Can MERS Assign the Debt?

The answer is complicated.

On its face and on its own the answer is obvious: since MERS never has any ownership of the debt or the note, it cannot transfer either one. It specifically disclaims such interests on its website and all agreements in which it is a party. Since it has nothing to convey it conveys nothing even in a written instrument that says otherwise.

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But the real issue is whether (a) the debt has been transferred in some other way or (b) whether MERS could somehow execute a document that transferred the debt from another party to yet another party. Some courts have used a backwards of analysis stating that if an assignment were executed the debt must have been transferred. But that is clearly not what the law requires.

Keep in mind that all states basically hold that an assignment of mortgage without the debt means nothing.

Transfer of the note, with delivery, is often used as the basis for saying the debt has been transferred.  BUT that is true only if the transferor was in fact the owner of the debt. Confusion abounds here because a holder might well be able to successfully sue on the note without ever being able to enforce the mortgage. The rules are different. See  Article 3 vs Article 9 UCC. You don’t need to be the owner of the debt to collect on a note. But you do need to be the owner of the debt to enforce the mortgage.

So the answer is that there is no case I have ever seen where the MERS assignment was in fact a transfer of the debt. Accordingly the assignment, without extrinsic evidence, transferred nothing. The extrinsic evidence must be proof that the transferee paid value for the subject debt.

Receipt of the note may raise the presumption that the debt was transferred but that presumption, if it is applied, is rebuttable. If you demand to see the proof of valid paid for the debt and they can’t give it to you then the presumption is rebutted. Hence the case fails because the prerequisite to bringing the foreclosure proceeding was that the party named as bringing the claim actually had a claim.

Some people think this is all technical. It isn’t. It is doing exactly what the law is intended to prevent — using the courthouse as in instrument of fraud. Somebody should win this fight and I can’t think of a single legal or moral reason why it shouldn’t be the homeowner.

When you look at the encumbrance itself (mortgage or deed of trust) this gets even more interesting. If the document says it secures the debt, then it is in compliance with Article 3 UCC adopted as state law. If it says it secures the debt and the note then the reasonable interpretation is that ti secures the debt in accordance with the terms expressed in the note.

But where it often states that it secures the note only then the document does not facially comply with Article 3. It must be implied from extrinsic (parole) evidence that the debt was included. But that turns out to be a problem. Because the debt was often changed immediately from both an legal and equitable obligation owed to one person to an equitable obligation potentially to investors and a legal one potentially to the investment banker but in all events not the party who is NAMED as bringing the foreclosure action.

Hence neither the legal nor equitable owner of the obligation of the borrower is set to receive the remedy being applied in the courts in favor of conduits controlled by third party strangers.  As far as I can tell the way the courts handle this problem is by pretending it doesn’t exist. Back when judges looked over foreclosure documentation carefully, such split personalities would not have been tolerated without a lot of clear and certain explanation.


12 Responses

  1. Community Reinvestment Act. The fraud was massive. You don’t get anything for nothing. Souls were sold – without disclosure. Without knowledge by borrowers and investors. People were set up to take the fall. The very victims were set up to take the fall. .

    Charles — Ginnie Mae only an insurer — correct. They did not securitize. Freddie/Fannie securitized – Ginnie’s insured loans. .

    To all — the loans you got — were AFTER GSEs received report of default. Could be prior owner, could be at refinance, but under any case, the loan was not an asset on anyone’s balance sheet. And,in order for valid securitization — which is (FINANCE 101) simply the removal of the loan from ON balance sheet to OFF balance sheet – the loan MUST be on someone’s balance sheet to begin with. This never happened. It does not matter if guarantor, or investor — investor in WHAT?? The original balance sheet (Lender) matters – and the loans ain’t there. Were never there. .

    Freddie/Fannie/Ginnie were NEVER the original lender. They, and Ginnie were never Lenders. But, securitization requires an original Lender who shows as on balance sheet ASSET. No one can show this Thus, as Neil states over and over — securitization was false. Thank you Neil.

    So — all was faked securitization. Default debt cannot be securitized. . Europe discovered this first. No balance sheet — no securitization.

