Maine Case Affirms Judgment for Homeowner — even with admission that she signed note and mortgage and stopped paying

While this case turned upon an  inadequate foundation for introduction of “business records” into evidence, I think the real problem here for Keystone National Association was that they did not and never did own the loan — something revealed by the usual game of musical chairs that the banks use to confuse and obscure the identity of the real creditor.

When you read the case it demonstrates that the Maine Supreme Judicial Court was not at all sympathetic with Keystone’s “plight.” Without saying so directly the court’s opinion clearly reveals its doubt as to whether Keystone had any plight or injury.

Refer to this case and others like it where the banks treated the alleged note and mortgage as being the object of a parlor game. The attention paid to the paperwork is designed by the banks to distract from the real issue — the debt and who owns it. Without that knowledge you don’t know the principal and therefore you can’t establish authority by a “servicer.”

The error in courts across the country has been that the testimony and records of the servicer are admissible into evidence even if the authority to act as servicer did not emanate from the real party in interest — the debt holder (the party to whom the MONEY is due.

Note that this ended in judgment for the homeowner and not an involuntary dismissal without prejudice.

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Hat Tip to Bill Paatalo

Keybank – maine supreme court

Here are some meaningful quotes from the Court’s opinion:

KeyBank did not lay a proper foundation for admitting the loan servicing records pursuant to the business records exception to the hearsay rule. See M.R. Evid. 803(6).

KeyBank’s only other witness was a “complex liaison” from PHH Mortgage Services, which, he testified, is the current loan servicer for KeyBank and handles the day-to-day operations of managing and servicing loan accounts.

The complex liaison testified that he has training on and personal knowledge of the “boarding process” for loans being transferred from prior loan servicers to PHH and of PHH’s procedures for integrating those records. He explained that transferred loans are put through a series of tests to check the accuracy of any amounts due on the loan, such as the principal balance, interest, escrow advances, property tax, hazard insurance, and mortgage insurance premiums. He further explained that if an error appears on the test report for a loan, that loan will receive “special attention” to identify the issue, and, “[i]f it ultimately is something that is not working properly, then that loan will not . . . transfer.” Loans that survive the testing process are transferred to PHH’s system and are used in PHH’s daily operations.

The court admitted in evidence, without objection, KeyBank’s exhibits one through six, which included a copy of the original promissory note dated April 29, 2002;3 a copy of the recorded mortgage; the purported assignment of the mortgage by Mortgage Electronic Registration Systems, Inc., from KeyBank to Bank of America recorded on January9, 2012; the ratification of the January 2012 assignment recorded on March 6, 2015; the recorded assignment of the mortgage from Bank of America to KeyBank dated October 10, 2012; and the notice of default and right to cure issued to Kilton and Quint by KeyBank in August 2015. The complex liaison testified that an allonge affixed to the promissory note transferred the note to “Bank of America, N.A. as Successor by Merger to BAC Home Loans Servicing, LP fka Countrywide Home Loans Servicing, LP,” but was later voided.

Pursuant to the business records exception to the hearsay rule, M.R. Evid. 803(6), KeyBank moved to admit exhibit seven, which consisted of screenshots from PHH’s computer system purporting to show the amounts owed, the costs incurred, and the outstanding principal balance on Kilton and Quint’s loan. Kilton objected, arguing that PHH’s records were based on the records of prior servicers and that KeyBank had not established that the witness had knowledge of the record-keeping practices of either Bank of America or Countrywide. The court determined that the complex liaison’s testimony was insufficient to admit exhibit seven pursuant to the business records exception.

KeyBank conceded that, without exhibit seven, it would not be able to prove the amount owed on the loan, which KeyBank correctly acknowledged was an essential element of its foreclosure action. [e.s.] [Editor’s Note: This admission that they could not prove the debt any other way means that their witness had no personal knowledge of the amount due. If the debt was in fact due to Keystone, they could have easily produced a  witness and a copy of the canceled check or wire transfer receipt wherein Keystone could have proven the debt. Keystone could have also produced a witness as to the amount due if any such debt was in fact due to Keystone. But Keystone never showed up. It was the servicer who showed up — the very party that could have information and exhibits to show that the amount due is correctly proffered because they confirmed the record keeping of “Countrywide” (whose presence indicates that the loan was subject to claims of securitization). But they didn’t because they could not. The debt never was owned by Keystone and neither Countrywide nor PHH ever had authority to “service” the loan on behalf of the party who owns the debt.]

the business records will be admissible “if the foundational evidence from the receiving entity’s employee is adequate to demonstrate that the employee had sufficient knowledge of both businesses’ regular practices to demonstrate the reliability and trustworthiness of the information.” Id. (emphasis added).

 

With business records there are three essential points of reference when several entities are involved as “lenders,” “successors”, or “servicers”, to wit:

  1. The records and record keeping practices of the initial “lender.” [If there are none then that would point to the fact that the “lender” was not the lender.] Here you are looking for the first entries on a valid set of business records in which the loan and fees and costs were posted. Generally speaking this does not exist in most loans because the money came a third party source who knows nothing of the transaction.
  2. The records and record keeping practices of any “successors.” Note that this is a second point where the debt is separated from the paper. If a successor is involved there would correspondence and agreements for the purchase and sale of the debt. What you fill find, though, is that there is only a naked endorsement, assignment or both without any correspondence or agreements. This indicates that the paper transfer of any rights to the “loan” was strictly for the purpose of foreclosing and bore new relationship to reality — i.e., ownership of the debt.
  3. The records and record keeping practices of any “servicers.” In order for the servicer to be authorized, the party owning the debt must have directly or indirectly given authorization and come to an agreement on fees, as well as given instructions as to what functions the servicer was to perform. What you will find is that there is no valid document from an owner of the debt appointing the servicer or giving any instructions, like what to do with the money after it is collected from homeowners. Instead you find tenuous documentation, with no correspondence or agreements, that make assertions for foreclosure. The game of musical chairs has bothered judges for a decade: “Why do the servicers keep changing” is a question I have heard from many judges. The typical claims of authorization are derived from Powers of Attorney or a Pooling and Servicing agreement for an entity that neither e exists nor does it have any operating history.

A NEW FACE in Government Activism in Securitization Scam

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Editor’s Comment:

Anyone who wants the job of being the county recorder takes a risk of being blamed for all the warts and defects that come out after they take office. So when somebody runs for public office without prior real estate experience like a Nurse, you know that community activism is on the rise and we all know why. The shell game and run-around that the banks and servicers are playing can only work so long.

The facts remain that the county recorders across the country fully understand that title is corrupted but they are mostly elected officials, a member of  a major political party and thus follow orders when told to do the Texas 2-step when it comes to removing illegal documents from the recording system or requiring proof of the authenticity of the documents and declarations in the documents.

We need many more people to run for office where it counts — the county level, get rid of the hacks who refuse to sue the banks for screwing up title, refuse to collect fees that are owed and would help the county budget, and refuse to hold those who submitted false filings accountable. THAT is where the banks have little influence. That is where they are weak politically. The lower the political office the less influence the bank has in preventing actions that would embarrass the mega banks.

Eventually the truth will all come out. It is seeping in through all the windows and doors. The logjam will break and we’ll know everything. And what we are going to find is that most mortgages were recorded without any transaction commenced between the the parties recited on the documents. We’ll find that the record is devoid of any real documentation between the real lenders (who might be impossible to determine with certainty because of commingling of funds in escrow accounts that ignored the existence of the REMICs). All that means is that the mortgages were fraudulently filed and therefore the foreclosures are invalid. There lies the path to salvation to our economy. Instead of the big boys getting a handout, the little people who were scrunched into the dirt by the boots of Wall Street titans are going to get a break.

Support with your money , effort and contacts and networking every candidate on the local level who runs for office on the platform of rejecting these illegal documents and throwing out the deeds of foreclosure based upon illegal mortgages and illegal, fabricated, forged and unauthorized documents.

Foreclosure Fraud Combatant Eyes Clerk of Court Role in Florida

By Jon Prior

Florida has been ground zero for foreclosure fraud, but even with multibillion-dollar settlements and federal consent orders, the state’s financial services industry may face new scrutiny from a community activist who’s taken a critical look at the industry and its practices.

Lisa Epstein, who’s running for clerk of court in Palm Beach County, was once an oncology nurse. For most of her career she saw her patients strike deals with their banks when they ran into debt problems, particularly with mortgage payments, once they became ill.

But when the housing crisis struck and foreclosures mounted, that changed. Banks and mortgage servicers overloaded with delinquent loans struggled with the paperwork and the complexity of linking struggling borrowers with decision-makers. To speed up the foreclosure process, reams of documentation was mishandled, signed improperly and filed at county courthouses.

In 2007, Epstein noticed her patients were no longer being helped. They were being rushed through the foreclosure system.

“That was my first hint that there was something very different,” Epstein said during a HousingWire interview.

