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EDITOR’S NOTE: It’s really very simple. The securitizers on Wall Street decided that MERS had the least amount of assets so it was a remote vehicle that would not kick back to them if the foreclosures exploded. After all, they didn’t own the loans, MERS certainly didn’t own the loans and even disclaimed publicly its interest or claim to any liability, note or mortgage as part of its marketing campaign. So they had MERS file tens of thousands of foreclosures and guess what? Everything went through smooth as a baby’s behind — until now.

The plaintiff’s are saying they were damaged by MERS and they were, for sure. They are claiming $100 million in damages because MERS didn’t have any right to FORECLOSE, WAS NOT A REAL PARTY IN INTEREST, AND WAS NEVER A CREDITOR, THE HOLDER OF ANY DOCUMENTS NOR DID IT EVER HANDLE OR ACCOUNT FOR ANY MONEY IN ANY TRANSACTION.

Of course damages would be mitigated IF the court simply did the right thing after the proof was admitted into evidence — tell the Plaintiffs that they still own the property and that while they maybe entitled to lots of money in compensatory and maybe punitive damages, they still have legal title to the property and without any encumbrance. Yes, a “free” house if you can call it free after being forcibly evicted from your home over a loan that was already paid off.

Merscorp Electronic Mortgage Registry Is Sued Over Michigan Foreclosures

By Margaret Cronin Fisk – May 10, 2011

Mortgage Electronic Registration Systems Inc. “illegally prosecuted” non-judicial foreclosures in Michigan and owes more than $100 million to people who lost their homes, lawyers for three homeowners said in a lawsuit.

The homeowners said Merscorp Inc.’s MERS, which runs an electronic registry of mortgages, used Michigan’s so-called foreclosure by advertisement process illegally and “misappropriated” their homes. Any foreclosures by MERS using this process in Michigan should be voided, they said in their complaint filed in federal court in Detroit.

Michigan is one of 27 states where banks don’t have to get a court’s permission to seize a property, meaning homeowners have to bring their own lawsuit to halt a foreclosure. Michigan law lets mortgage lenders or servicers foreclose after advertising a default in a newspaper for four consecutive weeks.

MERS “lacked the authority to foreclose by advertisement” because it didn’t own or have any interest in the underlying debt and “was not the servicing agent of the mortgage,” Maryla Depauw and Sharon and Terrance Lafrance, the homeowners said, in their complaint filed yesterday. MERS “knowingly, fraudulently and illegally” foreclosed on homes for years using a law it “had no authority or right to utilize,” they claim.

MERS is required to take foreclosures to court, their lawyers said, citing an April 21 decision by Michigan’s Court of Appeals. The decision, which voided two property seizures, said state law requires a foreclosing party to own the legal title to the debt.

Janis Smith, a Merscorp spokeswoman, didn’t immediately return a call seeking comment today.

Servicing, Ownership

Merscorp’s MERS tracks servicing rights and ownership interests in mortgage loans on its electronic registry, allowing banks to buy and sell the loans without having to record the transfer with a county.

Depauw and the Lafrances filed their suit as a class action, seeking to represent all other Michigan property owners “whose property was illegally foreclosed upon by MERS.” They’re asking for more than $100 million in actual damages on multiple counts including fraud and wrongful foreclosure, as well as more than $300 million in punitive damages.

Depauw, who lives in Oakland County, Michigan, and the Defrances, who live in St. Clair County, said their homes were illegally foreclosed on and sold at sheriff’s sales.

The suit is Depauw v. Mortgage Electronic Registration Systems Inc., 2:11-cv-12032, U.S. District Court, Eastern District of Michigan (Detroit).

To contact the reporter on this story: Margaret Cronin Fisk in Detroit at

To contact the editor responsible for this story: Michael Hytha at

22 Responses

  1. Like Michigan, in California it’s coming down to one key issue, MERS NOT having an assignment of the Note from the Original Lender to MERS.

    “The assignment of the lien without a transfer of the debt was a nullity in law.”
    “A lien is not assignable unless by the express language of the statute.”

    “The note and mortgage are inseparable; the former as essential, the latter as an incident. An assignment of the note carries the mortgage with it, while an assignment of the latter alone is a nullity.”
    CARPENTER V. LONGAN, 83 U. S. 271 (1872), U.S. Supreme Court

    More info at

  2. Thank you ANONYMOUS!

    Amazing that the article I posted yesterday was written 4 YEARS AGO!!!

    “They” really did a good job of keeping that information away from homeowners…as they figured out how to steal their homes as quickly as possible…

    Ultimately “they” seem to live by one rule:

    “NUMBERS are MUCH more IMPORTANT than PEOPLE, ( even LYING about those numbers…).”

    I don’t recall that statement being in the Constitution…or any sacred scriptures, for that matter…

  3. uprootedone & ANONYMOUS, regarding your NBC video link posted in the beginning of this treat.


    They state in the video wrongful foreclosure, regulators investigating irregularities in paperwork, blah, blah.

    DAMN, they make it sound like paperwork screw-ups and errors.

    The just won’t mention the fraud created by the banks and Wall St. They don’t mention the fact that the paperwork errors are not errors but intentional fraud cover-up.

    Oh, this video mentions speed is essential to go thru with foreclosures. Jeepers, I wonder why? The sooner it’s done with and time goes by why then less and less will look into the mess.

    Remember, Obama campaigned on his presidency that we want to look to the future, rah rah go. Why, he doesn’t want to unravel the MBS mess, lets look to the future and forget about the past is what he is saying. And who got him elected – you better believe it was Wall St & the banks.

  4. carie,

    Believe the insurance issues are coming to light — many different types of insurance – and, we know that servicers routinely misapply payments. What does it matter that they put you in default (again) on subprime refinance before you default?? — you were already in false default!!

    Just after subprime mortgage closing — only servicing rights are actually transferred. It is not until this “loan” (not really loan) goes into default that they had to scurry about to try to make it appear that the fake “loan” actually went to some trust. This became particularly important because courts were already coming down stating the servicer is not the creditor.

  5. Who Owns The Loan?

    Before someone can lose their home in a foreclosure a plaintiff must prove that it’s actually the loan owner. In more than a dozen Ohio foreclosure cases Deutsche Bank said it owned various notes and mortgages. However, Boyko found in each case that the paperwork actually identified the original lenders as the loan owners and said nothing about Deutsche Bank.

    The problem is that the original lenders who created the loans — the lenders listed as the loan owners in public records — were not seeking to foreclose. Instead, it was Deutsche Bank that was taking homeowners to court and Deutsche Bank, said Boyko, had no grounds to foreclose because it did not own the loans or have any authority to foreclose.

    Given that borrowers make monthly payments and that the money ultimately goes to those who own the mortgages, the Boyko decision seems odd. Aren’t the loan owners the ones getting the monthly payments?

    It used to be that if you wanted a mortgage you went to a local lender such as a savings & loan association or a commercial bank. The lender actually owned the loan.

    The Secondary System

    However, the system changed with the development of the “secondary” market. Now local lenders could sell their loans to investors around the country. Big institutions, such as Fannie Mae and Freddie Mac, would buy local loans, but only if those loans met certain standards. The loans that could readily be sold on the secondary market were called “conforming” mortgages because they conformed to the requirements established by Fannie Mae and Freddie Mac.

    With the secondary system a local lender could make loans, sell those mortgages, replenish its capital with the money it got from selling, and then make more loans. More loans meant the lender could generate more fees and charges. More loans also meant more money was available for local loans, and that helped lubricate the local housing market.

    Within the secondary market Fannie Mae, Freddie Mac and others would create securities backed by mortgages. Those securities would be sold to investors worldwide. The securities sold well because home mortgages were believed to represent little risk and because Fannie Mae and Freddie Mac made certain guarantees. Since Fannie Mae and Freddie Mac were “government-sponsored enterprises” that could borrow directly from the U.S. Treasury, many investors thought mortgage-backed securities were just about risk-free.

    Fannie Mae and Freddie Mac are not the only ones packaging mortgages, however. Wall Street firms got into the act and began accepting loans that did not meet conforming loan standards — mortgages with little down, loans with “nontraditional” terms and supersized “jumbo” loans that neither Fannie Mae nor Freddie Mac would buy.

    In the past few years it would not be uncommon for a lender to put up capital to fund a loan. The loan would be marketed to borrowers by a mortgage banker or a mortgage broker who, essentially, was a salesman for the lender. To borrowers, the mortgage broker or the mortgage banker was their “lender,” however that was not usually the case. Instead, the loan was typically sold by the original lender to an “issuer” and borrowers would make payments to a “servicer.”

    The actual owner of the loan at this point was not the original lender, not the mortgage broker, not the mortgage banker nor the servicer or the issuer. Why? When the loan was sold to the issuer, the issuer took that one mortgage, packaged it with other loans, and created a private-label mortgage-backed security (MBS). In effect, the issuer sold the loan to the holders of the mortgage-backed security.

    Equitable Interest

    But those who invest in the MBS do not actually own the loan either. They have, perhaps, an “equitable interest” in the sense that they are entitled to interest from the mortgage payments and a return of their capital when the loan is sold, paid off or foreclosed.

    However, it could be that a single loan might wind up in several loan pools, each with a different level of investor risk — more risk would hopefully produce a higher level of return. Or, it could be that a loan is in one pool today and another pool tomorrow.

    In such circumstances, as lawyers might ask, who is the real party in interest, the party who actually owns the loan?

    “This court acknowledges the right of banks, holding valid mortgages, to receive timely payments,” said Boyko. “And, if they do not receive timely payments, banks have the right to properly file actions on the defaulted notes — seeking foreclosure on the property securing the notes. Yet, this court possesses the independent obligations to preserve the judicial integrity of the federal court and to jealously guard federal jurisdiction. Neither the fluidity of the secondary mortgage market, nor monetary or economic considerations of the parties, nor the convenience of the litigants supersede those obligations.”

    In other words, a borrower can only be foreclosed when the actual owner of the loan goes to court. In the cases seen by Boyko, the paperwork said the loan owners were various banks, not the trustee for the owners of a mortgage-backed security.

    What does it all mean?

    First, the Boyko decision could be stayed or over-turned by higher courts. It may have no standing in other districts. It could also be voided with new laws from Congress.

    While no one can predict how courts may rule, help for lenders, trustees and MBS investors from Washington is unlikely. The politics of the time — with an estimated two million homeowners facing foreclosure this year — make assistance from Capitol Hill improbable, regardless of PAC contributions.

    Second, Judge Boyko asked a simple question: If a borrower fails to pay their mortgage then who is hurt? It’s not the original lender because they sold the loan. It’s not servicers because they do not have title to the mortgage. It may not be an individual trustee if a single mortgage has been used to support several mortgage-backed securities. Lastly, since mortgage-backed securities can be sold with electronic speed, it may not be the investor who held a stake in one particular MBS 10 minutes ago.

    If the Boyko decision spreads to other districts and courtrooms, then issuers will have to tie specific loans to particular mortgage-backed securities. In the same way that real estate titles are recorded in official records, a similar system will be needed for loan documents. Such a system will support investor claims when borrowers default, but at the same time such a system will also prevent unjustified foreclosures and forfeitures.

    “Given the huge stakes in this matter, everyone benefits by knowing who actually owns individual loans,” says Jim Saccacio, Chairman and CEO at, the leading online marketplace for foreclosure properties. “There’s no doubt that some foreclosures can be avoided if only borrowers and loan owners communicated at the earliest possible moment. For such a situation to arise the name of the loan owner has to be disclosed in a way that’s easily accessible to borrowers, disclosure which is not common today.”


    Published originally by during November 2007 and posted with permission.

    Read more:

  6. Well, Marie, these were comments that he has made with regards to anybody who is trying to put them (Deutsche) at fault for properties in LA county that have become horribly uninhabitable…Mr.Gallagher says that the servicers are supposed to be taking care of the foreclosed properties!!!!!

  7. Please let me know who I need to contact to get in on this class action suit!!! I WANT IN ON THIS The Sheriff’s Sale for my home was Sept. 22, 2010. The paperwork for the sale I had to pay $10.00 for at the Kent County Clerks office because B of A refused to send me a copy (after I requested a copy of my entire mortgage file. The paperwork has MERS all over it. They don’t have the authority to foreclose on my home!!!
    Any contact information you can send me, I would appreciate!!!


    Is this a true statement:

    A loan that a servicer claims is owned by Deutsche bank is in actuality a non-existent loan because it was paid off by insurance.

  9. To Carrie: regarding your quote of deutsche bank spokesman gallegher’s disavowal of any interest in loan(s). Was he speaking only of your loan or was it a more general comment useful to others like myself who have been recipients of deutsche banks tender mercies?

    Context of statement? And when? Would be grateful for this info…


    Bank “A” assigns mortgage interest to MERS. Bank “B” using an employee of both MERS and Bank B assigns mortgage interest to itself who is the servicer and claim to be the beneficiary. .Again, something stinks.

  11. So, my question is:

    What will they try to do to me next—since I decided not to send them any more money for the bogus “trial mod”…am I going to get a sheriff at my door? I can’t find my property on…it used to be listed under “pre-foreclosure”, but now I can’t find it anywhere—which I guess is a good thing?

  12. This is getting “curiouser and curiouser”, as Alice in Wonderland would say—

    Get this—my “servicer” at IndyMac sends me the (signed and notarized IN TEXAS), “substitution of trustee” document in an email when I asked him to show me who owns my loan…and he says to me in the email:
    “This proves that Deutsche Bank owns your loan, and we are the servicer”…

    I then asked him about a public statement made by Deutsche bank spokesman Mr.John Gallagher where he said:

    “Deutsche acts as trustee and has an administrative role…but has no beneficial ownership, stake, or interest in the underlying mortgage loans”.

    Curiously, he has not responded…


    You’re welcome…

    Like you- and many others here… I must fight for what a believe in.

  14. BSE

    The question is — what are they assigning??

    Have said before — there is a big difference between assignment and “sale” — assignment is used is transfer of collection rights. “Sale” is the for the sale of the loan itself.

    Only problem is — courts view as the same. But, it is NOT the same.

  15. Bank “A” assigns interest to MERS. Bank “B” using an employee of both MERS and Bank B assign interest
    to itself who is the servicer..Something stinks. .

  16. uprootedone

    You are new to me — but, you seem to be right out front. Thank you for this video. And, thank you NBC.

    These are are not “mistakes” — but, instead, calculated fraud to to cover-up the fraudulent “loans” to begin with. There can be no correction of documents by loan mods — only a foreclosure — MAYBE – and ONLY MAYBE, will cover the fraud in mortgage title.

    Thanks again — uprootedone

  17. On Los Angeles news either last night or the night before, there was a case where the couple is being allowed to “possess the home” without owning the home because of the paperwork foul ups.

  18. This is good.

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