Foreclosure Offense and Defense: Separation of Mortgage from Note

It might seem like a strange idea but it has been in the Uniform Commercial Code for Years and its predecessor. The usual rule is that the mortgage follows the note and the note follows the mortgage. But the UCC provides an exception for the operation of the parties intent, and by operation of law by inference.

Start with this Statute from Florida which has its counterpart in most of the country:

701.02 Assignment not effectual against creditors unless recorded and indicated in title of document.–

(1) No assignment of a mortgage upon real property or of any interest therein, shall be good or effectual in law or equity, against creditors or subsequent purchasers, for a valuable consideration, and without notice, unless the assignment is contained in a document which, in its title, indicates an assignment of mortgage and is recorded according to law.

So what you say? Well in most cases the note was assigned and the mortgage wasn’t. At least it wasn’t recorded. And in most cases as the loan moves up the securitization chain several things happens. Instead of there being a specific assignment of a specific loan, note or mortgage, there is a general description of hte pool and possibly some identification of the loan date or parties but not assignment, endorsement, allonge or actual transfer.

So the first thing that happens in securitization of the loan is htat the named payee on the note gets (a) paid in full and (b) paid a fee for the “rental” of its charter or license in order to facilitate an unchartered, unregistered entity or person to enter into a transaction that LOOKS like a residential loan transaction but is actually a scheme to issue unreglated securities to unsuspecting (or suspecting) investors under false pretenses. So if the loan is for $100,000, the payee on the note gets the full $100,000. Plus he usually gets $2500 “under the table” (TILA violation).

The point here is that the note is paid and without a RECORDED assignment, the mortgage does NOT travel with the note even if an assignment was intended. And the reason is the same as the reason for recording a deed. Without that requirement a person could issue warranty deeds to 100 people on the same property. In fact, as was done in many cases with the movement of these loans, it would be the equivalent of selling the deed to the same property 100 times by a grantor who has no title.

The reason this is so important, is that if the mortgage has been severed from the note, then the obligation, if it exists at all has been converted from a secured obligation to an unsecured obligation, thus making foreclosure impossible. No mortgage can be foreclosed without the mortgagee producing the note and stating that it is in default and showing (proving) that this is so. In securitization, this is NEVER possible.

32 Responses

  1. I’m trying to understand this separation of the note and mortgage to help some friends out. His dad died on 11/21/10 and on 11/22/10 a complaint for foreclosure was filed in Florida.

    Complaint states FNMA is the owner of the “loan” (mortgage and note) and that XYZ is the holder.

    I did the look up tool on FNMA’s website and the address is listed and FNMA claims to hold a loan on the property.

    But here is where it gets weird.

    Included with the complaint is an Assignment of Mortgage from the Original lender ABC Co. to the supposed servicer XYZ co. Also, the note has NO endorsements on it. There is only blank space after the homeowner’s sig. There is however an Allonge to the Note but it doesn’t even go with this loan/homeowner!!!!

    So the assignment was recorded in the county records and is currently owned by xyz co (servicer) and the note is in the original lender’s name!!!!!!

    Is this a permenant and fatal flaw? Is this what JT was talking about???

  2. Does MERS have a right to rescind the spinoff mortgage to note agreement with the lender, for the purpose of reuniting the ability to foreclose, and does the borrower have the right as a third party, not of that spinoff, to hold MERS and the lender to that agreement, not, to be able to foreclose, and, does the lender have a right to rescind what he’s given up, so as to, re add the mortgage to the credit of the borrower?

  3. We have successfully passed the demurrer stage here in California and the judge allowed declaratory relief as a cause of action on the issue of separation of note and deed of trust.

    We plan on showing that MERS cannot initiate foreclosure since it did not have the Note at the time of fling of NOD. We are not arguing “Produce the Note”, rather that there is direct evidence that the note is elsewhere.

    We also intend to challenge a claim of the note endorsed in blank and the use of an allonge since there is case law in CA that supports this.

    Would welcome any contributions from non-judicial states re: separation of note and deed of trust especially any cases won or pending in California. If we are successful, this might be a breakthrough in the fight against MERS and unlawful foreclosures here in CA.

  4. Hi I could use some advice. My lender only has security interest per our docs to an “undivided half interest” they do not seem to realize this how can I use this to make them work with me.