So began her advocacy work in Florida fighting against banks and third-party firms handling the foreclosure process. In June, she was placed on the ballot for clerk of court of Palm Beach County, the third largest clerk office in the state.

If elected in August, she will be in charge of many things, including managing an overloaded docket, acting as treasurer and chief financial officer of the county’s funds, and most importantly, serving as the keeper of public record.

Her major focus will be on what she claims is a broken system, surrounding the cloudy chain of title flaws filed with the counties to this day. If state funding allows, she said she will perform wide-scale audits of the entire county database and develop reforms — even if that means shutting down the process entirely.

“I don’t know if it is fixable,” Epstein said. “But these are not truly legal instruments that convey proper property ownership. Conducting any sort of real estate transaction or sorting who really owns the loans in many cases will become an enormous legal burden because of the morass of documentation fraud.”

The Florida system remains a nightmare after the collapse of the Law Offices of David J. Stern in March 2011. Several other firms came under investigation and some settled claims before being shut down. The $25 billion foreclosure settlement involving 49 states (Oklahoma didn’t participate) includes language that will hold servicers accountable for any third-party firms that handle any aspect of a foreclosure filing.

Consent orders with the Office of the Comptroller and the Federal Reserve will also force servicers to monitor these firms, specifically Mortgage Electronic Registration Systems and Lender Processing Services ($23.87 1.23%).

New foreclosure filings in Palm Beach County increased in May by 3.6% from the previous month as servicers are looking to restart the process. The 1,356 new filings was 61% above levels seen in the year-ago period.

Both Epstein and incumbent Sharon Bock, who’s held the office since 2003 and is running for re-election, are concerned with keeping up because of pending budget cuts.

“We expect that our foreclosure division is one that will be heavily affected by these budget cuts,” Bock said in a statement accompanying the numbers last week. “My fear is if the trend of increased filings continues as it has in recent months, we will not have the ability to keep up with the volume. We will do our best, but it will be a challenge.”

Mortgage servicers have stated they’ve ended past robo-signing practices and are installing new policies to reduce risk in the system. Few, if any, borrowers, they claim, were foreclosed on improperly because of past flawed practices.

But the financial industry is watching this election closely. Should Epstein prevail, her appetite for audits and new investigations could wipe out any restart to an already backlogged foreclosure process.

Some county record keepers in other states already launched investigations of their own, some founded on faulty claims, but some may have real consequences. A report in one Massachusetts county claimed 75% of mortgage assignments were invalid. Another in San Francisco attempted to show similar results through an audit but shrivels under scrutiny through California case law.

The treasurer for the clerk of courts in two Michigan counties filed lawsuits against Fannie Mae and Freddie Mac to get fees levied during the recording of foreclosure property transfers. The GSEs used a government tax status to escape the fees, an exemption now being challenged.

Epstein said she would be on board with taking all of these actions and suggested the federal government go even further with a wide-scale probe. For this, Epstein is running into a lot of pushback. Her race against Bock has become one of the most heated in the local Florida elections.

“We have to solve a fraudulent process that is hurting our property value taxes, hurting our ability to do a short sale, hurting our ability to work with lenders,” she said. “It’s hurting the faith that there would be some protection. It’s damaging our court systems and yet our court systems are allowing this go on and on.”

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JUDGE MARGERET MANN (SO. CA BKR) PLUNGES INTO DETAILS AND COMES UP WITH WELL-REASONED DECISION

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AURORA LOAN SERVICES LLC, SCME MORTGAGE BANKERS INC, ING BANK FSB, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS ALL BITE THE DUST, SUBJECT TO LIABILITY AND NO ABILITY TO FORECLOSE WITHOUT COMPLYING WITH LAW.

Salient points of Judge Mann’s Decision:

  1. TRUTH IN LENDING  was dismissed because they were time-barred. LESSON: Don’t ignore TILA claims or TILA audits. Get a forensic Analysis as early as possible, assert them immediately, assert rescission as soon as possible. TILA has teeth, but if you assert it late in the game.
  2. YOU CAN’T FORECLOSE ON UNRECORDED INSTRUMENTS: Judge Mann came right out and said the California Supreme Court would not and could not decide otherwise. Any other holding would defeat the purpose of recording and create uncertainty in the marketplace. This will cause a lot of grief to pretenders. It is getting harder for them to come up with people who are willing to lie, forge or fabricate documents. Getting a notary to affix their signature and seal will soon be a thing of the past unless the signature, the person and the document is real.
  3. THE ASSUMPTION THAT THE LOAN IS IN DEFAULT IS STILL A PROBLEM: As long as lawyers and pro se litigants are willing to concede that the obligation was in default, they are giving up their largest chip — i.e., that the loan was not in default and the loan was not subject to a perfected lien for the same reason that the court cites in its opinion. Our loan level analysis shows repeatedly that in most cases the servicer is continuing to make payments and reporting to investors that the loan is performing even as they send delinquency letter’s notices of default and notices of sales. The Court missed this point because nobody brought it up. Don’t expect the Court to do your work for you. If you have reason to believe that the servicer is still paying on your loan you should be stating that the loan is not in de fault, denying any delinquency to the creditor and objecting to any action that is based upon the premise of “default.” Note that if the servicer is paying your bills, the servicer MIGHT have a right of action against you, but it certainly isn’t under the terms of the note or mortgage.
  4. THE ASSUMPTION THAT A VALID PERFECTED MORTGAGE LIEN EXISTS IS STILL A PROBLEM: Again, the problem is not with the Courts but with the lawyers and pro se litigants who simply assume that this is not an issue. Put yourself in the banks’ shoes. If all you had were nominees for undisclosed principals on the note and mortgage would you be OK with that? No? Then the lien was never perfected, which means for legal purposes it doesn’t exist. Just because it shows in black and white doesn’t make it true. LESSON: Deny the lien exists, deny it was perfected and make them prove how it was perfected. They can’t. In most cases neither the mortgage originator nor the nominee beneficiary (MERS) had a disclosed lender or beneficiary, nor did they incorporate the real terms of  the payment to the investor/lenders. If this was a law school exam and the student wrote that the loan was perfected, the grade would be “F”.
  5. THE ISSUE OF FEDERAL PREEMPTION AND THEREFORE JURISDICTION AND VENUE ARE STILL IN FLUX: This Judge found that federal preemption prevents the homeowner from alleging TILA as state claims. The courts are not decided on this and the issue of res judicata and Rooker -Feldman will come into play once the issue is really resolved with finality. Beware then how you assert a claim and that you don’t let the statute of limitations run out by failing to assert the right claim under TILA in the right court. better to get dismissed than to find out that you are time-barred.
  6. WRONGFUL FORECLOSURE IS A TITLE ISSUE NOT A FAIRNESS OR TECHNICAL ISSUE: Judge Mann, correctly in my opinion, states that an assignment from MERS must be allowed in order to clear up title. But, she states that without recording an interest within the chain of title, you have no right to foreclose under the states recording laws. I think this is right, and I think it applies in all 50 states. LESSON: Plead your wrongful foreclosure, slander of title and quiet title cases as title cases and stop adding extra things that you think may them juicier. Either the title is right or it is wrong. There is no middle ground.
  7. MERS ISSUE IS STILL OBSCURE: While the assignment from MERS, if recorded clears up one part it leaves another part undecided again because it wasn’t raised properly. There is a difference between “bare record title” and an “interest in the land.” The MERS assignment is like a quit-claim deed from someone without any interest in the land and used to clear up the chain of title on paper, but it does not convey any interest. MERS on its website and in the public domain specifically disclaims any interest in the obligation, note or mortgage. That is its selling point to members who use its “Service.” And that is why it can’t foreclose and it is subject to cease and desist orders from regulators. As with other affidavits or quit-claims to clear up apparent clouds on title, the recorded assignment or quitclaim does nothing to convey a larger interest than that possessed by the grantor. LESSON: If the pretenders want to foreclose they can’t rely on the MERS assignment. They must file a credible affidavit that states that the affiant was the undisclosed principal in the original transaction with the borrower and that it joins in or separately assigns the actual interest in the obligation, note or mortgage. In my opinion, this is the only way to perfect the original “lien.” Whether it will relate back to the original transaction is an issue the courts must decide.
  8. NO DIFFERENCE BETWEEN A DEED OF TRUST AND A MORTGAGE: Pretenders who try to elevate a deed of trust above a mortgage are headed for a brick wall. Courts never liked non-judicial foreclosure in the first place. They are not about to to reverse centuries of law and provide higher status to a non-judicial foreclosure or the instruments that allow it. ONLY the statutes that provide for extra care on the part of the trustee are constitutional, since due process is the only way anyone in this country can be deprived of life, liberty or property. LESSON: Pound on the issue that the pretender cannot prevail in a judicial foreclosure so they are trying to get away with it in a non-judicial foreclosure. If you want to see how this will eventually unfold, look at Florida and other states that had similar issues in their “Contracts for deed.” Despite clear contractual language the courts have universally held they are mortgages and that they must be foreclosed as mortgages.

