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Case 3:14-cv-08089-NVW Document 87 Filed 05/01/15 Page 1 of 18


Monique Branscomb Wilhite (# 013775)
Homeowner Advocacy Project
Sandra Day O’Connor College of Law
Arizona State University
Two N. Central, Suite 1600
Phoenix, AZ 85004-2344
Barbara J. Forde (#013220)
20247 N. 86th Street
Scottsdale, AZ 85255
Attorneys for Plaintiff






JUDITH D. ERICKSON, an unmarried woman,
and as Trustee of THE ERICKSON FAMILY








Case No. 3:14-cv-08089-NVW
(Hearing May 19, 2015 at 1:30 p.m.)

Pursuant to this Court’s Order dated March 26, 2015 (Doc. 77), Plaintiff submits
her supplemental memorandum on the twelve (12) questions posed by the Court therein.
Defendant Mortgage Electronic Registration Systems, Inc. cannot be a legal beneficiary
under Arizona law, and the Motions to Dismiss (Doc. Nos. 53, 60) must be denied.


Question 1 Part 1: Under Arizona law, can MERS be the Beneficiary if it is
not “the person for whose benefit a trust deed is given”? Short Answer: No.
Under Arizona statute, the only entity which can be a beneficiary under a deed of
trust, must be "the person named or otherwise designated in a trust deed as the person for
whose benefit a trust deed is given, or the person's successor in interest." A.R.S. § 33801(1). “Trust deed” is defined as “a deed … conveying trust property to a trustee … to
secure the performance of a contract or contracts….” A.R.S. § 33-801(8). “Contract” is
defined as, among other things, a promissory note. A.R.S. § 33-801(4). Therefore, the

86) at 6:6-7. 805 F. MERS cannot be the beneficiary. 49 ¶ 4. 1-1 at 48-51.Ariz. Coughlin. See also.Supp.’” The contracts also support the Court’s conclusion. 3. (“CWHL”). 14 As this Court states. 26 The Note Holder/Lender is the only person for whose benefit the Deed of Trust is 27 given. M&I Bank. the Lender’s successor in interest must not only possess 23 the Note. 2011)(a 8 beneficiary’s credit bid is actual payment to the beneficiary to the extent of the bid).2d 858. and because “beneficiary” is used throughout the statutory 13 scheme. Doc. and the Deed of 25 Trust confirms this pronouncement. is further 5 bolstered by the fact that “only the beneficiary may make a credit bid” at a trustee’s sale." 24 The Note states that only the Note Holder is secured by the Deed of Trust. 16 The Defendants do not dispute this assertion. The Lender 21 Countrywide Home Loans. “no one contends that MERS actually received an ownership 15 interest in real property or is the transferee or holder of the Note. Inc. 77 at 2:7-8. But in fact. agreed through contract with Plaintiff. 6 therefore the beneficiary has to be the Lender.Case 3:14-cv-08089-NVW Document 87 Filed 05/01/15 Page 2 of 18 1 beneficiary must be the Lender and Note Holder. the Defendants admit in their 2 Memo that “[t]he purpose of the Deed of Trust is to ‘secure[] to Lender … the repayment 3 of the Loan. 62.” that an entity can be the beneficiary but not the Lender or Note Holder. Indeed. 1-1 at 54. that in 22 order for the Note to be enforced. 60. See Doc. See Doc. §§ 33-810(A). 20 49 ¶¶ 2. See 11 Defense Memo at 6 ll. 7-11. 33-801(5).” See Doc.S. but must also be the one "who is entitled to receive payments under this Note. FSB v.R.” therefore. because Lender and Note Holder are not defined 12 in the Deed of Trust statutes. and who is secured by the Deed of Trust. The Lender is the only one who can be 28 2 . Fixed/Adjustable Rate Note (the “Note”). Doc. the Defendants’ argument fails. 55. “beneficiary” must be “Lender. 9 The Defendants argue that because the definition of beneficiary does not include 10 “Lender. The Lender must be the beneficiary. See A. 19 The Note defines who may enforce it. 4 The conclusion that beneficiary and Lender must be one and the same. 17 The Court begins its question with the conclusion that MERS “is not ‘the person for 18 whose benefit a trust deed is given. 868 (D.’” Defense Memo (Doc. 33- 7 809(F).