  5. Neil – what part of Sec 8 does it converts the paper from negotiable to non-negotiable?

    Mike

  6. Thank You Neil. Your Info has come very usefull.

  7. holyox67: It is everything. All states have adopted the Uniform Commercial Code, although there are some differences from state to state. Mostly they are the same. Federal Courts are bound to apply it unless some specific state law exempts one or more of the parties from the application of the UCC. Very rare.

  8. Neil-is the article 8 just for Florida or is this a federal law?

    I’m in California.

  9. So Neil, could you expand on this a little

  10. JT: Good thinking. Yes it’s fraud and under article 8 it converts the paper from negotiable to non-negotiable. If it was non-negotiable then the note was paid and a new obligation arose between the seller and the buyer of the paper. The borrower who was meant to be left out in the cold was accidentally placed out of the loop — with a note that was paid in full by a third party who has NO RIGHTS against him.

  11. The UCC code for Florida (I would think) governs notes at stated by 701.02(4). Do yo think if loans were produced and approved, not because they made sense, but because the lenders wanted more loans to sell to investors (that shouldn’t have been approved) as AAA paper, wouldn’t that be a case of fraud by the transferee (673.2031(2))???

    673.2031 Transfer of instrument; rights acquired by transfer.–

    (1) An instrument is transferred when it is delivered by a person other than its issuer for the purpose of giving to the person receiving delivery the right to enforce the instrument.

    (2) Transfer of an instrument, whether or not the transfer is a negotiation, vests in the transferee any right of the transferor to enforce the instrument, including any right as a holder in due course, but the transferee cannot acquire rights of a holder in due course by a transfer, directly or indirectly, from a holder in due course if the transferee engaged in fraud or illegality affecting the instrument.

  12. Att: Tim McCandless

    County of San Bernardino Recorders office claims this document has no legal format and can not be used to record a notice of non compliance,

    Tim if you have a legal format please send me a blank copy where as I can fill in the lenders name and apply my info to it. I have rescinded my note after finding multiple TILA violations, the bank now claims that they have not received the document I certified eight different copies and all have been accounted for and signed at receipt.

    Prior, I asked three times for them to send me the forms needed to do a loan modification. I did receive the first request I made for the forms, I mailed them back with a grievance letter. I had to call them to inquire they said they did not get it, and since I was not behind they could not help because I did not need the help. I explained I was forced to close my business and that I sought for the bank to help with a loam Mod as I was looking for other employment and did not want to fall behind.

    Now that I rescinded my not they are telling me they have not got it and I know they did because I certified all letters sent and they signed for them. They claim now they are looking to help me come current with the note and that for them to be able to work with me I need to bring the note current. I have asked multiple times for them to stop calling me and they persist in calling. I have told them to correspond to my rescission notice and that we can talk further when they comply with my request. One agent did tell me “we will continue to call everyday until you pay Up.!”

    I found that the Loan Specialist that took my finger prints when the loan consummation took place was not a Notary Public, the banks manager had told the employee’s of the bank to take the finger prints of the clients. When ever the notary public was out to lunch and the Notary Public would latter fill in the blanks or in many cases the branch manager would do it. Under California Law the Notary public has to be present at the time documents are signed and failure to do so makes Loan Docs Null and Void. Another thing I found is that the Notary Public can not be an employee of the lender because they have mutual interest in the assignment of the loan.

    If brought to the attention of the Attorney General a violation such as this will be penalized in the amount of $2500.00 per occurrence and up to $6000.00 dollars per day the violation remained in affect. In my case my loan took place about two years ago that would be $4,380,000.00 the bank may be liable for.

    California Civil Code § 1185.
    8224. A notary public who has a direct financial or beneficial
    interest in a transaction shall not perform any notarial act in
    connection with such transaction.
    For purposes of this section, a notary public has a direct
    financial or beneficial interest in a transaction if the notary
    public:
    (a) With respect to a financial transaction, is named,
    individually, as a principal to the transaction.
    (b) With respect to real property, is named, individually, as a
    grantor, grantee, mortgagor, mortgagee, trustor, trustee,
    beneficiary, vendor, vendee, lessor, or lessee, to the transaction.
    For purposes of this section, a notary public has no direct
    financial or beneficial interest in a transaction where the notary
    public acts in the capacity of an agent, employee, insurer, attorney,
    escrow, or lender for a person having a direct financial or
    beneficial interest in the transaction.

    8227.1. It shall be a misdemeanor for any person who is not a duly
    commissioned, qualified, and acting notary public for the State of
    California to do any of the following:
    (a) Represent or hold himself or herself out to the public or to
    any person as being entitled to act as a notary public.
    (b) Assume, use or advertise the title of notary public in such a
    manner as to convey the impression that the person is a notary
    public.
    (c) Purport to act as a notary public.
    8227.3. Any person who is not a duly commissioned, qualified, and
    acting notary public who does any of the acts prohibited by Section
    8227.1 in relation to any document or instrument affecting title to,
    placing an encumbrance on, or placing an interest secured by a
    mortgage or deed of trust on, real property consisting of a
    single-family residence containing not more than four dwelling units,
    is guilty of a felony.
    8228.

    Tank You
    for the service you are providing here.

  13. OOPS CORRECTION TO MY POST :

    RESCISSION OF TRUSTEES DEED ON “JULY” 14

  14. Steve, do your audits deal with forged and falsely witnessed signatures, fraudulent work and income histories, devised in 2000 to cover up the Borrower’s dementia (Alzheimer’s) and legal incapacity?

    I’ve got a Miami foreclosure, and need a signature analyst. Got anybody?

    RSVP
    Allan
    bemoved@aol.com

  15. In Florida, the lender doing the foreclosure must be the legal custodian of the mortgage and the note and must be able to prove it. I’m working on several right now with AHMSI where they can prove they are the legal custodian.

  16. […] Foreclosure Offense and Defense: Separation of Mortgage from Note, 2008/10/11 at 6:50 […]

  17. I Bet you McCain only opposed the provision denying any judicial review of decisions made by Paulson for show and to insure he still has all those votes secure.

  18. Law Offices of
    TIMOTHY McCandless
    15647 Village Dr
    Victorville, Ca 92392
    TEL (760) 733-8885; FAX (909)494-4214

    California as of Sept 6, 2008 has added the following provisions that must be complied with prior to effectuating a foreclosure. It is hoped that lenders will work out things with borrowers as a result of this addition to civil code 2923.5.

    The lenders however are running roughshod over borrowers and claiming to make telephonic contact. When they make contact they merely say you are $26,580.00 behind how are you going to pay. That’s working it out.

    Most folks don’t have the 10,000.00 retainer to pay an attorney to file the lawsuit to make the lender do the right thing. Here is a way for under $50.00 to get the lender to the table.

    File a declaration of non-compliance with 2923.5. In this declaration state that the real beneficiary has not contacted you and has not assessed your financial situation as mandated in 2924.5 (a) (2).

    In this declaration state that you do not even know who the beneficiary is that is to say most lenders are not the true beneficiary.

    Lastly you should claim the loan you want and the amount that you are willing to pay. When I say file I mean record at the county recorder and be sure to include the legal description of your property. You must have your signature notarized by a notary public. Then send this conformed copy of the recorded document to anyone that is trying to foreclose. The trustee the title company, MERS, the servicer.

    This may cause the title company not to insure the title upon completion of the foreclosure. This may force the lender to undergo a judicial foreclosure in most cases in the subprime world they don’t even have the promissory note so a judicial foreclosure would be impossible.

    (a) (1) A mortgagee, trustee, beneficiary, or authorized agent may not file a notice of default pursuant to Section 2924 until
    30 days after contact is made as required by paragraph (2) or 30
    days after satisfying the due diligence requirements as described in
    subdivision (g).
    (2) A mortgagee, beneficiary, or authorized agent shall contact
    the borrower in person or by telephone in order to assess the
    borrower’s financial situation and explore options for the borrower
    to avoid foreclosure. During the initial contact, the mortgagee,
    beneficiary, or authorized agent shall advise the borrower that he or
    she has the right to request a subsequent meeting and, if requested,
    the mortgagee, beneficiary, or authorized agent shall schedule the
    meeting to occur within 14 days. The assessment of the borrower’s
    financial situation and discussion of options may occur during the
    first contact, or at the subsequent meeting scheduled for that
    purpose. In either case, the borrower shall be provided the toll-free
    telephone number made available by the United States Department of
    Housing and Urban Development (HUD) to find a HUD-certified housing
    counseling agency. Any meeting may occur telephonically.
    (b) A notice of default filed pursuant to Section 2924 shall
    include a declaration from the mortgagee, beneficiary, or authorized
    agent that it has contacted the borrower, tried with due diligence to
    contact the borrower as required by this section, or the borrower
    has surrendered the property to the mortgagee, trustee, beneficiary,
    or authorized agent.
    (c) If a mortgagee, trustee, beneficiary, or authorized agent had
    already filed the notice of default prior to the enactment of this
    section and did not subsequently file a notice of rescission, then
    the mortgagee, trustee, beneficiary, or authorized agent shall, as
    part of the notice of sale filed pursuant to Section 2924f, include a
    declaration that either:
    (1) States that the borrower was contacted to assess the borrower’
    s financial situation and to explore options for the borrower to
    avoid foreclosure.
    (2) Lists the efforts made, if any, to contact the borrower in the
    event no contact was made.
    (d) A mortgagee’s, beneficiary’s, or authorized agent’s loss
    mitigation personnel may participate by telephone during any contact
    required by this section.
    (e) For purposes of this section, a “borrower” shall include a
    mortgagor or trustor.
    (f) A borrower may designate a HUD-certified housing counseling
    agency, attorney, or other advisor to discuss with the mortgagee,
    beneficiary, or authorized agent, on the borrower’s behalf, options
    for the borrower to avoid foreclosure. That contact made at the
    direction of the borrower shall satisfy the contact requirements of
    paragraph (2) of subdivision (a). Any loan modification or workout
    plan offered at the meeting by the mortgagee, beneficiary, or
    authorized agent is subject to approval by the borrower.
    (g) A notice of default may be filed pursuant to Section 2924 when
    a mortgagee, beneficiary, or authorized agent has not contacted a
    borrower as required by paragraph (2) of subdivision (a) provided
    that the failure to contact the borrower occurred despite the due
    diligence of the mortgagee, beneficiary, or authorized agent. For
    purposes of this section, “due diligence” shall require and mean all
    of the following:
    (1) A mortgagee, beneficiary, or authorized agent shall first
    attempt to contact a borrower by sending a first-class letter that
    includes the toll-free telephone number made available by HUD to find
    a HUD-certified housing counseling agency.
    (2) (A) After the letter has been sent, the mortgagee,
    beneficiary, or authorized agent shall attempt to contact the
    borrower by telephone at least three times at different hours and on
    different days. Telephone calls shall be made to the primary
    telephone number on file.
    (B) A mortgagee, beneficiary, or authorized agent may attempt to
    contact a borrower using an automated system to dial borrowers,
    provided that, if the telephone call is answered, the call is
    connected to a live representative of the mortgagee, beneficiary, or
    authorized agent.
    (C) A mortgagee, beneficiary, or authorized agent satisfies the
    telephone contact requirements of this paragraph if it determines,
    after attempting contact pursuant to this paragraph, that the
    borrower’s primary telephone number and secondary telephone number or
    numbers on file, if any, have been disconnected.
    (3) If the borrower does not respond within two weeks after the
    telephone call requirements of paragraph (2) have been satisfied, the
    mortgagee, beneficiary, or authorized agent shall then send a
    certified letter, with return receipt requested.
    (4) The mortgagee, beneficiary, or authorized agent shall provide
    a means for the borrower to contact it in a timely manner, including
    a toll-free telephone number that will provide access to a live
    representative during business hours.
    (5) The mortgagee, beneficiary, or authorized agent has posted a
    prominent link on the homepage of its Internet Web site, if any, to
    the following information:
    (A) Options that may be available to borrowers who are unable to
    afford their mortgage payments and who wish to avoid foreclosure, and
    instructions to borrowers advising them on steps to take to explore
    those options.
    (B) A list of financial documents borrowers should collect and be
    prepared to present to the mortgagee, beneficiary, or authorized
    agent when discussing options for avoiding foreclosure.
    (C) A toll-free telephone number for borrowers who wish to discuss
    options for avoiding foreclosure with their mortgagee, beneficiary,
    or authorized agent.
    (D) The toll-free telephone number made available by HUD to find a
    HUD-certified housing counseling agency.
    (h) Subdivisions (a), (c), and (g) shall not apply if any of the
    following occurs:
    (1) The borrower has surrendered the property as evidenced by
    either a letter confirming the surrender or delivery of the keys to
    the property to the mortgagee, trustee, beneficiary, or authorized
    agent.
    (2) The borrower has contracted with an organization, person, or
    entity whose primary business is advising people who have decided to
    leave their homes on how to extend the foreclosure process and avoid
    their contractual obligations to mortgagees or beneficiaries.
    (3) The borrower has filed for bankruptcy, and the proceedings
    have not been finalized.
    (i) This section shall apply only to loans made from January 1,
    2003, to December 31, 2007, inclusive, that are secured by
    residential real property and are for owner-occupied residences. For
    purposes of this subdivision, “owner-occupied” means that the
    residence is the principal residence of the borrower.
    (j) This section shall remain in effect only until January 1, 2013,
    and as of that date is repealed, unless a later enacted statute,
    that is enacted before January 1, 2013, deletes or extends that date.

    RECORDING REQUESTED BY
    AND WHEN RECORDED MAIL TO

    You

    ________________________________________________ SPACE ABOVE THIS LINE FOR RECORDER’S USE

    You

    V
    Them (Your lender ,trustee ETC.
    .

    NOTICE OF NON COPLIANCE
    CALIFORNIA CIVIL CODE § 2923.5

    NOTICE OF NON COMPLIANCE CALIFORNIA CIVIL CODE § 2923.5

    Notice is given that the LENDERS AND OR TRUSTEES LISTED ABOVE has not complied with civil code 2923.5. As such all notices of default and or trustee sales and such other recordings and actions are void as a matter of law.
    I have in good faith attempted to mediate the loan and the true beneficiary has refused to negotiate in good faith. They have not complied with the provisions in which they were to meet with me in person or by telephone in order to assess the borrower’s financial situation and explore options for the borrower to avoid foreclosure. During the initial contact, the mortgagee,
    Beneficiary, or authorized agent shall advise the borrower that he or she has the right to request a subsequent meeting and, if requested, the mortgagee, beneficiary, or authorized agent shall schedule the meeting to occur within 14 days. The assessment of the borrower’s financial situation and discussion of options may occur during the first contact, or at the subsequent meeting scheduled for that purpose.

    If we had met the property would have reflected a value of ______________. I am willing to pay an interest rate of _____and I will be able to make monthly payments of__________. The principal balance of my loan should be reduced the present market value of ____________.

    In the event this is not acceptable I hereby exercise my right to have the security interest in this property rescinded pursuant to the Truth in Lending Act.

    APN: ______ ________ ___________

    And with a legal description of:
    Lot __ of Tract No. _________, in the City of _____________________, County of ___________, State of California, as per Map recorded in Book ________, Pages ___ and ____ of Maps, in the Office of the County Recorder of said County

    Dated ______________ .

    ____________________________________

    ACKNOWLEDGMENT
    Subscribed and sworn to before me this ______
    day of ____, 2008
    ____________________________________
    Notary Public in and for the County of Los Angeles, State of California

  19. Post-Script to previous post:

    Despite the “inescapable, yet a counter-intuitive necessity” for the upcoming government intervention into capital markets, concerning language included is below – a section from the original “U.S. Treasury Proposal to Buy Mortgage-Related Assets”:

    “Sec. 8. Review. Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.”

    PLEASE READ THE ABOVE LANGUAGE VERY CAREFULLY…

    Why is there no provision for judicial review? What are the effects of such authority? Moreover, the language seems to read as a circumstance as to be unconstitutional.

    The quoted text is cited from download of Sept. 20 (Bloomberg) — proposal by the U.S. Treasury to buy mortgage- related assets from financial institutions.

    Please recall, – Related “assets” is not “mortgage backed” or “titled”.

    Mort(imer) Gage

  20. Despite the “inescapable and counter-intuitive necessity” for the upcoming government intervention into capital markets, concerning language is below – a section from the original “U.S. Treasury Proposal to Buy Mortgage-Related Assets”:

    “Sec. 8. Review. Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.”

    PLEASE READ THE ABOVE LANGUAGE VERY CAREFULLY…

    Why is there no provision for judicial review? What are the effects of such authority? Moreover, the language reads as to be unconstitutional.

    Test from downloand of Sept. 20 (Bloomberg) — proposal by the U.S. Treasury to buy mortgage- related assets from financial institutions.

    Recall, – Related “assets” is not “mortgage backed” or “titled”.

  21. Oscar,
    Yes (maybe) the Statute reads:
    (4) Notwithstanding subsections (1), (2), and (3) governing the assignment of mortgages, chapters 670-680 of the Uniform Commercial Code of this state govern the attachment and perfection of a security interest in a mortgage upon real property and in a promissory note or other right to payment or performance secured by that mortgage. The assignment of such a mortgage need not be recorded under this section for purposes of attachment or perfection of a security interest in the mortgage under the Uniform Commercial Code.

