Kansas Landmark Decision Annotated 1

1st Annotation of Landmark v. Kesler:
No. 98,489
filed August 28, 2009

“The second mortgage lies at the core of this appeal. That mortgage document stated that the mortgage was made between Kesler–the “Mortgagor” and “Borrower”–and MERS, which was acting “solely as nominee for Lender, as hereinafter defined, and Lender’s successors and assigns.” The document then identified Millennia as the “Lender.” At some subsequent time, the mortgage may have been assigned to Sovereign and Sovereign may have taken physical possession of the note, but that assignment was not registered in Ford County.”
Editor’s Note: At the very start, the Court correctly sets the stage pointing out that the lender was Millenia but MERS was named on the mortgage, thus splitting the note from the mortgage. The Court later points out:

“What meaning is this court to attach to MERS’s designation as nominee for Millennia? The parties appear to have defined the word in much the same way that the blind men of Indian legend described an elephant–their description depended on which part they were touching at any given time…A nominee of the owner of a note and mortgage may not effectively assign the note and mortgage to another for want of an ownership interest in said note and mortgage by the nominee….

The practical effect of splitting the deed of trust from the promissory note is to make it impossible for the holder of the note to foreclose, unless the holder of the deed of trust is the agent of the holder of the note. [Citation omitted.] Without the agency relationship, the person holding only the note lacks the power to foreclose in the event of default. The person holding only the deed of trust will never experience default because only the holder of the note is entitled to payment of the underlying obligation. [Citation omitted.] The mortgage loan becomes ineffectual when the note holder did not also hold the deed of trust.” Bellistri v. Ocwen Loan Servicing, LLC, 284 S.W.3d 619, 623 (Mo. App. 2009).

“it was incumbent on the trial court, when ruling on the motion to set aside default judgment, to consider whether MERS would have had a meritorious defense if it had been named as a defendant and whether there was some reasonable possibility MERS would have enjoyed a different outcome from the trial if its participation had precluded default judgment….A person is contingently necessary if (1) complete relief cannot be accorded in his absence among those already parties, or (2) he claims an interest relating to the property or transaction which is the subject of the action and he is so situated that the disposition of the action in his absence may (i) as a practical matter substantially impair or impede his ability to protect that interest or (ii) leave any of the persons already parties subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations by reason of his claimed interest…..MERS is a private corporation that administers the MERS System, a national electronic registry that tracks the transfer of ownership interests and servicing rights in mortgage loans. Through the MERS System, MERS becomes the mortgagee of record for participating members through assignment of the members’ interests to MERS. MERS is listed as the grantee in the official records maintained at county register of deeds offices. The lenders retain the promissory notes, as well as the servicing rights to the mortgages. The lenders can then sell these interests to investors without having to record the transaction in the public record. MERS is compensated for its services through fees charged to participating MERS members.” Mortgage Elec. Reg. Sys., Inc. v. Nebraska Depart. of Banking, 270 Neb. 529, 530, 704 N.W.2d 784 (2005)….”

57 Responses

  1. URGENT: MERS is spotted in Kansas……see revealing photo:


    Steve Vondran, Esq.
    Arizona Foreclosure and Bankruptcy
    Phone (877) 276-5084

  2. Dan Edstrom, on September 20th, 2009 at 1:22 pm Said:

    “There is one difference though. They (MERS) are doing it under color of authority and getting away with it. If we did what they were doing we would go to JAIL.”

    ***********AND THERE YOU HAVE IT**************

    Great job pointing that out… thanks Dan!!!

  3. Foreclosure Fraud,

    Great MERS article. Thanks for pointing it out.

  4. dny,
    Once again, you hit the nail right on the head! The 9th supplemental indenture does in fact delete all mentions of repurchase.

    And you’re right, the Trust Indenture–in the original language from 1981–says that FNMA-as-corporation transfers, assigns and otherwise conveys to FNMA-as-Trustee all beneficial interest in the mortgage loans. Then FNMA-as-Trustee transfers and assigns all beneficial interest to the Trust (p. 47 of the document).

    And you’re also right that the Indenture requires both indorsement and assignment in blank and without recourse.

    Thanks for the tips about what may or may not be possible forgeries. I got a letter from BAC today concerning my outstanding QWR saying that they need still more time to obtain “the documentation and information necessary to address your questions and concerns.” They want me to accept their “sincere apology for the delay.” This is their second missive asking for more time to provide the note/allonge(s).

    My state (Mississippi) laws concerning negotiable instruments are, in my understanding, just the standard UCC language. So how does that comport with your point here: “If the note is transferred subject to claims and defenses by the issuer (borrower) – which seems to be happening when MERS ‘assigns’ these mortgages ‘together with the note’ after the loan is declred to be ‘in default’ – there may no longer be a ‘holder in due course’ according to your state law.”

    I think I see what you’re saying but I’m not sure. My entire suit is based on my (I of course am the “borrower”) claims and defenses regarding the transfer of the note. I agree and think it would be easy to convince a judge that what MERS has done (assigning note/deed of trust to BAC while FNMA “owns” note) is illegal and/or fraudulent. But how does that extinguish any party’s claim to be a holder in due course?

    One last thing–I’ve read Neil’s “Missing Assignment” piece a few times but still can’t wring from it an answer to my question, which is this:

    Can an assignment be legal/enforceable if it is done after the fact? My lawyer seems to think that even if we shut down MERS and this questionable BAC assignment, FNMA will just simply assign the note to someone else and then proceed with foreclosure again. From what I’ve read, I can’t really tell if that’s actually doable or not. It seems to me that if the assignments weren’t done properly, they can’t just be corrected when someone (i.e., me) decides to call them out on it. Or can they–is it that simple?

    You are really helping me hone in on some things, dny. I fully understand that you are not a lawyer and I do not take your information to be legal advice. I understand and believe that your posts are merely your opinion and are not to be taken any other way.

  5. zurenarrh: See the applicable Fannie Mae “Trust Indenture” for your (type and date) of loan. Go all the way to the end, where it has the “NINTH SUPPLEMENTAL INDENTURE” dated 1st May, 2002. I believe this section that modifies the Trust Indenture deletes all requirements for Fannie to “repurchase” loans out of the Trust.

    These “Trust Indentures” say that the mortgage notes MUST be assigned to the trusts. If the if servicer has held onto the note, that would violate the terms of the Indenture. I think the “indorsement in blank” policy of Fannie Mae seems to violate the terms of their own Indentures. Even if Fannie claims exemption from SEC filings, missing indorsements on the note wreak havoc with chain of title and prevent anybody from knowing if REMIC is in compliance with tax laws. Most note indorsements that I have seen are undated. Question any indorsement, especially if it is anywhere but below the signature(s) of the note issuer (borrower). If the indorsement(s) is(are) on a separate page or on the back, it may be only a copy or worse, a forged note.

    Look to your state laws regarding negotiable instruments and transfers of the note subject to claims or defenses. If the note is transferred subject to claims and defenses by the issuer (borrower) – which seems to be happening when MERS “assigns” these mortgages “together with the note” after the loan is declred to be “in default” – there may no longer be a “holder in due course” according to your state law.

    I would absolutely question a “MERS to BAC” mortgage assignment if Fannie says it “owns” the note (which it doesn’t if the note has been pledged to a securitization loan pool). The act might be considered a fraud, since MERS never “owns” the notes.

    See elsewhere on LivingLies for indorsement “in blank.” Perhaps Neil or Brad could comment on this practice of indorsements “in blank” and the effect it has on determining regulatory compliance and foreclosures. My understanding is that an indorsement “in blank” doesn’t make the instrument a “bearer bond” if the income has already been pledged to one or more third parties. In fact, the instrument would no longer be “negotiable” at all – my (non-legal) opinion.

  6. dny,
    Don’t know if note is “lost.” Don’t know if Fannie Mae would be stupid enough to claim such, as that defense has been effectively Charney-ized. I won’t know much about the note until I get my copy of the note/allonge pursuant to my currently outstanding QWR. I don’t expect to get the note, but like I said earlier, they may just make something up.

    Could you elaborate on this: “post-facto transfers for consideration (negotiations, per UCC) of “non-performing” loans are very problematic for pretender lenders”?

    This is something that I have wondered about–can an assignment legally be made after foreclosure proceedings have begun? For instance, if I get a copy of my note and it has a missing assignment, and I call their attention to it, can they just do the assignment at that point and have it be legal and enforceable after that? I’m guessing not, but I don’t know for sure.

    In other words, can an assignment be done retroactively or backdated? I mean, I’m sure they can and will do that, but is it legal? Wouldn’t such an assignment essentially mean that prior to it, anything that happened with the note/deed of trust was essentially illegal? For instance, if Countrywide failed to assign my note to Fannie Mae and Fannie Mae put the note into a pool saying that the investors now owned the note, wouldn’t that be securities fraud since there was never a valid assignment from Countrywide to Fannie Mae?
    And a retroactive/backdated assignment two years after the sale wouldn’t really be effective, would it?

    One more thing: I do find it interesting that neither MERS, Countrywide, or Fannie Mae (or anyone else) found it necessary to record any public assignments on my deed of trust until they decided they wanted to take my house. Then they did an assignment from MERS to BAC while Fannie Mae actually owns the note, which they admitted in their answer to my complaint. To me, that’s kind of an easy call for a judge–common law fraud if nothing else–and pretty easy for a lawyer to explain to a judge, no?

    Also, I looked at Fannie Mae prospectus supplements, and there was nothing about repurchases. Maybe I wasn’t looking in the right place, but I searched “ePro Supp” with a pool number that I know from prior research has 8 notes from my state in it for a grand total of $1.5 million (give or take).

    Thanks for your insight, dny…

  7. Hello All,

    Here is a detailed Paper I stumbled upon regarding MERS, Mortgage Electronic Registration Systems, that I thought I would share by Christopher Peterson. Click on the download link to view pdf file.


    At the roots of the worst recession since the Great Depression were unaffordable home mortgages packaged into securities, sold to investors, and used as capital assets by financial institutions. The process of securitization, as well as financial institution over-leveraging associated with it, has been well documented and explored. However, there is one company that was a party to more questionable loans and foreclosures than any other and yet has received virtually no attention in the academic literature. Mortgage Electronic Registration Systems, Inc., commonly referred to as “MERS,” is the recorded owner of over half of the nation’s residential mortgages. MERS operates a computer database designed to track servicing and ownership rights of mortgage loans anywhere in the United States. But, it also acts as a proxy for the real parties in interest in county land title records. Most importantly, MERS is also filing foreclosure lawsuits on behalf of financiers against hundreds of thousands of American families. This Article explores the legal and public policy foundations of this odd, but extremely powerful, company that is so attached to America’s financial destiny. It begins with a brief explanation of the origins of the county real property recording systems and the law governing real property liens. Then, it explains how MERS works, why mortgage bankers created the company, and what MERS has done to transform the underlying assumptions of state real property recording law. Next, it explores controversial doctrinal issues confronting MERS and the companies that have relied on it, including (1) whether MERS actually has standing to bring foreclosure actions; (2) whether MERS should be considered a debt collector under the federal Fair Debt Collection Practices Act; and (3) whether loans recorded in MERS’ name should have priority in various collateral competitions under state law and the federal bankruptcy code. The article culminates in a discussion of MERS’ culpability in fostering the mortgage foreclosure crisis and what the long term effects of privatized land title records will have on our public information infrastructure. The Article concludes by considers whether the mortgage banking industry, in creating and embracing MERS, has subverted the democratic governance of the nation’s real property recording system.

    Follow me on Twitter for updates

  8. TW,
    There is one difference though. They are doing it under color of authority and getting away with it. If we did what they were doing we would go to JAIL.

    Dan Edstrom

  9. It’s so fake (MERS)… it’d be like me going to the clerk of court and recording a discharge of my mortgage.

  10. erlinda,
    I don’t know about the out of state assignments, but there are probably many other reasons why it is invalid.

    Who was the originator? What chain of title have you found (allonges, SEC filings, recorders office, etc). Remember – MERS keeps a list of assignments also. In my case (I am in CA) a firm in Texas did an assignment from originator to Trustee – skipping all assignments from SEC filings and allonges. When I get into court (eventually), I will seek Discovery of assignments in MERS.

    I don’t really know about assignments done out of state, but in my case there was no consideration given, there was probably no agreement between the parties, the party assigning was probably not authorized for a couple of reasons:
    – the note they are authorized under was satisfied in full and extinquished
    – there was no agreement for MERS, trustee, beneficiary, etc in any subsuequent alleged “transfers”
    – etc, etc

    Also, everyone of the assignments were probably done out of state (in my case) – unless some were done at closing, which is doubtful. The warehouse lender isn’t from this state (or probably even authorized to lend money in this state).

    Dan Edstrom

  11. any help here?

    what about an unrecorded assignment of deed of trust from MERS grants, assigns and trasfer to hsbc bank u.s a. , national association as trusteee for DALT 2007- Oa 5 blah blah blah, was notarizez in other states but was certify under penalty of perjury under the lawa of california. blah blah blah. can someone certify a document under the law of california but was notarized in other state? i knew this is a fraudulent documents. cananyone tell me if this is legal?

  12. zurenarrh: one last thing – I seem to recall FNMA issuing a prospectus supplement or indenture supplement that specifically rescinds all language refferring to “re-purchase” of any kind. Be sure to check out those other referenced “supplemental” documents as well…

  13. zurenarrh: Is your note “lost?” If not, according to UCC negotiable instruments laws, transfer of the note after it has been declared “in default” and/or subject to defenses and claims may eliminate the possibility that any entity could be considered “holder in due course” (which is very different from mere “holder”) – even if FNMA’s policies might “obligate” them to repurchase after it has been “in default” for 24 months. I think this is another reason so many notes are falsely called “lost” – because post-facto transfers for consideration (negotiations, per UCC) of “non-performing” loans are very problematic for pretender lenders. I think that this is why FNMA lurks in the shadows during foreclosures, only to have any judgement in favor of the “servicer” quickly assigned to FNMA or to have the deed “quit claimed” from “servicer” to FNMA soon after foreclosure sale (not a “warranty deed,” demonstrating their acknowledgement that title is screwed).

    If the note is, however, proven to be lost and you can show that it has been paid to the last known indorsee, it may no longer be an obligation either.

    It certainly doesn’t help that FNMA’s securitization and accounting etc. is a complete and deliberate mystery to the public, but then this is perhaps what helped lead to that company being so off the rails that is is 80% owned by US government…

    I’m not a lawyer, so this is not a legal opinion. These are intuitions that you may want to follow up on with regards to your circumstances and state UCC laws.

  14. Anyone sending Fannie a FIOA request should also do so to Federal Housing Finance Authority. http://www.fhfa.gov/. Also, ask them and Fannie for copies of ALL communications that reference Nye Lavalle or mortgagefrauds@aol.com as well as documents related to the independent counsel investigation of Fannie Mae and final report that Fannie conducted via Baker & Hostetler’s Mark Cymrot. There, you will find the results that will show Fannie had full knowledge of these frauds years ago.

  15. /can someone answer if “holding” means holding in the literal sense? If one part is held in trust and the other is held in electronic form, but but held by the same person, wouldn’t that still be considered “holding?”

  16. dny,
    Good point. You are correct–according to the language of the prospectus, there are several circumstances listed in which Fannie Mae “has the option” or “could” or “may” repurchase loans from pools.

    There are a few circumstances in which Fannie Mae says it is “obligated” to repurchase:

    “‚ a court or a regulator instructs us to do so;
    ‚ a borrower takes certain actions permitted under the
    mortgage note (such as converting an adjustable rate
    loan to a fixed-rate loan), which are specified in
    a prospectus supplement as leading to mandatory
    ‚ the mortgage loan is delinquent for 24 consecutive
    ‚ a mortgage insurer or guarantor requires us to delay
    exercising loss mitigation remedies after a default;
    ‚ a mortgage insurer or guarantor requests transfer of
    the mortgage loan in connection with payment of a
    claim; or
    ‚ a governmental agency requires transfer of the mortgage
    in connection with payment of guarantee proceeds
    or insurance claims.

    Re: Modifications, the prospectus says this:

    “While we do allow repurchase and modification of certain non-performing loans under terms specified in our trust agreement, we generally prohibit lenders servicing our
    performing loans from (i) repurchasing mortgage loans from our pools for the purpose of making loan
    modifications or (ii) modifying mortgage loans that are in our pools.”

    Good eye, dny–none of those caveats above seem to apply to my particular set of circumstances…that I can tell, anyway. That changes my thinking a little bit about my case…Hmmm…

  17. To zurenarrh – 9:59 AM:

    You wrote: “It says that Fannie–which defines itself as Trustee in the Prospectus–will repurchase defaulted loans from the Pool.”

    I believe that Prospectus reads “MAY repurchase, blah, blah, blah…”

    That’s a HUGE difference and means they probably DON’T repurchase. Why would they if they didn’t have to. With insurance, CDS, etc. I’d bet they never repurchase. With no recording requirements per SEC, nobody would ever know what they are doing.

  18. Just for kicks, here is a list of questions I wrote up to ask Fannie Mae in a FOIA request, which Fannie Mae is now subject to since it was taken over by the government (haven’t sent it–yet–because they will probably just say they don’t have to answer it or that they aren’t required to answer these types of questions):


    1. When was our Note purchased from Countrywide?

    2. Was our Note pooled either alone or with other mortgages and sold to investors? If so, what is the pool number and who are the investors, if any, in the pool?