DALLAS D.A. CONSIDERS SUIT AGAINST MERS — MORE TO COME

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EDITOR’S COMMENT: If he doesn’t get stepped on political heavyweights who accepted bank money for their campaigns, Watkins may well be leading the real charge against the banks that will end up real results. Fixing the budgets of state and local governments with money they were entitled to receive in the great securitization scheme is a high priority. It will save jobs, improve the economy and maintain social services — like police, fire, rescue, education, parks etc.

District Attorney Craig Watkins to Explore Possible Claims against Mortgage Electronic Registration Systems, Inc.

Posted by shawnpwilliams on Aug 9th, 2011

Dallas South News Wire (Dallas County District Attorney’s Office)

Today Dallas County District Attorney (DA) Craig Watkins announced that the DA’s office is considering asserting claims against Mortgage Electronic Registration Systems, Inc. (MERS) for the possible loss of millions in revenues to Dallas County.

MERS, a subsidiary of MERSCORP, Inc., was established and is owned by banks and members of the mortgage finance industry.  MERS was established to act as a shadow recording system for the millions of mortgages in the United States and facilitate the buying and selling of mortgage rights as commodities.

There are currently approximately 31 million active residential mortgage loans registered on the MERS System.  Since its inception, MERS has attempted to track more than 60 million mortgages nationwide and more than 250,000 in Dallas County alone.  However, due to the fact that reporting is not always required, the MERS electronic records of mortgages may or may not accurately reflect the millions of transfers of mortgage rights that have occurred over the past several years.

“While the DA’s office is traditionally only thought of as the prosecuting authority for crimes against individuals, in addition to handling those types of cases, we are also responsible for providing legal representation in civil matters such as this issue with MERS where Dallas County is the victim,” said District Attorney Craig Watkins.

“When I learned about this issue, my first reaction was we needed to explore possible remedies for getting MERS to reimburse the estimated tens of millions in uncollected filing fees that are potentially owed to Dallas County.  These possible remedies are in the process of being explored.  This is yet another issue that has gone unaddressed for years that we have discovered, are taking action to correct and put measures in place to prevent it from happening in the future.”

Lenders ordinarily file a record of their rights in the deed records of the county where the property is located.  The county clerk maintains those records as notice to the public of the identity of persons who loaned money for the purchase of the property and who have rights to foreclose upon the property if the loan is not repaid.

For a fee, MERS allows lenders to show MERS as the “beneficiary” of the lender’s rights to the property if the loan is not repaid, even though MERS is not actually the beneficiary.  MERS acts as a placeholder for the lender as to the lender’s mortgage rights, but not the lender’s rights to receive the loan payments.

In that way, the lender is able to sell its rights to receive the loan payments and MERS agrees to protect the purchaser of the loan by remaining on the deed records as the “beneficiary” of the mortgage.  So long as MERS remains on the deed records as the beneficiary, subsequent purchasers can avoid having to file their acquisition of the rights to the loan payments and pay the associated filing fees.

After extensive research on the issue of whether MERS and others acting with it improperly recorded hundreds of thousands of real estate records in Dallas County, and were thereby able to avoid paying filing fees on subsequent transfers of the properties that were involved, it was concluded that MERS and those acting with it have engaged in conduct which wrongfully deprived the citizens of millions of dollars in filing fees on property located in Dallas County.

MERS operates a national electronic registry that tracks beneficial ownership interests and servicing rights associated with residential mortgage loans and any transfer of or changes in those interests or rights.  There are approximately 5,000 participating members of MERS, of which 3,000 are residential mortgage servicers.

Members register loans and may report transfers, foreclosures, and other changes to the status of residential mortgage loans on the MERS System.  However, there is no requirement that all changes or transfers be reported to MERS.

ALL MAJOR FINANCIAL FEDERAL AGENCIES ENTER CEASE AND DESIST ORDER AGAINST MERS

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MERS AND MERSCORP ENTERED INTO A CONSENT CEASE AND DESIST ORDER FINDING DEFICIENCIES IN THE PRACTICES AND PROCEDURES THAT POSE A RISK TO THE MEMBER BANKS.

ABSTRACT OF ORDER

The Agencies find, and MERS and MERSCORP neither admit nor deny, the following:
(1)    MERS is a wholly-owned subsidiary of MERSCORP. MERSCORP’s shareholders include federally regulated financial institutions that own and/or service residential mortgages, including Examined Members, and other primary and secondary mortgage industry participants.
(2)    MERSCORP operates a national electronic registry that tracks beneficial ownership interests and servicing rights associated with residential mortgage loans and any changes in those interests or rights. There are approximately 5,000 participating Members, of which 3,000 are residential mortgage servicers. Members register loans and report transfers, foreclosures, and other changes to the status of residential mortgage loans on the MERS System. There are currently approximately 31 million active residential mortgage loans registered on the MERS System. Examined Members receive a substantial portion of the services provided by MERSCORP and MERS.
(3)    MERS serves as mortgagee of record and nominee for the participating Members in local land records. MERS takes action as mortgagee through documents executed by “certifying officers” of MERS. MERS has designated these individuals, who are officers or employees of Members or certain third-parties who have contractual relationships with Members, as officers of MERS. By virtue of these designations, the certifying officers execute legal documents in the name of MERS, such as mortgage assignments and lien releases.
MERS Consent Order
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(4)    In connection with services provided to Examined Members related to tracking, and registering residential mortgage loans and initiating foreclosures (“residential mortgage and foreclosure-related services”), MERS and MERSCORP:
(a)    have failed to exercise appropriate oversight, management supervision and corporate governance, and have failed to devote adequate financial, staffing, training, and legal resources to ensure proper administration and delivery of services to Examined Members; and
(b)    have failed to establish and maintain adequate internal controls, policies, and procedures, compliance risk management, and internal audit and reporting requirements with respect to the administration and delivery of services to Examined Members.
(5)    By reason of the conduct set forth above, MERS and MERSCORP engaged in unsafe or unsound practices that expose them and Examined Members to unacceptable operational, compliance, legal, and reputational risks.
Pursuant to the authority vested in them by the Federal Deposit Insurance Act, as amended, 12 U.S.C. §§ 1818(b), the Bank Service Company Act, 12 U.S.C. § 1867(c)-(d), and the Federal Housing Enterprises Financial Safety and Soundness Act, 12 U.S.C. § 4631, the Agencies hereby ORDER that:
ARTICLE III COMPLIANCE COMMITTEE
(1)    Within twenty (20) days of this Order, the Boards of Directors of MERSCORP and MERS (the “Boards”) shall each establish and thereafter maintain a Compliance Committee of at least three (3) directors, of which at least two (2) may not be employees or officers of MERS or MERSCORP or any of their subsidiaries or affiliates. In the event of a change of the
MERS Consent Order
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membership, the name of any new committee member shall be submitted to the OCC Deputy Comptroller for Large Bank Supervision (“Deputy Comptroller”). The Compliance Committee shall be responsible for monitoring and coordinating MERS’ and MERSCORP’s compliance with the terms and provisions of this Order. The Compliance Committee shall meet at least monthly and maintain minutes of its meetings.
(2)    Within ninety (90) days of this Order, and within thirty (30) days of the end of each calendar quarter thereafter, the Compliance Committee shall submit a written progress report to the Boards setting forth in detail its actions taken to comply with each Article of this Consent Order, and the results and status of those actions.
(3)    The Boards shall forward a copy of the Compliance Committee’s report, with any additional comments by the Boards, to the Deputy Comptroller and the OCC Examiner-in- Charge within ten (10) days of receiving such report.
ARTICLE IV ACTION PLAN
(1)    Within ninety (90) days of this Order, MERS and MERSCORP shall jointly develop and submit to the Deputy Comptroller an acceptable plan containing a complete description of the actions that are necessary and appropriate to achieve compliance with the terms and provisions of this Order (“Action Plan”), as well as the resources to be devoted to the planned actions, with respect to services provided to Examined Members. In the event the Deputy Comptroller requests MERS or MERSCORP to revise the Action Plan, they shall immediately make the requested revisions and resubmit the Action Plan to the Deputy Comptroller. Following acceptance of the Action Plan by the Deputy Comptroller, MERS and
MERS Consent Order
-6-
MERSCORP shall not take any action that would constitute a significant deviation from, or material change to the requirements of the Action Plan, or this Order, unless and until MERS or MERSCORP have received a prior written determination of no supervisory objection from the Deputy Comptroller.
(2)    The Boards shall ensure that MERS and MERSCORP achieve and thereafter maintain compliance with this Order, including, without limitation, successful implementation of the Action Plan. The Boards shall further ensure that, upon implementation of the Action Plan, MERS and MERSCORP achieve and maintain effective residential mortgage and foreclosure- related services on behalf of Examined Members, as well as associated risk management, compliance, quality control, audit, training, staffing, and related functions. In order to comply with these requirements, the Boards shall:
(a)    require the timely reporting by MERS and MERSCORP management of such actions taken to comply with this Order and/or directed by either Board to be taken pursuant to this Order;
(b)    follow-up on any compliance issues with such actions in a timely and appropriate manner; and
(c)    require corrective action be taken in a timely manner for any non- compliance with such actions.
(3)    The Action Plan shall address, at a minimum: (a)    the capability of the Boards and senior management to ensure that MERS
and MERSCORP are operated in a safe and sound manner in accordance with applicable laws, regulations and requirements of this Order;
MERS Consent Order
-7-
(b)    development and implementation of a strategic plan to include a comprehensive review of business operations, including the risks associated with each business line, and recommendations to implement the strategic plan;
(c)    consistent with the strategic plan, development and implementation of a financial plan to ensure that MERSCORP and MERS have adequate financial strength to support business operations related to Examined Members. The financial plan, at a minimum, shall address:
capital;
and liquidity risk; and
(i)
(ii)
any need for additional capital, including the amount and source of
the identification, measurement, monitoring and control of funding
(iii) discretionary expenses and improve and sustain earnings, as well as maintain adequate reserves for contingency risks and liabilities;
(d)    development and implementation of a comprehensive litigation strategy to effectively manage lawsuits and legal challenges involving MERS and MERSCORP, regardless of whether MERSCORP or MERS is a named party, including early identification and tracking of such lawsuits and challenges;
(e)    development and implementation of a communication plan to communicate effectively and in a timely manner with MERSCORP’s shareholders, Members including Examined Members, and relevant external parties;
(f)    development and implementation of a compliance and quality assurance program for ensuring that Examined Members implement and follow all of the Rules, including
MERS Consent Order
-8-
a profit and budget plan to include specific goals to reduce
adherence to the requirements set forth in MERS Announcement 2011-01, dated February 16, 2011;
(g)    development and implementation of a plan to ensure that MERS certifying officers are transitioned expeditiously onto the Corporate Resolution Management System (“CRMS”) in accordance with MERS’ current certifying officer policy and process;
(h)    development and implementation of appropriate standards to maintain separation of corporate functions between MERS and MERSCORP;
(i)    review of the effectiveness of the Rules, and related Procedures, Terms and Conditions to determine what, if any, additions, amendments, or deletions are appropriate;
(j)    development and implementation of enhanced information reporting practices to senior management from lower levels of each organization, and from senior management to the Boards to ensure that significant issues are properly identified and escalated, and that corporate actions are considered, taken in a timely fashion, and properly documented;
(k)    any Matter Requiring Attention in the OCC Supervisory Letter No. MERS 2011-01, dated January 19, 2011, that addresses an issue that is not otherwise covered by provisions of this Order; and
(l)    development of contingency plans to address issues that arise with respect to any of the foregoing elements of the Action Plan, including plans that address operational continuity issues in the normal course of business and in a stressed environment.
(4)    The Action Plan shall specify timelines for completion of each of the requirements of this Order. The timelines in the Action Plan shall be consistent with any deadlines set forth in this Order.

