Court Denies Motion to Dismiss and Holds Backdated Mortgage Assignments May be Invalid

The bad news is that the Court mistakenly assumes that MERS must be the party to enforce because the MERS assignment was backdated. MERS specifically and publicly disclaims any interest in the mortgage, note or obligation. How can MERS assign something it disclaims? MERS internet site and promotional literature all say the same thing — use us to record your assignments and transfers, we promise we’ll never assert any interest or ownership in the property, loan, note or mortgage.

The court also mistakenly quotes statute saying that a beneficiary under a deed of trust need not record the assignment of the beneficial interest. That may be true, but if the assignment is of the DOT without concurrent assignment of the note (and notice to the Trustor/Homeowner) the assignment is of dubious quality.

It is also curious why anyone would assign the deed of trust or a beneficial interest, since the assignment of the note would incorporate all interests under the security instrument under NORMAL conditions. But this isn’t normal, is it. They split the note from the mortgage and both the note and mortgage are split from the original obligation because the actual creditor is not even mentioned in the closing documents.

On March 30, 2010, in the case of Ohlendorf v. Am. Home Mortg. Servicing

, (2010 U.S. Dist. LEXIS 31098) on Defendants’ 12(B)(6) Motion, United States District Court for the Eastern District of California denied the motion to dismiss Plaintiffs wrongful foreclosure claim on grounds that the assignment of mortgage was backdated and thus may have been invalid.

“On or about June 23, 2009, defendant T.D. Service Company (a foreclosure processing service) filed a notice of default in Placer County, identifying Deutsche Bank as beneficiary and AHMSI as trustee. In an assignment of deed of trust dated July 15, 2009, MERS assigned the deed of trust to AHMSI. This assignment of deed of trust purports to be effective as of June 9, 2009. A second assignment of deed of trust was executed on the same date as the first, July 15, 2009, but the time mark placed on the second assignment of deed of trust by the Placer County Recorder indicates that it was recorded eleven seconds after the first. In this second assignment of deed of trust, AHMSI assigned the deed of trust to Deutsche.  This assignment indicates that it was effective as of June 22, 2009. Both assignments were signed by Korell Harp. The assignment purportedly effective June 9, 2009, lists Harp as vice president of MERS and the assignment purportedly effective June 22, 2009, lists him as vice president of AHMSI. Six days later, on July 21, 2009, plaintiff recorded a notice of pendency of action with the Placer County Recorder.  In a substitution of trustee recorded on July 29, 2009, Deutsche, as present beneficiary, substituted ADSI as trustee.”

The court stated that “while California law does not require beneficiaries to record assignments, see California Civil Code Section 2934, the process of recording assignments with backdated effective dates may be improper, and thereby taint the notice of default.”

Plaintiff’s argument was interpreted by the court to be that the backdated assignments were not valid or at least were not valid on June 23, 2009, when the notice of default was recorded. As such the court assumed Plaintiff argued that MERS remained the beneficiary on that date and therefore was the only party who could enforce the default.

Judge Lawrence K. Karlton invited Defendants to file a motion to dismiss as to plaintiff’s wrongful foreclosure claim insofar as it is premised on the backdated assignments of the mortgage.

Dean Mostofi


6 Responses

  1. AHMSI has tortured me for 4 years. I revieved a letter from option one in june 08. It said to pay AHMSI in July. I did and the payment came back with a response that I was in Foreclosure.
    AHMSI claimed to have gotten my loan in March 08. July 16th 08. July5th 08, back to march. then June.
    They agreed to a mod on Nov 17th 11. they sold my house on Nov. 18th. On December 1st they say they had not sold my loan. One Dec 3rd AH said they did. They then agreed to a purchase agreement up to and on May 17t. May 18, they decided they didnot like the buyer.
    I never should of been in foreclosure tobegin with. They took it yesterday. I still fight and file complaints. I do not have funds for a lawyer and my legal aid quit.. Wondrer why.
    This has caused me tremendous phyical and emotional problems.
    Oh, I live in Mn. The atty gen here says they cannot help me
    Terri ..Mn

  2. FWIW:

    Keri Selman Facebook — the MERS “assigner” who wears too many hats …

  3. The ruling is posted here:

    When MERS assigned the DOT to AHMSI it was purportedly acting as nominee for American Brokers Conduit (ABC), the beneficiary under the DOT and original payee under the Note. But ABC had already negotiated the Note to AHMSI who had subsequently sold it to a Depositor before the final sale to Deutsche, back in 2007. Moreover, ABC is no longer in business, which makes it hard for MERS to act as its nominee for assigning the DOT to AHMSI.

    And by the same token if we follow the courts reasoning that MERS was the only party with the right to enforce the default, presumably as nominee for ABC, we would have to assume ABC was the holder of the Note, which is clearly not the case since the Note was sold to Deutsche two years earlier.

    So how could MERS assign the DOT as nominee for ABC? Or is MERS acting as nominee for AHMSI as successor/assign to ABC? In which case why is AHMSI assigning the DOT to itself?

  4. Patrick–would your last paragraphy be applicable if the foreclosure already happened?

  5. I have a question. Korell Harp who signed my assignment works for DOCX of Alphretta GA, who is under investigation. How is it he is signing for T.D. Service Company who has offices in both Santa Ana, California and Phoenix, Arizona?

  6. I have read the ruling in full. It is not as “impressive” as you might think.

    The court dismissed much of the meat of the complaint. Produce the note was dismissed, as is always the case under CA law.

    The judge did acknowledge that the Notice of Default might be invalid by the backdated Assignment, but he left open the opportunity for the Defendent to prove that the Assignment was lawful.

    More important is this: Assume the Assignment was tainted and the NOD was unlawful. All that is needed to be done is to rescind the NOD, issue a new Assignment, and then refile an NOD. At this point, all to be argued would be if “MERS” had the ability to Assign a Deed of Trust or not.

    Patrick Pulatie
    Loan Fraud Investigations

    Will this get posted?

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