AIG Mystery: Where’s the Money?

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3/2/09

Bailouts are going to the perpetrators rather than the victims. The mystery deepens as to where all this money went and where it is going. Something like a trillion dollars (a number with a lot of zeroes) has gone into a black whole called “the financial system.” AIG just received another $30 billion to cover losses from “write-downs.” But is that money actually going to investors who were supposedly insured or is it being pocketed? Like the bank holding companies who took federal bailout money and the never passed it on to the actual banks they were holding, no money seems to come out of this black whole. NO investor gets saved, nor borrower is helped, no foreclosure is stopped even though they were the victims of the largest PONZI scheme in history. (Mortgage backed securities, that is, not Madoff whose scheme was dwarfed by the scope of the Wall Street madness that produced illusory profits, illusory stock prices, and huge bonuses to corporate leaders who were driving hte bus into a ditch).

Here is a reply I entered to a squabble amongst two of our readers:

Glenn and Lynne: Weighing in here just a little. Lynne expresses the frustration a lot of people feel about the legal profession. Some of it is well-founded. Most of the bad results though comes from the usual 80-20 rule — 80% of the people in any profession are suspect at a minimum — not just for integrity but for competence. Glenn expresses frustration because he takes his profession seriously, putting him in the 20% category. So he took homage at being included, along with colleagues he respects, a barrel of monkeys.

To put things in perspective let’s agree that the current mortgage mess was created by a grand PONZI scheme that HAD to fail. The scheme was so large it was beyond the comprehension of even many bright people in law, government and finance. It was enabled by disinterested, unskilled “regulators” at the SEC and other state and Federal agencies. Like the “auditors” who look for TILA violations by comparing a good faith estimate with the settlement statement and a few other papers, the regulators left 99% of the problem on the table.

Most regulators, judges and lawyers left the big problem alone because they didn’t see it. You can’t ask a blind man to see and react with anger when he fails to comply.

Our job is to get mad — not at each other — and get even or even ahead.

In this crisis lies the opportunity for homeowners to reverse in a matter of weeks or months the transfer of wealth that has been boiling to the top of the financial services industry creating illusory profits that were falsely reported as real. Investors in those companies have been hurt badly as have the investors who bought those bogus mortgage-backed securities.

The bailouts of AIG et al have been extended to prevent collapse and to buttress trust and confidence in the financial system. But that can’t happen, and credit won’t start to flow in the private sector until we address the real issue of bailout the victims rather than perpetrators. Investors have been left with nothing, wiped out to actual or near financial extinction. Homeowners have been left with LESS than nothing, leaving them with a liability and no way to pay it off and no asset to provide security to anyone. On these mortgage deals everyone lost including the innocent holder of currency, the pensioner, and the homeowner who has no mortgage but is watching his property value plummet. Let’s work together on righting the wrong because government is too slow to do it. Get the wealth transferred back to where it came from — the consumer. Work out something where investors can recover some part of their investment without begging AIG for their money after the company received hundreds of billions of dollars.

5 Responses

  1. Here is a list of our “friends” we’re bailing out – its not AIG; AIG is just a front. And they are not getting 50 pennies on the dollar, 30 pennies, or 70 pennies – they are getting every dollar. Keep in mind these were early amounts from the first round of bailouts. Lots more handed out since then! And more to come in the future.

    The Wall Street Journal in December, citing a confidential document and people familiar with the matter, revealed that about $19 billion of the payouts went to two dozen counterparties between the government bailout in mid-September and early November. As previously reported, nearly three-quarters went to a group of banks, including Société Générale SA ($4.8 billion), Goldman Sachs Group ($2.9 billion), Deutsche Bank AG ($2.9 billion), Credit Agricole SA’s Calyon investment-banking unit ($1.8 billion), and Merrill Lynch & Co. ($1.3 billion), the Journal reported at the time.

    “It’s reasonable to ask why holders who would have received only pennies on the dollar for their credit-default swaps absent any government intervention would expect or deserve payments for what essentially is a bankrupt company.”

