NOTABLE QUOTE:
CONVEYANCE OF MORTGAGE LOANS; REPRESENTATIONS AND WARRANTIES
Section 2.01. Conveyance of Mortgage Loans.
As promptly as practicable after any transfer of a Mortgage Loan under this Agreement, and in any event within thirty days after the transfer, the Trustee shall (i) affix the Trustee’s name to each assignment of Mortgage, as its assignee, and (ii) cause to be delivered for recording in the appropriate public office for real property records the assignments of the Mortgages to the Trustee, except that, if the Trustee has not received the information required to deliver any assignment of a Mortgage for recording, the Trustee shall deliver it as soon as practicable after receipt of the needed information and in any event within thirty days.
From: Judy Long <puregoldmorgans@earthlink.net>
As a precursor to my thought of 1- 47 the following is important:
A lot of attorneys are afraid to sue MERS because they don’t understand HOW to use it.
Due to the secrecy surrounding MERS’ recordations, unless a court specifically ordered the data preservation company to cough up the documents and prove up the entire chain of title to its logical conclusion, the title to the property could be construed as “fatally defective” if the note and mortgage weren’t properly updated and recorded. Besides, if MERS-3 doesn’t have any assets, why would they be worth suing?
The improper use of the “official recordation system” that is tried and true in each county courthouse is the apparent cause of the cloud on the title, because proof of actual ownership interest is unknown. That brings us to the next proposed scenario:
The truth would not come out until the party holding title (you, the homeowner) to the property brings suit to “quiet” that cloud. In order for you as a homeowner to come to grips with your potential clouded title scenario; you may wish to examine the part of the process in understanding the role of the servicing lender and what will happen when you default on your mortgage loan. If MERS is named on the suit … conveniently … all of the other parties involved in your quiet title action will be tipped off by MERS. This is where your attorney can have a field day challenging every single assignment!
The servicing lender (the lender that takes your monthly mortgage payments) would then hire what is known in the business as a “foreclosure mill” (a group of attorneys that specialize in beating up homeowners in court by whatever means necessary). They will produce the minimal amount of documents they think are required to prove their case, including but not limited to, “lost note affidavits”, “lost instrument affidavits” and copies of recordations that are improperly notarized or affidavits that are blank or unsigned or improperly notarized; or affidavits and assignments that are dummied up to look like genuine articles or notes with allonges that are not properly affixed or indorsed.
Then they’ll assert to the judge that “the mortgage loan does in fact exist, Your Honor,
we just don’t have it here.”
As long as you the homeowner, or your attorney don’t object to these slipshod comments and half-baked documents; allowing this evidence to be admitted as “fact”, you will lose.
For the attorney defending the borrower, your ability to recognize “legitimate”
documents from those that aren’t becomes a “key” to winning. What’s worse is finding a
judge that thinks the lenders are never at fault, especially when they start ranting from the
bench that, “You’re just a deadbeat who wants his house free and clear!” This is a big
mistake of homeowners who take the system for granted as borrowers; but it also serves as a lesson to the egregious behavior committed against them by conduit mortgage brokers (REMICS).
1. Here, plaintiff seeks to quiet title by extinguishing IndyMac Bank F.S.B., MERS (Mortgage Electronic Registry System), IndyMac Bank MBS, Duetsche Bank National Trust and John Does 1 thru 1000 interest in the property as a remedy for fraud and the bifurcation of note and obligation. A court sitting in equity has jurisdiction to quiet title as a remedy for a fraudulent conveyance. See Hawkins v Dillman, 268 Mich 483, 488; 256 NW 492 (1934). Actions to quiet title are “equitable in nature.” MCL 600.2932(5).
2. A mortgage of land is a conveyance within the meaning of the recording acts. MCL 565.35; Stover v Bryant & Detwiler Improvement Corp, 329 Mich 482, 484; 45 NW2d 364 (1951).
3. MCL 440.9301 Law governing perfection and priority of security interests.
Sec. 9301. Except as otherwise provided in sections 9303 through 9306, the following rules determine the law governing perfection, the effect of perfection or nonperfection, and the priority of a security interest in collateral:
(a) Except as otherwise provided in this section, while a debtor is located in a jurisdiction, the local law of that jurisdiction governs perfection, the effect of perfection or nonperfection, and the priority of a security interest in collateral.
4. In Michigan Law, a mortgage which has been severed from the corresponding Note does not entitle the Mortgage Holder to collect on the indebtedness or to take possession of the real property. See also US Supreme Court Cases & Opinions > Volume 83 > CARPENTER V. LONGAN, 83 U. S. 271 (1872)
5. In Michigan, the essential [*3] elements of a valid contract are (1) parties competent to contract, (2) a proper subject matter, (3) a legal consideration, (4) mutuality of agreement, and (5) mutuality of obligation. Thomas v Leja, 187 Mich. App. 418, 422; 468 N.W.2d 58 (1991). Mutuality of agreement, commonly referred to as “a meeting of the minds,” requires a meeting of the minds on all the material facts in order to form a valid agreement. Kamalnath v Mercy Memorial Hosp Corp, 194 Mich. App. 543, 548- 549; 487 N.W.2d 499 (1992). Whether there is mutuality of agreement or “a meeting of the minds” is reviewed by an objective standard, viewing the expressed words of each party and their visible acts, rather than their subjective states of mind. Kamalnath, supra at 548. The time to incorporate desired terms and conditions into the settlement agreement is at the time that it is placed onto the record. Mikonczyk, supra at 350. Specific performance of a contract is an equitable remedy. Rowry v University of Michigan, 441 Mich. 1, 9; 490 N.W.2d 305 (1992)
6. MERS, a wholly owned subsidiary of MERSCORP, is a shell entity, which means MERS never holds these notes (again citing from the reported case of Mortgage Electronic Systems, Inc. v. Nebraska Department of Banking and Finance, 704 N.W. 2d. 884, 786 (2005) supra where MERS explains what it does), and means that Defendant MERS can’t legitimately claim it has lost notes or that they were ever in possession of any financial interest. Also, the Defendant MERS can’t legitimately file affidavits of lost notes or execute power of sale under the security instrument; and therefore, numerous courts have held it lacks standing when it can’t produce the original note or show that it holds it. In Mortgage Electronic Registration System, Inc. v. Southwest Homes of Arkansas (Ark. Sup.Ct. slip opinion March 23, 2009), where the Supreme Court of Arkansas held that MERS, which claimed to be both a nominee and beneficiary, had no interest in the Deed of Trust in question, was not a beneficiary despite language in the Deed of Trust stating it was, did not possess any rights as a lender, did not hold any legal title, and was therefore not entitled to be a party to an action where the lender, its principal, was a party.
