The McCoy Case Analyzed – MERS Smackdown!

Today, February 10, 2011, 1 hour ago | Phil QuerinGo to full article

“…the powers accorded to MERS by the Lender [whose name appears in the Trust Deed] – with the Borrower’s consent – cannot exceed the powers of the beneficiary.  The beneficiary’s right to require a non-judicial sale is limited by ORS 86.735.  A non-judicial sale may take place only if any assignment by [the Lender whose name appears in the Trust Deed] has been recorded.”

[Frank R. Alley III, Chief Bankruptcy Judge, published opinion, Donald McCoy III v. BNC Mortgage, et al., Adversary  No. 10-6224 -fra, Case No. 10-63814-fra-13, February 7, 2011]

Slapdown!  In a relatively uncomplicated adversary proceeding in Oregon’s bankruptcy court, Judge Alley hit the nail squarely on the head:  If lenders in Oregon want to foreclose people out of their homes, they must follow ORS 86.735(1). Or in the words of one Oregon title counsel, Judge Alley’s decision means that “…all assignments behind a MERS trust deed must be recorded for a non-judicial foreclosure.  In McCoy, it appeared there were unrecorded assignments by the original lender identified in the promissory note.  A “beneficiary” in Oregon is defined as the entity or person identified in the trust deed as the one for whose benefit the trust deed is given (or their successor in interest) – that was not MERS, but rather the original lender making the actual loan to the borrower.

For some reason, this relatively simple requirement has been routinely and flagrantly ignored in virtually every non-judicial foreclosure I have reviewed last year and this year.  I suspect if I went back to 2008 and 2009, I would see the same thing.  And this holding isn’t confined to situations in which MERS is the (nominal) beneficiary.

As this site has repeatedly pointed out, the Oregon statute is pretty clear:  Oregon Revised Statute 86.735(1) provides that a successor trustee [i.e the bank’s “enforcers” who actually process the foreclosure from beginning to end – PCQ] may foreclose a trust deed by advertisement and sale if “(t)he trust deed, any assignments of the trust deed by the trustee or the beneficiary and any appointment of a successor trustee are recorded…” in the public records of the county in which the property is located.  [Underscore mine.  PCQ]

Without going into details, suffice it to say, that from the initial funding of most loans, the note and trust deed, travel far and wide.  In many, many residential loans from the Big Banks during 2005 – 2008, loans were securitized, that is, sold into the secondary market to be sliced and diced into billion dollar REMICs and then gobbled up by investors.  Of necessity, this meant that the trust deed would be transferred into and out of the hands of multiple banks.  In theory, each time the trust deed was transferred, there needed to be an official “Assignment” document transferring ownership.  Compliance with this law was of little consequence if loans were always paid off.  But when they went into default, as millions did commencing in 2008, the handling of the trust deeds came under scrutiny.  People began to notice that lenders who were foreclosing through their successor trustees, simply materialized out of thin air.  There was really no way to trace the “genealogy” from the first bank to the last.

This blatant disregard for Oregon law was due to the need for speed in the foreclosure process.  It was also due to years of sloppy lender practices. In truth, it appears that most Big Banks never bothered recording the assignments every time they transferred their trust deeds.  In fact, it appears that they may have never even prepared the assignments at all.  The effect of the McCoy holding is a direct consequence of the MERS model, which sought to “electronically record” trust deed transfers, rather than following laws such as Oregon’s, that require recording in the public record.  This meant that the public record no longer disclosed multiple assignments of the trust deed.  The only way for successor trustees – the persons or companies foreclosing on behalf of a lender – to deal with this problem, was to ignore the law.  So they took it upon themselves to prepare and record assignment documents either from the originating lender whose name appeared on the trust deed – or MERS – to another lending institution.  No question was ever asked or inquiry made about the many other assignments – yet we know from the securitization process, that multiple banks, of necessity, received and delivered each trust deed multiple times, in order to obtain what is known as “true sales” and “bankruptcy remoteness.