    3. Why were there no assignments publicly documented regarding the transfer of this Note?

    4. Has our Note been repurchased from any pool it was originally put into (pursuant to the revised 6-1-07 prospectus)?

    5. Have funds from the federal bailout of Fannie Mae been used to repurchase our Note or to guarantee our principal payment to investors or for any other purpose related to our Note?

    6. If our Note is in a pool as part of a Fannie Mae MBS, is the beneficiary of the Note considered to be the investors (if any) in the MBS, or is the beneficiary of the Note considered to be the beneficiary named in the Note?

    7. If the Note is repurchased out of the pool by Fannie Mae, is the beneficiary then considered to be Fannie Mae or the beneficiary named in the Note?

    8. If the Note is repurchased out of the pool by Fannie Mae, who indorses the Note over to Fannie Mae pursuant to the provisions of Chapter 3 of the Uniform Commercial Code?

    9. If no indorsement to Fannie Mae is considered to be required as part of a repurchase from the pool, would it then be correct to say that Fannie Mae always owned the Note but that an investor in a pool of which the Note may be a part owns only a certificate entitling that investor to the revenue to be generated by the Note?

    10. Under what law or laws is Fannie Mae authorized to use a mortgagor’s Note–without said mortgagor’s knowledge or permission and without any benefit to said mortgagor–to create revenue from said mortgagor’s Note for both Fannie Mae and investors in Fannie Mae MBS?

    11. Under what law or laws does Fannie Mae, as owner of the Note, purport to be able to authorize a servicer, who is neither the holder in due course of the Note nor the beneficiary thereof, to proceed with foreclosure?

    Many of these questions are based on information I have gotten from this site, particularly #5 and #10 (which is my favorite and refers to the “undisclosed conditions” placed on borrowers’ obligations that Neil has referred to and which Dan mentioned in one of his posts below).

  19. Cheryl, thanks for your response. It looks like you may have them over a barrel–I hope a judge thinks so.

    Dan, you’ve got a lot of good info. More than I do at this point because I have not yet received a copy of the original Note with allonges. All I know is that I refinanced with Countrywide, they tried to foreclose, I did research and found out that Fannie Mae owns my loan (don’t know when they bought it), and then I sued them.

    So I don’t have a map of all the winding roads my Note has been down. I’m just kind of trying to take the info presented at this great site along with my own research and piece together what MAY have happened as best I can tell.

    What seems to have happened in my case is this:

    1. I signed a note with Countrywide

    2. They sold it to Fannie Mae.

    3. Fannie Mae probably placed it into a pool with other mortgages and created an MBS Trust (I don’t know for certain that they did this because I can’t locate my loan in any of their pools. Then again, I haven’t looked in all their pools because there are thousands of them, and they don’t seem to identify the loans by anything but state and amount and if there’s more than one loan in a pool from a given state, it’s impossible to tell if my loan is in there or not).

    4. Fannie Mae probably repurchased my loan from the Trust (per the terms of the June 1, 2007 prospectus) due to “default.”

    After that, I’m not sure what happened with my Note vis a vis Fannie Mae and can’t even really hazard a good guess. All I know is that MERS filed an assignment to BAC with my county, and this assignment purported to “grant, assign, and transfer” all “beneficial interest” in the Deed of Trust “together with the Note.” However, the whole time this was happening, Fannie Mae said it owns the Note–still does, as a matter of fact.

    That’s why I’m curious about whether or not repurchasing a Note from investors does in fact allow Fannie Mae to be considered the “holder in due course.” From what little I know, I don’t think it does, because that would require Fannie Mae securing an assignment from the investors in the Trust. Or maybe it doesn’t for some reason. Like you, Dan, I’m not a lawyer and might have missed a legal caveat or two somewhere.

  20. I haven’t actually thought far enough ahead to think about it. It raises many issues. The actual note should have been endorsed WITHOUT RECOURSE. This may be a claim in defense. But, if they buy it back, is that just another assignment? Do they have to give consideration? They will need to provide ALL of the documentation to support these claims and prove what they did plus prove it was valid. Why did they repurchase?

    It may be more complicated though as you have hinted. Other parties had an interest in the note that was assigned. Assigning or repurchasing without them may invalidate what happened. Also, in my case, it went like this:

    SEC Filings show:
    Seller transfers the loans to the Depositor (sale for tax purposes, secured financing for accounting purposes) and enters into a repurchase agreement.

    Depositor transfers the loans to (mine says both):
    -The Trustee as owner for the issuing entity for the benefit of holders of certificates
    -Into the Trust

    Nothing was ever recorded but the assignments on the back of my note show the Seller sold the note to the Trustee without recourse (SKIPPING THE DEPOSITOR as evidenced by sworn SEC filings).

    The SEC filings also say that the Trustee has perfected interest in the mortgages but other parties have interests also (specified parties and unknown parties).

    Other SEC filings show that the Seller used the warehouse lending facility of others to purchase the loan.

    So there are a bunch of known and unknown interests in the mortgages. Now, here are my questions:
    – Who does the Seller repurchase the loan from? (SEC filings show they transferred it to the Depositor but the allonges on the note show they sold it without recourse to the Trustee)
    – How does the Seller repurchase the loan from the Trust (and/or Trustee?) without all those interests? Especially considering they didn’t sell it to the Trust (and/or Trustee) – they sold it to the Depositor
    – Does the Seller repurchase the loan from the Depositor? If so how did the depositor get it?
    – What parties were involved in the pledge? How do they unwind it from all of the pledges?

    The issue of repurchasing brings up a TON of questions. How much existing law is in this area? I bet a ton because this has been going on for a long time before securitizing home loans.

    They would have to show a lot of information in discovery to “perfect” title in this case.

    I am not a lawyer and really do not have a full understanding of these types of agreements.

    Maybe somebody else can provide more information?

    Dan Edstrom

  21. Dan,

    I’m reading Fannie Mae’s June 1, 2007 Prospectus (my understanding is that document is now considered the “master prospectus” or some such). It says that Fannie–which defines itself as Trustee in the Prospectus–will repurchase defaulted loans from the Pool.

    In other Fannie Mae Trust documents, they do in fact say that they assign, transfer, etc. all rights to the mortgage loans to the certificate holders. So I guess another way to put my question is this: once they repurchase the loans, do they just “un-assign” them or something? I mean, how does Fannie Mae get the right to do ANYTHING with the repurchased loans since they were (supposedly) assigned to the investors and there is no way for the investors, as a group, to assign the loans back to Fannie Mae.

    Or is there? There is no separate Trustee for the investors that I’m aware of. In fact, in what I assume is a document with standard, boilerplate language common to all such documents, the Fannie Mae Trust Agreement 2007-106 identifies Fannie as Issuer, Guarantor, and Trustee. How can they perform all of these roles.

    Does that make sense?

  22. Wikipedia says this about servicing (under Securitization):

    A servicer collects payments and monitors the assets that are the crux of the structured financial deal. The servicer can often be the originator, because the servicer needs very similar expertise to the originator and would want to ensure that loan repayments are paid to the Special Purpose Vehicle.

    The servicer can significantly affect the cash flows to the investors because it controls the collection policy, which influences the proceeds collected, the charge-offs and the recoveries on the loans. Any income remaining after payments and expenses is usually accumulated to some extent in a reserve or spread account, and any further excess is returned to the seller. Bond rating agencies publish ratings of asset-backed securities based on the performance of the collateral pool, the credit enhancements and the probability of default.[10]

    When the issuer is structured as a trust, the trustee is a vital part of the deal as the gate-keeper of the assets that are being held in the issuer. Even though the trustee is part of the SPV, which is typically wholly owned by the Originator, the trustee has a fiduciary duty to protect the assets and those who own the assets, typically the investors.

    The Trustee has a fiduciary duty to protect assets … So the servicer is using Attorney in Fact to perform the duties of the Trustee (and was probably declared the nominee anyway) and is breaching their fiduciary duty by specifically NOT protecting the assets.

    Dan Edstrom

  23. I am praying that my attorney keeps on reading all this good stuff and applies it on my case, if not i’ll keep on sending it to him.
    Let’s fight our way to victory America!!! we may incur some casualties (possibly even me) as it is expected in every battle, but the truth and the great people of this county will prevail!!!

  24. Thank God we have Neil on our side, is people like Neil that makes this country still the best to live in, and people like the lenders/thieves the worse, at any rate i had the opportunity to attend their last seminar Ca. it was great! I had a chance to also chat with Brad Keiser for a minute, what a great and knowledgeable guy he is, i was impressed on how down to earth this two gentleman are, keep up the good work guys!!!!
    thanks for all you are doing for OUR America!!

  25. The Fannie Mae Expanded Approval documents I signed at closing were intentionally back-dated and recorded so the documents had different dates which is invalid. There were also other documents that were altered and back-dated and closing documents were redone and re-worded with different dates by BOfA. So my closing was not really a closing but I was never told that. I did not notice at the time because BOFA refused my final app and HUD-1 until closing table.

    BOFA would never speak to me so I went straight to fannie Mae’s regulator at the time OFHEO and they did an investigation into my mortgage and told me I had a fraud loan. Fannie Mae Fraud Dept. told me they were going to make BOfA repurchase the loan back for which they put in writing. to me. But BOfA lied and told Fannie Mae that I was in Bankruptcy and Foreclosure. I was not behind on my payments when they told Fannie Mae this. Repurchase demands are not permitted on performing loans.

    Our discovery is coming up and I cannot wait to see them squirm around the issues. BOfA will have to tell the truth or perjure themselves.

  26. zurenarrh,
    You said this:

    “If a Trustee repurchases a loan from its Trust, how can that Trustee then be considered a holder in due course of the loan/note? The investors obviously can’t endorse or assign it to the Trustee, and I wouldn’t think that a Trustee could endorse or assign it to him- or herself.”

    What do you mean by repurchase a loan from the trust? The Trustee is the “manager” of the trust. My SEC filings state two things that I consider mutually exclusive:

    1) The Trustee has perfected title to the mortgages (the notes are allegedly assigned to the Trustee without recourse)

    2) The SEC filings also state that the depositor will “deposit the mortgages into the Trust

    They also state that the mortgages are owned by the Trustee on behalf of the issuing entity for the benefit of holders of certificates.

    I have read that the servicer has to buy the loan back and the seller (usually master servicer) has to buy the loan back. But I have never heard of the Trustee buying a loan back. Especially because they are assigned to the Trustee anyway. The trustee is the successor master servicer, but I don’t think they take over the obligations of the “seller”, just the obligations of the master servicer. I believe that the Trustee is not the true owner of the mortgage loans as they gave no consideration and their title “Trustee” basically gives them a “nominee” type status (similar to MERS). The holders of certificates are the true owners and should be joined to any action the Trustee is doing on behalf of the Trust.

    Can you give me more information on what you mean by Repurchase and how it happened?

    Dan Edstrom

  27. Cheryl,
    What do you mean by “found out Fannie Mae made BOfA repurchase the loan for fraud?” Who was being fraudulent?

    Wait, maybe I just figured it out…was it like this: Fannie Mae accused BofA of fraud because of some misrepresentation to Fannie Mae on the part of BofA concerning your loan?

    I have a lawsuit going involving the same players. I don’t know whether or not Fannie Mae was the actual “lender”–Countrywide is the “Lender” on my documents–but I do know that Fannie Mae owns the Note. BofA admitted that much in their answer to my complaint.