62. NA.3d 781. 277 P. but was denied. 14 which mandate the conclusion that MERS cannot be a beneficiary.2d 20 83. Green Tree also. which abhors a forfeiture and requires that the 25 statutes be strictly construed in favor of homeowners. The Defendants admit that Green Tree is only a servicer. & Loan See Defense Memo at 6:12-17.. 100.” see answer to Question 2 Part 1. 3 a person who is entitled to enforce the obligation in which secures. First Amended Complaint (“FAC”) ¶¶ 31. 10 The Defense Memo cites a series of cases which purport to find that MERS may be 11 a beneficiary. allowing the parties to designate the 23 beneficiary. Bank. and is the only one entitled to enforce the Note. Sav. Patton v. See 8 Defense Memo at 2:5-6 and 10-11. 285 P. and then 7 admit that Green Tree claims in the Notice of Trustee’s Sale. A deed of trust "may be enforced only by. 35-39. 175 Wash. But none of the cases cited analyze the deed of 12 trust terms stating MERS is the beneficiary contrasted with the deed of trust terms which 13 declare that MERS is “solely nominee. Inc. See. 17-28. cannot 6 be the beneficiary.3d 34.” interpreted in light of the statutory provisions.1 21 The Defendants claim that the statutory definition of beneficiary is “broader” and 22 more “flexible” than the words in the statute. 15 MERS argues the definition of beneficiary does not apply by citing “the context 16 otherwise requires” statutory language. below..Case 3:14-cv-08089-NVW Document 87 Filed 05/01/15 Page 3 of 18 1 secured by the Deed of Trust. at 7-8. 24 statutory construction and Arizona law. MERS attempted this argument in 17 Washington (which has essentially the same definition of beneficiary). See Defense Memo at 4-5. Erickson has alleged that no Defendant is entitled to 9 enforce the Note. 5 For the same reasons that MERS cannot be the beneficiary. The 2 Arizona Supreme Court agrees. Id. 42 ¶ 21 (En Banc 2012). or in behalf of. Metropolitan Mortg. First Fed." Hogan v. 585. 783 (En Banc 2012).g. 1 3 . 230 Ariz. This argument goes against all canons of 26 27 28 Regarding Defendants’ position that Erickson’s signing of the Deed of Trust was a “context” which was “otherwise required. to be the beneficiary. 18 This common introductory statutory language does not mean “that the parties can alter 19 statutory provisions by contract.” Bain v. Washington 4 Mut. Group. e.

2012). 434 ¶ 65 (Ct. at 704. McVey ex rel. 15 16 17 Brandrup. who holds legal title to the deed of trust. 18 As the law set out in this section demonstrates. ReconTrust 10 Co. 6 See Defense Memo at 5:26-27. 656 F. Minnesota 8 does not recognize the deed of trust as a security instrument.Supp. Defendants’ argument that “Arizona 22 23 24 25 26 27 28 Oregon has a nearly identical definition of beneficiary. 8-9. However. It follows that.A.. Steinberger v. 473.. ORS 86. 303 P. The argument is easily defeated. for instance. deeds of trust introduce a third 11 party. 20 law--without exception—holds that MERS is and may be designated as a beneficiary”6 is 21 simply false. Therefore. James v. Elec. 5 Citing Minnesota law. the Defendants provide a convoluted exposition on legal and 6 equitable title to justify MERS’ acting as beneficiary because it holds “legal title” in the 7 Deed of Trust. 118 Ariz. the Minnesota 9 case on which Defendants rely3 pertains to a two-party mortgage. 318 P.3d at 320. 668. 140.” M.. MERS cannot be the legal 19 beneficiary under this or any other Deed of Trust. Dismissal of the FAC would be error. Inc.. 2 3 4 . 578 P.3d at 1039. 5 There are other reasons why Minnesota law should be disregarded. 2009). 353 Or. 4 To the extent Cervantes provides otherwise.Case 3:14-cv-08089-NVW Document 87 Filed 05/01/15 Page 4 of 18 1 Ass’n. See Defense Memo at 3. 1167 (D. 2014). 353 Or. 304 (En Banc 2013).3d 301.Or. 125. 674. 477.A. 12 Cnty of Maricopa.S. the trustee. 4 N. Brandrup v. 303 P. App. it holds no interest at all in the lien conveyed by the trust deed.. ReconTrust Co.2d 487 (Minn.2d 1145. Jackson v. 156 (In Banc 1978). 234 Ariz. Registration Sys. Steinberger controls.4 MERS’ 13 argument fails5 because MERS has no legal ability as nominee to assign a deed of trust: 14 [T]he trustee under a deed of trust holds legal title to the lien. This argument was also 2 debunked by the Oregon Supreme Court:2 the beneficiary is designated in the trust deed by 3 stating that it secures “to Lender” the repayment of the Note.413. and the beneficiary holds equitable title to that lien. Mortg. because MERS is neither the trustee nor the beneficiary.W. 845 F. 770 N. its legislature passed a “MERS statute” specifically authorizing MERS to record assignments to authorize foreclosure “as nominee or agent for a third party.3d 419. § 507.2d 152.713(1)(b)(D).

in describing the preservation of the Property and inspections allowed. the term “solely as nominee” used to describe MERS in the Deed of Trust cannot simply be substituted with the word “agent. 140. MERS’s role in the transaction is “solely as a nominee for Lender” under the Deed of Trust as described in two different places in the document. See Doc. 66. 1131 (1972)(meaning should be given to every word and phrase of a contract). 228 Ariz. For instance. 500 P. Under well-established rules of contract construction.” See Doc. 263 P. 2011). The Deed of Trust contains a severability clause stating that any provision which conflicts with applicable law “shall not affect other provisions of this Security Instrument.” The Deed of Trust uses the word “agent” only in certain specific instances.App.S. 1-1 at 60-61 ¶ 16.3d 69.” See Doc. the Deed of Trust states that the “Lender or its agent may make reasonable entries upon and inspections of the Property. 61. 74 (Ct.2d 1128. 18 Ariz.” Id. Nowhere in the entire Deed of Trust is MERS described as “agent” of anyone. or adding something which the parties have not put there.R. and never related to MERS. CWHL also told Erickson that CWHL had elected to name MERS “as the mortgagee in a nominee capacity. 1 Part 2: If MERS is not the Beneficiary. at 70.Case 3:14-cv-08089-NVW Document 87 Filed 05/01/15 Page 5 of 18 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Q. The document 5 . Tucson Realty & Trust.. Q. 1-1 at 54 (emphasis supplied). The Defendants argue that MERS is the agent of the beneficiary under the “law or custom” provision of the Deed of Trust. 2 Part 1: Does this transaction remain within the confines of the Arizona Deed of Trust Act if the undefined term “nominee” is construed as “agent” and the purported status of MERS as Beneficiary disregarded? No short answer. 1-1 at 58 ¶ 7. App. The terms of a contract must be applied as written without expanding it beyond its plain meaning. § 33-702) but not the option of a non-judicial foreclosure? Short answer: No. see also Hyde Park-Lake Park v. The Deed of Trust terms calling MERS the beneficiary are void terms under Arizona statute as well as the terms of the Note and Deed of Trust. IB Property Holdings v. 143. then does the Deed of Trust provide the remedies and obligations of a mortgage (see A. Rancho Del Mar Apts. See Defense Memo at 7-8.

Therefore. 9. “An assignee steps into the shoes of her assignor. 248 P.” See Doc 1-1 at 55. 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 As for the argument that MERS may be the agent of the Lender: MERS offers no authority for the implicit proposition that the lender’s nomination of MERS as a nominee rises to an agency relationship with successor noteholders. 303 P. Nat.2d 643. And as has already been established in Question 1 Part 1 above. 1958)(citation omitted). MERS may only assign any interest that it held. Home Savings & Loan Ass’n. at 692-93. Ass'n.2d at 107. Id.’” Vig v. She ‘can stand in no better position than the assignor’ and ‘[a]n assignment cannot alter the defenses or equities of the third party. See Cent. that a nominee has a limited status with respect to any contract: The word “nominee” … connotes … a representative or nominal capacity only. not more. Id. 867 (1952). means that CWHL specifically elected not to designate MERS as its agent. 353 4 Or. 74 Ariz. Rather.2d 866. Ott v. Nix Project II Partnership. 265 F. Federal law is clear.” twice to even further qualify MERS’ status as nominee. 310-11.Case 3:14-cv-08089-NVW Document 87 Filed 05/01/15 Page 6 of 18 1 actually states that MERS has the right “to exercise any or all of those interests. 175 Wash. 285 P.” the failure of the Deed of Trust to state that MERS is the “agent” of Lender. the “law or custom” clause 7 does not give MERS an interest that would qualify it as the trust deed’s beneficiary. Fed. Accordingly. 399. CWHL’s use of the word “solely. Id.” which 2 interests are those “granted by Borrower in this Security Instrument. Corp. and does not connote the transfer or assignment to the nominee of any property in or ownership of the rights of the person nominating him. 308. 303 P. MERS cannot transfer or assign any interest because MERS holds no interest of CWHL. Brandrup.3d at 314 n. the right to repayment is only secured by the trust 5 deed. Under the doctrine of “expressio unius est exclusion alterius. 3 The Borrower does not grant “the right to repayment” in the Deed of Trust. at 693. as nominee of CWHL. 393. 212 6 . Inv. Bain.3d at 314. 647 (9th Cir. should be interpreted as written. 221 Ariz. not less. MERS cannot legally be the beneficiary. Hous.3d at 45 ¶ 31. the right to exercise the interests is not the same as conveying those 6 interests to MERS. Further. v. Mortg.

558 (1971)(waiver 20 and estoppel cannot be used to circumvent legislative intent). n. the beneficiary decides 25 26 27 28 In reality. 151 Ariz. 18 incorporated into. Yank v. 552. 1-1 at 106. App. Walled Lake Door Co. App. and that meaning “is 23 It makes perfect sense that the person with the right to repayment of the underlying 24 obligation also controls the foreclosure process. 1-1 at 106. MERS itself7 realized this when it signed 2 the Corporate Assignment of Deed of Trust (the “Assignment”). that term is illegal. 490 P. it did not give Green Tree any beneficiary rights under the trust deed. 545. if a contract term 21 violates statute. even if the 12 Assignment is valid. 729 P. See Doc.2d 941. 303 P. Yuhrend. signed the Assignment “as nominee for Countrywide 4 Home Loans. the Assignment was prepared and signed by Nationwide Title Clearing in Palm Harbor. Second. The meaning of beneficiary is determined by statute.” See Doc. Nationwide Title 7 Therefore. was MERS’ nominee status under the Deed of Trust. it depends on legislative intent. 107 Ariz.3d 17 at 311.”8 is falsehood. and cannot be altered by. nor could it assign a 8 beneficial interest in the Deed of Trust. if 11 anything. at 7-8. “[t]he resolution of 15 th[e] question [of who may be a beneficiary under the statutes] does not hinge on the 16 parties’ intent. MERS could not assign the Note to anyone. the Defense Memo’s representation 5 that MERS “holds legal title to the lien conveyed by the deed of trust. 91 (Ct. Florida. pretending to be MERS. 1-1 at 106. Therefore. 7 7 .” Brandrup. pretending to be MERS. 13 The Defendants’ attempt to save MERS’ designation as “beneficiary” in the Deed 14 of Trust by saying the parties agreed to it9 does not save them. see also Town of 19 Gila Bend v. First. the party’s agreement.2d 551. All the Assignment transferred. 9 See Defense Memo at 3:4-8. it never possessed the Note and had no right to 9 assign the Deed of Trust in any capacity.Case 3:14-cv-08089-NVW Document 87 Filed 05/01/15 Page 7 of 18 1 P. 590. at 687..” Id. Even 6 MERS knew it was not beneficiary when the Assignment was executed.. 2009)(citations omitted). and cannot be enforced. 3 Clearing. 944 (Ct. See Doc. 353 Or. Under the statutes. 2. 22 587. The Assignment is void and of no force or effect 10 with respect to beneficiary status. rather. 8 See Defense Memo at 3:1-2. 1986).3d 85. Inc. Therefore.

the Court should bear in mind in this case that in spite of this admission on the part of MERS. at 10-11.” as well. Erickson has already provided the basis for the fact that MERS is not the “agent” of the Lender in response to Question 2 Part 1 above.2 Part 2: Is the original Lender the Beneficiary until the Deed of Trust and endorsed Note are transferred to a successor Lender/Beneficiary? 7 Yes. -810(A). A. §§ 33-807(A). MERS is also not legally the Beneficiary. -808(C)(5).Case 3:14-cv-08089-NVW Document 87 Filed 05/01/15 Page 8 of 18 1 whether to foreclose judicially or non-judicially. The Defense Memo therefore answers the Court’s questions in this regard.S. Id. 8 9 10 11 12 13 14 15 16 17 18 19 the Deed of Trust is a nullity. its Assignment claimed to assign not only the Deed of Trust. and the trustee of a trust deed may commence a trustee’s sale if certain conditions are met. Note. MERS cannot substitute the trustee under the Deed of Trust. However. or Deed of Trust. 8 . 20 21 22 23 24 25 26 27 28 Question 3: Under Arizona law. See Doc 1-1 at 106. and only the beneficiary may credit bid at 2 sale. This representation in the Assignment is therefore false by MERS’ own admission. but “all interest secured thereby. not 3 in care of the trustee. Allowing MERS to be 4 beneficiary corrupts the statutory scheme and is not true to statutory intent. Finally. and both must be transferred together.” with no interest in the transaction. as here.R. MERS is “solely nominee. MERS therefore does not have the power to transfer ownership of a note.2 Parts 3-5: Does MERS have power to transfer ownership of the Note? Must it have instruction from the actual Holder to do so? Or does MERS merely keep track of unrecorded transfers made between lenders until it is instructed to place on the public record the end result of the transfers? No short answer. the Beneficiary may appoint a successor trustee. the notice of sale must contain the name and address of the beneficiary. But if the two are separated. 5 6 Q. If MERS is not the Beneficiary. MERS admits in the Defense Memo that it “does not transfer or negotiate promissory notes or debt because it does not hold notes …. as Lender’s agent does it have authority to appoint a successor trustee? Short answer: No.” See Defense Memo at 1:811. Therefore. Q.

656 F. then Bank of America. No. and cite pre-Steinberger federal case law 9 which no longer applies. Id. or void the Note? Short answers: Yes. 14 15 The Defendants admit. that they intend that Even when the Deed of Trust is no longer enforceable. and then Green Tree seamlessly? Further. See answer to Question 7. does that separate the Note from the Deed of Trust? Does that void the Deed of Trust. See 10 Defense Memo at 12-13. 20 The facts and legal issues before the court in Cervantes limit its holding. at 1041-42. Yes. Under [Cervantes] reasoning. or in which plaintiffs failed to make the proper argument. leave it enforceable as a mortgage. No. This affirmative 12 choice to separate the two renders the Deed of Trust a nullity. which 21 does not apply here. once separated from the Note. 11 the Deed of Trust not follow the Note. Id. it ceases to exist as an enforceable 8 contract. Cervantes. The claim was dismissed for the plaintiffs’ failure 24 to specifically allege fraud. The Defendants argue the opposite. 4 Beneficiary status cannot be held and transferred independently from the Note. 16 17 18 19 Question 5. A security instrument such as a deed of trust does not 7 exist without a debt. See Defense Memo at 3:9-18.Case 3:14-cv-08089-NVW Document 87 Filed 05/01/15 Page 9 of 18 1 2 3 Question 4: If Beneficiary status can be held and transferred independent of Holder status. and in fact argue. Because the Deed of Trust 13 is rendered null and void it cannot be enforced as a mortgage either. was MERS permitted to act as the agent for Countrywide. must both the Note and the Deed of Trust appoint MERS as Nominee for MERS to act as Lender’s agent? Short Answers: No. No short answer. In that case the Note is an unsecured debt. The issue before the Ninth Circuit in Cervantes was a borrower’s 22 appeal of a dismissal of their claim for conspiracy to commit fraud through the MERS 23 system. if payable at all. 26 27 28 9 . at 1042. The plaintiffs simply alleged that they were 25 defrauded because MERS is a “sham” beneficiary. that does not void the Note.3d at 1041. If it 5 is then the Deed of Trust is separated from the Note making the Deed of Trust null and 6 void.

10 . CWHL. See.” Bain. Nos.Case 3:14-cv-08089-NVW Document 87 Filed 05/01/15 Page 10 of 18 1 The Cervantes Court did not have before it the arguments made by Erickson. MERS cannot be and is not the agent for Countrywide. And finally. Zadrozny does not apply. 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 The Ninth Circuit specifically made room for allegations like Erickson’s here: The legality of MERS’ role as a beneficiary may be at issue where MERS initiates foreclosure in its own name. Registration Sys. as explained in response to Question No. 72. MERS clearly cannot be agent for Lender with respect to the Note. 39.” it cannot act as Lender’s agent if the terms of the Note and Deed of Trust are faithfully and properly applied to this dispute.2d at 105. 175 Wash. 2 A.3d at 45 ¶ 28.3d 289. v.g. “Nowhere in Cervantes does the Ninth Circuit suggest that the parties could contract around the statutory terms. In 2 particular. or where the plaintiffs allege a violation of state recording and foreclosure statutes based on the designation. 285 P. Landmark Nat’l Bank. Further.R. Saunders. The original Lender here. Bank of New York Mellon.S. 1. 294-97 (Me. and by the Defense Memo’s own admission has nothing to do with the Note and no power to transfer it. Mortgage Elec. chose to use a deed of trust form which limited MERS’ role to “solely nominee. § 33-801(1). Zadrozny did not allege that MERS could not be a beneficiary under A. or that because MERS was “solely nominee. because of A. because MERS is nowhere mentioned in the Note..3d at 165-69 (same)…. Doc. Further. and then Green Tree. 720 F.3d 1163 (9th Cir. e. See FAC ¶¶ 5. Id.” The Lender and its legal successors and assigns must live with that choice. because MERS is “solely nominee. at 1044. 64. § 33-801(1). Erickson’s position is that MERS cannot legally be a beneficiary under the trust 3 deed.R. Zadrozny v. that court only concluded that MERS’ assignment of the deed of trust there was not improper because MERS did not initiate foreclosure.” that MERS had no the authority to assign the Deed of Trust. 216 P. The Cervantes plaintiffs made no such argument.S. 2013). That is precisely what Erickson has alleged here. then Bank of America.2019)(concluding that MERS cannot foreclose because it does not have an independent interest in the loan because it functions solely as a nominee).

Not so.”). Favour. cmt. 550 (1980). MERS "solely as nominee" has no power or authority to do anything or transfer anything. 546. Hill v.4(b). However. Short answer: No. much less be transferred. Question 7: Under Arizona law. 84 P. 859.. 52 Ariz. either. the Note does not follow the Deed of Trust. Coll. independent from the obligation which it secures." See Doc. MERS should not be recording anything on the public record because of its nominee status. As explained in answer to Question 2 above. the Assignment is invalid. Jesik v. 1-1 at 106. 562. 194 B. does the transfer of a Deed of Trust also transfer the underlying Note unless the parties to the transfer agree otherwise? See Restatement (Third) of Property: Morgages § 5. any Assignment of the Deed of Trust by MERS is ineffective and void. c. 11 . but also "all interest secured thereby …. 578 (1938).Case 3:14-cv-08089-NVW Document 87 Filed 05/01/15 Page 11 of 18 1 2 3 Question 6: Does the prospect of invalidating the transaction as a Deed of Trust if the powers given to the Nominee/MERS exceed the Deed of Trust Act favor limiting the Nominee's authority to recording on the public record the identity of the current Holder of the Note? If so. 861 (9th Cir. Dist. the converse is not true.R. If the Note has not been endorsed or otherwise substantively transferred to the entity to whom MERS purports to assign the Deed of Trust. Erickson has already demonstrated in response to Questions 1 and 2 above as to why MERS has no authority to transfer a Note. 611 P. In re Leisure Time Sports. See Defense Memo at 12:4-7. the Assignment at issue here claims to transfer not only the Deed of Trust. that is. anyway.2d 547. Therefore. the Deed of Trust follows the Note. 568. and it is not the legal beneficiary so MERS should not record anything as beneficiary. Inc. the Restatements of the Law apply unless state law provides otherwise.. In fact. And as already explained in response to Questions 1 and 2 above. unless the contract provides otherwise. 125 Ariz. does it invalidate the purported record transfer if the Note has not been endorsed or otherwise substantively transferred to the person? 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 The Defense Memo claims that MERS does not record anything reflecting the identity of the current Holder of the Note. Under Arizona law. BAP 1996)(“A security interest cannot exist.2d 575. 543. In Arizona. Maricopa Cnty Comm.