    With its latest rescue this week, the government has committed more than $170 billion to prevent AIG’s collapse.

  2. Sal: MERS is essentially part of the fraud. The disinformation being spread around is intended to confuse and dishearten borrowers and attorneys. MERS was intended to side step the recording requirements in each state. It is a private company and does NOT supersede the laws passed by the government of the state. But they sure make it look that way. The MERS language in each deed clearly shows that it is a nominee without any right, title or interest in the mortgage, note or obligation. Judges and lawyers who assume that such private contractual language would somehow take precedence over the Uniform Commercial Code, Securities Regulations, Banking laws and Regulations, and common law actions for fraud are not just mistaken, they are misguided or paid well.

  3. Posting for

    Tuesday, November 3, 1998
    by: Bob Duffin
    rduffin@firstam.com
    and: Sharon Horstkamp
    sharonh@mersinc.org

    MERS/ESCROW AND CLOSING/TITLE UNDERWRITING

    Bob Duffin writes:

    I just read an article in the September – October issue of Title News regarding Mers (Mortgage Electronic Registration System). The article indicated that Mers would be the mortgagee on the mortgage we would be insuring out of a closing. Query, since Mers is not “involved in the transaction” who is our insured? Presuming Mers would be the insured for the purpose of the transaction, in what capacity will they be acting? If they are a nominee for the actual lender, will they be required to register in each state under the various fiduciary or trust laws for us to insure the mortgage lien priority. Or rather, can there be a question of the validity of the mortgage on a state by state basis relating to the authority of Mers or Mers involvement in the transaction since they will not be involved in the funding?

    In addition, under the scenario who will be filing or entitled to file a claim under the policy?

    Another article indicates that Mers has filed foreclosures in various states. If someone files a defense related to the validity to the lien of the mortgage based upon Mers “involvement” or lack thereof (consideration), I would think it very difficult to deny coverage since we are aware of the various issues surrounding the transaction when we insure. On the other hand, maybe Mers is a methodology whereby no title insurance will be necessary.

    Reply: Bite your tongue! For the benefit of Savants not familiar with MERS, it is the new corporation formed to become the nominal mortgagee on recorded mortgages (or nominal beneficiary under recorded deeds of trust)–which will then keep track of the true mortgagee/beneficiary, and all assignees thereof off-record. The idea is to eliminate the need for mortgage assignees to record notices of assignment to protect their interests–and to facilitate purchase and sale of mortgages in the secondary market. As more lenders participate in MERS–escrow and closing folk will more and more be contacting MERS to identify who to contact for payoff information.

    Bob, I forwarded your questions to MERS via e-mail–and here is their reply through corporate counsel Sharon Horstkamp:
    Your 10/27/98 e-mail was forwarded to me. I appreciate anything that you can do to help get the correct information about MERS to your (Savants).

    The article that your in-house counsel from Illinois was referring to is the first of many that will appear in Title News. Since the inception of MERS, the title industry has been a part of MERS. First American Title Insurance is a shareholder of MERS and has been a source of guidance to us. Also, ALTA is one of our three largest shareholders and has a seat on our Board of Directors.

    This article talked about MERS being named the mortgagee on the mortgage. We call this MOM for short which stands for MERS as Original Mortgagee as nominee for the originating lender, its successors and assigns. During the process of gaining approval for MOM, we asked Cliff Morgan, SVP/Underwriting Director at First American, his opinion on what, if any changes, were necessary to title policies. He responded that First American is willing to name either or both MERS and the originating lender – the lender’s closing instructions need only to identify who First American is to insure. The insured will be the originating lender, its successors and assigns with the recommendation that MERS be named an additional insured.

    Extensive legal research by the law firm of Covington & Burling (DC) was part of the process of Fannie Mae and Freddie Mac’s approval of MOM. The research concluded that a court would not hold that a loan is unsecured or that the validity of a mortgage is subject to challenge with MERS as original mortgagee as nominee. There is no requirement under the UCC that the secured party identified in the security instrument be a principal rather than an agent.

    MERS has obtained all state licenses and has qualified to conduct business in all fifty states and the District of Columbia where such licensing and/or qualification is required by law for an entity serving as mortgagee of record, solely as nominee, in an administrative capacity, for the beneficial owner.

    A mortgagor should be estopped to deny the validity of the mortgage given the fact that the mortgagor executed a mortgage at the closing of its loan which expressly identifies MERS as mortgagee on behalf of the noteholder.

    If you or any of your in-house counsels have any other questions or comments, please forward them to me. There will be another article about MERS in the November/December issue of Title News.

    Thank you,

    Sharon McGann Horstkamp

    Corporate Counsel

    **********

    Following up on our posting for Tuesday, 11/3/98, Robbie Dimon (Atlanta) writes:

    Query as to subsequent assignees. If a loan is assigned five times and we are asked to issue an endorsement to lender #5, what evidence will we be able to obtain that lender #5 is the holder of the mortgage? Will assignments still be done but just housed in MERS or is MERS just going to allow member lenders to make these changes electronically?

    Reply to Robbie: I expect lenders will continue to take assignments of mortgages and deeds of trust–but these transactions will be registered with MERS and the practice of recording notice of assignment docs with local county recorders will go by the wayside. We should be able to rely on MERS for advice as to identity of the last assignee (unless –and this is unlikely–a later assignment should show up in county records). I don’t think MERS will store assignment docs–it will instead register them “electronically.”

    Not all lenders now participate in MERS, and even if MERS is very successful and most lenders sign on I think we should expect some lenders and/or investors in mortgages may remain outside the system. So I suppose it’s possible an assignment may take place which will not be registered with MERS. But if an assignee’s interest is not registered with MERS, and is not otherwise a matter of public record, we should always be safe dealing with the last assignee identified by MERS. (I say that it’s unlikely an assignment will not be registered with MERS, but instead will be evidenced by a recorded notice of assignment, because the major institutional lenders and investors who play in the secondary mortgage market will probably all participate in MERS.)

    Note that part of the MERS modus operandi calls for each participating lender/investor to identify a “certifying officer”–a real person with whom MERS and other outside parties may deal in connection with assignments and payoffs–a “contact person,” if you will. So we should always have the name of someone to verify information obtained from MERS. The role of the certifying officer is described in the September-October edition of Title News which prompted Bob Duffin’s e-mail on this subject. To view these articles from Title News, just click on the URL below. The article about the “certifying officer” is on page 2.

    http://ul.firstam.com/landsakes/Mers.pdf

  4. I am in need of an attorney that will file a counter cross suit against a bank who will be trying to foreclose on one on my investment properties. Basically, I have collected evidence that shows the Federal Reserve and big banks pressure the Appraisal Foundation Advisory Board to put in a new standard without congressional input ( The Uniform Standards prior to the change originated from Congress.) The new standard was called the “Scope of Work “standard, and it allowed appraisers to do for the first time what they had never done before, and that is count foreclosures and destress sales as comparable sales. Congress defined a comparable sale as arms lenght, a willing buyer not under duress and a willing seller, not acting with any extraordinary stimuls. This is what caused the melt down. The Federal Reserve and the big banks pressured the Foundation to make the changes. The Federal Reserve not only controls our money, they now have moved to control our property values. The extreme melt down of property values is due to this one act of the Appraisal Foundation Board and noting else, as property value charts will demostrate.

    I bought my property for 175 K I have a 152K mortgage on it. Forclosures in the complex have brought my value down to 90- K because they have been couinted as legitimate comparable sales. I want to sue the bank for return of my 85 thousand dollar equity.

  5. At the heart of the entire mortgage meltdown is identity theft by the
    banks and investment banks. They take your identity, merge it with the
    identities of thousands of other people and sell it to investors under
    false pretenses leaving you holding the bag not knowing who to pay or
    if you still owe anything after the insurance, bailouts and cross
    collateralization.