  28. The Lender of 90% mortgages is Fannie Mae. Homebuyers are never told this, but I had a Fannie Mae Expanded Approval Loan and signed documents at closing. Fannie Mae paid for my mortgage and Bank of America told me they were my Lender and were listed on the Deed of Trust. But I found out BOfA was only the servicer and never paid a dime on my mortgage and got paid every month from Fannie Mae to service my loan. I have a lawsuit and Bank of America cannot produce a note, found out Fannie Mae made BOfA repurchase the loan for fraud, and I think my loan is in China. No one knows where the note is.

    When a bank says they are the Lender, check it out. You will probably find out this is not true.

    Also read about the credit default swaps on this website. They really tell the story.

  29. I’ve asked this question in another thread but never saw an answer:

    If a Trustee repurchases a loan from its Trust, how can that Trustee then be considered a holder in due course of the loan/note? The investors obviously can’t endorse or assign it to the Trustee, and I wouldn’t think that a Trustee could endorse or assign it to him- or herself.

  30. Dan, thanks for your reply.

  31. Alina- Fla. has its share of unseemly laws, but I read somewhere in that Kansas decision that as per Black’s Legal Dictionary or guide or whatever it is, that “mortgagee and lender” have the same meaning. If MERS, as the ruling said, “never lent any money and never received any payments” then they are not a lender or a mortgagee. So by extension, if they are an assignee or self-described nominee for either, then since neither MERS is the lender and we know that the pretender lender isn’t the lender, then they are irrelevant? They are the nominee or assignee of no-one. Good luck, I enjoy your insights.

  32. How does one tell if their mortgage has been securitized? Our mortgage was considered ‘distressed’ by Greenpoint Mortgage and sold to a private investment group during foreclosure.

  33. Alina,
    I don’t know much about the Florida cases but there are other factors to consider, such as splitting the note and the mortgage, etc. Do the cases in question bring up these and other pertinent issues? It is my understanding that judges only consider the laws presented. If the issue was presented, they wouldn’t consider it. Also, I assume in Florida the Note and Mortgage are done similar to what I have seen here in California (The lender was assigned the Note and MERS was assigned the Mortgage or Deed).

    Also, read this case as it has some interesting information (it may have been based on a real case but it is not real):


    Dan Edstrom

  34. This decision is fantastic.

    However, in Florida courts, MERS has, thus far, been able to weasel their way by stating in appellate briefs that they are the holders of the note “indorsed in blank.”

    Following are quotes from MERS appellant brief in the Azize case:

    “Florida law has been the same for more than a century – a beneficial interest in the Note is not necessary to enforce the Note and foreclose on the property that secures its payment.”

    “MERS had possession of and was the “holder” of the Note that secured the mortgage naming lvIERS as the mortgagee and was authorized by contracts with both the borrower and the lender to foreclose.”

    “By MERS having possession of a note indorsed
    in blank, MERS is considered to be the “holder” of the Note.”

    Although courts in other states are starting to open their eyes, in Florida we have the precedent set by 2 Courts of Appeal that have ruled that MERS has standing to foreclose.

    I strongly believe that both CoA decisions are bad case law, however, they are precedent and have not been overturned.

    Interestingly, in the Nebraska Banking case, MERS said the direct opposite in their appellant brief. They stated they have no interest whatsoever in the loans and they have never owned or held the notes.

    If I get past their Motion to Dismiss, I plan on filing a Motion for Judicial Estoppel. Not sure how well that will play out but I am willing to give it a shot.

  35. zurenarrh,
    Sorry, my posts are coming in out of order – some are waiting for moderation. Here in a nutshell I will try to explain the fraud. (I am not an attorney, these are only my opinions). I am being very specific here about the pooling and servicing. I am leaving out a lot of other information already covered in this site and fairly well known.

    My obligation to pay is specified in my note that I issued – an unconditional promise to pay (negotiable instrument). Without my knowledge or consent unknown parties took my “unconditional promise to pay” and attached various conditions to it. The Pooling and Servicing agreements state that the sub-servicer, master servicer and successor master servicer (Trustee) are all required to make advances for any payments not received (so that the “holders of certificates” will receive a steady payment stream). These “conditions” (among many many others) were not authorized or agreed to by me. The servicers are required to make an accounting of all payments, advances and DELINQUENCIES that will all be rolled up to the Trustee. The Trustee gives these reports to the “holders of certificates” as well as to the RATINGS AGENCIES. Various parties have “sold” the loans without recourse (for tax purposes) but have used secure financing for accounting purposes. The secure financing involves REPURCHASE agreements in the event a loan becomes delinquent beyond 60 days. This should raise a RED FLAG to every single reader on this site. This is a conspiracy of unimaginable proportions to avoid repurchase obligations. It just so happens that this is a WIN / WIN / WIN / WIN / WIN for all the parties involved in the middle of this (including the cottage industries that have grown up around them).

    Did you ever have the chance for a meaningful workout? The servicer (in my case) said they were working with the investor (GMAC). But GMAC SOLD the loan (for tax purposes) and were not authorized to issue a loan modification. For accounting purposes they transferred the loan using secured financing – which means they pledged it to others, which means they were not authorized to issue a loan modification. (
    so either way they were not authorized).

    They use the process of foreclosure to aid in their scheme. They “report” that you are delinquent only right before the foreclosure sale (non-judicial). If you look at any foreclosure sale date, the assignment is done typically 42 to 55 days before the sale. So they are essentially saying: this guy just missed a pmt so lets quickly foreclose and oh by the way Trustee, don’t worry, they aren’t 60 days behind yet. The Trustee doesn’t care because they didn’t pay any money for the assignment (they KNOW they don’t own the note!) and will not get your house anyway. The servicer acts with Power of Attorney to sell your house for the Trustee (does anybody believe the “Power of Attorney” will not apply when the servicer deposits the check from the foreclosure sale into their own bank account as Pay to the Order of the [Trustee] Attorney in Fact?

    The sub-servicer cannot fail to report you delinquent without the knowledge of the master servicer and the Trustee.

    The master servicer and Trustee cannot suddenly report you as having missed a payment and all of the sudden foreclose without knowledge of what the sub-servicer is doing.

    This is not one party seeing an opportunity and taking advantage of it. This is not a mistake that happened (oops, we split the note or oops, we should have recorded the note or oops, we should have reported the borrowers as delinquent, or oops, we rated the securities to high, ad infinitum). From start to finish and every path along the way through the “loan” and securitization process, the parties are all moving very precisely and in complete coordination – with scienter (an evil mind).

    Dan Edstrom

  36. i do believe the escrow and or the suspense acc. allowed by servicers are key elements re; default [ or status to loan pools ] in [the] pattern of both complicity and fraud with the master servicing trusts. the scope of this mortgage fraud scheme could not have been perpetrated without the servicer to hide the trusts from the public exposure [in actual visibility & liability ]

  37. Dan, you raise a very important point here:

    “I assume this stems from the Pooling and Servicing agreements that require the SERVICER to make your payments for you in the event they are not received. This conflict of interest results in the SERVICER denying you equal protection. YOUR payments were applied to your “loan” but THEIR payments (on your loan) ARE NOT APPLIED – according to them. This is because they tell the master servicer your payments are current, but then they defraud YOU by telling you they were not made.”

    What are you basing this conclusion on? I also believe it is correct, but I don’t have any documentation that specifically spells this out. I suppose I’ll have to re-read the Fannie Mae prospectus(es) and/or PSAs.

    In my case, the whole reason I went into “default” was because Countrywide raised my monthly payment due to an escrow deficiency. The deficiency was created at closing because in the original monthly payment, they only required me to escrow half of what they knew the taxes for the previous year had been.

    The first month after raising the monthly payment, I sent in the original amount. They then sent a letter saying that unless I paid the new amount, they would return my check and not credit the account. And so they did, driving me into “default,” not because I couldn’t or wouldn’t pay my obligation to the Noteholder (which was obviously contained in the original monthly payment), but because they made an error in the original escrow calculation (possibly to make my monthly payment seem lower at closing).

    In other words, they blocked me from fulfilling my obligation to the Noteholder and now are saying they want to take my house because they wouldn’t let me fulfill my obligation to the Noteholder.

    One more thing:

    My Deed of Trust contains the following language (which I assume is standard):
    “This Security Instrument secures to Lender: (i) the repayment of the Loan, and all renewals, extensions and modifications of the Note; and (ii) the performance of Borrower’s covenants and agreements under this Security Instrument and the Note.”

    This language is interesting because it specifically states that the “Lender” is entitled to repayment, without mentioning “successors or assigns.” So if my “Lender” is Countrywide, as they are identified in both the Note and the Deed of Trust, and Countrywide sells the note (which they did), hasn’t Countrywide then received the required repayment? After all, the Deed of Trust language above does not say that the “Lender” must be repaid BY ME, it just says they have to be repaid.

    And interestingly, my Note differentiates between a “Lender” and a “Noteholder”–the “Lender” is Countrywide and the “Noteholder” is whoever they sell the Note to. But the Deed of Trust only states that the “Lender” must be repaid, saying nothing about repayment being due to the “Noteholder” (although the Note does say that a Noteholder is entitled to receive payments).

    I’m sure there’s some technicality I’ve overlooked in all this–if so, please point it out. I am not a lawyer either (but my wife is).

  38. The previous article is still in moderation. It is:


    Dan Edstrom

  39. The previous article states the following:

    When an FHA loan defaults, FHA takes most of the loss, while mortgage servicers take on the rest. Ginnie Mae, however, would have to provide a backup if the servicers default on their obligations.

    How exactly do mortgage SERVICERS take on the LOSS?

    I assume this stems from the Pooling and Servicing agreements that require the SERVICER to make your payments for you in the event they are not received. This conflict of interest results in the SERVICER denying you equal protection. YOUR payments were applied to your “loan” but THEIR payments (on your loan) ARE NOT APPLIED – according to them. This is because they tell the master servicer your payments are current, but then they defraud YOU by telling you they were not made. This is followed by the servicer denying you due process when you inform them.

    I am not a lawyer and this is my opinion. Is this not a civil rights violation?

    Dan Edstrom

  40. drew,
    thank you for the info. i did check it fannie mae did’nt own my loan so with the freddie mac. hopefully, BAC acquired my loan from countrywide, so it is easy for me to sue BAC directly. i am just doing it as pro se. BTW, i filed an aapeal to Bankrutcy Appelant Panel on ninth court district in Pasadena, Ca, i have given until october 30, 2009 to file my ‘ BRIEF”. as a pro se, i found it so interesting although a little bit stressful and with the help of livinglies website, i acquired so much knowledge about how to defend your property against pretender lender.. my advise to all homeowners who did not succesfully win their case in lower court, you still have option to file a notice of appeal questioning the court decision. just be familiarize with federal civil rule procedure 60 (b). in my case, the bk court granted a relief of stay from a pretender lender wihout even reviewing the document the pretender lender submitted which i found out a fraudulent promissory note and deed of trust.. court never read the case until they found out their mistakes but still the court denied my motion for reconsideration pointing out the alleged fraudulent. the reason why i filed an appeal in Bankruptcy Appelant Panel on ninth district court. while i am appealing, i filed lis pendins on my property in the county where the property located and i have it certified by the BK court pending appeal. i still have some porperties i’m fighting for one is BAC, GMAC, AURORA, EMC AND AHMS. I WILL LET YOU THE OUTCOME OF THAT APPEAL. if it will take for me to bring it to the supreme court i will do it.

  41. The Recession is over …

    Don’t worry if we fall below 2% of the required reserver …

    Are they taking into consideration the coming waves of foreclosure?


    Dan Edstrom

  42. erlinda,

    The Fannie Mae Loan Lookup enables mortgage borrowers to quickly determine if Fannie Mae owns their loan by providing a street address, unit, city, state, and ZIP code.


    You can look up Freedie Mac as well…


    Follow me on Twitter

  43. Here is the look up tool, kind of limited enjoy.


  44. Erlinda:

    Fannie Mae Loan Lookup Tool is here:

    Freddie Mac Loan Lookup Tool:

    Just checked the Fannie Mae tool again. Still says they own my loan, even though MERS assigned it to BAC two months ago.

  45. can you tell me about the fannie mae loan lookout tool? i hav ealso countrywide loan that was acquired by BAC.

  46. Thanks, never heard of the FannieMae Loan Lookup Tool. But I found it and here it is for all:


    Dan Edstrom

  47. Nye Lavalle,
    I don’t see your email. Mine is included in my posts …

    I sent a QWR that included a rescission. I was very surprised they sent the allonges. But I specifically asked for them (under TILA/RESPA and CA law).

    For those in California, there is a GREAT state law allowing you to ask for the note, benficiary statement and payoff demand.

    California Civil Code §2943

    Sample Written Request

    Dan Edstrom

  48. Dan, I have an outstanding QWR that asks for copies of the original Note with any and all allonges. BAC has said they will respond to the letter, but I don’t expect to actually get a copy of the Note/allonge(s), especially now that I’ve sued them. I’d sure like to see it though. Or maybe they’ll just make up some $#!+ and claim it’s the endorsed Note/allonge.

  49. zurenarrh,
    Its easy, they can say anything they want. There is little truth in it though – except in those crazy moments where they actually say the truth – as in your case when they said “oh yeah, some other guy actually has it” …

    nye Lavalle,
    There is a LOT of hanky panky going on. I have 8+ different title chains. Some examples:

    Allonges show the title chain of the NOTE (not Deed of Trust). Sworn SEC filings show a chain similar to the
    allonges except they skip one entity right before the Trustee

    The recorders office shows no assignments (until after Notice of Default). After default MERS assigns from originator to Trustee – skipping all 3 from the allonges and all 4 from the SEC filings. Oh yeah – originator declared bankruptcy after my loan closing and before Notice of Default making it IMPOSSIBLE to do an assignment from the originator.

    There are other unrecorded and unassigned interests also:

    The warehouse lender (or somebody else) “pledged” the note (sale for tax purposes, secured financing for accounting purposes). So everybody after the pledge just received pledges. All parties in the pledge chain are parties in interest (indispensible parties). The warehouse lender gets its “warehouse lending facility” from its parent company and the parent company gets its “warehouse lending facility” from an affiliate – a Federal Savings Bank.

    Then of course they don’t even mention the Trust in the assignments but the SEC filings show they “deposited the mortgages into the trust” and the Trustee is “owner of mortgages on behalf of the trust for the benefit of holders of certificates” …

    Which brings us to the “holders of certificates” – who of course are a party in interest if not the REAL party in interest.

    So basically when I got my loan half of the country received an interest in my title – hows that for hanky panky?

    The more I dig the more I find. It doesn’t seem to end.

    Dan Edstrom

  50. Here’s what happened in my case:

    I have a MERS beneficiary/nominee Deed of Trust.

    The only assignment on my Deed of Trust that is on file at the courthouse is from 2 months ago, from MERS to BAC Home Loans Servicing. Right around the same time, they listed my house as being in “preforeclosure” on the Recontrust site and on foreclosure.com.

    Before this, though, I stumbled upon the Fannie Mae Loan Lookup Tool, which said that Fannie Mae “owned my loan.”

    The Trustee’s Notice of Sale (published after the assignment), however, said that BAC Home Loans was the “legal holder of said indebtedness.” I knew this to be false because of the Fannie Mae Loan Lookup Tool.

    So I took the advice of Neil and Marcy Kaptur and filed a suit for an ex parte preliminary injunction to stop the foreclosure. Miraculously, it worked.

    In BAC’s answer to our complaint, they admitted that Fannie Mae “held the loan” in question AT THE TIME WE FILED OUR SUIT. Am I crazy, or did they just admit to all kinds of fraud?

    How can BAC claim to be “the legal holder of said indebtedness” while simultaneously, Fannie Mae also claims to own the Note? Meanwhile, there was no public assignment on the Deed of Trust filed at the courthouse from Countrywide OR MERS to Fannie Mae–but MERS seems to think that they can pull a fast one and assign to BAC right as they kick off foreclosure.

    BAC is trying to remove to federal court. We’re working on a response.

  51. Dan, love to see PDFs of your assignments and note to see if there is any hanky going on! My addy above!

  52. My experience and what I have heard from others is you can send them QWRs but they will only respond to an adversary pleading in bankruptcy or a lawsuit in Federal or State court. A letter from a lawyer may help, I don’t really know. You can do this yourself (difficult, time consuming, steep learning curve) or hire a competent lawyer (make sure they know what they are doing).

    This is non-judicial – in judicial you would typically respond to a lawsuit.

    Just my opinions.

    Dan Edstrom

  53. To: Dan Edstrom

    Beg a question?

    What course of action would be taken knowing this
    in order defend yourself?

  54. […] Read this article: Kansas Landmark Decision Annotated 1 « Livinglies's Weblog […]

  55. I just looked at the QWR response from the servicer. They sent a copy of the Note and allonges showing the assignments (last one is the Trustee). They did NOT send a copy of the Deed of Trust. This was after the Notice of Default (stating that the Trustee was the creditor) and before the assignment from the originator to the Trustee (attempting to bring back in the Deed of Trust and rejoin it with the note).

    “They” obviously know exactly what “they” did.

    Dan Edstrom

  56. Incredible, I never put the two together, even though you have said it so many times. My “lender” received the note (along with the obligation to pay) but MERS took over the Deed of Trust. This is proven in STONE after the Notice of Default is recorded (stating the creditor is the Trustee of the Trust), but then a month or two later they file an assignment from the originator to the Trust in an attempt to bring them back together.

    Dan Edstrom

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