The Arizona Supreme Court affirmed its Hill holding over 70 6 years later. or in behalf of. that relationship does not carry over to successive lenders.A. The trust deeds. A split in the note and deed of trust The Defendants admit this purposeful splitting. “[T]he holder of the deed alone does not have a 11 right to repayment and. MERS is not the agent of the Lender.Case 3:14-cv-08089-NVW Document 87 Filed 05/01/15 Page 12 of 18 1 A Deed of Trust without a debt. 52 Ariz. Bank.3d 781. do not establish the necessary relationship. cannot be assigned separately. like a mortgage. A mortgage is a mere incident of 2 the debt.. See below. “[A] deed of trust. More importantly. See Defense 5 Memo at 14-15 (citing Hill). 4 the transfer of a deed of trust does not transfer or assign the debt or the note.3d at 323. 656 F.” Cervantes. ‘may be enforced only by. Id. at 708-09. 230 Ariz. Hill. secures nothing. 20 But this argument has been debunked: 21 22 23 24 25 26 It is unclear whether such a broad common agency relationship exists in these cases among MERS and the original lenders and their successors in interest. 277 P.4 (c)). But 17 even if it were. See 18 The Defendants claim that MERS is the “nominee of the new noteholder” when a 19 note is transferred between “MERS® System members. 84 P. it is nugatory.3d at 1039. As the Defendants admit. Plaintiff has distinguished the Jackson case.’” Hogan v. 8 Washington Mut. 10 The Ninth Circuit is in accord. 783 (2012)(quoting 9 Restatement (Third) of Property (Mortgages) § 5. 584. does not have an interest in foreclosing on the property to 12 satisfy repayment. thus. at 568. is not a thing 3 of value. and distinct from the debt it secures. … are not signatories. 353 Or. the original lenders and their successors. by themselves. 586. or if the plaintiff alleges a violation of recording or foreclosure statutes based 15 on that designation. 16 Defense Memo at 8. 27 28 12 .” See Defense Memo at 3:9-11. See answer to Question 1. 13 renders the mortgage unenforceable if MERS as nominal holder of the deed. 7 a person who is entitled to enforce the obligation the mortgage secures.2d at 578. Brandrup. 303 P. The Defendants fail to support their assertion that MERS carries on as nominee. N. at 1044. they instead confuse the issue…. is not agent of 14 the Lender. although the trust deeds are signed by the borrowers.

” See Doc 1-1 at 54. 230 Ariz. 18 “Green Tree is not seeking to enforce the Note…” Id. they do not. If any interest of MERS 3 continues after sale of the Note. 5 Thus. 11 The Defendants are the ones who should have knowledge of the answers to these 12 questions. the foreclosure or trustee’s sale is ancillary to the collection of the debt. which is another critical fact. and any purported transfer of the 8 Deed of Trust thereafter. 8. and confers no rights and no interest in the Deed of Trust. Green Tree does not tell the Court from where the Note 16 Defendants assert that the answers to the Court’s well-advised Question No. not the other way around.” 9 10 Question 8: Has the Note ever been endorsed or otherwise transferred to Green Tree? How? When? Short Answer: Unknown. 283 P. Defendants admit they do not know the date the Note Further.Case 3:14-cv-08089-NVW Document 87 Filed 05/01/15 Page 13 of 18 1 True. 2012)(emphasis added).” 4 But this status is meaningless. 6 this has no bearing on the fact that MERS is not and cannot be the beneficiary.3d 41. Id. at 14-18. mortgages and deeds of trust are in accord with the interpretation that the contractual debt is foremost with any foreclosure or sale being secondary and merely a means of recovery on the original debt. App. even if MERS’ nominee status continues if the original Lender transfers the Note. Schwartz. 15 came. And yet. 313. that interest is “solely nominee” for the “new noteholder. 310. 44 ¶ 9 (Ct. *** The promissory note is the primary source of the debt. National Bank of Arizona v. or even when it came into Green Tree’s possession. are 17 irrelevant. They go so far as to claim that in seeking non-judicial foreclosure. 19 20 21 22 23 24 25 26 27 28 In so arguing. And. the Deed of Trust states that MERS is “acting solely as a nominee for Lender 2 and Lender’s successors and assigns. 13 was endorsed in blank. This Note 7 and Deed of Trust have been split since loan inception. See Defense 14 Memo at 15:13-15. did not cause the Note to “follow. 13 . as the debt on the promissory note is primary. the Defendants ignore on-point Arizona law: The Arizona statutes governing foreclosures.

Rather.” See Erickson’s answer to 11 Question 1. Fannie Mae is merely the guarantor on the loan. 10 14 . 12 The Defendants assert that Fannie Mae is “the current successor and assign of the 13 Lender. fails. Defendants admit that Green Tree is merely the servicer of the Erickson loan. 1-1 at 72. The document from the MERS Website does not support the Defendants’ 16 claim that Fannie Mae is “current successor and assign of the Lender. In fact.”). 1-1 at 91-93.” Instead. Green Tree cannot be the beneficiary because it is merely a servicer 10 which is not “the person for whose benefit a trust deed is given. 49 at ¶ 14. Fannie Mae is not the 20 successor or assign of the Lender.” See Defense Memo at 2:5-7. and Erickson does not admit they are true. when and whether it came into 2 legal possession of the Note with entitlement to enforce it. 24 The FAC adequately alleges that the Lender is unknown. that no Defendant has standing to enforce the Deed of Trust or the 4 Note. The Erickson Loan was 25 sold to Fannie Mae. The only support the Defendants give for this 14 unfounded assertion is citation to the MERS ServicerID attached to the Complaint. Green Tree cannot enforce the Deed of Trust.” not the legal beneficiary.” which comports with Erickson’s 18 allegations that Fannie Mae purchased the loan. that 17 document states that Fannie Mae is the “Investor.Case 3:14-cv-08089-NVW Document 87 Filed 05/01/15 Page 14 of 18 1 Green Tree’s argument that it is irrelevant how. then sold it into a presently-undisclosed 19 mortgage-backed security (“MBS”). Id. See FAC Doc.10 And because MERS was “solely nominee.. the 26 27 28 The Defendants do not submit an affidavit from Fannie Mae affirming these assertions. Therefore. See 15 Doc.” See Defense Memo at 7 15:11-13. In any event. the Defense 3 Memo makes it clear. Fannie Mae 22 letter Doc. 1-1 at 95-104 (“Under no circumstance does either Fannie Mae in its corporate 23 capacity or the lender retain control of the loans within the trust. see 21 also Basics of Fannie Mae Single-Family MBS excerpt Doc. See 5 Defense Memo at 2:5-7. the 8 Assignment to Green Tree is void or in the alternative only assigned MERS’ nominee 9 status. Green Tree claims that it “has physical possession of the original 6 endorsed Note as custodian for and as authorized by Fannie Mae. but Fannie Mae does not retain ownership of any loans.

that Assignment was not signed until March 8. The apparently false statement in the February 18. 4 16.” Black’s Law Dictionary. and not recorded until 17 March 11. See FAC Doc. 1-1 at 106. 6th ed. why Green Tree is not and cannot be the 21 Lender. That letter falsely represents to Erickson that 12 Green Tree is the creditor. for which it served “solely as nominee. The widespread irregularities in MERS transfers made by document preparation services? Because of the rampant abuse of the MERS nominee status and purported beneficiary status by document preparation services in concert with loan servicers. at least in Arizona. 2013 default letter that claimed Green Tree was the creditor. In spite of Defendants protestations to the contrary.” The Erickson loan was bundled into an MBS and certificates were 3 issued to those who purchased an interest in the MBS. are always plausibly stated. 49 at ¶¶ 5. holding the loans for the benefit 2 of certificate holders. which it 16 is not. 13. at 368. 15 Green Tree is not the creditor. 87. 2013? 10 The February 18. 14. 2013. not the Lender. 2013. The information available to Plaintiff indicates that 5 the Lender of the Erickson loan is the Certificate Holders of the Fannie Mae MBS. 13 See Doc. An example of those widespread irregularities 15 . allegations calling into question the authority of MERS to assign a deed of trust. and Doc. 37. 22 23 24 25 26 27 28 b.Case 3:14-cv-08089-NVW Document 87 Filed 05/01/15 Page 15 of 18 1 MBS “are passive structures with Fannie Mae as trustee. See Doc. default letter supports the fact that the MERS' Assignment 11 to Green Tree is invalid for lack of authority. when the purported transfer did not happen until March 8.” Erickson has 20 already explained in answer to Question 1. 2013. 95-104. 1-1 at 91-93. even after the Assignment was signed and recorded. 6 9 Question 9: Are the following circumstances sufficient to allege MERS lacked instruction/authority from the current Holder to record transfer of the Deed of Trust to Green Tree: a. as does a similar letter from Green Tree dated May 13. MERS was taking instruction from the 19 servicer Green Tree. “creditor” is 14 defined as “a person to whom a debt is owing….1-1 at 86. at best. 2013. 7. Even if the Assignment to Green Tree were valid. 7 8 18 These letters therefore show that.

Because CWHL has 27 28 16 . Substitution of Trustee. and then sold it into an MBS. Ashley Braband. 9 10. even 7 though it specifies that MERS is signing the Assignment as nominee only. Why are Fannie Mae and Countrywide named as Defendants? 10 11 Erickson’s answers to the Questions above. 16 and the Certificate Holders of that MBS. The Assignment is filled with falsehoods and inconsistencies. is not 4 with CWHL or MERS. but rather is an employee of Nationwide Title Clearing. The Assignment states on its face that it was prepared by “NTC” 2 (Nationwide Title Clearing) in Palm Harbor. answer this Question. which means 8 MERS has no authority to transfer anything. CWHL is the only known Lender. a well-known foreclosure mill 3 document preparation service. 14 Fannie Mae purchased the Erickson Loan. See answer to Question 8. The Assignment purports to transfer the Note. Mr. Erickson 24 has plausibly alleged in her FAC that the Assignment. See answer to Questions 1 and 2 above." See Defense Memo at 2:5-7. If all of those documents are declared invalid and 26 released of record. Therefore. and the Defendants. and Notice 25 of Trustee's Sale documents are all void. CWHL refused to provide such documentation. as is more fully 6 described in the answers above. the transactions are unwound back to CWHL. Iannelli was invited to provide proof of a legal and proper sale of the 22 Erickson Loan to another entity so that Erickson could determine whether CWHL should 23 be dismissed from this action. who may well be the Lender as defined in the 17 Note and the Deed of Trust. Gregory 20 Iannelli. See FAC 5 at ¶ 17. Fannie 15 Mae is the one with knowledge about the MBS into which the Erickson Loan was sold. in the Defense Memo. The FAC alleges that the signer. Florida.Case 3:14-cv-08089-NVW Document 87 Filed 05/01/15 Page 16 of 18 1 is the Assignment here. claim that Fannie 13 Mae is "the current successor and assign of the Lender. When the attorney for CWHL. Fannie Mae is 12 claiming to be the Investor. asked that CWHL be dismissed for an alleged lack of present involvement with 21 the Loan. 18 Previous answers by Erickson also explain why CWHL is a Defendant in this 19 lawsuit.

and legitimately so. 2015. Therefore Green Tree has no authority to declare default. 2014. A request for documentation proving a legal and valid sale was refused. therefore. So whether the documents were “transferred” to Green Tree is irrelevant to determining who has legal standing to enforce the Note and Deed of Trust. 22 23 Plaintiff respectfully submits that the Motions to Dismiss should be denied. notify the trustee in writing to foreclose. 2 CWHL has remained a Defendant in this action. Doc. does it moot this case? 10 11 12 13 14 15 16 17 18 19 20 21 If documentation showing a “transfer” of the Note and Deed of Trust to Green Tree is supplied. 24 25 26 27 28 See e-mail messages between Attorney Forde and Attorney Iannelli dated October. If Fannie Mae purchased the Erickson Loan. but this assertion by the Defendants admits that Green Tree cannot be the Lender and cannot be the true Beneficiary. Fannie Mae without doubt bundled the Loan into an MBS. the Defendants have 6 entered into an agreement with Plaintiff Erickson that they will provide Erickson's Counsel 7 with at least 45 days' notice of any intent to proceed to sale pursuant to the presently 8 pending Notice of Trustee's Sale. 72-1. the Certificate Holders in that presently-undisclosed MBS. If the documentation of the transfer of the Note and Deed of Trust to Green Tree is supplied. 9 12. The Defendants have not given a 45-day notice. accelerate the balance. The Defendants have alleged in the Defense Memo that Fannie Mae is the current successor and assign to the Lender. the case is not moot. Fannie Mae in fact is not the Lender.Case 3:14-cv-08089-NVW Document 87 Filed 05/01/15 Page 17 of 18 1 refused to provide documents providing a legal and valid sale of the Erickson Loan. Plaintiff has stated plausible claims and is entitled to proceed on the merits. or take any other action related to this matter. and the Lender is. 11 17 .11 3 11. What is the status of the Trustee's Sale? 4 5 The Trustee's Sale is presently set for June 3. However.

Dodrill Wolfe & Wyman LLP 11811 N. Central. 2015. District Court Clerk’s Office using the CM/ECF System for filing and transmittal of a Notice of Electronic Filing to the following CM/ECF registrants: Colt B. McElenney Gregory B.. Forde.C. Two N. Central Avenue. FLA 33131-2339 Attorneys for MERS /s/Karen Furgeson 18 . AZ 85028 Attorneys for Defendants Green Tree.S. 20247 N. 86th Street Scottsdale. Iannelli Bryan Cave LLP Two N. P. 4 5 6 7 8 By: s/ Barbara J. Moores Sean K. Esq. Ste 1600 Phoenix. 2 3 BARBARA J.Case 3:14-cv-08089-NVW Document 87 Filed 05/01/15 Page 18 of 18 1 RESPECTFULLY SUBMITTED this 1st day of May. Forde Barbara J. AZ 85255 Attorney for Plaintiff HOMEOWNER ADVOCACY PROJECT By: s/Monique Branscomb Wilhite Monique Branscomb Wilhite Sandra Day O’Connor College of Law ASU. Robert M. Inc. Fannie Mae and MERS Eric M. Ste 5300 Miami. FORDE. AZ 85004-4406 Attorneys for Defendant Countrywide Home Loans. Suite 2200 Phoenix. I electronically transmitted the foregoing document and any attachments to the U. Brochin Clay M. 2015. AZ 85004 Attorney for Plaintiff 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 CERTIFICATE OF SERVICE I hereby certify that on this 1st day of May. Tatum Blvd. Carlton MORGAN. Suite 3031 Phoenix. LEWIS & BOCKIUS LLP 200 South Biscayne Blvd.