In many Oregon foreclosure cases, the successor trustee signs and recorded all of the necessary documents that tee up the foreclosure – the Assignment of Trust Deed, the Appointment of Successor Trustee, and the Notice of Default and Election to Sell.  For the answer to this and other cosmic (and comic) mysteries, see my posts here and here.  The process is patently wrong.  Now, Judge Alley, has said “Stop.”  In effect, he ruled that if you want to non-judicially foreclose someone out of their home in Oregon, the trust deed assignments must be recorded.  The next move is up to the folks who’ve been ignoring the law to date.  That includes those companies acting as successor trustees, who should think twice before recording a Notice of Default without first recording the other trust deed assignments.

Of course, the recording  problem now raises several moral conundrums for the major players in the booming foreclosure industry (from MERS and the Big Banks to their processor services, successor trustees, title insurance carriers, and attorneys: “Do I comply?” Do I pretend I didn’t know better?” “Do I rely upon the ‘I was just following orders’ excuse?”  Do I rely upon the time-honored lawyer practice of “distinguishing” the McCoy case from everything else?”  And then there is the ultimate ruse, which raises the civil and criminal consequences exponentially: “Do I participate in the fabrication of assignment documents, suitable for recording?”  How long will they be able to cloak themselves in “Don’t Ask, Don’t Tell” hoping that the issue will never find it’s way into the court system?  And ultimately, the lawyers advising their foreclosure industry clients will have to face the reality that their licenses may be on the line if they give bad or illegal advise. Time will tell – but the problem is not going away.

24 Responses

  1. For anyone looking for help in Oregon, I’ve gotten to know a couple of really good attorneys specializing in foreclosure defense here in Oregon. Their link is on my site

    John Bowles, Esq. and Rick Fernandez, Esq.

  2. Sunday 13 February 2011

    There is a wealth on infornation and arguments to be used for anyone who wants to defend against a foreclosure that involves MERS, particularly its ability as a “nominee” to have authority from the original lender to act…which it NEVER has.

    The court agreed with Select Portfolio Servicing, movant in the case, that Rooker-Feldman applied and the court could not consider US Bank’s standing as determined by a state judgment. What the court did was say, the front door is locked, but it went in via the back door and said to MERS, et al,
    “F U.’

    Marvelous exercise of judicial power to right a major wrong and tell MERS it is no longer business as usual.

    Does anyone have access to a copy of the quiet title case re the Utah condo winner? There seems to be under-reporting of this kind of strategy, and the few who claim expertise on the topic are not willing to share, beyond the “I-am-expert-in-this-and-you-ar- not.” attitude.


  3. Still no bloody ability to spell check for errors or edit after posting, by this site.

    Case Cite, not site, below.

  4. Sunday 13 February 2011


    Superb case site that contains excellent information and language that can be used by many in mounting their own fight against foreclosure.

    Thank you!

  5. Something to take in consideration is also if the assigments are legal. Tha means perform in due course

  6. Thank God The Crooks made mistakes. Now let’s see if the letter of the law, blind justice and morale ethics come into play.

  7. Quoted by edgetraderplus,
    One more point by Soliman:
    “…MERS as a nominee protects the anonymity of the parties from each other..”

    I disagree. MERS hides the parties from each other. @ edgetraderplus, don’t you think the words hide and protects mirrors any similarities just like how MERS represent itself?

  8. I certainly hope that attorneys that have falsified documents are aware of the fact that it could come around and bite them in the butt. Now would be the time to check out which countries do not have an extradition treaty with the U.S.

    I do like Concerned’s point about the so-called original lender being defunct as American Brokers Conduit is. Defunct means not functioning, not in reality–so how can the original lender determine what MERS shoulda, woulda coulda done after they have already “died”.

  9. Friday 11 February 2011

    A Bailey:

    You need not make a point of your missing the point because you do not see any tie-in to the case The discussion is on point, my man.

    You give a petty lecture and then want somone to tell you about your preumably own state statutes?
    How rich.

    frankielee: Your first response:
    “edgetraderplus, while I agree with concerned’s post, I would take issue with yours.”

    Your second response:
    “edgetraderplus, first off, I’m not arguing anything. I agree with your stance completely.”