    Thus the UCC controls the perfection of the security interest.There was an earlier attempt by a bankruptcy trustee in Kapila v. Atl. Mortg. & Inv. Corp. 184 F.3d 1335; 1999 U.S. App. This was before the amendment to 701.02 in 2005 that added (4). This case used an earlier version of the UCC so there is still hope in the right case. It is not thus a simple statutory argument and needs to be combined with arguments at a minimum about notice and fundamentals of others statutory and common law schemes to combine into successful causes of action.
    Gator Bradshaw
    gator.bradshaw@yahoo.com

  22. The US taxpayer outrage over the bail-out may be justified in that their “return on investment” may end up being as risky as purchasing an unsecured instrument – if it doesn’t pay there is no collateral to offset any loss; but, I would assume this will involve a minute percentage of those “assets” bailed out b/c, correct me if I’m wrong, the legality of the secured instrument (mortgage) can be removed only by court action, such as a defense or counterclaim to a foreclosure action?

  23. My question is, Does the FL Statute 701.02(4) says that assignments and transfers don’t have to be recorded to make them valid in court? Thanks.

  24. Title to property is a material issue.

  25. What he’s trying to say is that financially as a nation, we’re all screwed.

  26. So, Mort is it? In Laymans terms what are you trying to say?

  27. Rescue, Bail-Out, Bust-Out? or Bleed Out?

    Our forefathers entrusted us with the affirmative duty to protect the country’s future –to be present and to serve when our nation is in need of our contribution. Now is one of those times.
    Patriotically albeit reluctantly; we move forward. Forward without clarity; all gathered together to make a significant contribution. We need and deserve to know whether we are reluctant investors or unknowingly part of a bail-out, bust-out, or bleed-out. (See government definitions: http://www.usdoj.gov/ust/eo/ust_org/ustp_manual/volume5/vol5ch10.htm)
    Our contribution will not only involve tax dollars, but call upon us to contribute an individual gift of our human capital through patience and trust. Our investment is indeed necessary to rescue our financial markets.
    We are poised to make a significant contribution. As taxpayers and future investors we are asked to assist each other in resolving the “unforeseen” and presently “unknown” financial chaos.
    We are told that the genesis of the current financial chaos lies with questionable mortgage backed securities (MBS). The “private” sales of the MBS (actually of mortgage – “related” – securities) originally were issued as an investment with a direct security interest in “real estate”. In fact, the troubled securities were originally labeled subprime “mortgages”.

    These securities have now been redefined “toxic assets”.

    Many of these “toxic assets” are in default. As these mortgages have not amortized and matured, we find the largest private financial institutions calling upon taxpayer assistance as during the period after 1986 tax reform.

    To address that previous significant financial crisis, Congress adopted in 1989 the Financial Institutions Reform Recovery and Enforcement Act (FIRREA), and created the Resolution Trust Corporation (RTC).

    On Sunday September 21, 2008, Tom Brokaw interviewed Secretary of the Treasury Paulson on Meet the Press. Secretary Paulson related the current crisis with the Resolution Trust Corporation.

    The Secretary stated, “…First of all, a lot of people talk about the RTC…in those days, there were whole loans, and the government owned the real estate…Here, the financial institutions are clogged with illiquid loans…[that] won’t be giving us control of real estate, … and that, that is what we have in front of us today.”

    Notably, Secretary Paulson acknowledges the material distinction between whole loans, and mortgage “backed” securities. To be sure legislation is necessary to prevent a most certain global panic and chaos regarding these mortgage-related securities. Title to property is a material issue.

    Exactly, what are the taxpayers being asked to support – a mortgage with security and “control of real estate”? As new investors, we need “control of real estate”. Without “control of real estate” what will we have? Transparency is necessary because of the potential for “misstatements of assets”.

    In that regard, Katherine M. Porter, wrote in her University of Iowa Legal Studies Research Paper Misbehavior and Mistake in Bankruptcy Mortgage Claims, “If a security interest in property of the debtor is claimed, the proof of claim shall be accompanied by evidence that the security interest has been perfected.” (Fed. R. Bankr. P. 3001(d)). (website: ssrn.com/abstract=1027961) Otherwise, as investors we will come to discover we lack the very evidence necessary to confirm our contribution is not just a back-door open to address at best a bail-out, or worse enable a bust-out or bleed-out.

    As assets are worked out in the future, some of our human capital must be devoted to insist that transparency evidences we own a security interests properly perfected, and secured by a debtor’s home. It is that interest, I understood Secretary Paulson addressed and the interest we should be acquiring.

    Simultaneously, we need to protect that proposed changes in accounting practices are well reasoned, and not abused just to support an aggregate amount of real estate securing the investment is just insufficient to support the shares or interests previously securitized and sold.
    Last year Judge Christopher Boyko of the United States District Court for the Northern District of Ohio in In re Foreclosure Cases, 2007 WL 3232420 (N.D. Ohio Oct. 31, 2007), dismissed cases in which lenders sought to foreclose on securitized residential mortgages in default because they failed to evidence a perfected mortgage with the security and “control of real estate”. Judge Boyko reinforced to lender’s counsel that the jurisdictional integrity of United States District Court is “Priceless.” (Additional information is the subject of an article in The New York Times on November 15, 2007.)

    The current fear in financial markets will only be resolved through the trustworthy administration by our leaders and our patient resolve to require transparency and accountability.

    Mort Gage

  28. OK IN 1985 MY DAD BOUGHT OUR HOUSE JOINTLY WITH WITH MY MOTHER

    THROUGH THE VA. IN 1991 HE HAD TO PULL OUT A SECOND(WITH B OF A) BECAUSE

    MY MOM DIVORCED HIM CAUGHT HIV & SPLIT TO OREGON. AROUND 2000 – 2003 HE

    HAD TO HAVE 3 HEART SURGERIES & BECAUSE OF NOT WORKING COUPLED WITH

    MEDICAL BILLS BANK OF AMERICA STARTED TO FORECLOSE IN 2005. JUST BEFORE

    THEY DID WE FOUND A BROKER(JEFF MERRICK) THAT FOUND A BROKERAGE(EMERALD

    FINANCIAL) THAT COULD DO A “PRIVATE HARD MONEY LOAN”. THEY QUOTED US

    ABOUT $8,500 CLOSING COSTS OUT OF A $214,000 LOAN WHEN MY DAD WENT TO

    SIGN THE CONTRACT IT WAS A WHOLE OTHER STORY THEY INCREASED THE LOAN

    AMOUNT WITHOUT MY FATERS CONSENT TO $260,000 AND TOOK OUT $37,000 IN

    CLOSING COSTS (AND DIDN’T DISCLOSE IT) INCLUDING $3,000 FOR A SEARS

    JUDGEMENT THEY DID NOT PAY OFF ALONG WITH MANY OTHER DEBTS, BUT WAIT IT

    GETS BETTER THE LOAN THEY SIGNED US UP FOR WAS A 60 MONTH TERM ARM WITH

    AN APR OF %12.602 WITH A PREPAMENT PENALTY & A $262,000 BALOON PAYMENT

    AT THE END. ALSO AN AUDITOR OUT IN TEXAS SAID THEY VIOLATED THE RICO

    STATUE BECAUSE HAD MY DAD PAID ACCORDING TO THEIR PLAN HE WHOULD HAVE

    BEEN PAYING %42 INTEREST, BUT INSTEAD JEFF MERRICK REFERED US TO ANOTHER

    LENDER AND BROKERAGE FREMONT AND PC LENDING. SO WE REFINACED I EARLY

    2006 EVERYTHING WAS FINE UNTIL AROUND JUNE OF 2007 MY DAD HAD TO HAVE

    KNEE SURGERY AS A RESULT OF A WORK RELATED INJURY SO HE FELL BEHIND &

    THEY STARTED TO FORECLOSE. MY DAD HAD BEEN CLEARED TO START WORKING

    AGAIN(PARTIALY) & WAS GETTING MORE HOURS & I HELPED HIM RESOLVE A TAX

    LEVY ISSUE WITH THE IRS ALLOWING HIM ENOUGH INCOME TO BE APPROVED FOR A

    FORBEARANCE/REPAYMENT PLAN THEY SAID MAKE 3 REGULAR MONTHLY PAYMENTS IN

    A ROW (WHICH WE DID) AND THEY WOULD MODIFY THE DELINQUENCY & TERMS OF

    THE LOAN (WHICH THEY DID NOT) AND JUST AFTER OUR THIRD PAYMENT WE GOT A

    LETTER STATING THAT LITTON WAS BUYING FREMONTS PLATFORM. I HAD CALLED