    Who owns your house???
    Forecasting the future of any market whether it’s real estate or the stock market
    requires good financial analysis and a little bit of luck. Not if you
    are on the MERS Bandwagon, the real estate market changes every the
    day…. Even the Past..
    The Mortgage Electronic Registration System, asset backed securities and
    trustee deed foreclosures are the name of this game. First In………First
    Out………….! In Clark County Nevada, (Las Vegas) and Maricopa County, Arizona, an average of five thousand documents are recorded every day. The two
    municipalities even brag about the ‘State of the Art’ of their
    recording technologies (the same goes for San Diego County). Online, Anytime.. In Maricopa County you can view the Unofficial Documents to any public recording on line. If you want the official document, you will have to order it and they will mail it to you. Chances are, it’s not going to be the same document you
    viewed on line. Remember, it’s the unofficial recordings as opposed to
    the Official Recording. Good, but not as good as Clark County Public
    Recorders Office. They will record any document as long as the
    paperwork is filled out per their instructions. Public beware since
    they record documents back in the time as well. Recordings are posted
    back in time superseding or outright replacing what really happened.
    Once the transaction posts, its official. Hindsight is 20/20 and in
    Clark County, Nevada and Maricopa County, Arizona, the past is never
    really history since it could change tomorrow. Confused?? So was I
    until I researched the fraud that has perpetrated my life. Only after
    hiring professionals whom I paid to uncover and identify these
    fraudsters, did I realize how big this criminal network really is. The
    professionals came in and covered up the past fraud and set me up for
    another round of financial loss. Don’t think it affects you, check it
    out for yourself. You can find out by checking your assets online @ http://www.knowx.com. Your lender’s trustee has probably already foreclosed once on you at least once without your knowledge.

    WHO OWNS YOUR HOUSE????
    The scenario reflects my personal experience with Wells Fargo Bank over the
    last several years. After banking with them for over 16 years, I
    realized that I was a victim of identity theft, which was controlled
    and perpetrated by the bank.
    On my search for my stolen identity, I discovered a ‘ring of fraud’
    involving several reputable companies who I discover all are under the
    umbrella of Wells Fargo Bank. If the bank owns the mortgage company
    (Wells Fargo Home Mortgage) and is also the trustee for the loan
    (American Securities Company of Nevada) and the title companies (pick
    one), and the insurance company, the only thing they need to make a
    deal is the consumer. They issue one loan to the consumer and one to
    themselves. One is recorded in the county the property is located with
    the lender as the beneficiary; one is recorded with MERS with MERS as
    the beneficiary. Since the consumer only pays on the loan he signed up
    for, the second loan eventually goes into default because of
    non-payment, which activates the foreclosure process by the trustee.
    These non-judicial foreclosures are kept in-house and are only known
    about by the insiders (the MERS network). This includes the lenders, real estate brokers, lawyers and title companies and other criminals, all of whom are
    breaking the law. Three months later the non-judicial foreclosure takes
    place without public knowing about it. The trustee for the lender adds
    the outstanding debt on the second bogus loan to the bid price for the
    property. Since the bid is now 80% +(typical value of second loan) of
    the original appraisal, the lender is able to clear the first and
    second loan off their books and now owns the property. The owner never
    knows what has happened but technically, the real first loan and bogus
    second loan is cleared by right of the non-judicial foreclosure, the
    lender now owns the property free and clear and the owner becomes a
    renter. If someone other than the lender buys the foreclosure, they are
    issued a Substitution of Trustee and a Deed of Reconveyance from MERS
    (Mortgage Electronic Recording System). The payment for the foreclosure
    (generally the amount of the borrowers loan balance at the time) is the
    price of admission into the loan pool of funds. Instead of getting to
    take ownership of the foreclosure property, they now have an investor
    number and an investor loan number which puts them in the real estate
    investment trust and secures there position in line to collect. It’s a
    pyramid. First in………First Out……….There is always the title policy that
    is often time collected on by the group as well since most of the title
    policies issued pay the lender for the property because of unmarketable
    title either because of easements, restrictions or other title flaws
    that are placed on the property using DMS Order Management Software.
    The title company can pick a start date and a plant date to insert
    negative history on the property that never really happened but
    clouding the title so they can collect once the home has closed. These
    encumbrances are added to the property history after the preliminary
    title report is issued but before the property closes escrow. The
    public doesn’t know about any of this or else it would be anarchy. To
    add injury to insult, the government ends up paying for the fraud as
    well through RESPA, HUD claims and through a Federal Reserve bank
    account held by Wells Fargo unbeknownst to the Federal Government. The
    RESPA and HUD claims are made possible by keeping the limit of the
    transactions below the HUD insured thresholds. The Federal Reserve
    account is an retired payroll withholding account Wells Fargo was
    supposed to close when Bank of America took over payroll (EFTPS)
    withholding electronic transfers for the government in the early 90’s.
    This country will not survive if the very people paid to properly transact
    and control the home buying process are double dipping. This is not an
    isolated case. It is happening everywhere. The only way to stop it is
    to make these institutions and their employees responsible for their
    actions. Because of the very nature of the fraud, the people in the
    network are not rookies. Most of them are educated professionals
    holding well paying, respectable jobs and position in their
    communities. Unfortunately, our local, state and federal government is
    infected with people that help facilitate the transactions of these
    fraudulent activities as well. The war is not in IRAQ. It is here in
    the United States. Where do you think the money goes? Hidden originally
    in a trust account that is not audited and then electronically
    transferred OFFSHORE. Out of the reach of our government. All tax-free.
    Money Laundering at the Speed of the Internet.
    The situation is much like anything terrible that is this big. Eventually
    the truth will come out. How many years did it take for the Catholics
    to even admit there might be some truth to the sexual misconduct of the
    clergy? How many people had to lose their life savings in their
    retirement plans did it take for the public to find out about the
    accounting improprieties that Big Financial Houses were committing? How
    many people will have to die fighting a war half way around the world
    when the real war is right here in this country? It is time for the
    truth to be told and the cross collaterization of United States real
    estate to STOP. The future of our democracy is at stake. The
    alternative is nothing less than true Anarchy.

    MERS
    Mortgage Electronic Registration System
    The Myth Exposed

    The first time I heard the term “MERS” was in April 2003. Not one person I
    have asked since knows what it is even though a few people acknowledge
    hearing the term before. “MERS” is short for Mortgage Electronic
    Registration System. It has quickly become the single most threatening
    thing to Homeland Security along with the 9th Circuit Courts in the
    United States. Why? Simple, both MERS and the 9th Circuit Courts are
    being manipulated and used to commit fraud. Unfortunately, the
    uninformed public will be left to bear the burden if the insanity
    doesn’t end soon. In the case of MERS, when JQ public borrows money to
    buy a home, the lender takes a second loan for the exact same amount as
    well. Since the lender is generally a bank, as long as they can balance
    the collateral against their outstanding loan obligations, they take as
    much as they want. Effectively, doubling the consumer debt by 100% for
    each real estate transaction made in the United States today. The purchase contracts are written up on VPN contracts (Virtual Private Network) agreements, which look like a normal escrow form with VPN on the bottom left hand corner of each page. What the hell am I taking about? MERS………… Lets start at the
    beginning.
    *Excerpt from CTA Federal Legislative and Regulatory Committee White Paper written by James E. Cornwall, Chairman (in italics)
    In 1993, a ‘Whole Loan Book Entry White Paper’ was published jointly by
    the Mortgage Bankers Association of America, Fannie Mae, Freddie Mac,
    and Ginnie Mae. The paper outlined a concept for a national registry
    system for tracking mortgage loans. The original concept is now a
    reality and is known as MERS (Mortgage Electronic Registration System).
    CTA’s involvement in MERS began in 1994 when they began monitoring various
    news releases concerning the subject of electronic loan registration.
    In November 1995, CTA hosted a MERS meeting, which was attended by
    approximately twenty-five of our members and featured Dr. Leilani Allen
    of Tenex Consulting, representing MERS.

    WHAT IS MERS?

    MERS is an industry-owned electronic registry and clearinghouse that
    revolutionizes the way the mortgage market works by eliminating paper,
    and cutting the cost of the mortgage process. A loan registered with
    MERS will receive a permanent 18-digit mortgage identification number
    (MIN) as early as loan application. The MIN will be a loan’s identifier
    throughout the life of the loan, even if ownership or servicing rights
    are transferred. Currently, a lender records the mortgage or deed of
    trust with the County Recorder and this step will remain the same. In
    addition, an assignment will be recorded with the County Recorder
    reflecting MERS as the mortgagee of record. The MERS database will
    reflect the name of the actual owner of the loan.

    TECHNOLOGY PARTNER

    In April 1996, MERS selected EDS of Plano, Texas as its official
    information technology partner to develop the systems needed to make
    MERS work. MERS also held its inaugural meeting of the MERS Advisory
    Council in April 1996. The Council is made up of representatives from
    the broader real estate finance industry that is not directly engaged
    in originating, funding or servicing mortgage loan. (CTA is a member of
    the Advisory Council)

    MERS TODAY

    On April 28th, MERS production software was delivered to its first users,
    Norwest Mortgage, Inc. and Allied Group Mortgage Company. Both
    companies were the first companies to register mortgages electronically
    with MERS, Paul Mullings, Chief Executive Officer of MERS, said ‘MERS
    represents the culmination of a dream that those of us in the mortgage
    industry have long had, and that is to transform our business
    through the cooperative application of advanced business process and
    technologies. Many have been skeptical about our chances of bringing
    the entire industry together to create something that would be
    beneficial to all parties involved.
    To date, more than 130 entities, including mortgage companies, data processing companies and trustees have signed on to become part or MERS. Several CTA members, including First American Title Company, Stewart Title Company, Cal-Western Reconveyance Corporation and T.D. Service Financial Corporation are listed as MERS members.
    I’m not sure if this “White Paper” is accurate or not. I found it on the
    Internet during my research of MERS. Assuming it is accurate, than why
    hasn’t anyone heard about MERS? According to their website, MERS
    recently celebrated its 20 million recording. Twenty million real
    estate loans recorded and no one’s ever heard of it. I will tell you
    what it is. It’s white-collar crime. It is greed orchestrated through
    the use of technology unregulated and gone wild. It’s E-commerce
    controlled by imposters of our Federal and Local Governments in Cyber
    World. Every day of the business week, five thousand plus recordings
    are recorded with the County Recorder of Clark County, Nevada. This is
    the average per day, 5,000 recordings. That’s 25,000 per week, 100,000
    per month, 1,300,000 per year. How is that possible? Its only possible
    if 50% of the recordings are fraudulent, and they are. Clark County is
    the center of the e-recording world where fraudulent transactions are
    recorded to offset the transactions taking place in Cyber Space. MERS
    is a major factor in these recordings. Still, no one knows what MERS
    is. Or do they? The only people that know about MERS are the insiders
    using it for ill-gotten gain. It is nothing more than a database of
    mortgage loans that are kept track of nationally in one place and are
    still recorded in the County where the property exists.
    *According to the “MERS Quality Assurance Procedures Manual, Version 2.0 November 17, 2003: (in italics)
    Legal title to the mortgage lien or the lien of other security agreements
    must be vested in the Mortgage Electronic Registration Systems, Inc.; a
    Delaware stock corporation with its principal offices at 1595 Spring
    Hill Road, Suite 310, Vienna, VA 22182.
    The loans are vested in MERS recorded in the MERS database but not on the
    recordings in the County where the property exists. MERS is supposed to
    be the beneficiary on the note and not the lender. In my case, MERS is
    not listed anywhere on the title or note but apparently are listed as
    beneficiary on the MERS database for my properties. This double
    recording creates the opportunity for fraud. By changing the
    beneficiary on the MERS recording, they are essentially creating
    another record for the same loan. This enables them to issue two loans,
    one for the borrower and one for the lender. The second loan is
    collaterized by the same property as the first loan. Since the
    beneficiary is listed as the lender on the recordings made in the local
    County where the property exists, the borrower sees the lender or
    trustee listed as the beneficiary and has no reason to question the
    recording. At the same time, the mortgage is recorded on MERS with MERS
    as the beneficiary essentially creating two recordings for the same
    property. The MERS recording is used to keep up with the
    cross-collaterization that has just happened. Another place to track
    the double recordings is at http://www.knowx.com
    This is owned by Choice Point in Atlanta, GA. Know X is a national
    public records database open to the public. It is a fee based search
    engine and is used extensively by law firms and credit managers in the United States. The MERS recording comes up as a (trustee deed forclosure) on record with knowx if you have a loan that is recorded with MERS and with the county recorder. Essentially, it keeps track of the fraud. If you have a loan listed on knowx.com with (trustee deed forclosure) beside it, the property has been
    double-mortgaged. The second loan, which the consumer doesn’t know
    about, is a mirror loan. It will be exactly the same amount, issued the
    same date, etc. etc. as the originating transaction. This is done so
    that if there is a cross up and the consumer somehow gets a statement
    or invoice for the second loan, it appears to be information concerning
    the first loan. If the second loan is the same amount, same interest
    rate, issued the same day, then the amortization schedule will be
    exactly the same. This makes the second loan basically undetectable.
    *Excerpts from MERS Commercial quality Assurance Procedures Manual Version 2.0 November 17, 2003

    Obligations and Reliances:
    Section 6.1: RELATIONSHIP OF BORROWER, MERS AND LENDER.
    The relationship between Borrower and Lender is solely that of debtor and
    creditor. The relationship between Borrower and MERS is solely that of
    mortgagor and mortgagee. Neither the Lender nor MERS has any fiduciary
    or other special relationship with Borrower, and no term or condition
    of any of the Note, this Security Instrument and the Other Security
    Documents shall be construed so as to deem the relationship between
    Borrower and MERS to be other than that of debtor and creditor, and the
    relationship between Borrower and MERS to be other than that of
    mortgagor and mortgagee. The grants, assignments and transfers to MERS
    made in Article I are for the benefit of the Lender and its successors
    and assigns. Borrower understands and agrees that MERS holds only legal
    title to the interests granted, assigned and transferred by Borrower in
    the his Mortgage and Security Agreement, but if necessary to comply
    with law or custom, MERS (for the benefit of the Lender and its
    successors and assigns) has the right to exercise any or all of those
    interests, including without limitation, the right to foreclose and
    sell the Property, and take any action required of Lender, including
    without limitation, a release, discharge or reconveyance of this
    Mortgage and Security Agreement.
    In the event of a sale, by foreclosure, power of sale, or otherwise, Lender, or MERS on behalf of Lender, may bid for and acquire the Property and, in lieu of paying cash therefore, may make settlement for the purchase price by crediting
    against the Obligations the amount of the bid made therefore, after
    deducting therefore the expenses of the sale, the cost of any
    enforcement proceeding hereunder and any other sums which Lender, or
    MERS on behalf of Lender, is authorized to deduct under the terms
    thereof, to the extent necessary to satisfy such bid. Notwithstanding
    the provisions of this Section 11.1 to the contrary, if any Event of
    Default as described in the clause (i) or (ii) of Subsection 10.1 (g)
    shall occur, the entire unpaid Debt shall be automatically due and
    payable, without any further notice, demand or other action by Lender,
    or MERS on behalf of the Lender.

