MERS Admits NO Interest in Mortgage and No Loss On Default




Arnold admitted MERS does not have a beneficial interest in any mortgage; does not loan money; does not suffer a default if monies are not paid; etc...the internal agreement used by MERS expressly disavows any beneficial interest.

By Mark Mausert, Nevada

On September 25, 2009, R.K. Arnold, the President and CEO of MERSCORP, Inc. — the parent corporation of Mortgage Electronic Registration Systems, Inc. was deposed in Alabama. Arnold is also an Officer of MERS. Arnold admitted MERS does not have a beneficial interest in any mortgage; does not loan money; does not suffer a default if monies are not paid; etc. etc. On November 11, 2009, William C. Hultman was deposed in Alabama and made the same admissions. And, of course, the internal agreement used by MERS expressly disavows any beneficial interest.

One tactic, if confronted with a foreclosure in Nevada, is to elect mediation. At the mediation, demand the assignments, i.e., the assignments which would cure the problem (according to Judge Riegle’s March 31, 2009, opinion, as affirmed by Judge Dawson on December 4, 2009). MERS and/or the lender has been unable to produce any such assignments — because they almost certainly do not exist.

Request the Mediator to check the appropriate box, i.e., the box which memorializes a failure by the lender to produce all required documents (all assignments must be produced per AB 149 — incorporated into Chapter 107 of the Nevada Revised Statutes). The requisite Certificate will not issue as a result. The Notice of Default is effectively negated. The “lender” must thereupon issue a new Notice and the borrower is again at liberty to elect mediation within 30 days of receipt thereof. The borrower should pay his or her taxes, and insurance, but not the mortgage — especially if upside down. It is an effective stopgap measure.

If the courts continue to follow the reasoning of Judge Riegle and Dawson a borrowr may, if otherwise eligible, declare bankruptcy; bring an adversary proceeding within the bankruptcy; and discharge the “mortgage” debt (which re a MERS mortgage is not really a mortgage but rather an unsecured debt — per Judge Riegle).

Or the borrower may initiate litigation based on causes of action for breach of contract, fraud by omission and racketeering (Chapter 207 of the Nevada Revised Statutes). By conducting systemic predatory lending, and coupling predatory lending with credit default swaps, i.e., bets homes would be foreclosed upon, the lenders breached the implied duty of good faith and fair dealing — the duty to refrain from frustrating the purpose of the contract. Borrowers generally harbored two main purposes — to secure a place to live and to safeguard/create an investment. By engaging in systemic predatory lending the banks frustrated the second purpose. They devalued the collaterized asset and breached the lending contract. Because this information was not disclosed, fraud by omission occurred. A series of fraudulent act constitutes racketeering, which gives rise to a claim for treble damages, plus fees and costs. Those are the theories.

25 Responses

  1. My my case with CW & BOA the assingment from MERS to BAC, Bank of America, and last but not least Countrywide, they used Corelogic as a substitue for Recon Trust. Who the hell is Corelogic? Just another doc frabricator ?

  2. MERS- is their any court cases regarding MERS Vice-President’s admitting all that is stated above?

  3. I am concerned about the MERS tool to search for the parties to the mortgage. I think this tool went online recently and might be used for datamining. I searched for my property and the first time it showed matching information to my copy of the mortgage and gave the MIN; but now, after several tries, it says no record is found.

    An old property that I sold in 2000 is still showing Aurora Loans, but is marked inactive. It was supposedly paid off at closing; should it still be showing on the MERS system if a lien satisfaction was recorded?


  5. Pretty stunning, but I think the public at large is totally oblivious to the notion that MERS was an active participant in such widespread fraud. Thanks for all the time you’ve invested in exposing this.

  6. This is excellent exposure and very meaningful for the Public to grasp this. I am working on civil theories that include MERS as participating in the fraud committed by Countrywide, BofA and Wells fargo.

    I am very much greatfull to you taking the time to research and report such stuff. I’ll be tagging along with you in the future.

  7. We are dealing with a pooled loan in Nevada.
    Deuthsche (as the MBS servicer), OneWest, IndyMac and MERS are all listed in the responce from OneWest for the request of the identity and contact information of the investor or entity that owns our loan.
    It smells of all the issues pointed out at this site and we would like to be part of the movement to help get things corrected for the homeowners

  8. I am writing a RICO now against MERS and Wells Fargo

  9. angry & and not taking it I thought you lived in FL?

  10. You must argue that the Plaintiff is not the Real Party in Interest because it is not the Note holder at the time of the Complaint filing.

    It is never the case.

    Only after the default does the magic photocopy of the Note re-appear…with an undated and non-notarized endorsement. Use this logic to build the defense.

    A court will not allow the Note to be assigned via Mortgage Assignment, MERS’s basic strategy, IF the defendant challenges using this basic principle….the note must be endorsed.

    Of course, the notes are being endorsed all of a sudden….challenge the signing authority…look for back dates….strawmen….etc…

    ……….it is a tough battle…but well worth the fight!

  11. […] MERS Defined in GARFIELD GLOSSARY Posted on March 12, 2010 by Neil Garfield see mers-admits-no-interest-in-mortgage-and-no-loss-on-default […]

  12. Mr. Garfield,

    If the assignments are ALL invalid, which we all know to be the case now, then is it possible that the transaction is still open? Almost like we are back at the begnining waiting for “escrow’ to close? If that could be true, then could we collect on the title insurance policy that was issued? If the assignments are invalid, then the policy should still be in the borrowers name? Our title is defective right?

    Perhaps I’m WAAAYY off here, but I wanted to ask you!

    Thanks again Neil!

  13. “so what” ???? Chase Home Finance is a mortgage servicer. Did anyone point this out?? See below:

    Report title: Servicer Evaluation: Chase Home Finance LLC
    from S&P Credit Research
    11389 word report published Feb 27, 2009

    “Standard&Poor’s Ratings Services has affirmed its STRONG rankings on Chase Home Finance LLC (Chase) as a residential mortgage servicer and a residential subprime mortgage servicer. The outlook is negative. Chase services mortgage loans under the name of J.P. Morgan Chase Bank N.A. (since Jan. 1, 2005) and Chase Home Finance LLC. Chase Home Finance LLC acts as a subservicer for J.P. Morgan Chase Bank N.A. Chase is on schedule to complete the final phase of its transition to a new servicing system for its prime residential mortgages in mid-2009. With the completion of the subprime conversion in 2008, the company will operate on a unified technology platform that should result in better productivity and efficiencies.”

    From me – Most of the SAIL (Structured Asset Investment Loan Trust) trusts were securitized by Lehman Brothers – and the certificates to the trust, as with all trusts, were sold to the security underwriter – in this case Lehman Brothers (and we all know what happened to them).

    No offense to the honorable judge – but not all facts were not on the table.

  14. That case assumes the mortgge ws valid. It was not. It was separated from the note by design. There never was a valid mortgge to follow the note. At inception the mortgagee was MERS yet MERS was never ble to enforce the debt so therefore there never was a valid mortgage. Shocking that u r a law professor and do not “get it.”

  15. Thank you Neil, but what can you do about the judge’s ruling on the below article? Obviously these judges, either refuse to get it or they just don’t get it. Thanks

  16. WORKING HARD: EVERYONE has seen the assignments. The problem is that they are not worth anything. MERS admits it, and so does practically everyone else. The question is not whether they are valid. The real question is what to do with all the invalid assignments from MERS that were used as the basis for foreclosures. Those people still own those homes LEGALLY, even if they are long gone.

  17. Daniel B. Bogart Donley and Marjorie Bollinger Chair in Real Estate Law
    Chapman University School of Law, Orange, California

    MORTGAGES; FORECLOSURE; STANDING: Ownership and possession of note confer standing to foreclose mortgage even if mortgage arguably has been unlawfully assigned.

    Chase Home Finance, LLC v. Fequiere, 2010 WL 653239 (Conn. Ct. App. March 2, 2010)

    The mortgagor borrowed $240,000 from BNC Mortgage in August of 2005. In return, she executed and delivered a promissory note to BNC, and secured the note with a mortgage that she executed and delivered to MERS. The mortgage recited specifically that the subject property was mortgaged to MERS and its assigns “as nominee for [BNC Mortgage, Inc.] and [its] successors and assigns.”

    MERS later assigned the mortgage to Chase Home Finance (“Chase”). The mortgage assignment was recorded. In conjunction with the assignment, BNC endorsed the mortgagor’s promissory note in blank to Chase. As of the time of the foreclosure and litigation, the promissory note was in Chase’s physical possession.

    Chase began its foreclosure in September of 2008. The mortgagor failed to show at the judicial foreclosure and the court issued a default order for strict foreclosure. The Connecticut court set the “first law date” as May 19, 2009. On May 8 the mortgagor filed a motion to open to foreclosure. The mortgagor claimed she did not receive notice of the summons and complaint for the foreclosure. The court opened foreclosure; this acted as an extension for the law day to July 28, 2009.

    On May 19, the mortgagor made her broadside attack on the foreclosure, filing a motion to dismiss for lack of subject matter jurisdiction.

    “Specifically, the defendant asserted that the plaintiff [Chase] lacked standing to bring the action because MERS, the original mortgagee as nominee for BNC Mortgage, Inc., did not have proper title to the mortgage and, therefore, its purported assignment of the mortgage to the plaintiff was ineffective.” The mortgagor also argued that the “trust for which the plaintiff claimed to be trustee was not an enforceable “express trust” as required by [state statute] § 52-106. The result of this alleged impropriety, according to the defendant, also deprived [mortgagee] of standing to bring its foreclosure action.”

    The trial court ultimately held against the mortgagor, denying the motion to dismiss. The court of appeals affirmed the trial court.

    At the outset, the court in Fequiere determined that Chase did have standing to bring the foreclosure action. According to the court, “standing is the legal right to set judicial machinery in motion. One cannot rightfully invoke jurisdiction of the court unless he has, in an individual or representative capacity, some real interest in the cause of action, or a legal or equitable right, title or interest in the subject matter of the controversy.” Quoting Wilcox v. Webster Ins., Inc., 982 A.2d 1053 (2009). The court cited Fleet National Bank v. Nazreth, 818 A.2d 69 (Conn. Ct. App. 2003 and stated that standing is not a “technical rule intended to keep aggrieved parties out of court.” Rather, it is a “practical” rule designed to limit vexatious non justiciable cases.

    The defendant argued that MERS assignment to Chase was invalid (and therefore Chase had no interest in the property) because MERS did not have the authority to assign the mortgage to anyone other than the “nominator,” BNC. The court responded by essentially asking “so what?” According to the court “even if we were to assume arguendo that the assignment of the mortgage from MERS to [Chase] was invalid, the defendant’s claims fails.” Citing Connecticut statute § 49-17, a party holding the promissory note secured by the mortgage is allowed to foreclose the mortgage even if it is not assigned. “The statute codifies the common law principle of long standing that the ‘mortgage follows the note’ pursuant to which the only the right owner of the note has the right to enforce the mortgage. It was “undisputed” that Chase possessed the note. The endorsement of the promissory note in blank, coupled with Chase’s ability to produce the note, established prima facie that they were holder. The mo
    rtgagor failed to show that Chase was not the holder.

    The court also rejected the mortgagor’s argument that Chase lacked standing because the structured asset investment loan trust was not a valid and enforceable trust. The idea here was that, under state law, a trustee can sue on behalf of the trust without joining in the lawsuit all the persons that trustee represents. If Chase was not a valid trust, then presumably, it would be necessary to join beneficiaries or not sue to foreclose at all.

    The court tossed this argument out very quickly, stating simply that mortgagor “has not offered any evidence or directed our attention to anything in the record that contradicts the plaintiff’s assertions that the SAIL trust is a valid and enforceable express trust.”

    Reporter’s Comment 1: Judge Samuel Bufford, bankruptcy judge for the Central District of California, authored a piece (disseminated on Dirt) titled “Where’s the Note, Who’s the Holder: Enforcement of Promissory Note Secured by Real Estate.” His piece contains a the mortgage law equivalent of Cuba Gooding, Jr.’s line “show me the money!” in the Tom Cruise movie, Jerry Maguire. Judge Bufford tells parties seeking to foreclose: show me the note. Judge Bufford has backed up his demand that any party wishing leave to foreclose on property in bankruptcy proffer the note, with a judicial order to that effect. However, Fequiere is a case in which Chase was able to do just that. In addition, there was a recorded the assignment. This is therefore not one of the cases in which assignments were not made or notes were lost or placed in the hands of entities not party to the foreclosure.

    Reporter’s Comment 2: The court really did not answer the question of whether the assignment of the mortgage from MERS to Chase was valid; rather the court said that whether the assignment was valid would not change the result. The question remains whether the court believed that the only party to whom MERS could assign was its nominator. The reporter realizes he lacks the experience of many of the readers on this subject, but he would have liked to know whether there was other language in the original mortgage or ancillary documentation spelling out the rights and limitations of MERS to assign. This case does demonstrate the implications of a transfer of the note: even if the mortgage assignment is missing or ineffective, the court held that the right to foreclose followed the note.

    Editor’s Comment 1: This case circumvents the issue raised in Bellistri v. Ocwen Loan Servicing, LL:C, 284 S.W.3d 619 (Mo. App. 2009), which held that MERS had no ability to transfer ownership of the loan becasue it did not control the note, and recorded ownership of the mortgage “as nominee” meant nothing. Since, by that analysis, the assignment meant nothing, there was no point in notifying MERS of prior tax foreclosures, even if the statutes require notice to parties of record. MERS is attacking that decision in federal court on the point that it was entitled to notice of any proceeding in which recorded interest holders are entitled to notice, so that it could pass on the information to its principals. The lower court decision that MERS lacked authority to transfer note ownership when it didn’t hold the note may still stand.

    Editor’s Comment 2: In the recent decision in Chase Home Finance, LLC v. Fequiere
    119 Conn.. App. 570, — A.2d —-, 2010 WL 653239 (3/2/10), the foreclosing mortgagee had possession of the note, but a challenge was made, similar to Bellestri, that MERS , the record owner of the mortgage, lacked the ability to assign the mortgage. The court held that the question of whether MERS had the possession of the note is moot, since transfer of the note automatically transfers the rights under the mortgage insofar as the right to foreclose is concerned.

  18. Can you give us the case name or court reporting company name or both so that we can get a copy of that transcript?

  19. In my case, the attorney for MERS verbally told me during a case management conference that MERS does not have an assignable interest. He said that the assignment means nothing. When I asked him what he meant by that, his response was that MERS does not have any interest to assign. I wanted to get him into open court with a court reporter and have him repeat this.

    It’s interesting that Arnold said the same thing.

  20. I see MERS’ assignments all the time. Several CA cases have affirmed that MERS can foreclose and can assign its beneficial interest.

  21. Neil;

    Thank you for this information as I am just starting the fight to protect my home. MERS and Ricontrust are the racketeering vehicle in this financial mess. These CEO’s who made billions in bonuses during the booming time did not care about the middle class who worked the hardest to make it through these challenges. Is anyone knows of any RICO class action against Bank of America dba Countrywide?

  22. That document would be good..

  23. Do we have a copy of the internal agreement used by MERS expressly disavows any beneficial interest?

  24. MERS is a Racketeering Vehicle being used behind the veil of Government.

    The Fraudulent Deeds & assignments, Perjourious testimony of MERS agents and thousands of injured borrowers and investors should be enough to bring an RICO suit.

  25. Neil
    Any case[s] law[s] you can point to re;”Those are the theories” to help define necessary measures or steps to further the similar theories that may or may[NOT] apply in Ca?
    Thanks again for the support !!

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