    FREMONT AND SPOKE WITH ONE OF THE ACCOUNTANTS THERE AND HE TOLD ME THAT

    LITTON WOULD HONOR THE MODIFICATION AND TO MAKE SURE I SENT LITTON ONE

    LAST REGULAR MONTHLY PAYMENT BEFORE THE TRUSTEE SALE DATE ON JUNE 20 TO

    STOP THE FORECLOSURE.THEY SENT A VOD(WITH A $25,000 DELINQUENCY) NOTICE

    DATED JUNE 13 ON JUNE 17 THER RECIEVED & ACCEPTED AND ON JUNE 20 THEY

    FORECLOSED & RECORDED A TRUSTEES DEED UPON SALE (& SATISFACTION OF THE

    DEBT) IN FAVOR OF HSBC BANK THEN ON JUNE 30 LITTON RECORDED AN

    INCOMPLETE ASSIGNMENT OF DEED OF TRUST TO HSBC UNSIGNED BY FREMONT.I

    SENT THEM A DISPUTE VOD CERTIFIED DATED JULY 11 THEY RECORDED A

    RESCISSION OF TRUSTEES DEED ON JUNE 14 “RETURNING ALL TITLE AND LIEN

    HOLDERS TO THE STATUS QUO-ANTE AS EXISTED PRIOR TO THE TRUSTEES SALE”.

    AS FOR THE VOD THEY EVENTUALLY SENT ME A PACKET OF PAPERS WITH A COPY OF

    THE TRUST DEED, A PRINTOUT OF FEES INCLUDING AN EVICTION COST FOR $371

    ON AUGUST 13 AND A DETAILED TRANSACTION HISTORY WITH A TRANS. ON 6/04/08

    NEW LOAN NOCASH EFFECTIVE DATE: 5/26/08 AND GUESS WHAT NO ASSIGNMENT

    PROVING THAT THEY OWN THE DEBT NOT TO MENTION THAT ON THE MERS WEBSITE

    WHEN YOU LOOK UP THE PROPERTY ADDRESS THE M.I.N. COMES UP AS INACTIVE.

    OH AND I FORGOT TO MENTION I HAD SENT EMERALD AN EXTENDED RESCISSION

    LETTER FOR TILA ETC. VIOLATIONS (WITHIN THE SOL) AND THEY DID NOT COMPLY

    AND I THINK MY LAWYER MIGHT BE HAVING PROBLEMS WITH IT.

    ANY ADVICE WOULD BE MUCH APPRECIATED THANK YOU AND SORRY FOR THE LONG

    STORY PS THANK YOU NEIL GARFIELD YOU ARE TRULY THE LIGHT FOR US TO SEE

    IN THESE DARK TIMES

    PHILIP SHELLEY WESTMINSTER CA

  29. MERS is the “nominee” of the lender and is the beneficiary on the Deed of Trust and thereby I guess can assign the Deed of Trust. Am I missing something here? MERS does not record any assingments and all transfers are documented internally when a member of MERS records with MERS that they have received an assignment. Very confusing. If the member doesn’t notify MERS of the assignment then MERS doesn’t know. Or the assignment can be made to a non MERS member in which case MERS would not know either of he assignment.

  30. mymortgage company filed a foreclosure against me, i countered with the fact the the assignment of mortgage from the “original lender” did not record the assignment to superior bank until 4 years later, lasalle bought the mortgage from the fdic, superior bank. and recorded its assignment befroe the earlier one was recorded. i aqlso filed an action to quiet title.
    pa law requires that an assignment executed and acknowledged in pennsylvania be recorded within 90 days, otherwise it is “void and fraudulent” upon any subsequent purchasers.
    today is the 20th day since i filed suit, lasalle has not responded to the suit, so it looks like i may win by default. i will keep you posted.

  31. Does this apply in Arizona? What part of the UCC would this fall under.

    Thanks, in advance

  32. I have a question. Now is an “assignment of trust deed” good if:
    “H” was on deed of trust,
    then “MERS” does an assignment of trust deed to “N”
    then “N does an assignment of trust deed to “Deutsche”?
    Shouldn’t “H” have assigned to MERS? Didn’t they miss a step? and if so this is a defective transfer? and therefore invalid?
    Thank you for your responses!

Leave a Reply

%d bloggers like this: