Vermont Judge Sua Sponte Knocks Down MERS on Standing

“Plaintiff Mortgage Electronic Registration Systems, Inc.’s foreclosure action is DISMISSED for lack of standing. Accordingly, the Court’s Order, issued August 27, 2009, granting plaintiff’s Motion for Default Judgment against the defendants Frank and Ellen Johnston is VACATED. The dismissal of the foreclosure action is without prejudice as to allow the proper plaintiff to come forward.”

see MERS-v -Johnston-October-2009-Vermont-Case

Because the transferee’s rights are derivative of the transferor’s rights, those rights must be proved. Because the transferee is not a holder, there is no presumption under Section 3-308 that the transferee, by producing the instrument, is entitled to payment. The instrument, by its terms, is not payable to the transferee and the transferee must account for possession of the unindorsed instrument by proving the transaction through which the transferee acquired it.

Significant provisions of Decision:

Note was secured by a Mortgage Deed dated April 27, 2005, from the Johnstons to Mortgage Electronic Registration Systems, Inc. (“MERS”), as nominee for WMC Mortgage Corp. (“WMC”). The Mortgage Deed also listed MERS as the mortgagee.

The mortgage deed consistently referred to MERS “solely as a nominee” and that
it holds “only legal title,” but it then purported to expand the authority of MERS as a
“nominee” to act as in essence as an agent or as a power-of-attorney to carry out the
rights of the Lender, including foreclosure and the sale of property. However, this
purported expansion of authority was restricted to that “necessary to comply with law or custom.” Importantly, the MERS and the lender WMC purposely chose to use the
specific legal term “nominee,” and not “agent” or “power-of-attorney.” MERS also chose
not to define the term “nominee.” Furthermore, the mortgage deed consistently referred
to the Lender’s rights in the property, and not MERS’s.

a mortgage may be enforced only by, or in behalf of, a person who is entitled to enforce the obligation the mortgage secures. Restatement (Third) of Property, Mortgages § 5.4(c). In general, a mortgage is unenforceable if it is held by one who has no right to enforce the secured obligation. Id.

To be a “holder” of an instrument, 9A V.S.A. § 3-301(i), one must posses the note
and the note must be payable to the person in possession of the note, or to bearer. 9A
V.S.A. § 1-201(b)(21)(A) (emphasis added). Here, the “holder” option is not available to
MERS because the note is not payable to MERS, nor has it been indorsed, either
specifically to MERS or in blank. See Id.; 9A V.S.A. § 3-205(b) (blank indorsement
becomes payable to bearer). Also, 9A V.S.A. § 3-301(iii) is not applicable, as it does not
appear that plaintiff is entitled to enforce the instrument pursuant to either section 3-309 or 3-418(d).

Because the transferee’s rights are derivative of the transferor’s rights, those rights must be proved. Because the transferee is not a holder, there is no presumption under Section 3-308 that the transferee, by producing the instrument, is entitled to payment. The instrument, by its terms, is not payable to the transferee and the transferee must account for possession of the unindorsed instrument by proving the transaction through which the transferee acquired it.

If MERS were able to bring the instant foreclosure action, the result would be incongruous in two ways. First, that a clearinghouse or exchange for mortgages would become an active entity in the transactions it oversees. Second, that MERS, an entity that by its own terms in the mortgage deed holds only bare legal title, and as it argued to the Nebraska Supreme Court does not acquire or service mortgage loans, would, upon foreclosing in its own name as “nominee,” be able hold title to the property.

Plaintiff Mortgage Electronic Registration Systems, Inc.’s foreclosure action is DISMISSED for lack of standing. Accordingly, the Court’s Order, issued August 27, 2009, granting plaintiff’s Motion for Default Judgment against the defendants Frank and Ellen Johnston is VACATED. The dismissal of the foreclosure action is without prejudice as to allow the proper plaintiff to come forward.

20 Responses

  1. ASSIGNMENT OF MORTGAGE. For value received the undersigned, MERS Inc. holder of that certain mortgage granted by ,————- to homecomings financial Network Inc. and recorded on —— 2004 as instrument #——– of the records of ——— county , state of ——-, hereby assigns said mortgage and obligation secured thereby to ——————— as trustee for ———————

    WHAT THE HECK IS THIS….. for value received. What did MERS receive of value. ??????????

  2. Why are these judges dismissing these cases without prejudice? I know Martin claimed frivolity in one of his pleadings–it would seem that MERS is certainly engaging in that when they attempt to foreclose judicially inther own name. Why do the judges let the pretender lenders have more opportunities to incur legal costs for the defendants?

    The reason I bring this up is because I’ve been told my suIt will be dismssed WITH prejudice if I decide I can’t afford it (which I can’t since the judge allowed removal to federal court) and don’t wish t declare bankruptcy. Or maybe even if I DO want to declare bankruptcy. Yet these actions brought by pretenders all seem to end in non-prejudicial dismissal, allowing the deep pockets to regroup and try their theft some other way. But apparently I won’t be given the same chance to do that.

  3. Thank you Abbey from CA,

    How can I find out about how many time my mortgage has been bundled and securitized and sod multiple time?

    I had the forensic auditor done on my mortgage, but I did not look into SEC. What service do I need to look into to find out what happened to my loan after closing?

    I am very curious to know what really happen to my mortgage.

    Who do I hire to do forensic review on the securitizing process? I would really like to know.

    Send QWR to the servicer, Ocwen, and they wrote back that they cannot tell me who the lender is because it’s confidential.

    Thank you,
    Lucy

  4. Oh how I wish I could find where my loans are! Too bad the Trust has intentionally ommitted the pages of loan numbers.

  5. Lucy
    you might check to see if the signer had a Power of Attorney from the defunct entity.

    DNY
    The electronic copy of docs is what seemingly has allowed the fraudsters to pledge (or sell) the mortgage loan to multiple entities concurrently (I think my mortgage loan was sold to 3 different large banking entities)……I know one securiites trust my mortgage loan is in…..and I will find out the others.

    So the fraudster company got paid in triplicate for my one mortgage loan.

    Then, think of the insurance monies claimed by those 3 different large banking entitites (the likes of AIG insurance covering securities). In my case, if each mortgage loan was insured up to 18X my loan …it could mean that one entity alone made over 20 million and multiply that by 3 banks…..60 million made from my one loan default!!

    I know of another someone who has shown me that thier loan was put into over 30 different securities trusts!! Get your calculator out!! Is it any wonder the size of the so called ‘bailouts’……or maybe the bailouts were just a thinly veiled move by our government to get in on the action and make a profit. Sort of like a short term investment.

    SO—the fraudsters seem to have several angles—one being, using electronic docs, to sell and sell again the same mortgage loan to multiple entities.

    and/lor use the same electronic doc to pledge the asset into multiple securities trusts!

    does anyone else know of other twists on their schemes?

    This would be very similar to us having one car which we owned, then taking out insurance with multiple insurance carriers at the same time. The going out and purposefully totaling the car to collect insurance money from all of the carriers. A windfall for us, but we’d very quickly be behind bars.

    totaling the car = making sure the subprime borrower goes into default-impossible to make payments on the subprime loan

  6. Thank you Martin, I appreciate it very much.

    Yes, We are planning to fight all the way.

    I have one more question. We originally signed with Argent Mortgage llc in 2006, I thought Argent was bought by Citifinancial in 2007? If so, how can someone from Argent sign the indorsement as vp in 2009? especially couple of days before fpreclosure and lis penden?

    Thank you

  7. I know that this is off-topic here, but do you have any thoughts, Neil, on electronic conversion of instruments? Alina and ANONYMOUS had touched on this issue of the UETA in their posts.

    Most states have incorporated the UETA in their statutes. Seems to me that the UETA prohibits electronic conversion of signatures unless the parties to those agreements accept it. I don’t recall ever seeing any such provision in any mortgage or note that I’ve seen that woulod authorize the replacement of a signed paper original with an electronic “original.” Though it appears that when all these mortgages and notes (or the “pass thru” pledged income from the mortgage and notes) were fed into the securitization vegimatic, the notes and mortgages were “converted to electronic originals” and the underlying paper originals were deliberately destroyed – contrary to stated custodial agreements, contrary to UETA, contrary to the instruments themselves. This was bascially admitted by the FBA recently to the Florida Supreme Court Task Force on Foreclosures.

    Would such a conversion perhaps also result in a conversion of the instrument from “negotiable” to a “non-negotiable” instrument – an electronic entry that represents the pledged pass-thru income – and possibly void the original instrument / agreement? It seems the securitizers knew documents would be destroyed / “converted” when, wayyy back in 2004, they pushed through laws in states making it easier to enforce “lost instruments.”

    Any thoughts on this would be appreciated.

  8. Steve, see the quote from the decison pulled out by smallz below and attack the “assignment of mortgage (together with the note)” as fraudulent or invalid. Most “assignments” are pretty hilarious when you look closely at what the clowns are doing. If the note was transfered while some entity had declared it to be “in default” (just before f/c), ask why, as Judge Shack asks, would an entity purchase a non-performing loan?

    I’m not an attorney, so don’t listen to me; seek local cousel that understands. Pro se folks are getting flattened in the courts under the gavels of angry, indifferent (but not impartial) judges.

  9. Can anyone give info on position of MERS once the Original Lender goes Bankrupt. Have heard that the Bankruptcy severs the ‘Agency Relationship’ of MERS acting in any capacity regarding the Loan / Mortgage / Note. etc.
    Need some ‘case law’ or ‘legal contract’ support here Servicers have passed our loan around without benefit of recorded chain of Title, all the while using MERS as the assigning party, (Assignor) to effect assigment to new ‘Securitized’ purported lender,
    Need to prove MERS has ‘No Standing’ from this position of no longer having a valid ‘Agency Contract’ or ‘Agency Agreement’ since Original lender went bankrupt and there is no recorded assignment of Deed of Trust from the bankrupt lender to the new purported ‘party in Interest’ The servicing entity is using MERS to cover the fraudulent acquiring of the loan / DOT / Note. Anyone please, with appreciation PRB

  10. Steve,
    If you look at the mortgage, MERS never owned the
    Note, therefore they had no standing to assign the Note.
    MERS was only named as a Nominee of the Mortgagee, ie their name is on the mortgage, not the
    Note.
    This is where people mess up. If MERS never owned the Note, how can they assign something they
    never owned. You have to call this to the Judge’s attention or he/she will just let it slide on by!

  11. there are a few dismissed cases that were initiated by MERS in vermont,unfortunately for me,MERS transfered the note right before the foreclosure action to citimortgage and the judge approved that they had standing,2 days ago.

  12. No Touchdown without the football.

    “Because the transferee’s rights are derivative of the transferor’s rights, those rights must be proved. Because the transferee is not a holder, there is no presumption under Section 3-308 that the transferee, by producing the instrument, is entitled to payment. The instrument, by its terms, is not payable to the transferee and the transferee must account for possession of the unindorsed instrument by proving the transaction through which the transferee acquired it.”

  13. lucy,

    They are the Trustee for the Trust fund, a pool of mortgage securities, your loan they are purporting was assigned to this pool, and because they are the Trustee, they are attempting to foreclose. They must prove standing in court and present an assignment and note endorsement. Challenge everything and ask for discovery….

  14. Dear Andy S.

    Ignorance is not an excuse. When I compare to Hitler and Stalin, with the astronomic numbers 3 million Foreclosures not to mention the loss of jobs etc…
    Yes I compare to Hitler and Stalin. That means that at least 6-7million peoples lives have been ruined.

    YES ONE MISTAKE TWO MISTAKES BUT 3 MILLION MISTAKES?

  15. Hi,

    Can somebody tell me who or what is US Bank National Association, as Trustee for the registered holders of Asset-Backed Pass-Through Certificates Series 2007-AMC2?

    They are the plaintiff that is foreclosing us, but who are they?

    Thank you,
    Lucy

  16. The A Man is right, a lot of these judges are evil and corrupt. And why not, they’re part of a corrupt government.

    Steve
    99Libra@gmail.com

  17. It seems clear to me, MERS was never more than
    the Registered Agent of the original lender and since it is a separate entity, it could never have standing to
    foreclose, unless the original lender gave it a power
    of attorney to do so and the power of attorney was duly
    recorded with the County Clerk.
    This appears to be the official standing of MERS
    in Florida where it is designated by the Department
    of State, division of corporations as a registered agent, not a normal, for profit corporation. MERS own
    instructions say that in Florida, MERS may not be named as a plaintiff in a foreclosure action, so they
    must realize they are only a registered agent for service of process.

  18. “No better than Hitler or Stalin” is quite a charge. Judges can simply fail to read newspapers, and become insulated in their judicial thrones, and their ignorance lets injustice happen. They don’t mean to be evil, they are just too uninformed or lazy to prevent the evil. Call them henchmen if you will, but even if they wanted to be Stalin or Hitler, it would be too much work for them.

  19. Finally, a great ruling on standing.

  20. ANY JUDGE THAT DOESNT GET IT YET DOESNT WANT TO GET IT AND IS PREJUDICE AND HAS A PERSONAL AGENDA. IN OTHER WORDS HE/SHE IS A MASS ECONOMIC CRIMINAL. AND IS NO BETTER THAN HITLER OR STALIN. 3 MILLION DISPLACED HOMES IS MORE PROOF THAN ANYBODY NEEDS TO KNOW THAT THERE WAS AND IS SOMETHING WRONG WITH THE MORTGAGES.

Leave a Reply

%d bloggers like this: