Fannie Mae Policy Now Admits Loan Not Secured


Editor’s Note: Their intention was to get MERS and servicers out of the foreclosure business. They now say that prior to foreclosure MERS must assign to the real party in interest.

Here’s their problem: As numerous Judges have pointed out, MERS specifically disclaims any interest in the obligation, note or mortgage. Even the language of the mortgage or Deed of Trust says MERS is mentioned in name only and that the Lender is somebody else.

These Judges who have considered the issue have come up with one conclusion, an assignment from a party with no right, title or interest has nothing to assign. The assignment may look good on its face but there still is the problem that nothing was assigned.

Here’s the other problem. If MERS was there in name only to permit transfers and other transactions off-record (contrary to state law) and if the original party named as “Lender” is no longer around, then what you have is a gap in the chain of custody and chain of title with respect to the creditor’s side of the loan. It is all off record which means, ipso facto that it is a question of fact as to whose loan it is. That means, ipso facto, that the presence of MERS makes it a judicial question which means that the non-judicial election is not available. They can’t do it.

So when you put this all together, you end up with the following inescapable conclusions:

  • The naming of MERS as mortgagee in a mortgage deed or as beneficiary in a deed of trust is a nullity.
  • MERS has no right, title or interest in any loan and even if it did, it disclaims any such interest on its own website.
  • The lender might be the REAL beneficiary, but that is a question of fact so the non-judicial foreclosure option is not available.
  • If the lender was not the creditor, it isn’t the lender because it had no right title or interest either, legally or equitably.
  • Without a creditor named in the security instrument intended to secure the obligation, the security was never perfected.
  • Without a creditor named in the security instrument intended to secure the obligation, the obligation is unsecured as to legal title.
  • Since the only real creditor is the one who advanced the funds (the investor(s)), they can enforce the obligation by proxy or directly. Whether the note is actually evidence of the obligation and to what extent the terms of the note are enforceable is a question for the court to determine.
  • The creditor only has a claim if they would suffer loss as a result of the indirect transaction with the borrower. If they or their agents have received payments from any source, those payments must be allocated to the loan account. The extent and measure of said allocation is a question of fact to be determined by the Court.
  • Once established, the allocation will most likely be applied in the manner set forth in the note, to wit: (a) against payments due (b) against fees and (c) against principal, in that order.
  • Once applied against payments, due the default vanishes unless the allocation is less than the amount due in payments.
  • Once established, the allocation results in a fatal defect in the notice of default, the statements sent to the borrower, and the representations made in court. Thus at the very least they must vacate all foreclosure proceedings and start over again.
  • If the allocation is less than the amount of payments due, then the investor(s) collectively have a claim for acceleration and to enforce the note — but they have no claim on the mortgage deed or deed of trust. By intentionally NOT naming parties who were known at the time of the transaction the security was split from the obligation. The obligation became unsecured.
  • The investors MIGHT have a claim for equitable lien based upon the circumstances that BOTH the borrower and the investor were the victims of fraud.

22 Responses

  1. Just in case you do not know MERS won this one as a beneficiary:

    Federal Judge Finds MERS To Be a Proper Beneficiary

    MERS’ Role Upheld Under Washington Deed of Trust Act


    Jason Lobo
    Phone: 703-652-1660

    Karmela Lejarde
    Phone: 703-761-1274

    Reston, Virginia, March 5, 2012—MERSCORP Holdings, Inc. today announced that a United States District Court Judge in the Western District of Washington dismissed with prejudice all claims against Mortgage Electronic Registration Systems, Inc. (MERS) related to alleged violations of the State of Washington’s Deed of Trust Act (WDTA).

    In Myers v. Mortgage Electronic Registration Systems, Inc., U.S. District Court Judge Ronald B. Leighton dismissed all counts against MERS in a ruling that mirrored other federal court decisions in Washington.

    Judge Leighton found no merit to the claim that MERS’ involvement tainted the foreclosure process or that the defendants violated the WDTA and added that other “Courts routinely reject these claims.” Citing other decisions from both the Eastern and Western Districts of Washington, including Salmon v. Bank of Am. Corp. and Daddabbo v. Countrywide Home Loans, Inc., the Court found that the plaintiff agreed that MERS would serve as nominee of the lender and lender’s successors and assigns. The WDTA states that “parties may insert in [a] mortgage any lawful agreement or condition,” which Judge Leighton interpreted as “including the agreement that MERS serve as an agent.”

    “The Myers decision adds to a legion of similar federal and state rulings across the country finding these challenges to MERS’ role meritless,” said MERSCORP Holdings Vice President of Corporate Communications, Janis L. Smith. “We are confident that as MERS and the role it plays becomes more understood, people will see that it adds great value to our nation’s system of housing finance and provides community and homeowner benefits too.”

    For descriptions of cases and other materials pertaining to MERS’ role and business model in U.S. housing, please visit

    MERSCORP Holdings, Inc. is a privately held corporation that owns and manages the MERS® System and all other MERS® products. It is a member-based organization made up of about 3,000 lenders, servicers, sub-servicers, investors and government institutions. Mortgage Electronic Registration Systems, Inc. (MERS) serves as the mortgagee in the land records for loans registered on the MERS® System, and is a nominee (or agent) for the owner of the promissory note. The MERS® System is a national electronic database that tracks changes in mortgage servicing and beneficial ownership interests in residential mortgage loans

  2. @chitown2020 I too am dealing with PHH. Email me!!!

  3. Neil, the bank attorney for the pretender lender admitted to me and my husband, in the hall,after court, and after I told him that I want to see some discovery, (the note is unendorsed) outside of the courtroom that the loan was never delivered to a trust, there are no assignments, no psa agreement…there is no trustee…the original lender is a failed bank..the pretender lender who brought the fraudclosure is PHH mortgage…The bank attorney told me the allonge is the assignment…I told him that is not true…The judge gave me 21 days to answer the second amended complaint with affirmative pleadings of fraud and forgery…how do you recomend that I proceed? I am in Illinois and there are no attorneys helping homeowners fight a fraudclosure..I have filed 2 motion to dismiss on the fraud and forgery, both were dismissed w/o prejudice..the Judge said he sees my point but I need a hearing..there is fraud everywhere even in the foreclosure..they have stamped over forgeries and alterations from the original foreclosure filing…An attorney advised me to file a motion to dismiss on the altered docs…the judge won’t do it..I told the attorney after his admission, that you are telling me that this is an unsecured debt and you are no more than a third party bill collector..?.he said, I did not say that…What would you do Neil..? I have uncovered tons of fraud and forgery not to mention what the bank attorney told me…he let the cat out the bag..could you please e-mail me or post some advice as how to proceed..I have about 2 weeks left to answer..

  4. If my HELOC made me sign for a deficiency in 2009 and they didn’t own the loan but they were just a servicer, would the agreement be void?

  5. Fannie Mae and Freddie Mac, yet another violation of our rights. Add it to the list of gov’t violations of our right:
    They violate the 1st Amendment by fencing-in demonstrators at G-20, banning books like “America Deceived II” and trying to take-over the internet.
    They violate the 2nd Amendment by confiscating guns.
    They violate the 4th and 5th Amendment by wireless wiretapping.
    They violate the entire Constitution by starting undeclared wars.
    Impeach Obama (and sweep out the Congress, except Ron Paul).
    [Link of Banned Book]:

  6. Fellow Fannie Fighters:

    I was hoping I could pick your collective brains about a couple of Fannie/foreclosure issues as I have continued my federal case as a pro se litigant and have an amended complaint due soon.

    So here goes…

    1. In pre-discovery disclosure, I was given my Fannie Mae pool number, which allowed me to find the CUSIP number for the trust my loan was put in.

    2. When the pool was created, it had over 1,600 loans in it, with 8 from my state. As of May 2010, the pool has approx. 750 loans left in it, with only 2 from my state. Given the amount of the unpaid balances of the loans from my state, I think it’s likely that my loan was repurchased from the pool by Fannie, BoA, a junk debt buyer, or someone.

    3. So my question is, based on your research and/or personal experience, do you think that my loan has in fact been repurchased out of the pool? If so, does the purchaser become a holder in due course (my inclination is to think that the purchaser would not be a holder in due course because the repurchase would have taken place due to delinquency/being overdue, which is one of the factors that prevents a purchaser from becoming a holder in due course according to the UCC)? Has the loan been charged off and sold to a junk debt buyer–how likely is that scenario?

    4. As I mentioned, I am amending my complaint and would like to include a quiet title action as part of it. Currently, Fannie Mae is not named as a defendant in my suit, but my servicer–BAC Home Loans Servicing–is, as is my trustee (Recontrust) and their parent (Bank of America, N.A.). The servicer assigned the loan and deed of trust to itself while posing as MERS and had this recorded in my county land records. So the servicer is currently the noteholder of official record. But, both the servicer and Fannie say that Fannie held the loan at the time when I began the litigation against them.

    I’m wondering if I should join Fannie as a defendant so that they can be included in the quiet title action since Fannie is the consensus noteholder even though Fannie is not the noteholder of record. However, I don’t really want to join Fannie to the suit because I’d have to serve them, do even more research, depose someone with Fannie, etc. Not that I am not willing to do such things if absolutely necessary, but I guess that’s what I’m asking: do you think it is absolutely necessary to join Fannie Mae to my current suit given the fact that even though both Fannie and BAC say that Fannie “owns a loan at [my] address” (Fannie’s words) and “held the note at the start of this litigation” (BAC’s words), Fannie is not the noteholder according to my county land records vis a vis a fraudulent assignment from MERS/BAC to BAC?

    Any help is appreciated, and I offer anything I can help you all with in return.

  7. Another small victory in Virginia. Homeowner filed for Chapter 7 in the U.S. Bankr. Court for the Eastern District of VA. A pretender lender (Chase) filed a motion to lift stay to be able to proceed with its bogus foreclosure. Debtor then filed an answer and an opposition to the motion, asserting about 10 defenses and arguing that Chase did not have the right to enforce the subject obligation.

    Chase in response filed an affidavit by an FDIC official alleging that Chase got the subject loan by operation of law. The problem was, the affidavit did not establish that the official had any personal knowledge of the events he was testifying too. Debtor challenged the affidavit on evidentiary grounds.

    On the day of the hearing, Chase’s attorney said “your honor, we are not prepared to address Debtor’s objections; we request a continuance. The case was continued beyond the date the automatic stay would normally last (60 days), so the continuance was tantamount to a denial of Chase’s motion.

    Let’s get ’em!

  8. Why don’t we all appoint ourselves as certified MERS officers and then go foreclose on every foreclosure in the country including MERS oh and all the judges on the west coast and then donate all the profit to charity

  9. In reality a power to sell under a mortgage or deed of trust can only be expressly granted or approvedly assigned by one party the HOMEOWNER anything else would be a bank trying to add a link to the chain it doesn’t have. They just tried getting real crafty by squeezing in so many implieds or possiblities into one document and got really caried away as to what the limits to those possibilities were. Wall Street got the World to fill up the Piggy Bank then when it got full it smashed it & sold the pieces and the only way to solve a puzzle is putting together all the pieces.

  10. Wednesday 2 June 2010

    Keep in mind, these are all conclusions, and they may not translate successfully in court. Arguments of fact germane to one’s specific case is all the court will address.

  11. Don’t for get petri dish, because this MERS crap was definitely brewed in a lab somewhere!

  12. Raja

    Had to respond to this. We all know who owns MERS – it is the banks. Biological?? You have to be kidding. A father is a father – whether that be biological, adoptive, foster, or a step-parent. They know their child.

  13. Our loan was assigned to WF by the “Vice-President” of Mers. The Vice-President also happens to be the attorney representing WF in this foreclosure lawsuit. So “MERS” assigned the loan to WF 2.5 years after we made payments to WF. And about 4 months AFTER we stopped paying. What’s the deal with assigning toxic loans ? I’m sure that’s a No No in the PSAs. So if MERS is the bastard child of Fannie Mae, I’m assuming Freddie Mac is dear old Dad !

  14. They all are thieves.MERS is the illegal child of all these Banks including the Fannie Mae and still no one knows the real biological father of MERS.

  15. This new policy of Fannie’s is identical to what was used in my situation back in July of 2009. My servicer is BAC Home Loans, and they posed as MERS to assign the Deed and the Note to themselves. They then had that recorded in my county land records, and that assignment is the only assignment in the margin on my Deed of Trust.

    When I say BAC used MERS to assign the Deed and Note to themselves, here’s what I mean:

    -The assignment says that it is being done by “MERS as nominee for Countrywide Bank, FSB” which is merely an intentionally convoluted and duplicitous way to say “BAC Home Loans Servicing.”

    -The assignment was signed and notarized by employees of BAC Home Loans, not employees of MERS (although Jill Arnold, the main signer of my documents, could conceivably be related to MERS head thug R.K. Arnold).

    MERS really had nothing to do with the assignment then. MERS was really only a puppet for BAC to stick its hand in to try to put on a little puppet show using the players in my Deed of Trust as the cast of characters in order to convince me that it was all legit.

    (Not that it really matters to those of us who read this site–we already know that MERS policy is to never hold or lay claim to any beneficial interest, so it is impossible for them to assign any beneficial interest in either the Deed or the Note.)

    Anybody know why Fannie wants the principal (BAC in my case) to act or pose as the agent (MERS)? Since my loan is or was held by Fannie Mae, why not just do an assignment from Fannie Mae to BAC? That would seem to be the best way to avoid any questions if in fact Fannie Mae is the holder in due course of my note. Why would Fannie Mae tell my servicer (BAC) to assign the note to itself (BAC) when that is a legal impossibility, at least according to my layman’s understanding? Don’t they realize that opens up a giant can of worms?

  16. 2 Dave…. I agree that it only implies complicity or the effort to distance from… how ever what can one do when your (true AAA) 1999 loan was sold to and used by FM in 2006 for a “jumbo pool” that no longer exists…

    “FNMA was one of the founders of MERS and now, because of the legal challenges, appears to be distancing itself from MERS in order to avoid complicity and further scrutiny into agency documents that do not exist. (However, they do! ”

    Have been dead ended in the muck & mire of FM for over a year… as of this date there is no mention of MERS on the one assignment recorded in the County Records…when it was “sold into the secondary market” and the servicer states on the record that FM owns the loan… if so then where the hell is it or has it been paid in full through CDS’s… and as a taxpayer who has been asked to “bailout” F&F why can I not get answers without fear of reprisal from a “shadow associate”… complicate of using my families collateral and equity and passing it around “like a bottle of booze at a frat party”

  17. And false in one false in all and from fraud nothing else is valid

  18. This just confirms everything that we have been striving to prove. This is great information. Now lets hope we can get the courts on board Neil.

  19. FNMA was one of the founders of MERS and now, because of the legal challenges, appears to be distancing itself from MERS in order to avoid complicity and further scrutiny into agency documents that do not exist. (However, they do! If FNMA was one of the founders, they would have established nexus through MERSCORP, Inc.’s corporate filings. That makes them complicit in MERS’ scheme!) If MERS is not who they say they are, then title to property is slandered [poster’s opinion is not legal advice].

  20. Nice job Neal

  21. Thank you for the information. You answered all my questions regarding Fannie Mae. I’m feeling more and more confident about my defense.

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