. this time factor has given several “parties” (in conjunction with MERS. a waste of time). you can be sure that whatever follows is going to be suspect. once the lender’s standing is challenged and the lender has to produce paperwork to prove his claim. In many instances. As soon as the homeowner goes into default on his payments (whether he legally and genuinely is or is not) the lender-MERS subscriber summons MERS and the “boogey man comes out of the closet”. LPS. the lender will do everything in its power to buy time. These untimely filings are certainly cause for not only legal challenge. Whatever “stall pattern” you see in a case involving lender challenge. especially where documents are backdated and then brought into court and proffered as genuine. The author points to this as disinformation. Bank v. claiming the party being assigned the note and mortgage (or deed) is the real party in interest. this is also virtually impossible. and this list may only be somewhat futuristic and may need to be amended. 5. 2. DOCX) and/or agents the opportunity to produce what are known as “manufactured” documents. 4. The lenders have done everything to fight discovery. Most of the cases the author has seen involve MERS’ agents doing the dirty work. Harpster.
When the role of a servicing agent acting on behalf of a mortgagee is thrown into the mix. MERS’ “certifying officers” are not covered under MERS’s E&O. Washington Mutual or Long Beach Mortgage. Table Funded Loans: pg 46 (Did the lender have a beneficial interest in the note?) Generally.. The way mortgage notes were securitized. 10. Once the broker is finished securing the transaction. If MERS is involved. 31.” In re Schwartz. never to be seen again (unless you default on your mortgage loan). often more than once. These loans (if you can imagine this scenario) work sort of like this: When you close on your mortgage loan. the appointment of a successor trustee will generally involve turning the duties of foreclosure over to a “foreclosure mill”. especially in the subprime markets) which was not made known to you even after your loan was closed. Problem of MERs pg 46 “It is not uncommon for note and mortgages to be assigned. Mass. 265. is that the broker is working under a “wholesale lending agreement” he engaged in from the secondary funding source. Carlisle et al (Decided April 21. etc. 2007). The biggest fraud on the county recordation system is where MERS and its agents (who in the author’s opinion all ought to be jailed for a minimum of 10 years for each signature they put on a phony document used to further their cause) attempt to transfer the deed AND NOTE. a trust.be notified. . all of this information is generally transferred by the secondary funding source into MERS’ electronic systems. 9. 366 B. What you don’t understand though. A lot of attorneys the author has spoken with see no point in naming MERS as a Defendant in an action. 30. the funding source pays the broker and the party to whom the payment is due (the other homeowner or builder) for the home you just bought. In most instances the author has seen. The concurrent fraud generally surrounds HOW the assignments and appointments of successor trustees are executed. There is a defined SCOTUS case in Jerman v. The broker is receiving directions from a secondary funding source that is paying the broker a commission for handling the paper. even though it legally does not own the note and couldn’t pass a litmus test under Restatement of Mortgages (Third) if it tried. 2010) that addresses the issues covering foreclosure mills under the Fair Debt Collection Practices Act. it is also possible that once you signed your note and deed of trust. your loan went directly through the secondary funding source into a “special purpose vehicle” or SPV. 266 (Bankr. the documentation is usually signed at a title company who then records the note and mortgage (or deed) and sends it to where the lender directs it to be sent.R. many loans obtained by borrowers over the last decade were what are known as “table funded loans”. These trustees (according to many attorneys now coming head-on against them with FDCPA threats) are in essence third-party debt collectors. it came from the secondary funding source (who may have been Countrywide Lending. The actual loan did not come from the broker. D. it is no wonder that it is often difficult for unsophisticated borrowers to be certain of the identity of their lenders and mortgagees. The author disagrees and points to the qui tam suits.
only trustee could do that at MER’s request. where the trustee was merely a “puppet” in name only for MERS. Note: In the case of a table funded note. where it became part of a rated portfolio that became a collateralized debt obligation (CDO) and then wrapped into a derivative called a credit default swap and from there.on Wall Street. This poses potential arguments under merger doctrine. Deed of Trust Void: pg 48 Trust and the note. deed of trust or mortgage does. was already owned by the pool as the warehouse lender was the pool sponsor. the Deed of Trust becomes evidence of the note (operating in the nature of a lien). From all indications those investors funded your loan BEFORE your note made the CDO. Note: MERS as agent for “Lender” could direct Trustee. and MERS comes in and removes the Trustee as if the Trustee didn’t exist. The “lender” never had a beneficial interest. If the Deed of Trust is ruled a fraud. For a percentage of the original principal (most likely the Rodash charges on HUD1) the entity named as “lender” merely posed as the lender. when the parties can’t prove authority (standing or capacity. Note: They are even more hidden as the true lender is also hidden: The author poses a different theory on this subject: That at the time the note is sold to another lender and the deed of trust or mortgage is electronically registered with MERS. 36. Note: Note does not become unenforceable. and substitutes another trustee when the Deed of Trust specifically reserves that right to the Lender. but rather. Pg 47 33. the note was never sold into the pool.) 32. the title to property is clouded because the deed or mortgage is many times in fact. 34. If the note is being held by one party as an obligation and the Trustee that is responsible for overseeing that the Deed of Trust is followed through to the letter. misrepresenting who the real party in interest is because the real holder of the note and all of its subscription data entries were hidden in an electronic file at MERS. marketed as bonds to investors. The true lender was never disclosed to the borrower. . via agency) to act. Note: MERS had no authority to transfer deed of trust. The sponsor was the entity who (while hiding behind the licnese of the “lender” ) had original beneficial interest in the note. by virtue of a quiet title action. it does not own the note and therefore cannot convey the evidence of the note away from the note. the chain of title becomes broken because MERS is acting in a capacity for which it is not legally entitled to act. 35. then MERS has caused the Deed of Trust (as evidence of the security) to be voidable. The title is slandered because MERS exceeded its legal authority when it acted outside of its capacity as “nominee”. Even though MERS claims in the Deed of Trust that it holds legal title to the property.
MERS lack of standing: pg 48 There are so many bankruptcy court decisions.37. Trustee and Beneficiary ill defined: pg 48 Also bear in mind (in reality) that the Deed of Trust and/or mortgage lacks specific definitions of the duties of the Trustee and the specific duties of MERS. it’s going to have a hard time surviving a quiet title action. ambiguous and is left open to interpretation in an action to quiet title. discovery might show that because MERS has no written contract with any lender outside the original lender wherein the lender doesn’t retain full beneficial interest. MERS couldn’t define what its specific obligations were as a “nominee”. In Re Walker) that lend credence to MERS’ lack of standing that the author feels it would be virtually impossible for MERS’ attorneys to argue they had every right to convey property they don’t legally own. Agency Relationship Defeated:pg 48 Further. In Kesler. 43. the first time the note is transferred to an intermediary party. This is where the bifurcation argument came into play. thus. the agency relationship is thus defeated. 39. Because MERS fails the litmus test under Restatement of Mortgages (Third). “lender” is still the holder. that the deeds of trust issued today with MERS’ name on them STILL don’t identify the specific duties of the Trustee or MERS. And what happens if the trustee really doesn’t exist? 41. 44. called an “intervening assignee” (because MERS is NOT a lender or true creditor) and the note is securitized and then turned into a derivative. Read Ginnie Mae manual. but since the lender never had a beneficial interest in the note in the first place. Intervening assignee: pg 48 In theory. the language is vague. 40. of late (In Re Box. the paperwork is hidden or destroyed and the paper trail goes nowhere. 42. therefore. so the Kansas Supreme Court did it for them. Note: Paperwork has not been destroyed. The note is without collateral: pg 49 . the trust agreement was never perfected . Note: No evidence that trustee accepted position. no one holds a claim against the property. Note: Lender would have to come forward to enforce the lien that is in lenders name. 38. therefore. Note: No transfer of beneficial interest from “lender” is reflected in the form of a notice of release of lien and beneficial interest in the note and a transfer to a subsequent holder is reflected in the court record.
50. Look the case up yourself! 46. thus having to expend legal fees? 48. 47.With the deed of trust being knocked out because of fusing of the parties or some other defect (like no proof of standing) it would leave the note left without collateral to secure it. for those of you lay people perusing the law library for the first time). that at any point subsequent to that transaction. The question arises as to whether you as the seller of the home are now involved in a fraud scheme when that true creditor comes calling on the new buyer of the foreclosed home that was sold to them. Jackson. turned into a derivative and sold to that investor in the form of a bond) comes looking to cash in … and your “security interest” isn’t legally extinguished by MERS. Would the end result put the former homeowner in the path of an action to quiet title. Circuit Court of Appeals gave the Plaintiff in Clomon v. Change of character of debt: pg 49 Because MERS is only a nominee and not the true creditor. 49. 988 Federal Reporter 2d Series (beginning at page 1314. (The author isn’t quite sure that this isn’t what the Wall Street players were dealing to investors anyway because all of the bonds they sold to them were non-recourse. the character of the “debt” could have been altered past the supposed understanding of the borrower. any defect in paperwork would also further cloud the title. Now … ask a title company to insure all of that and see what answer you get. It’s that simple. FDCPA liability: pg 49 In accordance with the latitude the Second U. 45.S. Did the seller engage in fraud: Note: (without knowledge or intent. 51. all it takes is ONE SINGLE VIOLATION of the Fair Debt Collection Practices Act to establish civil liability! But don’t just take the author’s word for it. This is a “hint” of the things to come in Section 12. not culpability) Another argument arises that if the true creditor (the investor who bought the note as part of a portfolio that was securitized. .) It could also be assumed that because the “agency relationship” was divested by the first intervening assignee (that got it from MERS who had no “party in interest” status).
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