7. MERS members decided it was too costly to pay recordation fees on loans that might be flipped numerous times. So, according to MERS, MERS was chosen as nominee for the lender and its assigns in these deeds of trust or mortgages, for the purpose of “immobilizing the mortgage lien” while transfers of the promissory notes and servicing rights could continue to occur without the expense of recordation” (MERS’ own explanation of what it does, from the reported case, Mortgage Electronic Systems, Inc. v. Nebraska Department of Banking and Finance, 704 N.W. 2d. 884, 786 (2005). This immobilization of the mortgage lien now makes it terribly difficult for the Plantiff to track the holder of his note because deeds of trust are no longer assigned, and therefore, new holders of the notes do not record assignments of the deeds of trust when they purchase mortgages. This, according to MERS, has saved their members in excess of $2.4 Billion in recording fees. And as such has reduced the income to local County Register of Deeds offices and cancelled any transparency of their actions which would be evident had the recordings took place properly in the County Register of Deeds offices.
8. The statute, MCL 600.3204; MSA 27a.3204 , clearly presupposes the existence of a lien on the property because, by its very definition, a mortgage is a lien on real estate securing payment for performance of an obligation. McKeighan v Citizens Commercial & Savings Bank of Flint, 302 Mich 666, 670; 5 NW2d 524 (1942); Foote v City of Pontiac, 161 Mich App 60, 65; 409 NW2d 756 (1987). But, when MERS “immobilized the mortgage lien” (by their own assertions) and due to case law, Plaintiffs alleges that the mezzanine lender, IndyMac bank F.S.B, who nominated MERS as “Nominee” , proceeded under both UCC Article 9 and Michigan UNIFORM COMMERCIAL CODE Act 174 of 1962 in bad faith. Additionally, MERS does not have an interest in the indebtedness as they did not contribute to the financial transaction and are acting solely as a “nominee” for the lender IndyMac F.S.B. Therefore, Plaintiff is able to bring a claim under both Michigan Law and UCC §9-625 (in addition to any breach of contract claims and lender liability claims, each of which are outside the scope of this article) to enforce the provisions of UCC §1-203.
§ 1-203. Obligation of good faith.
Every contract or duty within this Act imposes an obligation of good faith in its performance or enforcement.
9. The Michigan Supreme Court has held: In natural justice and equity, the principle right of the mortgage is the money when due and the right to the land is only as security for the payment of the money, the debt being merely collaterally secured by the mortgage on real estate Dougherty V. Randall, 3 Mich. 587, 587 (1855). Also see: Ginsberg V. Capital City Wrecking Co., Michigan 712, 717, 2N.W.2d 892(1942), Ladue v. Detroit & Milwaukee Railroad Co., 13 Mich. 380 (1865).
10.MERS is claiming only to hold Legal title in the Security Instrument, and not both the indebtedness and legal title. Legal title secures the indebtedness. Therefore, one cannot exist without the other. Dougherty V. Randall, 3 Mich. 587, 587 (1855). Also see: Ginsberg V. Capital City Wrecking Co., Michigan 712, 717, 2N.W.2d 892(1942).
included is reference to professor Christopher L. Peterson’s writings on MERS and the secondary market as a source for the court to understand what MERS is and how it operates. (R. I/179) Christopher L. Peterson, Associate Professor of Law, University of Florida, testified at a hearing before the U.S. Senate Committee on Banking, Housing, and Urban Affairs Subcommittee on Securities, Insurance, and Investment and stated: (1) MERS is merely a document custodian. . . . The system itself electronically tracks ownership and servicing rights of mortgages. . . .The parties obtain two principal benefits from attempting to use MERS as a “mortgagee of record in nominee capacity.” First, under state secured credit laws, when a mortgage is assigned, the assignee must record the assignment with the county recording office, or risk losing priority vis-à-vis other creditors, buyers, or lienors. Most counties charge a fee to record the assignment, and use these fees to cover the cost of maintaining the real property records. Some counties also use recording fees to fund their court systems, legal aid organizations, or schools. In this respect, MERS’ role in acting as a mortgagee of record in nominee capacity is simply a tax evasion tool. By paying MERS a fee, the parties to a securitization lower their operating costs. The second advantage MERS offers its customers comes later when homeowners fall behind on their monthly payments. In addition to its document custodial role, and its tax evasive role, MERS also frequently attempts to bring home foreclosure proceedings in its own name. This eliminates the need for the trust—which actually owns the loan—to foreclose in its own name, or to reassign the loan to a servicer or the originator to bring the foreclosure.
11. R.K. Arnold, Senior Vice President, General Counsel and Secretary of Mortgage Electronic Registration Systems, Inc., stated:
MERS® will act as mortgagee of record for any mortgage loan registered on the computer system MERS® maintains, called the MERS® System. It will then track servicing rights and beneficial ownership interests in those loans and provide a platform for mortgage servicing rights to be traded electronically among its members without the need to record a mortgage assignment in the public land records each time. . . .
Members pay annual fees to belong and transaction fees to execute electronic transactions on the MERS® System. . . . A mortgage note holder can sell a mortgage note to another in what has become a gigantic secondary market. . . . For these servicing companies to perform their duties satisfactorily, the note and mortgage were bifurcated. The investor or its designee held the note and named the servicing company as mortgagee, a structure that became standard. . . . When a mortgage loan is registered on the MERS® System, it receives a mortgage identification number (MIN). The borrower executes a traditional paper mortgage naming the lender as mortgagee, and the lender executes an assignment of the mortgage to MERS®. Both documents are executed according to state law and recorded in the public land records, making MERS® the mortgagee of record. From that point on, no additional mortgage assignments will be recorded because MERS® will remain the mortgagee of record throughout the life of the loan. . . . MERS® keeps track of the new servicer electronically and acts as nominee for the servicing companies and investors. Because MERS® remains the mortgagee of record in the public land records throughout the life of a loan, it eliminates the need to record later assignments in the public land records. Usually, legal title to the property is not affected again until the loan is paid and the mortgage is released.
(R.K. Arnold, Yes, There is Life on MERS, Prob.& Prop., Aug. 1997, at p.16;
http://www.abanet.org/genpractice/magazine/1998/spring-bos/arnold.html)
12.Thus, back in 1997 it was admitted by R.K. Arnold, Senior Vice President, General Counsel and Secretary of the Mortgage Electronic Registration Systems, Inc , that “For these servicing companies to perform their duties satisfactorily, the note and mortgage were bifurcated”
13.Given that the attached certified copy of the Oakland County Register of Deeds copy of mortgage contains a MIN number is validation that the mortgage was bifurcated.
14. On Nov 26, 2010 the Plantiff was informed by IndyMac F.S.B. that “Your loan is pooled in the following Mortgage Backed Security: Indx 2006-ar4” ( see attached). When this took place on 3/31/2006 the note (obligation) and deed (security instrument) were forever separated. This was not only done by the use of MERS and bifurcation but also by the derecognition of assets required by the various actors.
15.The Financial Accounting Standards Board (FASB) is located in Norwalk, Connecticut and has been in around since 1973. This organization is officially recognized by the Securities& Exchange Commission (SEC) as well as the American Institute of Certified Public Accountants. FASB Statement No. 166 requires ”funds” to be paid as part of the “consideration” involved as an element of the contract in the “ transfer of a financial asset”. Thus, logic would dictate that the actors involved in the transfer of assets (obligation) to the bond offering followed these (FASB) rules and as such have no “standing“ as “Holder in Due Course” of the obligation. The only logical claim otherwise would require a thorough disclosure of all financial transactions regarding this obligation from all actors in an evidentiary hearing. The contents of which would then need examination by an independent auditor for validation purposes.
16.The processes by which the actors were required to operate within the constraints of the PSA, GAAP, FASB , SEC and IRS regulations further substantiates the bifurcation of the Note (obligation) from the security (Deed). The following is an attempt to explain for the court as to how this took place by IndyMac Bank F.S.B., IndyMac MBS, Duetsche Bank National Trust and Lehman Brothers. These steps are outlined by the PSA (Pooling and Service Agreement) for IndyMac INDX Mortgage Loan Trust 2006-AR4 (see attached). These actors are a party to this PSA and are governed by the SEC (Securities Exchange Commission) and IRS (Internal Revenue Service) rules in order to maintain it as a REMIC (Real Estate Mortgage Investment Conduit) and the appropriate tax status.
17.As an overview as to how a mortgage securitization works, the following applies: (see attached)
Statement of Cameron L. Cowan Partner Orrick, Herrington, and Sutcliffe, LLP On behalf of the American Securitization Forum
Before the Subcommittee on Housing and Community Opportunity Subcommittee on Financial Institutions and Consumer Credit United States House of Representatives
Hearing on Protecting Homeowners: Preventing Abusive Lending While Preserving Access to Credit November 5, 2003
Excerpts)
In most cases, the originator of the asset anticipates a regular stream of payments. By pooling the assets together, the payment streams can be used to support interest and principal payments on debt securities. When assets are securitized, the originator receives the payment stream as a lump sum rather than spread out over time.
To initiate a securitization, a company must first create what is called a special purpose vehicle (SPV) in the parlance of securitization. The SPV is legally separate from the company, or the holder of the assets. Typically a company sells its assets to the SPV. The payment streams generated by the assets can then be repackaged to back an issue of bonds. Or, the SPV can transfer the assets to a trust, which becomes the nominal issuer. In both cases, the bonds are exchanged with an underwriter for cash. The underwriter then sells the securities to investors. (emphasis added)
As part of the Tax Reform Act of 1986, Congress created the Real Estate Mortgage Investment Conduit (REMIC) to facilitate the issuance of CMOs (collateralized mortgage obligations). Today almost all CMOs are issued in the form of REMICs. In addition to varying maturities, REMICs can be issued with different risk characteristics. REMIC investors—in exchange for a higher coupon payment—can choose to take on greater credit risk. Along with a simplified tax treatment, these changes made the REMIC structure an indispensable feature of the MBS market. Fannie Mae and Freddie Mac are the largest issuers of this security.
Asset Transfer or the “True Sale”
In the vast majority of securitizations, it is critical that the transfer of assets from the originator to the SPV is legally viewed as a sale, or “true sale”. The proceeds of the securities are remitted to the originator as the purchase price for the assets. If the asset transfer is not a “true sale,” investors are vulnerable to claims against the originator of the assets. The cash flows backing the securities or the assets themselves could be ruled a part of the originator’s estate and used to satisfy creditors’ claims if a true sale did not occur. Legally separating the assets also protects the originator.
Special Purpose Vehicle and the Trust
The SPV can either be a trust, corporation or form of partnership set up specifically to purchase the originator’s assets and act as a conduit for the payment flows. Payments advanced by the originators are forwarded to investors according to the terms of the specific securities. In some securitizations, the SPV serves only to collect the assets which are then transferred to another entity—usually a trust—and repackaged into securities. Individuals are appointed to oversee the issuing SPV or trust and protect the investors’ interests. The originator, however, is still considered the sponsor of the pool.
Underwriter
Underwriters — usually investment banks — serve as intermediaries between the issuer (the SPV or the trust) and investors. Typically, the underwriter will consult on how to structure the ABS and MBS based on the perception of investor demand. The underwriter may, for example, advise the SPV to issue different tranches each with specific characteristics attractive to different segments of the market. Underwriters also help determine whether to use their sales network to offer the securities to the public or to place them privately. Perhaps most importantly, underwriters assume the risk associated with buying an issue of bonds in its entirety and reselling it to investors. (emphasis added)
Financial institutions that realize the full value of their loans immediately can turn around and re-deploy that capital in the form of a new loan.
Flexibility for the Originator
Securitization also benefits the financial institution or corporation that originates the securitized asset. Without securitization, a bank making a home loan usually would hold that loan on its books, recognizing revenue as payments are made over time. To realize the value of the loan immediately, the bank can sell the whole loan to another institution, though this is generally not economical unless the loan is very large. The more efficient option is to pool similar loans together, as discussed above, and enter into a securitization transaction.
Originators realize another benefit from securitization as the transfer of the asset to an SPV removes it from the firm’s balance sheet. This can help the originator improve certain measures of financial performance such as return-on-assets (ROA). A way to gauge a firm’s efficiency, ROA tells observers how many dollars are earned for every dollar of assets. Moving an asset off of the balance sheet while simultaneously increasing income has a positive effect on ROA and demonstrates to investors a more efficient use of capital. Banks realize a unique advantage from securitization. Removing loans from their balance sheet can lower regulatory capital requirements, or the amount and type of capital banks must hold given the size of their loan portfolio, to reflect lowered risk.
18.Based on the above explanation of how a securitization process works, along with the applicable PSA for IndyMac INDX Mortgage Loan Trust 2006-AR4, it is easy to ascertain that the current “HOLDER in DUE Course” of the obligation can only be the investors who purchased the bond offering. And based on the conversion of the debt obligation to a bond offering, which in and of itself is a “NO RECOURSE” negotiable instrument as outlined in the bond offering Procpectus, there has been a separation of the security and the obligation. This is in direct violation of CARPENTER V. LONGAN, 83 U. S. 271, “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.” In Michigan Law, a mortgage which has been severed from the corresponding Note does not entitle the Mortgage Holder to collect on the indebtedness or to take possession of the real property. Legal title secures the indebtedness. Therefore, one cannot exist without the other. Dougherty V. Randall, 3 Mich. 587, 587 (1855). Also see: Ginsberg V. Capital City Wrecking Co., Michigan 712, 717, 2N.W.2d 892(1942)
19.The Plantiffs obligation, from prior to its inception, was destined for a transition to a Mortgage Backed Security. This was never disclosed. It was never conveyed that the obligation was going to be converted to bond and forever separated from the security (Title) that Plantiff gave as collateral. It was never disclosed that future assignments and sales would not be recorded in the Oakland County Register of Deeds office. It was never disclosed that the lending institution (IndyMac Bank F.S.B.) had been involved in this practice for several years prior to Plantiffs signing of the note and that all the actors were already in place. It is quite possible, given the number and frequency of the MBS offerings by IndyMac bank, that this loan was a “ table funded loan “, where the lender never even put up any funds and the loan was prefunded by the bond offering. This “prefunding” being something that is addressed in the Prospectus issued by IndyMac F.S.B. and IndyMac MBS.
20.Based on the fact that the obligation was sold into the IndyMac INDX Mortgage Loan Trust 2006-AR4 between 3/1/2006 and 3/31/2006, according to SEC filings, and prior to Plantiffs first scheduled loan payment due on 4/1/2006, it is easy to surmise the intent was in-place prior to closing of the obligation.
21.Given the sequence with which Plantiffs obligation was transferred, by the various actors involved in the bond offering of the IndyMac INDX Mortgage Loan Trust 2006-AR4, it is easy to apply the Step-transaction doctrine to see that this was the intent from the very beginning and should have been disclosed.
i. Step-transaction doctrine is a principle applicable to Taxation laws. According to this principle effect should be given to the substance, rather than the form, of a transaction, by ignoring for tax purposes steps of an integrated transaction that when taken separately are without substance. In short, the tax liability should be determined by viewing the transaction as a whole, disregarding one or more non substantive, intervening transactions taken to achieve the final result. This doctrine expresses the familiar principle that in applying the income tax laws, the substance rather than the form of the transaction is controlling. The U.S. Supreme Court has expressly sanctioned the step transaction doctrine in many cases, noting that interrelated yet formally distinct steps in an integrated transaction may not be considered independently of the overall transaction.
ii. Courts generally enunciate three basic tests that define the criteria upon which application of the step transaction doctrine applies–the interdependence test, the end result test, and the binding commitment test. The interdependence test requires an inquiry as to whether the steps were so interdependent that the legal relations created by one transaction would have been fruitless without a completion of the series. The end result test examines whether it appears that separate transactions were really component parts of a single transaction intended from the outset to be taken for the purpose of reaching the ultimate result. The binding commitment test examines whether there was a binding commitment to undertake the later step in a series of transactions. [Falconwood Corp. v. United States, 422 F.3d 1339 (Fed. Cir. 2005)]
22.Because of the IRS rules, regulations and Taxation laws relating to REMIC’s it is a necessity on the part of the various actors in the securitization process that there must be a derecognition of the assets (obligation) and thus a TRUE sale of the obligation. This is also a requirement of General Acceptable Accounting Practices ( GAAP ) as well as FASB Statement No.140.
23.As issued by Financial Accounting Standards Board
of the Financial Accounting Foundation
Statement of Financial Accounting Standards No. 140
Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities
i. Derecognition is the removal of a previously recognized financial asset or liability from an entity’s balance sheet. You should derecognize a financial asset if either the entity’s contractual rights to the asset’s cash flows have expired or the asset has been transferred to a third party (along with the risks and rewards of ownership). If the risks and rewards of ownership have not passed to the buyer, then the selling entity must still recognize the entire financial asset and treat any consideration received as a liability.
24.GAAP will permit either:
1.) a direct pledge of the note to create a bond.
2) The sale of the note
3) tender of the note for other consideration.
In explanation:
1) alleges the note is lost to Obligee custodial or bailee
2) The note is lost to the Purchaser.
3) Alleges the note is registered into another recognized marketable shape of form …..
25.For #3 (tender of the note for other consideration) you need a national recording system or a means for mortgage registrations into an electronic registry citing ownership or a “Mortgage Electronic Registry System”.
26.Courts around this country are clearly recognizing that MERS is not an owner of the promissory note and that it is also only a mortgagee in name alone and has no beneficial interest in the mortgage instrument. Landmark National Bank v. Kesler, 216 P.3D 158 (Kansas, 2009); Mortgage Electronic Registration System, Inc. v. Southwest Homes of Arkansas, 08-1299 (Ark. 3/19/2009) (Ark.,2009) MERS own website says as much. Therefore, the assignment of mortgage from MERS to any other actor could not transfer an interest in the promissory note; it could not even transfer an enforceable interest in the mortgage instrument.
27.One hundred and thirty-nine years ago, the U.S. Supreme Court recognized that the mortgage instrument is inseparable from the promissory note. Carpenter v. Longan, 16 Wall. 271, 83 U.S. 271, 21 L.Ed. 313 (1872) That was necessary to ensure that title to property could be deraigned. However, MERS is a product of the past two decades and was designed to privatize recorded mortgages in order to avoid the payment of taxes upon the recording of assignments of mortgage. The design of bifurcating the mortgage instrument from the promissory note is not based on law and it impairs the historical ability to deraign title. The logical conclusion of bifurcating the mortgage instrument by MERS is that it renders a Title “clouded”, as the promissory note is no longer secured by that mortgage instrument. What they have sown, they should reap.
28.In Stuyvesant Corp. v. Stahl, 62 So.2d 18, 20 (Fla., 1952), the Florida Supreme Court stated:
The rule is settled in this State that a principal is bound by the acts of his agent. The authority of the agent may be real or it may be apparent and the public may rely on either unless in the case of apparent authority the circumstances are such as to put one on inquiry. The agent’s authority may be conferred by writing, by parol, or it may be inferred from the related facts of the case. (Cites omitted)
The Arkansas Supreme Court came to the same conclusion in Mortgage Electronic Registration System, Inc. v. Southwest Homes of Arkansas, 08-1299 (Ark. 3/19/2009) (Ark., 2009)(At page 7)
29.Assertions have been made that E-Sign (Electronic Signatures in Global Networking) and UETA (Uniform Electronic Transaction Act) allow for a negotiable instrument to be in electronic form. This electronic negotiable instrument is the item that is commonly held in electronic digitized format residing in a computer and offered up to the secondary market as the “negotiable instrument”. E-Sign and UETA only allow for “Electronic Signatures” and both Acts exclude most of the UCC Articles including Article 3 & 9. Therefore many of the secondary markets securities contain electronic negotiable instruments and unperfected security instruments
However, in their own PSA, the actors claim to follow UCC Articles.
30. From Schedule III
INDYMAC MBS, INC.
MORTGAGE PASS-THROUGH CERTIFICATES,
SERIES 2006-AR4
Representations and Warranties as to the Mortgage Loans
(40) The Pooling and Servicing Agreement creates a valid and continuing “security interest” (as defined in Section 1-201(37) of the UCC) in each Mortgage Note in favor of the Trustee, which security interest is prior to all other liens and is enforceable as such against creditors of and purchasers from the Depositor. Each Mortgage Note constitutes “promissory notes” (as defined in Section 9-102(a)(65) of the UCC).
31.One only has to look at the Uniform Commercial Code – Article 9 to understand the meaning of Perfection. It is commonly taught that Perfection establishes “Priority Rights” as to subsequent purchasers. What is overlooked is that Article 9 also provides the guidance on “Lien Perfection”. Article 9, itself, relinquishes authority to the local laws of jurisdiction in defining what is required for the perfection of a lien. If perfection is not complied in accordance with the laws of the local jurisdiction then there is “No” perfected lien. Bifurcation negates any possibility of “Perfection”.
32.Article 3 in conjunction with Article 9 defines the legal requirements to determine what would be a “Secured Indebtedness”: without a “Valid Perfected Lien” there can be no “Secured Indebtedness”. Failure to maintain perfection of the “Security Instrument” would render a “Secured” indebtedness to be “Unsecured”. The author agrees that a “Valid” security instrument follows a “Valid” negotiable instrument and such understanding is embedded in the law and supported by many court opinions. What is being presented to the courts in this day of economic disaster is a “Security Instrument” in which “Perfection” has been lost by failure to follow the Articles and the local laws of jurisdiction and claims are being made that this now “Unperfected” lien is following the “negotiable instrument” and the court is accepting these lies.
33.Promissory Notes have to be negotiable instruments under UCC Article 3 to allow for 3rd party negotiation.
§ 3-308. PROOF OF SIGNATURES AND STATUS AS HOLDER IN DUE COURSE.
(a) In an action with respect to an instrument, the authenticity of, and authority to make, each signature on the instrument is admitted unless specifically denied in the pleadings.
It is the Plaintiffs contention, and thus pleaded, given the recent acts of fraud committed on various courts around the country by the submission of falsified documents, that have been well documented in both the media and court citations, that all documents presented by the defendants will be objected to, and will require validation by an outside independent agency through a proper forensic analysis ( carbon dating, handwriting analysis, finger print analysis, chemical composition analysis, xerographic dating, etc.) prior to being accepted.
It is the opinion of the Plaintiff that the defendants have willfully destroyed the Original Wet Ink document. It is the opinion of the Plaintiff that this was done to ensure ease of transfer/ assignment by the nominee MERS in an electronic format as described by MERS itself. However, offering a copy of a “negotiable instrument” does not carry the same security. It would be akin to coping a $20 bill and offering it as a “negotiable instrument”. It is up to the defendant to produce the ORIGINAL WET INK document in court. Fake is not negotiable.
34.As for the “Negotiable Instrument”, the Articles only allow for a written paper instrument. When promissory notes are converted from paper to electronic in many cases the paper promissory note was destroyed. An intentional voluntary act such as destruction is discharge of the debt obligation, UCC Article 3, 3-604.
§ 3-604. DISCHARGE BY CANCELLATION OR RENUNCIATION.
(a) A person entitled to enforce an instrument, with or without consideration, may discharge the obligation of a party to pay the instrument (i) by an intentional voluntary act, such as surrender of the instrument to the party, destruction, mutilation, or cancellation of the instrument, cancellation or striking out of the party’s signature, or the addition of words to the instrument indicating discharge, or (ii) by agreeing not to sue or otherwise renouncing rights against the party by a signed record.
35.Duetsche Bank National Trust is acting as TRUSTEE and the MASTER Servicer of the REMIC (Real Estate Mortgage Investment Conduit) by definitive statement in the PSA with a Master REMIC # 36-458790 (I.R.S. Employer Identification No.) . A “conduit” by its own definition means that it is a pass thru entity and doesn’t hold anything. Failure to follow these IRS rules could result in severe tax penalties for having properties on their books and not reporting the associated income from them. Duetsche Bank National Trust acting as TRUSTEE also failed to abide by the regulations of the PSA as to recordings. ( see following)
Filed On 4/17/06 4:15pm ET · SEC File 333-127556-26 · Accession Number 905148-6-3334
CONVEYANCE OF MORTGAGE LOANS; REPRESENTATIONS AND WARRANTIES
Section 2.01. Conveyance of Mortgage Loans.
As promptly as practicable after any transfer of a Mortgage Loan under this Agreement, and in any event within thirty days after the transfer, the Trustee shall (i) affix the Trustee’s name to each assignment of Mortgage, as its assignee, and (ii) cause to be delivered for recording in the appropriate public office for real property records the assignments of the Mortgages to the Trustee, except that, if the Trustee has not received the information required to deliver any assignment of a Mortgage for recording, the Trustee shall deliver it as soon as practicable after receipt of the needed information and in any event within thirty days.
36.As of 3/31/2011 the only registered mortgage on file at the Oakland County Register of Deeds office is the one between Plantiffs and IndyMac Bank F.S.B. dated 2/27/2006 as evidenced by the certified copies attached.
37. My obligation followed the path to securitization of IndyMac Bank F.S.B. selling to and being paid by IndyMac Bank MBS. IndyMac Bank MBS selling to and being paid by Deutsche Bank National Trust. Deutsche Bank National Trust selling to and being paid by Lehman Brothers. Lehman Brothers selling to and being paid by the investors (purchasers) of the “NO RECOURSE” bond offering known as IndyMac INDX Mortgage Loan Trust 2006-AR4. Each of these steps required a Derecognition under both GAAP and FASB Statement No. 140 of the obligation.
38.In all steps of the transaction, as outlined by the PSA (Pooling and Service Agreement) that these actors are a party to and are governed by the SEC and IRS rules in order to maintain an REMIC and the appropriate tax status, the obligation was paid in full. The IndyMac INDX Mortgage Loan Trust 2006-AR4 PSA thus shows that the only legitimate “holder in due course” is the purchasers of the bond offering.
39.As to the assignment of the security (title), it is “clouded” by the lack of transparency by which MERS operates. If, the actors had followed their PSA it could be logically surmised that it was assigned to Deutsche Bank National Trust. However, since there is a failure by the defandats to follow their own PSA, there have been no filings in the Oakland County Register of Deeds office to show this. Therefore it is impossible to ascertain who may claim an interest in the title. As such they have not acted in “good faith’ and are in violation of provisions of UCC §1-203.
40.To prove actionable fraud, a plaintiff must prove: (1) that the defendant made a material representation; (2) that the representation was false; (3) that the defendant knew that the representation was false or that he recklessly made a positive assertion without knowledge of its truth; (4) that the defendant made it with the intention that the plaintiff should act upon it; (5) that the plaintiff acted in reliance upon it; and (6) that the plaintiff suffered injury as a result of his reliance. Scott v Harper Recreation, Inc, 444 Mich 441, 446 n 3; 506 NW2d 857 (1993).
Generally, actionable fraud must be predicated on a statement relating to a past or existing fact. Samuel D Begola Services, Inc v Wild Bros, 210 Mich App 636, 639; 534 NW2d 217 (1995).
However, Michigan also recognizes fraud in the inducement, which occurs when a party materially misrepresents future conduct under circumstances in which the assertions may reasonably be expected to be relied upon and are relied upon. Id. Fraud in the inducement does not render a contract void, but merely voidable at the election of the defrauded party. Id. at 640.
41. Excerpts from the Prospectus shows dates for Mortgage loan payments:
From the Prospectus · Rule 424(b)(5)
Document/Exhibit Description Pages Size
1: 424B5 Indymac Indx Mortgage Loan Trust 2006-Ar4 212 1,080K
With the PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED FEBRUARY 27, 2006)
$1,504,469,000
(Approximate)
INDYMAC MBS, INC.
DEPOSITOR
[INDYMAC BANK LOGO]
SPONSOR, SELLER AND SERVICER
INDYMAC INDX MORTGAGE LOAN TRUST 2006-AR4
ISSUING ENTITY
DISTRIBUTIONS ARE PAYABLE MONTHLY ON THE 25TH DAY OF EACH MONTH, BEGINNING
APRIL 25, 2006
The following is contained
Monthly Payment Adjustments
The month of the earliest first payment date, earliest stated maturity date and latest stated maturity date of any Mortgage Loan is set forth
in the following table:
Earliest First Earliest Stated Latest Stated
Payment Date Maturity Date Maturity Date
————– ————— ————-
August 1, 2005 July 1, 2035 April 1, 2046
As of the Cut-off Date, none of the Mortgage Loans were delinquent 30 days. None of the Mortgage Loans have been more than one payment delinquent in the last 12 months. No Mortgage Loan was subject to a buydown agreement.
S-30
42.The questions that beg to be asked are; 1) Since the loan with the earliest payment to the trust was on 8/1/2005, 6 months prior to Plaintiff’s Mortgage, why wasn’t it revealed to Plaintiff at closing that the obligation was intended to be put in a MBS? Was there fraud committed at the closing by this failure to disclose?
43.The above steps clearly show that fraud was perpetrated from the very beginning. There was NO disclosure as to the intent of IndyMac bank F.S.B. ( sponsor, seller and servicer ) to sale the loan and assign the Deed to IndyMac Bank MBS ( a bankruptcy remote shell company ). Then IndyMac Bank MBS ( SPV and depositor ) sold the loan and assigned the deed to Deutsche Bank Trust (trustee ). The trustee then repackaged several thousand loans together and sold them as a BOND offering to Lehman Brothers ( Underwriter ). When this was done the obligation (note) was separated from the security (deed) and thus unperfected. Lehman Brothers then made the offering of sale of the “NO RECOURSE” bond available to the market place. At that point it was sold to several entities which IndyMac MBS was required to disclose to the SEC ( Securities and Exchange Commission). The last of which was filed 10 months after the bond offering on 1/17/2007 when they filed a 15D form with the SEC stating the number of holders of the $1.5 Billion bond offering had dropped to less than 30 entities and didn’t require any further disclosure to the SEC. These investors, by all rights of logic, would now be the “Holder in Due Course” of the obligation minus of course the security due to the separation committed by the actors in the PSA.
44.Harm has been committed on the Title to Plaintiffs property in that it has been “clouded” by the actions of these actors. Through the use of MERS and its associated secrecy the actors have concealed their actions. They have failed to pay proper fees to the County Register of Deeds as they assigned and sold Plaintiffs note and obligation. They have failed to maintain a “PERFECTED LIEN”, and by the very fact of the methodology of the PSA they knew from prior to the inception, that they were going to bifurcate (separate) the note from the obligation and were going to hide this fact behind a wall of secrecy known as MERS. And, Plaintiff believes, fraud was committed by IndyMac Bank F.S.B. for failure to disclose the known actions which they were going to follow with the mortgage and the bifurcation of the note and obligation that was going to take place prior to the first loan payment.
45.And as stated before, the action is a local jurisdiction action
MCL 440.9301 Law governing perfection and priority of security interests.
Sec. 9301. Except as otherwise provided in sections 9303 through 9306, the following rules determine the law governing perfection, the effect of perfection or nonperfection, and the priority of a security interest in collateral:
(a) Except as otherwise provided in this section, while a debtor is located in a jurisdiction, the local law of that jurisdiction governs perfection, the effect of perfection or nonperfection, and the priority of a security interest in collateral
46.It is the request of the Plantiff to have the TITLE to the property located at 1867 Pettibone Lake Rd, Highland, Michigan 48356, with a property description of T3n, R7E, SEC35, of S 5 ACRES of N 25 ACRES of NW 1/4 of NW 1/4 5.0A and a tax ID of 11-35-101-005 located in Oakland County Michigan and under the jurisdiction of the local court and property laws to be QUIETED. This request is based on the sited information of bifurcation, note derecognition and fraud perpetrated on the Plantiff by the Defendants and their violation of BLACK LETTER LAWS of both Michigan and the U.S. Supreme Court. In Michigan Law, a mortgage which has been severed from the corresponding Note does not entitle the Mortgage Holder to collect on the indebtedness or to take possession of the real property. Legal title secures the indebtedness. Therefore, one cannot exist without the other. Dougherty V. Randall, 3 Mich. 587, 587 (1855). Also see: Ginsberg V. Capital City Wrecking Co., Michigan 712, 717, 2N.W.2d 892(1942). Again according to CARPENTER V. LONGAN, 83 U. S. 271, “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.”
47. 1) Subprime Mortgage Market Turmoil: Examining the Role of Securitization,
http://banking.senate.gov/public/indeX
Securities Trust
Pooling and Servicing Agreement
Depositor – Master Servicer – Trustee
POOLING AND SERVICING AGREEMENT
ASSET-BACKED PASS-THROUGH CERTIFICATES
SECTION 2.01. Conveyance of Mortgage Loans. excerpt (vi)
The Master Servicer (in its capacity as Seller) shall promptly (and in no event later than thirty (30) Business Days, subject to extension upon a mutual agreement between the Master Servicer and the Trustee, following the later of (i) the Closing Date, (ii) the date on which the Seller receives the Assignment from the Custodian and (iii) the date of receipt by the Master Servicer of the recording information for a Mortgage) submit or cause to be submitted for recording, at no expense to the Trust Fund or the Trustee, in the appropriate public office for real property records, each Assignment
referred to in Sections 2.01(iii) and (iv) above and shall execute each original Assignment referred to in Section 2.01(iii) above in the following form: “Deutsche Bank National Trust Company, as Trustee under the applicable agreement.”
SECTION 2.01. Conveyance of Mortgage Loans. (iii) & (iv)
(iii) an original Assignment assigned in blank, without recourse; (iv) the original recorded intervening Assignment or Assignments showing a complete chain of assignment from the originator to the Person assigning the Mortgage to the Trustee as contemplated by the immediately preceding clause (iii) or the original unrecorded intervening Assignments;
4/04/06 Indymac Mbs Inc 424B5 Prospectus
Assignment of the Mortgage Loans
Pursuant to the pooling and servicing agreement, on the closing date the depositor will assign without recourse to the trustee in trust for the
benefit of the certificate holders all interest of the depositor in each Mortgage Loan and all interest in all other assets included in IndyMac INDX Mortgage Loan Trust 2006-AR4. This assignment will include all scheduled payments received on account of the Mortgage Loans that were due after the Cut-off Date but will not include any scheduled payments due on or before the Cut-off Date.
In connection with the assignment of the Mortgage Loans, the depositor will deliver or cause to be delivered to the trustee the mortgage file, which contains among other things, the original mortgage note (and any
modification or amendment to it) endorsed in blank without recourse, except that the depositor may deliver or cause to be delivered a lost note affidavit in lieu of any original mortgage note that has been lost, the original mortgage creating a first lien on the related mortgaged property with evidence of recording indicated thereon, an assignment in recordable form of the mortgage, the title policy with respect to the related mortgaged property and, if applicable, all recorded intervening assignments of the mortgage and any riders or modifications to the mortgage note and mortgage (except for any documents not returned from the public recording office, which will be delivered to the trustee as soon as they are available to the depositor). With respect to up to 30% of the Mortgage Loans, the depositor may deliver all or a portion of each related mortgage file to the trustee not later than five business days after the closing date. Assignments of the Mortgage Loans to the trustee (or its nominee) generally will not be recorded in a public office for real property records in California and other states where, in the opinion of counsel, recording is not required to protect the trustee’s interest in the Mortgage Loan against the claim of any subsequent transferee or any successor to or creditor of the depositor or the seller. Under certain circumstances specified in the pooling and servicing agreement, the assignments will be recorded (at the Servicer’s expense).
The trustee will review each mortgage file within 90 days of the
closing date (or promptly after the trustee’s receipt of any document permitted to be delivered after the closing date) and if any document in a mortgage file is found to be missing or defective in a material respect adverse to the interests of the certificate holders in the related Mortgage Loan and the seller does not cure the defect within 90 days of notice of the defect from the trustee(or within such longer period not to exceed 720 days after the closing date as provided in the pooling and servicing agreement in the case of missing documents not returned from the public recording office), the seller will be obligated to repurchase the related Mortgage Loan from the issuing entity. The trustee will hold the Mortgage Loan documents in trust for the benefit of the certificate holders in accordance with its customary procedures, including storing the documents in fire-resistant facilities. Rather than repurchase the Mortgage Loan as provided above, the seller may remove the Mortgage Loan (referred to as a deleted Mortgage Loan) from the issuing entity and substitute in its place another Mortgage Loan (referred to as a replacement Mortgage Loan); however, substitution is permitted only within two years of the closing date and may not be made unless an opinion of counsel is provided to the trustee to the effect that the substitution will not disqualify any REMIC or result in a prohibited transaction tax under the Code.
THE TRUSTEE
Deutsche Bank National Trust Company (“DBNTC” or the “trustee“) will act as trustee, calculation agent and custodian. DBNTC is a national banking association which has an office in Santa Ana, California. DBNTC has previously been appointed to the role of trustee for numerous mortgage-backed transactions since 1991. As custodian, DBNTC will maintain the mortgage files in secure, fire-resistant facilities. DBNTC will not physically segregate the mortgage files in DBNTC’s custody and the mortgage files will be kept in shared facilities. DBNTC’s proprietary document tracking system will show the location within DBNTC’s facilities of each mortgage file held by the trustee on behalf of the trust.
S-47
Filed On 4/17/06 4:15pm ET · SEC File 333-127556-26 · Accession Number 905148-6-3334
CONVEYANCE OF MORTGAGE LOANS; REPRESENTATIONS AND WARRANTIES
Section 2.01. Conveyance of Mortgage Loans.
As promptly as practicable after any transfer of a Mortgage Loan under this Agreement, and in any event within thirty days after the transfer, the Trustee shall (i) affix the Trustee’s name to each assignment of Mortgage, as its assignee, and (ii) cause to be delivered for recording in the appropriate public office for real property records the assignments of the Mortgages to the Trustee, except that, if the Trustee has not received the information required to deliver any assignment of a Mortgage for recording, the Trustee shall deliver it as soon as practicable after receipt of the needed information and in any event within thirty days.
(d) The Seller agrees to treat the transfer of the Mortgage Loans to the Depositor as a sale for all tax, accounting, and regulatory purposes.
Ø First the act of closing a loan wherein the lender is not revealed invalidates or destroys the note even though acceptance of the money creates an obligation. The question is to whom that obligation is owed.
Second by “securitizing the receivable according to terms far different than the note ever recited, the description contained in the note becomes increasingly remote from a proper description of the obligation, which keeps changing as the receivable, not the note, moves up the securitization chain. Thus the receivable — the actual obligation that the note purported to describe — keeps changing while the note remains the same and the original note never moves physically by delivery, transfer documents (endorsement, assignment etc.)
Thus the point is that the note is destroyed by operation of law. And the problem the pretender lenders have is that the note, even if it is transferred and delivered does not describe the receivable (payments from borrower, insurer, counterparties etc.).
Ø Even better – in 2009 The Florida Banker’s Association ADMITTED that they have been intentionally destroying the original “wet ink” signatures and documents:
The reason “many firms file lost note counts as a standard alternative pleading in the complaint” is because the physical document was deliberately eliminated to avoid confusion immediately upon its conversion to an electronic file. See State Street Bank and Trust Company v. Lord, 851 So. 2d 790 (Fla. 4th DCA 2003). Electronic storage is almost universally acknowledged as safer, more efficient and less expensive than maintaining the originals in hard copy, which bears the concomitant costs of physical indexing, archiving and maintaining security. It is a standard in the industry and becoming the benchmark of modern efficiency across the spectrum of commerce—including the court system.
I don’t care what’s a “standard” if it does not comport with the law!
This is like saying that “dealing crack is a standard in the gang industry, therefore, we can sell it even though Federal Law says that we should go to prison for doing so.”
Incidentally, for those who will chime in that “electronic copies are just as good”, no they’re not. They’re not secured, they’re not cryptographically signed and verified by the originator, and they are trivially easy to tamper with.
I’d accept that an electronic copy is ok provided that the original is scanned, encoded, and digitally signed by the consumer at the point of origination, and that consumer then takes the original and a copy of the electronic document with him, with all of this being disclosed and approved by the consumer. If I PGP-sign a document or file it is extremely difficult to tamper with it in a way that cannot be detected. But without that sort of signature and encoding in the presence of the consumer, along with the consumer being the one that gets the paper copy, it is essentially impossible to prove that the document was not tampered with. “Wet signatures” and originals are required for exactly this reason – it makes tampering dangerous as it can usually be detected quite easily.
This is massive, pernicious and OUTRAGEOUS fraud folks.
*
It is fraud upon the county governments who were deprived of their recording and transfer fees (e.g. “doc stamps.”)
*
It is fraud upon all of the MBS buyers, who purchased these securities with a representation and warranty that these notes WERE transferred and properly endorsed.
*
And it is fraud upon the courts when the “lost note” affidavits are filed asserting that the documents were LOST, when in fact THEY WERE INTENTIONALLY DESTROYED
48.A mortgage existence evidences a Lien, whereby Power of sale becomes operative upon default. Since IndyMac Bank F.S.B. and MERS conspired to immobilize the lien (keeping in mind of the reported case of Mortgage Electronic Systems, Inc. v. Nebraska Department of Banking and Finance, supra where MERS explains what it does), Power of Sale is not available to the servicer or MERS. Due to immobilization of the lien, immediately after closing, said actors could not have performed under the Mortgage in good faith.
49.Every mortgage of real estate, which contains a power of sale, upon default being made in any condition of such mortgage, may be foreclosed by advertisement, in the cases and in the manner specified in this chapter. [MCL 600.3204; MSA 27a.3204 (emphasis added).]
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Filed under: bubble, CDO, CORRUPTION, currency, Eviction, foreclosure, GTC | Honor, Investor, Mortgage, securities fraud | Tagged: CONVEYANCE OF MORTGAGE LOAN, cutoff date, disclosure, foreclosure defense, foreclosure offense, fraud, mortgage meltdown, PSA, quiet title, securitization | 36 Comments »