    Problem is — all was withheld. Anyone see the 10th anniversary of Rick Santelli? Telling people at stock market — DON”T PAY FOR NEIGHBORS” mortgage. He said push the people to foreclosure. Let good paying people pay. Don’t pay for your neighbors extra bathroom. Let them fall. (I am paraphrasing — but very close – see original link – replayed today). He was referring to a certain movement he promoted – the “Tea Party.” Rick and others — set the fate. Be seated when you watch this. I recall it well. .

    Really Rick?? What about the fraud?? Your bond stuff is good. Your take on the financial crisis — a disaster. More than a disaster – promoted fraud. Tenth anniversary of Rick’s ranting. See original link: And by the way — The Tea Party failed.

  2. I had or have the same bogus language in my mortgage. wherein it is stated that “…..MERS does hereby assign the mortgage, together with the note…..” . That’s all the court wants to see, is “facial validity”.
    Furthermore, a MERS MIN # has 18 numbers in it, the assignment only had 17 numbers. But they later issued a “corrective assignment of mortgage”, this one with a different entity and a MIN # with 18 numbers. The first one shouldn’t have been accepted at the recorder’s office, as it was invalid, but it was.

  3. Prior court testimony by MERS Pres/CEO RK Arnold, and later on, Wm Hultsman, they both testified that MERS has nothing to do with the mortgage notes, just the mortgage . Not sure at which deposition or court thisncame out in, but I’ve read it. May have been deposed by Jeff Barnes, he set 2 legal precedents in I believe Montana and Washington state which declared MERS to be illegal.

  4. Javagold if you look in the land recording around the country you will see tons of foreclosed properties that are owned by either Fannie and Freddie who have REO personnel listing these properties and even, in fact, a Fannie REO specialist in Shirene Hernandez is facing 40yrs for the illegal practices she was doing in kickback and purchasing some of the properties she handled!

    With the Holm v Wells and Freddie case that they could not provide the court with proof either owned the debt and a judge rule against them and granted $3 million judgment, also a case handled by a NY attorney won a similar case. Linda Tirelli was the NY attorney and she found Wells’s manual on handling these Notes that they did not have proof of ownership.

    In the cases were Washington Mutual Bank collapsed and JPMorgan was assigned these Fannie & Freddie loans there appears to be that lack of proof they purchased the loan even when there is a blank endorse Note which leads me to believe they were actually funding the closing, however, mortgage lending is not their mission but filling pools to sell MBS is the goal. This is the big difference with Ginnie as they cannot ever claim to have originated, buy or sell a single home mortgage loans, so with every single loan you understand that as long as you can prove the separation as in the WaMu Ginnie pooled loans that Wells was serving as it was published the transfer of all the files as Wells purchased the building housing the 1.3 million $140 billion in Fed Gov program loan on Jul 31, 2006, the fact that physical transferring to consummate the UCC3 procedure!

  5. Ok. Then how come I never see an assignment of mortgage for either Fannie and/or Freddie. And note endorsed in blank (not to Freddie) with a stamp signature of BOA robo signer Christine Schmidt.

    Been fighting for 10 years. Can’t believe the whole truth for all to understand has still not been revealed as of yet.

  6. Fannie and Freddie were not the property of the Fed Gov until they seized them Sept 7, 2008. The two GSE are different from Ginnie as they allegedly purchase the loans from the lenders and it the two in Fannie & Freddie that creates the MBS. What could have happen in cases were the two cannot show they purchased the loan is that they could have upfronted the monies to fund the loans. not having a trail that they purchase the loan after the fact.

    Ginnie Mae is different as it never does or can purchase a mortgage loan or sell one, and they are a insurer of the MBS only and not an investor. So the different from the other two is the other two would be able to be in title and you see in all the states county recording Fannie and Freddie as the “holder in due course”. Ginnie is never the :holder in dur course” pn a primary resident property as there never a sell of the debt to them!

  7. And what if — no longer MERS? But, still paying? That is, removed from MERS with no records? Next step into the unknown? How are records ever recovered? What and Who is the unknown?

    Charles — could be wrong, but my research shows Ginnie went to Freddie for securitization. Of course, never any “real” securitization” anyway. Thus, Java is right – unsecured.

    So what the heck was ever being transferred? That is the trillion dollar question. And, it is not going away. That is because it was never resolved in the first place. Can never give up. Even if lost house. Truth must be told. Dignity.

    To Neil – thanks for keeping all issues alive.

  8. How are Fannie and Freddie any different than Ginnie and how these debt collectors servicers able to fraudclose as the Plaintiff while Freddie and Fannie stay in the shadows ?????

    Im basically fighting BOA (originator and servicer) SLS (new servicer) the scumbag fraudclosure attorneys and Freddie Mac !!!!

  9. One of my arguments before the judge that MERS does not own anything so how can they assign it?

  10. Why not start with what we know for a fact and that is in the case of all with Ginnie Mae MBS pooled loans cannot have but the one owner of the loan, which is to follow the UCC3 where the blank enodrsed Note is relinquished to Ginnie Mae with a signed HUD11711A Release of Security Interest and through MERS only after the Security Interest is recorded at the local land recording office, then MERS does a “Trnasfer Beneficial Rights-Option 1” that list on the MERS Milestone report which act as a title transfer in the MERS system only.

    There is no turst or investor ownership of the FHA. VA or USDA loans that are attached to the Ginnie MBS and never are the debts purchased by Ginnie or investors who are insured at 100% of their initial principal investment.

    Ginnie Mae informs the world with its Loan Modifications Frequently Asked Question that it does not buy or sell mortgage loans or is invested in MBSs. The document also informs the world that VA recently introduce it’s HAMP and to see Circular 26-10-02!

    FDIC handling of the Washington Mutual Bank receivership was done so to hide the FDIC responsibility for the $300 billion bankrupt bank that the FDIC only had $45 billion in their insurance fund.

    So as FDIC Chair Sheila Bair had done with IndyMac and was servcing these loans before she sold them to now Treasury Secretary Mnuchin and his group after the Jul 11, 2008 failure. Bair should have realized the problem that as Indy stop existing how could the Ginnie pooled loans be called due when neither the FDIC, Ginnie or Mnuchin owned the debt?

    Now come the largest bank failure in the history of mankind which because of allowing the bank to transfer the mortgage servicing of 1.3 million FHA & VA loans on Jul 31, 2006, knowing the bank was having financial problem, with the issue of physically transferring of the blank Notes that have been hidden from the challenged of UCC9 because as the originator of the loans one does not have to provide proof of purchase because you extended the loan.

    Are we to believe that Ginnie did not realize what happen if WaMu went under? What Ginnie did realize it did not have a challenge in court because they had not purchased the debt, but if they had physical possess the homeowner had to first realize they were in a MBS and next get Ginnie to release that proof it a loan was entered into a MBS.

    Even as 95% of the of all Fed Gov loans are attached to a Ginnie Mae MBS, but 100% of the borrowers don’t realize they are a part of this post non-obligating pooling the the lender transacted between them and the investors.

    The FDIC is on the hook for part of those losses WaMu and other banks had, and FDIC put that obligation on the homeowner to repay the debt of WaMu from the money advances they took out against the securities not the mortgage loan which could not be sold or wanted by the investor who insurer for there investment of the securities to a 100% protection of principal investment unlike a property is worth what the market values it at and from 2008-2011 that was as low as 50% of its high value!

    Ginnie, Wells and FDIC are are colluding together to steal the properties of these Fed Gov loan borrowers!

  11. They are all Fraudclosures of UNSECURED debt.

  12. Keep in mind, however, it would not be a far-stretch of the imagination for an improper plaintiff or “zealous” attorney to make it appear as if MERS was the owner or holder of the note at some point in time (see e.g., Mtge. Elec. Registration Sys., Inc. v Coakley, 41 AD3d 674, 674 [2d Dept 2007]; citing UCC 3-204[1] [“The record shows that the promissory note was indorsed by First National over to the First National Bank of Nevada, then indorsed by First National Bank of Nevada in blank, and ultimately transferred and tendered to MERS. Therefore, at the time of the commencement of this action, MERS was the lawful holder of the promissory note”]).

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