An Open Letter to Dean Martin Arizona State Treasurer: You are leaving Money on the Table — MERS and Securitization — Hundreds of millions of dollars in receivables go uncollected

January 4, 2008

Dear Mr. Martin:

The Arizona Republic reports today that you and others in government have asserted that the State of Arizona is about out of cash. Others have described the state as “broke.”

What you are missing is one very large receivable due to the state and county governments — hundreds of millions of dollars in taxes, recording and registration fees for all the companies that side-stepped Arizona Law in the great Mortgage Meltdown of 2001-2008.

This isn’t a long letter because it doesn’t need length — it needs action. State Receivables are not being collected and State expenses are rising as people lose their homes, their jobs and the ability to put a roof over their heads and food on the table. As unregistered, unchartered, unregulated companies created billions of dollars in illegal profits (undisclosed and unreported to the State, but reported to Federal Agencies) from “mortgage” transactions tens of thousands of Arizonians were defrauded and the State was cheated.

Mortgage Electronic Registration Systems was invented by the financial services industry as an illegal scheme to avoid recording changes in ownership of the mortgage rights, changes in Trustees, assignments etc. Arizona law requires any interest in real estate to be recorded. The reason for the recording requirement, besides revenue, is simple — it is the only way to keep track of who owns which property. MERS (currently banned in the State of California and under attack in at least 2 dozen other states) is a cloak which the financial services industry is using to avoid paying the taxes, stamps and fees on each step of the securitization process, plus a way to obfuscate the real ownership and to essentially choose later who will be designated to be the “owner” of the mortgage rights — i.e., who will be said to own the mortgage note and thus be a successor to the beneficiary under the Deed of Trust.

Hundreds of millions of dollars are owed to Arizona by entities that now claim rights to foreclose on property using the state’s non-judicial procedures, when they are not the record owner nor even the actual owner or lender on the transaction. The required condition that they record every element in the chain of title has been ignored because if they file a judicial foreclosure they would be required to make allegations that are fraudulent. Thus they avoid the filing fees, and  service fees attendant to judicial foreclosure as they are committing a fraud on the government and the homeowners.

Further, the state requires any trust, corporation or lending company, plus any bank, credit union or other financial institution to register in the state (more fees owed to the State). Instead, using MERS as their cloak, unregistered, unchartered, unregulated individuals and companies have operated with the the State of Arizona without registering, obtaining a charter, or paying required taxes on property interests, income taxes, and normal annual fees.

At the heart of this is a potential liability for the State of Arizona beyond its current economic woes, and beyond these enumerated uncollected receivables, to wit: the fact that the state has ignored the issues raised by the use of MERS does not improve the title that is reflected on the record. The fact remains that companies are getting certificates of title transferred to them when there is nothing in the record to support the chain of title. Thus Arizona faces an enormous challenge and potential lawsuits in failing to enforce its recordation laws. One day, in the not distant future, some lawyer is going to take a close look at these transactions and realize that not one of the modification, refinancings, short sales, foreclosure sales and subsequent third party sales is supported by a proper chain of title in the record. The effect on the solvency of title insurers is immeasurable.

As an Arizonian, I am concerned that the State is about to borrow money and probably raise taxes when the State has a clear right of action and an ability to collect fees, stamps and taxes against hundreds of investment banks, Special Purpose Vehicles, Mortgage Aggregators/Wholesalers, “lenders” whose charters were essentially rented in most “mortgage” transactions, each of whom have operated and are operating illegally within the State.

Note that in table funded loans of this sort the real lender is not the named payee on the note or the named beneficiary on the deed of trust — but it is the source of funds. The named payee on the note, the beneficiary under the deed of trust was paid an extra fee to drop its underwriting standards in favor of whatever was dictated by the securitizers, which makes the securitizers the successor trustee, successor beneficiary and possibly the successor payee. It means that companies are operating as “trustees” when they have failed to register or qualify as Trust Companies.

As Treasurer of the State of Arizona you stand in a unique position to save the economy of the State and to correct the thousands of title deficiencies in state and county records. My immediate recommendation to the State is that it seek receivership (and recovery of fees, taxes, damages and interest) over all participants in financial services that launched and executed this scheme, taking care NOT to interfere with the many community banks and credit unions that DID play by the rules and that didn’t do anything wrong.

Thank you for your time.


Neil F. Garfield, Esq. (Licensed in Florida only)

27 Responses

  1. Finally; Someone who can put what I have “felt” ever since I bought a Condo in Mesa, Az. for my Wife. A case that brings other entities in as well as “MERS” is the Mikulaco vs. Aegis Wholesale Corp. who conveniently went Bankrupt in 2007. My parcel # was changed, and I was never notified. Names, behind names, behind names, et. al., ad. infinitum.

  2. Is MERS banned by the Department of Corporations in the State of California? If so, is there a judgement or a notice of suspension? Did they ask for reinstatement?

  3. Most excellent Garfield!!! Now so long as Dean Martin isn’t overlooking this fiasco is because he received millions in payoff’s, you just might have something here!

  4. We need a serious lifeline out here in California!


  5. Great Letter!!! Received a response from the California Department of Treasury. They thanked me for sending the Letter, my prayer for us ALL is, California and the U.S. pull their heads out of the sand. In addition, the letter was submitted to the Governor of California. Wishful Thinking? Hopefully. flood their mailboxes .


  6. Thank you for you bring MERS to our attention.
    MERS appeared as an assignee in our loan documents. Now I see some else, after I had Saxon Mortgage reverse the trustee sale. However, my home sold again in the trustee sale for the second time. Who knows of any good trustworthy attorneys in California? I mean a good attorney that is not afraid to help us bring our case to Federal Court?

  7. What is coming? We are living in exponential times. This problem and those dealing with it (auditors, attorneys, etc) are only going to get busier and busier – especially as word of this spreads:

    Dan Edstrom

  8. Jose, I take it you are in the DC metro area. I live in VA and am looking for other people to work with. It seems like the trend in this state is to just roll over without a fight. I may be going pro se soon and am looking to get the actual details sorted out in how to execute a defense in the state of VA. If you are interested in helping or know somebody that could, please email me at

  9. I’m in California, at least for as long as it continues to exist. The state is in very deep financial trouble, and now I’m learning that most other states aren’t faring much better. California just raised a bunch of taxes illegally … sales tax, gasoline tax, income tax, etc … by classifying them as “fees”. To raise “taxes” requires a 2/3 majority in the state Senate, but raising “fees” only requires a simply majority. Change one lousy word, and you can rip the people a new one. And that’s exactly what they did.

    Seriously … I’m looking into moving over to Arizona. What’s now happening and what’s about to happen in this world is beyond most people’s comprehension. What’s coming is the end of what we now know, and the begining of something new. Let’s just see where we’re all at by this time next year. Survival will be paramount. We may well all be reminissing for the good old days of 2008.

    San Diego, Calif.

  10. Note that in table funded loans of this sort the real lender is not the named payee on the note or the named beneficiary on the deed of trust — but it is the source of funds. The named payee on the note, the beneficiary under the deed of trust was paid an extra fee to drop its underwriting standards in favor of whatever was dictated by the securitizers, which makes the securitizers the successor trustee, successor beneficiary and possibly the successor payee. It means that companies are operating as “trustees” when they have failed to register or qualify as Trust Companies.
    I will certainly forward your “right on” letter to every California State legistlator, state and county governments, congressmen, David Dreier and Jim Brulte to name a few. I’m personal friends with these guys and have been compiling letters and information I receive from all over the State telling me their story and asking for help.

    Thank you Neil. Without this site I would be a very ignorant woman (when it comes to the mortgage meltdown and all that entails).

    I’m still working on my debacle proving to be an precise example of how to screw up a TILA, an assignment or lack thereof, proper notices, chain of title, a foreclosure proceeding, MERS involvement, my immediate sanity, and on and on…..

    I couldn’t not have possibly have recognized these missteps and outrageous irresponsible acts performed by my lending institutions without you and this site.


  11. I have forwarded the copy of the letter, I modified it to fit Virginia and I am in the process of preparing Maryland and DC.

    Maryland is worried sick about their budget deficit.
    I believe this to be the perfect time to do this.

  12. Neil,
    I have a suggestion. Why don’t you create a separate post for this letter as kindof a sign up page for individuals to take the responsibility of forwarding this letter to members of the press, government and other consumer organizations. Divide and conquer.
    I will take Illinois and central florida. I’m sure Mario will take south Florida.

    Mike Linton

  13. It is worth it Jose – I’ve applied. I have noticed two occupations that really haven’t slowed down – legal and medical

  14. I will be registering for classes for a law degree. It will take time but I think it will be worth it.

  15. Most lawyers do not understand the ins and outs of the continuum and are gun shy some times to assert the clients rights due to an aversion to losing in court. If you ask me I rather lose with my boots on than running away from my house without a fight.

    In many instances the very fact that they will have to learn new aspects of law and relearn the law as it should be applied also prevents the lawyers from getting involved. Some are concerned that if the do get involved they will not get business from the lenders that have never sent them any business before. All stupid excuses.

    I know of a person in the Washington Metro that has referred over 300 cases to different attorneys, at an average of $3,000 per case that is almost $1,000,000 in retainer fees, I think that is good hard earned money.

    It takes real testicles or ovaries for that matter to confront the legal practice and tell them to wake up.

    I have been accused of everything for my attitude toward the foreclosure debacle. But it is all worth it. If all these lenders, brokers and even us the consumers had done things right many of these foreclosures could have been prevented.

    I have sent Mr. Garfield’s letter to our state comptroller, and to all legislators, I bet they will appreciate for us to tell them where they can collect money so they are not the next in line for a lay off.

  16. send it to every state, every senator, every congress person, every state delegate, every county official, to every newspaper so they start spreading the reality. It is shameful that the media has already moved on from the mortgage meltdown to other news while millions of us are facing the reality of losing our homes. Thanks Mr. Garfield, thanks are not enough.

    I will send a copy of this letter to every Virginia, Maryland State delegate and county official.

  17. Is there a quickway to become a lawyer? How about pulling a Leo DeCaprio in Catch me if you can?

  18. I still don’t understand why lawyers don’t jump on the bandwagon and accept cases pro bono since they will be able to make more money than they they can swallow with a countersuit. Why?

  19. I will send this letter to Illinois and Florida .

  20. Is MERS banned in NY ?Cause they are holding my mortgage along with several other so called banks. LOL

  21. Is MERS banned in NY cause they are holding my mortgage along with several other so called banks LOL

  22. We need attorneys with b—s to follow through and initiate a massive action on the state for them to realize it.

  23. I would like to meet with a Florida Lawyer to class action the banks or my bankster or any bank or organization period.

    call me one and all
    786 274 0527

  24. I can’t do it all. Everyone who sees this should be sending it to their state treasurer, county government etc.

  25. That is a great letter. It should be sent to every State. As well as being published in the newspapers.

  26. Great letter, Neil!

  27. Aha, so MERS is for sure banned here in Calif. Thanks, that should help my case a great deal !!


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