    Section 11.2 Application of Proceeds:
    The purchase money, proceeds and avails of any disposition of the Property,
    or any par thereof, or any other sums collected by Lender, or MERS on
    behalf of Lender, pursuant to the Note, this Security Instrument or the
    Other Security Documents, may be applied by Lender to the payment of
    the Debt in such priority and proportions as Lender in its discretion
    shall deem proper. Upon any foreclosure sale or sales of all or any
    portion of the Property under the empower of sale herein granted (if
    any), Lender, or MERS on behalf of Lender, may bid for and purchase the
    property and shall be entitled to apply all or any part of the Debt as
    a credit to the purchase price.
    This must be illegal. If a borrower defaults on his mortgage, the property goes into foreclosure and a non-judicial foreclosure sale takes place. This sale is supposed to be open to the public. The sale price is determined by high bid and once
    the bid is accepted, all encumbrances on the property including liens,
    mortgages, etc. are all wiped clean and clear title is presented to the
    highest bidder. If the Lender or agent of the lender is allowed to bid
    on the property and add the outstanding debt owed by the borrower as a
    credit to the purchase price, the lender is going to be the highest
    bidder every time. Basically, none of the money bid for the property
    goes towards satisfying the borrowers debt with the lender since the
    outstanding debt owed is factored in the bid by the lender. This
    effectively eliminates most or all-potential bidders from outbidding
    the lender since the lender is using the debt owed as part of the bid
    price. This must be illegal. Any vehicle such as this that makes
    foreclosure a more lucrative situation for the lender than actually
    servicing the loan as originally intended promotes fraud by design.

    Problems:
    ·
    EDS was given the contract in April 1996, to create the software used
    for MERS. According to my research, (Exhibit ) All but 3 EDS companies
    located @ 5400 Legacy Drive, Plano Texas are foreign entities. I would
    be surprised if the Federal Government through Fannie Mae or Freddie
    Mac would award the software development contract to a non-US foreign
    entity. Where is official government endorsement of the MERS system?
    Nowhere to be found!

    MERS is an industry owned entity.

    What Industry? The Real Estate industry? If there is no clear ownership
    defined and the industry as a whole owns the system, who is responsible
    for the monitoring the system for accuracy and possible fraudulent
    recordings? The only way a national registry database makes since is if
    the federal government is in control of MERS and to my knowledge, they
    are not.

    Who Owns MERS?

    The main reason stated as the benefit of MERS is that the recordings will
    be cheaper. If the property still records in the County where the
    property is located, and another recording is required in the MERS
    database as well, how could it save anybody any money? There are now
    two recordings required instead of one. How can two recordings cost
    less than only one?
    ·
    I don’t believe that Fannie Mae or Freddie
    Mac or any other real government agency approved or endorsed MERS and
    agreed to include government subsidized loans in this registry. I
    believe the Fannie Mae referred to in the MERS documents is an
    imposter. “In the name of” Fannie Mae is whom these people are, not the
    Fannie Mae which is a division of Housing and Urban Development, an
    agency of the United States Government Where’s the proof?
    Why is http://www.knowx.com listing thousands of trustee deed forclosures on properties where no foreclosures have take place? These foreclosures are not recorded in the county records where the property is located. Show me proof of
    these foreclosures and identify the new owners of these properties.
    Twenty Million loans recorded to date with MERS and no one knows who they are. Who is MERS and why can’t anybody answer that question? Does MERS own our properties?
    MERS Quality Assurance Procedures Manual contains language and instructions for handling mortgages that is against State and Federal Consumer
    Protection laws. MERS is part of the Enron debacle. It represents the awards taken through the bankruptcies as unsecured debt. It represents recorded documents that generate the instruments to steal with. Essentially, they are borrowing from the past, debt registered owing in the future, collect the Money
    today. Many major financial houses including Wells Fargo are included on the MERS memberships list. MERS is the master database tracking recordings that are offset for stolen loan funds. MERS is recorded on loan documents that have VPN in the bottom left corner. VPN stands for Virtual Private Network
    MERS members are all committing fraud if they record the lender as the
    beneficiary on the county recorders office and MERS as the beneficiary
    on the MERS recording.

    IT IS TIME TO STOP THE CROSS COLLATERIZATION OF OUR MOST PRECIOUS COMMODITY……..AMERICA’S REAL ESTATE

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