    The rest of your comments have little to do with the specific issue of MERS assignments, but that is okay.


  10. edgetraderplus, first off, I’m not arguing anything. I agree with your stance completely. But the case in point is that Mers BELIEVES that it has the right to transfer and assign, and obviously thousands of courts around the nation have agreed to that premise as well. The supreme court of MN still stands by that decision, obviously all of the jurists on that bench are convinced that their pensions and the cushy life they’re acustomed to are worth more than citizen’s homes and the welfare of the mases.

    The big picture issue here is not whether Mers can assign, foreclose, act as nominee etc., the real issue here is that securitization is a flawed, fraudulent business model that benefits only the players on Wall Street, at the expense of the entire world outside of same. The elite, the TBTF banks, the Treasury and Fed, and all the minions within the beltway are struggling to hold onto a system that exploded like a nuclear weapon of mass financial destruction.

    And as Neil constantly argues, the two systems can’t co-exist….that is, securitization and a stable economy are two polar opposites that can’t play on the same field. It’s simply impossible. One rapes the other at every chance, and it’s always the usurious bastard banksters that rape, it’s never the other way around.

    Securitization must go. The re-selling of already sold products is a non-starter. It’s against the law of each and every state, as well as of federal statutes. Mers was designed to assist the fraud that is securitization, and they got away with it for a long time. But the jig is up. Game over. Lock up the criminals and return the monies. It’s that easy.

  11. What do any of these comments have to do with the McCoy case? It would be good if people stayed on point. There are those of us who use Neil’s LivingLies blog as a resource.

    So, my question is: does Arizona have a mirror statute to Oregon’s ORS 86.735? If so what is it?

  12. One more point by Soliman:
    “…MERS as a nominee protects the anonymity of the parties from each other..”

    I disagree. MERS hides the parties from each other. That was the entire purpose of the banks creating MERS as a circumvention of recording and enhancing the banks’ ability to engage with securitization with impunity.

    That fraudlulent set-up is now what eveyone sees unraveling.

  13. Friday 11 February 2011

    frankielee: You take exeption but then present an argument that is a diiferent expression of what I said. ? Also, you did not address my statement about ORIGINAL lender, not the bogus MERS VPs
    that manipulate the system at will, after the fact.

    Let me amplify. Who is the true lender?! I have never seen an assignment from the original lender to MERS. MERS set itself up as the nominee in the language of the MORTGAGE. Where does MERS appear in the language of any Note?! None. Where does MERS get its power?

    It has none, if one argues their standing.

    >”Look at the mortgage or deed. You executed the right of assignment. That right or acknowledgment records with the deed.”

    Where did “I” execute right of assignment? There can be NO separate agreement in the mortgage between MERS and “me,” per the language of the mortgage. Neither MERS nor “I” can make such an arrangement within the language of the deed, irrespective of how it is expressed. Language in the mortgage is between the Lender and Borrower, NOT MERS and the borrower.

    What is it that anyone thinks these court decisions are saying, re MERS involvement?

    Follow the money. Follow the assignment. First find the assignment from the original lender to MERS. Anything after is window-dressing designed to deceive.

  14. edgetraderplus, while I agree with concerned’s post, I would take issue with yours. You said:

    “there is NEVER any assignment from the lender to MERS that gives MERS authority to act.”

    That’s not correct according to the game as Mers set it up. A study of the coniving web they’ve spun will show that ANY lender, whether a Mers member or not, can assign to Mers the ability to assign on its behalf. Mers states:

    “A lender unaffiliated with MERS may assign its interest in a deed of trust to MERS, as
    nominee for a MERS affiliated lender.”

    Now we all know that that’s horseshit, but that’s how they spell it out. That’s also a clear cut case of bifurcation of the note and deed, but hey, that’s what they do at Mers. And they do it so well. But that’s all about to change.

  15. Comments – Remember, the true lender and the borrower never intersect, by contract, and there is NEVER any assignment from the lender to MERS that gives MERS authority to act.

    You say the true lender and the borrower never intersect, by contract. Your right, but MERS as a nominee protects the anonymity of the parties from each other. MERS is a highly efficient in integral part of the future of housing.

    When you say there is NEVER any assignment from the lender to MERS that gives MERS authority to act…Look at the mortgage or deed. You executed the right of assignment. That right or acknowledgment records with the deed.

    Excellent points, but remember ! “extortion of title” by means of manipulative controls aginst assets and interests are insufficient to claim a transfer by sale – and where by reconstruction of a coventional foreclosure is for purposes of profit and gain. There is where the emergence of the Robo signature’s and MERS arguments are evidentury and not causal to releasing title of all claims or recorded encumberances.

    Cite the parties perpetrating deceptive practices in order to affect an economic advantage and having levered the court jurisidiction for purpose of possession. Any advantage to the lender is manufactured and brought by misjoinder as we see; soley to effect unlawful estopples (“Collateral” and “by lache”) that raises the threshold for the argument to bifurcate the matter into separate hearings; motions to dismiss.

    The debt argument having been charged to a loss thanks to manipulation of the wholesale platform for unfair advantage – MERS. And for defending ones estate held in fee for which the merit of the obligation due is separate.

    These arguments are subject to hearing the matter on separate docket in opposition of counter parties’ claims for related cases –


    Opinions and views are not legal advice. Only a licensed practitioner can advise you of your real property rights and rights to defend title.


  16. Lets just make this real easy MERS is a computer software program it can only be as good or BAD as the human input is.If your feeding the program unlawful info. then the software does what the human tells it to do.Are we going to let a computer program replace common sense.I like technology as well as the next person but I’m not going to let it ruin me or run my life.MERS was thought up by the big banks as a way to enrich themselves.We need to go after the people that allowed this to happen.



  18. Friday 11 February 2011

    Pay careful attention to the post by Concerned, for it is right on point. Further, I would question if the true lender is even aware of the content of the mortage contract terms. The mortgage contracts were rewritten to accomodate the MERS scheme. Remember, the true lender and the borrower never intersect, by contract, and there is NEVER any assignment from the lender to MERS that gives MERS authority to act.

  19. Mers is simple. It was a scheme to hoard and steal all the houses. This is an example of the inventors thinking the rest of the world is stupid and they can and will do what they want. It is a scam, it is fraud and it is built on a lie. Can’t wait til some of the culprits go to prison. That is my hope and prayer. Debi

  20. Now getting back to this post and the lead-in:

    “the powers accorded to MERS by the Lender [whose name appears in the Trust Deed] – with the Borrower’s consent – cannot exceed the powers of the beneficiary.”

    Everyone with any CountryWide loan of any type should take note that the LENDER did NOT accord MERS any specific powers but only designated MERS as the ‘nominee’. Without that designation of WHAT powers MERS was granted by the ‘LENDER’, MERS has been granted, basically, NOTHING. Also, where MERS is simply designated the nominee, If the named lender is now defunct, there are no powers that the original lender could now exercise, thus MERS would also not have any powers as the nominee since MERS can not exercise more powers than the original named lender has after it’s own demise. Double-whammy.

  21. It is time to go Egyptian on Obama and hid bankster friends

    mubarak and obama must go.

  22. […] This post was mentioned on Twitter by Social Apocalypse and i8 wamu, kim thomas. kim thomas said: The McCoy Case Analyzed – MERS Smackdown!: […]

  23. Once upon a time there was a builder. He buil houses, but he was broke. He asked a big bank WendySac if he could have some money to pay all his bloated CEO bonuses.

    In exchange he would forward-sell all his “loans” he made on his houses to them. He did this,and he told the “Buyers” he was loaning them money, but he did not do that.

    He took all the “loans” that he had already forward-sold, and he resold them, again and again.

    It was a great plan.

    The County recorded ALL the sales one month. He did very well. He sold 10 houses in one special zip code!.

    But the poor investors soon found out that in this special zip code, where only 10 houses were sold that month, there existed in the loan pools over 30 loans, all supposedly originated that month inthat zip code.
    It was a mystery.
    Had secret homes been sold and not recorded?
    Or was there only 10 houses sold?

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