GET THAT PSA: Alabama judge denies securitization trustee standing to foreclose

COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary SEE LIVINGLIES LITIGATION SUPPORT AT LUMINAQ.COM

GET COMBO TITLE AND SECURITIZATION SEARCH, REPORT, ANALYSIS ON LUMINAQ

SINGLE TRANSACTION THEORY CORROBORATED: INVESTOR-HOMEOWNER DEAL

“The court is surprised to the point of astonishment that the defendant trust (LaSalle Bank National Association) did not comply with the terms of its own pooling and servicing agreement and further did not comply with New York law in attempting to obtain assignment of plaintiff Horace’s note and mortgage,” the judge’s order, signed March 25 and filed with the court Wednesday, said. “Horace is a third-party beneficiary of the pooling and servicing agreement … without such … plaintiff Horace and other mortgagors similarly situated would never have been able to obtain financing.”

ALABAMA! BORROWER IS THIRD PARTY BENEFICIARY OF PSA!

EDITOR’S NOTE: As Jon Lindemen has been continually saying, GET the PSA (Pooling and Servicing  Agreement). Shotgun the discovery and retreat to “just give me the PSA.” This court, simply following normal existing law, looked at the PSA and agreed with the borrower that since the pool did NOT receive the loan in accordance with the terms of the PSA, the Trustee didn’t have any interest in it.

The pretenders have contended that they could effectuate a remedy by submitting the absent or corrected paperwork (even if it is forged and fabricated). But as Judge Shack said in New York and many other Judges and lawyers around the country, there is something inherently wrong with even a validly executed assignment of a receivable from a loan that is already in default. The PSA is the governing instrument for the transaction with the investor. The investor obviously never agreed to take loans that were already declared in default. That is the OPPOSITE of what the investors wanted and the Opposite of what they were told.

Which leaves us, as I have said all along, with the fact that there was no securitization of ANY debt in most cases. It was an illusion and it can’t be fixed. That leaves some sham entity on the recording books of the county in which the property is located as being the “lender of record.” But they have a real problem — they are not the creditor and they never were. With the receivable instantly split from the security instrument (mortgage or deed of trust) that leaves an unsecured debt to an undisclosed and unknown party — with no room for “declaration fo default,” “Notice of sale”, or summons in foreclosure, eviction, UD, FD or anything else.

In the end, this IS that simple. Making it complicated might save the ass of the mega banks for a while, but this can’t last. Application of existing law on property, contracts and lending, leaves the creditor with remedies, but none of them include foreclosure.

Alabama judge denies securitization trustee standing to foreclose
by KERRI PANCHUK

Friday, April 1st, 2011, 2:41 pm

An Alabama circuit court in Russell County has issued a summary judgment this week in the case of Horace v. LaSalle Bank, preventing the bank from foreclosing due to irregularities with the assignment of a promissory note.

The ruling prevents defendant LaSalle Bank – as the trustee holding the plaintiff’s securitized mortgage – from proceeding with a foreclosure because the trust failed to follow its own pooling and servicing agreement, and did not follow applicable New York law when trying to “obtain assignment of Horace’s note and mortgage,” according to the court order.

Without proof the mortgage had been assigned to the trust, in this case a Bear Stearns-related mortgage trust, the trustee lacked standing to foreclose, the court found.

Specifically, the homeowner alleged LaSalle only “produced a collateral file that included the original, wet-ink, signed note in the case,” according to court records. That note contained a single endorsement in blank, which came from the originator of the mortgage, Encore Credit Corp. While the loan was sent through the securitization process – going through two other parties before reaching the trustee – the only assignment on record was from Encore.

“Accordingly, the endorsement chain … does not comply with that required by the PSA,” Judge Albert Johnson wrote in an order granting summary judgment and permanently enjoining LaSalle from foreclosing on the property, a home in Phenix City, Ala.

“The court is surprised to the point of astonishment that the defendant trust (LaSalle Bank National Association) did not comply with the terms of its own pooling and servicing agreement and further did not comply with New York law in attempting to obtain assignment of plaintiff Horace’s note and mortgage,” the judge’s order, signed March 25 and filed with the court Wednesday, said. “Horace is a third-party beneficiary of the pooling and servicing agreement … without such … plaintiff Horace and other mortgagors similarly situated would never have been able to obtain financing.”

Horace’s attorney, Nick Wooten, said the judge’s decision proves “the securitization process totally and completely failed,” and that many of these “assets were not transferred.”

It does not mean the party gets a free house, however, he said. Rather, Wooten said the issue is “allocation of real losses,” and the next step would be to determine who is the proper foreclosing party.

But Shaun Ramey, an attorney representing LaSalle Bank, said the ruling contradicts existing court opinions and is a debacle for trusts handling loans that have been in default for years.

“They (opposing attorneys)  … say this does not mean the person gets a free house, but my response is it sure looks like that because my client holds the note, and they can’t foreclose.”

He added that if the note holder can’t foreclose, “then it calls into question who can foreclose?”

Ramey said when removing the securitization issues from the case,  he believes under Alabama law the actual holder should have absolute foreclosure rights. The LaSalle ruling seems to contradict other Alabama cases, he said, namely U.S. Bank v. Congress.

In U.S. Bank v. Congress, an Alabama judge ruled that a former homeowner challenging a foreclosure had no third-party standing to challenge the terms of the pooling and servicing agreement connected to the trust. Ramey said he believes the cases are similar.

“The most surprising aspect of the (LaSalle) order is that the holding suggests the mortgagor is a third-party beneficiary to (the pooling and servicing agreement),” Ramey said. He believes the recent decision “definitely shows there is no defined rule.”

But for Wooten, the homeowner’s attorney, the latest decision illustrates just how deep the nation’s securitization issues go.

“There were thousands of documents moved where there was no chain of assignments,” Wooten said. “The problematic side is what are we going to do about the fact that this didn’t occur? My only wish after being in this fight for the three and a half years is that we will get an honest evaluation of what is really wrong, so we can as a country get back on our feet. If we don’t get control of servicing, they will drive us into a depression that will take 20 years to get out of.”

The case involves certificate holders of Bear Stearns Asset Backed Securities I LLC, asset-backed certificates series 2006-EC2. It also names as defendants Mortgage Electronic Registration Systems, Encore Credit Corp., EMC Mortgage Co. and Bank of America (BAC: 13.37 +0.30%).

Write to Kerri Panchuk.

WEISBAND Case No. 4:09-bk-05175-EWH. BKR Tucson Judge HOLLOWELL Denies MLS for Lack of Standing

GMAC has failed to demonstrate that it is the holder of the Note because, while it was in possession of the Note at the evidentiary hearing, it failed to demonstrate that the Note is properly payable to GMAC

Once the securities have been sold, the SPV is not actively involved.

IN RE WEISBAND

In re: BARRY WEISBAND, Chapter 13, Debtor.

Case No. 4:09-bk-05175-EWH.

United States Bankruptcy Court, D. Arizona.

March 29, 2010.

Barry Weisband, Tucson, AZ, Ronald Ryan, Ronald Ryan, P.C., Tucson, AZ, Attorney for Debtor.

MEMORANDUM DECISION

EILEEN W. HOLLOWELL, Bankruptcy Judge

I. INTRODUCTION

The debtor, Barry Weisband (“Debtor”), has challenged the standing of creditor, GMAC Mortgage, LLC (“GMAC”), to seek stay relief on his residence. After reviewing the documents provided by GMAC and conducting an evidentiary hearing, the court concludes that GMAC, the alleged servicer of the Debtor’s home loan, lacks standing to seek stay relief. The reasons for this conclusion are explained in the balance of this decision.

II. FACTUAL AND PROCEDURAL HISTORY

A. Creation of Debtor’s Note And Asserted Subsequent Transfers

On or about October 6, 2006, the Debtor executed and delivered to GreenPoint Mortgage Funding, Inc. (“GreenPoint”) an adjustable rate promissory note in the principal sum of $540,000 (“Note”) secured by a Deed of Trust (“DOT”) on real property located at 5424 East Placita Apan, Tucson, Arizona 85718 (“Property”).

On a separate piece of paper, GreenPoint endorsed the Note to GMAC (“Endorsement”). The Endorsement is undated. The DOT was signed by the Debtor on October 9, 2006, and recorded on October 13, 2006. The DOT lists GreenPoint as the lender, and Mortgage Electronic Registration Systems, Inc. (“MERS”) as the beneficiary of the DOT “solely as nominee for [GreenPoint], its successors and assigns.”

Approximately five months before the creation of the Note and DOT, on April 10, 2006, GreenPoint entered into a Flow Interim Servicing Agreement (“FISA”) (Exhibit D)[ 1 ] with Lehman Capital, a division of Lehman Brothers Holdings, Inc. (collectively “Lehman”), pursuant to which Lehman agreed to purchase conventional, residential, fixed and adjustable rate first and second lien mortgage loans from GreenPoint. Under the FISA, GreenPoint agreed to service the mortgage loans it sold to Lehman. According to GMAC, GreenPoint transferred the Note and DOT to Lehman under the FISA.

On November 1, 2006, Lehman entered into a Mortgage Loan Sale and Assignment Agreement (“MLSAA”) with Structured Asset Securities Corporation (“SASC”) (Exhibit E). Under that agreement, Lehman transferred a number of the mortgage loans it acquired under the FISA to SASC. GMAC claims that the Note was one of the mortgage loans transferred to SASC. SASC created a trust to hold the transferred mortgages — GreenPoint Mortgage Funding Trust (“Trust”). The MLSAA also transferred the right to receive principal and interest payments under the transferred mortgage loans from Lehman to the Trust.

Also, on November 1, 2006, SASC entered into a Trust Agreement (Exhibit F) with Aurora Loan Services (“Aurora”) as the master servicer, and U.S. Bank National Association (“U.S. Bank”) as the trustee. A Reconstituted Servicing Agreement (Exhibit G) was executed the same day, which provided that GreenPoint would continue to service the mortgages transferred to the Trust under the MLSAA, but that the Trust could change servicers at any time. Also, according to GMAC, on November 1, 2006, GMAC, Lehman, and Aurora entered into a Securitization Servicing Agreement (“SSA”) (Exhibit H), pursuant to which GMAC would service the loans transferred to the Trust. GMAC claims that under the SSA it is the current servicer of the Note and DOT.

Thus, according to GMAC, as of November 1, 2006, the Note and DOT had been transferred to the Trust, with SASC as the Trustor, U.S. Bank as the Trustee, Aurora as the master servicer, and GMAC as the sub-servicer. GreenPoint went out of business in 2007. According to GMAC, it remains the sub-servicer of the Note, and that is its only financial interest in the Note and DOT. (Transcript Nov. 10, 2009, pp. 44, 47, 75.)

B. Bankruptcy Events

As of March 1, 2009, the Debtor was in default of his obligations under the Note. Debtor filed his petition for relief under Chapter 13 of the Bankruptcy Code on March 19, 2009. On May 16, 2009, GMAC filed a proof of claim (“POC”), which attached the Note and DOT. The Endorsement from GreenPoint to GMAC was not attached to GMAC’s proof of claim. On May 12, 2009, MERS, as nominee for GreenPoint, assigned its interest in the DOT to GMAC (“MERS Assignment”). The MERS Assignment was recorded on July 16, 2009.

GMAC filed a Motion for Relief from Stay (“Motion”) on May 29, 2009, on the grounds that the Debtor had no equity in the Property and the Property was not necessary for an effective reorganization. The Motion also requested adequate protection payments to protect GMAC’s alleged interest in the Property. GMAC attached the Note with the Endorsement and DOT as exhibits to the Motion.

The Debtor filed a response challenging GMAC’s standing to seek relief from stay. After various discovery disputes, GMAC sent a letter dated September 17, 2009, to the Debtor which purported to explain the various transfers of the Note and the DOT. (Docket #90). The letter explained that GreenPoint transferred the “subject loan” to Lehman under the FISA, that Lehman sold the “subject loan” to SASC under the MLSAA, that SASC, Aurora Loan Services, and U.S. National Bank entered into a trust agreement, which created the Trust and made Aurora the master servicer for the “subject loan,” and, that GMAC was the servicer of the “subject loan” under the SSA. According to GMAC, its status as servicer, along with the Endorsement of the Note to GMAC and the assignment of the DOT from MERS to GMAC, demonstrated that it had standing to bring the Motion.

On November 10, 2009, the Court conducted an evidentiary hearing on the Motion. GMAC offered the original Note at the hearing and admitted into evidence a copy of the Note, DOT, copies of the FISA, MLSAA, Trust Agreement, the Reconstituted Servicing Agreement and the SSA. However, GMAC did not offer any documents demonstrating how the Note and DOT were conveyed by GreenPoint to the FISA. No document was offered demonstrating how the Note and DOT were conveyed from the FISA to the MLSAA or from the MLSAA into the Trust. Schedule A-1 of the MLSAA, where the transferred mortgages presumably would have been listed, only has the words “Intentionally Omitted” on it, and Schedule A-2 has the word “None.” (Exhibit F, pp. 19-20). Similarly, there is no evidence that the Note and DOT are subject to the SSA. Exhibit A to the SSA, titled “Mortgage Loan Schedule,” is blank. At the conclusion of the hearing, this Court ordered the Debtor to begin making adequate protection payments commencing on December 1, 2009 to the Chapter 13 Trustee. The Court further ordered GMAC and the Debtor to negotiate the amount of the adequate protection payments. When the parties were unable to reach agreement, the Court set the amount of the monthly payments at $1,000.

III. ISSUE

Does GMAC have standing to bring the Motion?

IV. JURISDICTIONAL STATEMENT

Jurisdiction is proper under 28 U.S.C. §§ 1334(a) and 157(b)(2)(G).

V. DISCUSSION

A. Introduction

Section 362(a) of the Bankruptcy Code provides that the filing of a bankruptcy petition operates as a stay of collection and enforcement actions. 11 U.S.C. § 362(a). The purpose of the automatic stay is to provide debtors with “protection against hungry creditors” and to assure creditors that the debtor’s other creditors are not “racing to various courthouses to pursue independent remedies to drain the debtor’s assets.” In re Tippett,Dean v. Trans World Airlines, Inc., 72 F.3d 754, 755-56 (9th Cir. 1995)); see also In re Johnston, 321 B.R. 262, 2737-4 (D. Ariz. 2005). Despite the broad protection the stay affords, it is not without limits. 542 F.3d 684, 689-90 (9th Cir. 2008) (citing Section 362(d) allows the court, upon request of a “party in interest,” to grant relief from the stay, “such as terminating, annulling, modifying, or conditioning such stay.” 11 U.S.C. § 362(d)(1). The court may grant relief “for cause, including the lack of adequate protection.” Id. The court may also grant relief from the stay with respect to specific property of the estate if the debtor lacks equity in the property and the property is not necessary to an effective reorganization. 11 U.S.C. § 362(d)(2).

Any party affected by the stay should be entitled to seek relief. 3 COLLIER’S ON BANKRUPTCY ¶ 362.07[2] (Henry Somers & Alan Resnick, eds. 15th ed., rev. 2009); Matter of Brown Transp. Truckload, Inc., 118 B.R. 889, 893 (Bankr. N.D. Ga. 1990); In re Vieland, 41 B.R. 134, 138 (Bankr. N.D. Ohio 1984)). Relief from stay hearings are limited in scope — the validity of underlying claims is not litigated. In re Johnson, 756 F.2d 738, 740 (9th Cir. 1985). As one court has noted, “[s]tay relief hearings do not involve a full adjudication on the merits of claims, defenses or counterclaims, but simply a determination as to whether a creditor has a colorable claim.” In re Emrich, 2009 WL 3816174, at *1 (Bankr. N.D. Cal. 2009).

Nevertheless, in order to establish a colorable claim, a movant for relief from stay bears the burden of proof that it has standing to bring the motion. In re Wilhelm, 407 B.R. 392, 400 (Bankr. D. Idaho 2009). The issue of standing involves both “constitutional limitations on federal court jurisdiction and prudential limitations on its exercise.” Warth v. Seldin, 422 U.S. 490, 498 (1975). Constitutional standing concerns whether the plaintiff’s personal stake in the lawsuit is sufficient to have a “case or controversy” to which the federal judicial power may extend under Article III. Id.; see also Lujan v. Defenders of Wildlife, 504 U.S. 555, 559-60 (1992); Pershing Park Villas Homeowners Ass’n v. United Pac. Ins. Co., 219 F.3d 895, 899 (9th Cir. 2000).

Additionally, the “prudential doctrine of standing has come to encompass several judicially self-imposed limits on the exercise of federal jurisdiction.'” Pershing Park Villas, 219 F.3d at 899. Such limits are the prohibition on third-party standing and the requirement that suits be maintained by the real party in interest. See Warth v. Seldin, 422 U.S. at 498-99; Gilmartin v. City of Tucson, 2006 WL 5917165, at *4 (D. Ariz. 2006). Thus, prudential standing requires the plaintiff to assert its own claims rather than the claims of another. The requirements of Fed. R. Civ. P. 17, made applicable in stay relief motions by Rule 9014, “generally falls within the prudential standing doctrine.” In re Wilhelm, 407 B.R. at 398.

B. GMAC’s Standing

GMAC advances three different arguments in support of its claim to be a “party in interest” with standing to seek relief from stay. First, GMAC asserts it has standing because the Note was endorsed to GMAC and GMAC has physical possession of the Note. Second, GMAC asserts that by virtue of the MERS Assignment, it is a beneficiary of the DOT and entitled to enforce and foreclose the DOT under Arizona law. Third, GMAC asserts it has standing because it is the servicer of the Note. The court addresses each of GMAC’s claims in turn.

1. GMAC Has Not Demonstrated That It Is A Holder Of The Note

If GMAC is the holder of the Note, GMAC would be a party injured by the Debtor’s failure to pay it, thereby satisfying the constitutional standing requirement. GMAC would also be the real party in interest under Fed. R. Civ. P. 17 because under ARIZ. REV. STAT. (“A.R.S.’) § 47-3301, the holder of a note has the right to enforce it.[ 2 ] However, as discussed below, GMAC did not prove it is the holder of the Note.

Under Arizona law, a holder is defined as “the person in possession of a negotiable instrument that is payable either to bearer or to an identified person that is the person in possession.” A.R.S. § 47-1201(B)(21)(a).[ 3 ] GMAC has failed to demonstrate that it is the holder of the Note because, while it was in possession of the Note at the evidentiary hearing, it failed to demonstrate that the Note is properly payable to GMAC. A special endorsement to GMAC was admitted into evidence with the Note. However, for the Endorsement to constitute part of the Note, it must be on “a paper affixed to the instrument.” A.R.S. § 47-3204; see also In re Nash, 49 B.R. 254, 261 (Bankr. D. Ariz. 1985). Here, the evidence did not demonstrate that the Endorsement was affixed to the Note. The Endorsement is on a separate sheet of paper; there was no evidence that it was stapled or otherwise attached to the rest of the Note. Furthermore, when GMAC filed its proof of claim, the Endorsement was not included, which is a further indication that the allonge containing the Endorsement was not affixed to the Note.[ 4 ]

In Adams v. Madison Realty & Dev., Inc., 853 F.2d 163 (3d Cir. 1988), the plaintiffs executed promissory notes which, after a series of transfers, came into the defendant’s possession. At issue was whether the defendant was the rightful owner of the notes. The court held that the defendant was not entitled to holder in due course status because the endorsements failed to meet the UCC’s fixation requirement. Id. at 168-69. The court relied on UCC section 3-202(2) [A.R.S. § 47-3204]: “An indorsement must be written by or on behalf of the holder and on the instrument or on a paper so firmly affixed thereto as to become a part thereof.” Id. at 165. Since the endorsement page, indicating that the defendant was the holder of the note, was not attached to the note, the court found that the note had not been properly negotiated. Id. at 166-67. Thus, ownership of the note never transferred to the defendant. Applying that principle to the facts here, GMAC did not become a holder of the Note due to the improperly affixed special endorsement.

While the bankruptcy court in In re Nash, 49 B.R. 254 (Bankr. D. Ariz. 1985) found that holder in due course status existed even though an allonge was not properly affixed to an instrument, the court based its determination on the clear intention that the note assignment be physically attached because: (1) the assignment was signed and notarized the same day as the trust deed; (2) the assignment specifically referenced the escrow number; (3) the assignment identified the original note holder; and (4) the assignment recited that the note was to be attached to the assignment. Id. at 261.

In this case, however, there is no proof that the allonge containing the special endorsement from GreenPoint to GMAC was executed at or near the time the Note was executed. Furthermore, the Endorsement does not have any identifying numbers on it, such as an account number or an escrow number, nor does it reference the Note in any way. There is simply no indication that the allonge was appropriately affixed to the Note, in contradiction with the mandates of A.R.S. § 47-3204. Thus, there is no basis in this case to depart from the general rule that an endorsement on an allonge must be affixed to the instrument to be valid.

GMAC cannot overcome the problems with the unaffixed Endorsement by its physical possession of the Note because the Note was not endorsed in blank and, even if it was, the problem of the unaffixed endorsement would remain.[ 5 ] As a result, because GMAC failed to meet its burden of demonstrating that the Endorsement was proper, it has failed to demonstrate that it is the holder of the Note.

2. The MERS Assignment Of The DOT Did Not Provide GMAC With Standing

GMAC argues that it has standing to bring the Motion as the assignee of MERS.[ 6 ] In this case, MERS is named in the DOT as a beneficiary, solely as the “nominee” of GreenPoint, holding only “legal title” to the interests granted to GreenPoint under the DOT. A number of cases have held that such language confers no economic benefit on MERS. See, e.g., In re Sheridan, 2009 WL 631355, *4 (Bankr. D. Idaho 2009); In re Mitchell, 2009 WL 1044368, *3-4 (Bankr. D. Nev. 2009); In re Jacobson, 402 B.R. 359, 367 (Bankr. W.D. Wash. 2009). As noted by the Sheridan court, MERS “collect[s] no money from [d]ebtors under the [n]ote, nor will it realize the value of the [p]roperty through foreclosure of the [d]eed of [t]rust in the event the [n]ote is not paid.” 2009 WL 631355 at *4.

Because MERS has no financial interest in the Note, it will suffer no injury if the Note is not paid and will realize no benefit if the DOT is foreclosed. Accordingly, MERS cannot satisfy the requirements of constitutional standing. GMAC, as MERS’ assignee of the DOT, “stands in the shoes” of the assignor, taking only those rights and remedies the assignor would have had. Hunnicutt Constr., Inc. v. Stewart Title & Trust of Tucson, Trust No. 3496, 187 Ariz. 301, 304 (Ct. App. 1996) citing Van Waters & Rogers v. Interchange Res., Inc., 14 Ariz. App. 414, 417 (1971); In re Boyajian, 367 B.R. 138, 145 (9th Cir. BAP 2007). Because GMAC is MERS’ assignee, it cannot satisfy the requirements of constitutional standing either.[ 7 ]

3. GMAC Does Not Have Standing As The Servicer Of The Note

(a) Servicer’s Right To Collect Fees For Securitized Mortgages

Securitization of residential mortgages is “the process of aggregating a large number of notes secured by deeds of trust in what is called a mortgage pool, and then selling security interests in that pool of mortgages.” Kurt Eggert, Held Up In Due Course: Predatory Lending, Securitization, and the Holder in Due Course Doctrine, 35 CREIGHTON L. REV. 503, 536 (2002). The process begins with a borrower negotiating with a mortgage broker for the terms of the loan. Then, the mortgage broker either originates the loan in its own name or in the name of another entity, which presumably provides the money for the loan. Almost immediately, the broker transfers the loan to the funding entity. “This lender quickly sells the loan to a different financial entity, which pools the loan together with a host of other loans in a mortgage pool.” Id. at 538.

The assignee then transfers the mortgages in the pool to another entity, which in turn transfers the loans to a special purpose vehicle (“SPV”,) whose sole role is to hold the pool of mortgages. Id. at 539. “The transfer to the special purpose trust must constitute a true sale, so that the party transferring the assets reduces its potential liability on the loans and exchanges the fairly illiquid loans for much more liquid cash.” Id. at 542. Next, the SPV issues securities which the assignee sells to investors. Id. at 539.

Once the securities have been sold, the SPV is not actively involved. It “does not directly collect payments from the homeowners whose notes and deeds of trust are held by the SPV.” Id. at 544. Rather, servicers collect the principal and interest payments on behalf of the SPV. Id. Fees are associated with the servicing of loans in the pool. Therefore, GMAC would have constitutional standing if it is the servicer for the Note and DOT because it would suffer concrete injury by not being able to collect its servicing fees.[ 8 ]In re O’Kelley, 420 B.R. 18, 23 (D. Haw. 2009) . In this case, however, the evidence does not demonstrate that the Note and DOT were transferred to the Trust, and, without that evidence, there is no demonstration that GMAC is the servicer of the Note.

(b) There Is Insufficient Evidence That The Note Was Sold To Lehman And Became Part Of The Trust

When the Debtor executed the Note and DOT, GreenPoint was the original holder of the Note and the economic beneficiary of the DOT. GreenPoint, allegedly, transferred the Note to Lehman pursuant to the FISA. However, the term “mortgage loans” is not defined in the FISA and GMAC’s documents regarding the securitization of the Note and DOT provide no evidence of actual transfers of the Note and DOT to either the FISA or the Trust. Because such transfers must be “true sales,” they must be properly documented to be effective. Thus, to use an overused term, GMAC has failed “to connect the dots” to demonstrate that the Note and DOT were securitized. Accordingly, it is immaterial that GMAC is the servicer for the Trust.

C. Debtor’s Other Arguments

1. Securities Investors Are Not The Only Individuals Who Can Satisfy Standing Requirements When Dealing With A 362 Motion on a “Securitized” Mortgage

The Debtor argues that, in an asset securitization scheme, only the securities investors have standing to seek stay relief because they are the only parties with a financial interest in the securitized notes. However, because the Debtor executed the Note and received consideration (which he used to purchase the house), the contract is enforceable regardless of who provided the funding. In other words, the fact that the funds for a borrower’s loan are supplied by someone other than the loan originator, does not invalidate the loan or restrict enforcement of the loan contract to the parties who funded the loan. A number of cases and treatises recognize that consideration for a contract, including a promissory note, can be provided by a third party. See, e.g., DCM Ltd. P’ship v. Wang, 555 F. Supp. 2d 808, 817 (E.D. Mich. 2008); Buffalo County v. Richards, 212 Neb. 826, 828-29 (Neb. 1982); 3 WILLISTON ON CONTRACTS § 7:20 (Richard A. Lord, 4th ed. 2009); RESTATEMENT (SECOND) OF CONTRACTS § 71(4) (2009).

Notes are regularly assigned and the assignment does not change the nature of the contract. The assignee merely steps into the shoes of the assignor. In re Boyajian, 367 B.R. 138, 145 (9th Cir. BAP 2007); In re Trejos, 374 B.R. 210, 215 (9th Cir. BAP 2007). No additional consideration is required, as opposed to a novation which creates a new obligation. Id. at 216-17 citing RESTATEMENT (SECOND) OF CONTRACTS § 280, cmt. e. Therefore, the Debtor’s argument that the Note is unenforceable because the funder of the Note was not the payee fails. The Note is still valid and can be enforced by the party who has the right to enforce it under applicable Arizona law.

2. Proof Of A Note’s Entire Chain Of Ownership Is Not Necessary For Stay Relief

A movant for stay relief need only present evidence sufficient to present a colorable claim — not every piece of evidence that would be required to prove the right to foreclose under a state law judicial foreclosure proceeding is necessary. In re Emrich, 2009 WL 3816174, at *1 (Bankr. N.D. Cal. 2009). Accordingly, not every movant for relief from stay has to provide a complete chain of a note’s assignment to obtain relief.

Arizona’s deed of trust statute does not require a beneficiary of a deed of trust to produce the underlying note (or its chain of assignment) in order to conduct a Trustee’s Sale. Blau v. Am.’s Serv. Co., 2009 WL 3174823, at *6 (D. Ariz. 2009); Mansour v. Cal-W. Reconveyance Corp., 618 F. Supp. 2d 1178, 1181 (D. Ariz. 2009); Diessner v. Mortg. Elec. Registration Sys., 618 F. Supp. 2d 1184, 1187 (D. Ariz. 2009). It would make no sense to require a creditor to demonstrate more to obtain stay relief than it needs to demonstrate under state law to conduct a judicial or non-judicial foreclosure. Moreover, if a note is endorsed in blank, it is enforceable as a bearer instrument. See In re Hill, 2009 WL 1956174, at *2 (Bankr. D. Ariz. 2009). Therefore, this Court declines to impose a blanket requirement that all movants must offer proof of a note’s entire chain of assignments to have standing to seek relief although there may be circumstances where, in order to establish standing, the movant will have to do so.

3. The Movant Has Not Violated Rule 9011

The Debtor argues that GMAC “violated Rule 7011” by presenting insufficient and misleading evidence. Given that there is no Rule 7011, the Court assumes that the Debtor was actually referring to Bankruptcy Rule 9011. Rule 9011 allows a court to impose sanctions for filing a frivolous suit. FED. R. BANKR. P. 9011(c); see also FED. R. CIV. P. 11(c). As noted at the evidentiary hearing, the Court did not find that GMAC filed its motion for relief stay in bad faith, nor does this Court believe GMAC filed its motion thinking it did not have proper evidentiary support. There are numerous, often conflicting, decisions on the issues of “real party in interest” and constitutional standing, and what evidence must be presented by a servicer seeking stay relief. The record in this case does not support imposition of 9011 sanctions.

VI. CONCLUSION

GMAC has not demonstrated that it has constitutional or prudential standing or is the real party in interest entitled to prosecute a motion for relief from stay.

Accordingly, its motion is DENIED without prejudice.

Moral Hazard in Non-Judicial Sale: Trustee commits violations of FDCPA and other statutes!

From Eaine B

Editor’s Note: I have long advocated sending letters, objections to sale and complaints against “trustees” named (or substituted) on deeds of trust who initiate foreclosure proceedings. Indeed, it is highly probable that because of statutes attempting to protect the trustee from liability, the trustee is at best usually named only as a nominal party in a lawsuit challenging the legality of the non-judicial sale, demanding the identity and contact information of the creditor and getting a full accounting from the real creditor.

I would argue that this reader’s comment is more on target than they even know. Because that is the point — knowledge. If the “trustee” knowingly proceeds when it KNOWS there is a question of title, a question of who is the creditor, and knows that this loan was sold to third parties that have not been disclosed to the Trustor nor the Trustee, then the trustee is more than a nominal party, to wit: they are a co-venturer in a  fraudulent scheme.

Typically non-judicial action commences under a “substitute trustee”.  One would ask why it was necessary to call in a “substitute trustee” from the bullpen, when the current one is just fine. The only possible answer is that the old trustee either doesn’t want any part of this, or won’t do it without following industry standards to confirm ownership etc. It would seem fairly obvious that if the existing trustee is still in business and continues to qualify as a trustee, the only rational reason to change trustees is because the actors wish to do business with people who won’t ask questions.

Often the “substitution of trustee” is backdated, undated or dated after the notice of sale, notice of default etc., so there is a simple procedural angle to set back the sale if you are actually reading the documents, and getting a title report.

More substantively, the “substitute trustee” is granted that position by a party who in all probability does not have the power to grant it — but that requires a forensic analysis, title report, and probably a lawsuit to establish. For example, if some person unknown to MERS assumes the title of “assistant Vice president of Mortgage Electronic Registration Systems” and signs the substitution of trustee or any other document, they probably lack the power to do so, or they lack the documentation showing they have the power to do so.

This actually runs to the core of moral hazard in non-judicial states. Anyone who knows you have missed payments, could file a “substitution of Trustee” document in the county records, send you a notice of default, notice of sale and sell your property to the highest bidder — all BEFORE your real servicer (who we know is only a pretender lender) even knows about it. It is a scam waiting to happen. The scammer then takes the money and runs. Meanwhile you have most likely given up and left the house so it is now abandoned. This scenario can only happen in non-judicial states, where the statute authorizing a non-judicial foreclosure sale ASSUMES that the right party is doing the right thing under proper authority.

When mortgages were simple, and securitization was only an idea, the opportunity for abuse in non-judicial states was present but generally controllable because your true lender had control of the loan, they knew when you were delinquent, and they would be in touch with you, during which time it might come out that you had already received a notice of sale from a “substitute trustee.”

In the world of securitization where the potential real parties in interest are almost infinite in number, where the credit report is used rather than the title report, and where various layers of companies are used to create plausible deniability, insulation from liability and the ability to move things around “off-balance sheet” or “off record” at the county recorder’s office, the potential for abuse is practically infinite. And true to form, my experience is that virtually every foreclosure in a non-judicial state contains at least the taint of this abuse and often facially shows the failure to use proper documentation.

Comment submitted by Eaine B—–

Trustee commits violations of Fair Debt Collections Practice Act!
A good cause of action against Northwest Trustee Services Inc, Routh Crabtree Olsen PS is that I have found they sell your private information to the public. Go to http://www.usa-foreclosoure.com and find your foreclosure….then buy for $39.00 a copy of the title report that is supposed to be private between the trustee and the beneficiary. Any public person can order your report online. This is mail and interstate violations. Make a complaint to the Bar association, and the FTC and your state Attorney General.
Call the title company on the top of the form and ask them. Then perhaps you can file a suit against Routh Crabtree Olsen and Northwest Trustee Services Inc for violations of 15 USC 1692 Fair Debt Collection Practices Act violation. It’s triple damages. Most likely they will have sent you a letter from Routh Crabtree Olsen. One I got even quotes the 15 USC 1692. So obviously THEY know about it. The owner of Routh, Crabtree and Olsen is Stephen Routh and Lance Olsen. Routh has various companies in AK, MT, AZ, CA etc. Just look at the list on the various web sites. http://www.usa-foreclosure.com has the same address as Routh Crabtree Olsen and Northwest Trustee Services and as Routh in AK.
Also, the process serving company that they use is owned by them.

Notarized MERS Assignment of DOT as Nominee: Forensic Analysis and Motion Practice

I was looking at an assignment signed by Margaret Dalton, “Vice President”, Mortgage Electronic Registration Systems, Inc (MERS) “as nominee” for “Hoecomings” (sic) Financial Network, Inc. with an execution date of March 5, 2010 and a notarization date of the same date, notarized by D. Pakusic in Duval County, Florida, naming United Independent Title as Trustee under the Deed of Trust and purporting to assign the Deed of Trust to JP Morgan Chase Bank National Association.

A forensic analysis report would or should state as follows:

  1. The title chain reveals the property is located in the County of Los Angeles, State of California and contains a purported assignment signed by Margaret Dalton, “Vice President”, Mortgage Electronic Registration Systems, Inc (MERS) “as nominee” for “Hoecomings” (sic) Financial Network, Inc. with an execution date of March 5, 2010 and a notarization date of the same date, notarized by D. Pakusic in Duval County, Florida, naming United Independent Title as Trustee under the Deed of Trust and purporting to assign the Deed of Trust to JP Morgan Chase Bank National Association. in public records book ____, at page ____ of the County of _________, in the State of Florida. The document appears on its face to have been prepared by Malcolm-Cisneros, a Law Corporation located at 2112 Business Center Dr., Irvine, California 92612. Given the location of the property in California, the location of the law firm that prepared it in California and the location of of the other parties, the fact that it was “notarized” in Florida raises numerous forensic questions requiring production of additional documentation and facts.
  2. Location Issues: The property is located in the State of California, as are the Trustors under the Deed of Trust (DOT). Margaret Dalton is believed to be located in Irvine, California, possibly employed by or on the premises of the above-referenced Law Corporation. The Notary is located in Duval County, Florida which has no known connection with any of the parties. MERS offices are reported to be located in states other than California and the IT platform is reported to be located in the Midwest. Homecoming Financial Network, Inc. (which undersigned believes was intended by the referenced instruments and title chain) is authorized to do business in the State of California, but upon research does not appear to be a chartered bank, financial institution or lender. HFN is a mortgage originator acting on behalf of unknown sources of funds who may be located anywhere, since they are neither disclosed nor described in the closing documentation nor any document on record. Accordingly there is a question as to the identity of the creditor at the time of the origination of the loan, the identity of the creditor at the current time, and the identity of the creditor at all times between the origination of the loan and the present. There are also questions requiring additional documentation and fats to reveal whether the purported assignment was executed by or on behalf of anyone in Duval County, Florida where the instrument was notarized or in Irvine, California where the instrument may have been executed.
  3. Margaret Dalton’s employment is unknown but it does not appear that she has ever been an employee of MERS, nor that MERS is located where Margaret Dalton apparently signed the document. Previous investigations by the undersigned indicate that MERS is an electronic database privately owned and operated by fewer than 17 employees, which do not include Ms. Dalton. According to information received from MERS, the database platform operated by MERS for its members, has an access procedure consisting of a user ID and password. With such information any person could enter, alter or amend any entry in the MERS database. The procedure also provides access to an automated procedure wherein the user may name a person to serve as “vice-president” or “limited signing officer” for MERS. No record has been produced for this analysis indicating that Ms. Dalton was named as “vice-president” or whether she did so herself, nor whether she was authorized to do so or from whom said authority would be claimed. There is accordingly a question as to whether the document was in fact signed by Ms. Dalton, and if so whether she had authority to sign a document that conveyed an interest in real property.
  4. Given the above information, there is also a question as to whether the notarization was valid or void. Florida law provides that if the Notary knows that the person signing does not possess authority to sign or knows that the person is ignorant of their authority, that the oath administered is invalid and that the instrument is construed to be not notarized, despite the signature and stamp. Recording laws require notarization. Thus there is a question as to whether the document is or would be construed as a recorded instrument despite its obvious appearance in the title record. If it is not construed as a recorded instrument, then the chain of title should be amended to remove this document.
  5. The chain of title, as stated above, reveals a Deed of Trust (DOT) in favor of MERS as nominee. No issues are readily apparent as to the execution of the Deed of Trust. However, the content of the DOT raises factual issues that require further examination and the production of additional documents and information. Since MERS is an IT platform operated for the purposes of its private owners, it is not authorized by Florida Statutes nor California Statutes to serve as the equivalent of a recording record for instruments in the public records. It is a data entry and retrieval system that is private, not public. Since MERS was named as nominee and the MERS documentation available on the internet clearly state that under no circumstances will MERS ever claim an interest in the real property, the DOT, the note, nor will ever be the actual lender, beneficiary or mortgagee in any transaction, the effect of naming MERS raises factual issues since there are questions regarding title raised by the conflict between naming MERS and MERS disclaiming any such interest. There is no record of MERS accepting the position as nominee and if so under what circumstances. Those terms exist in agreements executed between members of MERS and one of the MERS corporations and are unavailable to the undersigned forensic analyst.
  6. The DOT and the above-referenced purported assignment refer to MERS as nominee for HFN, which was neither the creditor nor the lender at the time of the origination of the loan. Thus the DOT appears to name MERS (who disclaims any interest in the loan) on behalf of HFN (who served as a conduit for a table-funded loan transaction, probably as part of the securitization of the subject loan transaction) both of whom served principals that were not disclosed at the time of the origination of the loan nor, to the knowledge of the undersigned, to the present. The effect of misspelling the name of HFN on the purported assignment is unknown, but based upon advice from title agents consulted, it would be ordinarily required in any subsequent transaction, that the document be re-executed with the proper spelling. Whether this affects the legality of the instrument is unknown to the undersigned analyst.
  7. The purported assignment refers only to the DOT, which raises several questions. It is unknown whether an assignment of the note, as evidence of the underlying obligation, was executed at the same time as the purported assignment of the DOT. It is unknown whether all the necessary parties executed instruments required to authorize the assignments, and if so when this was accomplished. If there were no such other assignments then there is a question as to whether the instrument was effective, and if so, whether it intended to provide ownership of the security instrument (DOT) to one party while the ownership of the note remained or was transferred to another party, while at the same time the underlying obligation to yet another party may have existed between the Trustor as debtor and the source of funds for the origination of the loan, as creditor. Additional documentation and facts would be required to make these determinations.

MERS Discovery Items

From Eric Mesi

MERs has a manual and I included some of it below regarding foreclosures. But who would know if their manual is correct? Of course they will write it to protect their selves.
Section 2: (a) If a Member chooses to conduct foreclosures in the name of Mortgage Electronic Registration Systems, Inc., the note must be endorsed in blank and in possession of one of the Member’s MERS certifying officers. If the investor so allows, then MERS can be designated as the note-holder.
—————————————————————————–
Section 1. MERS shall within two (2) business days forward to the appropriate
Member or Members, in the form prescribed by and otherwise in accordance with the
Procedures, all properly identified notices, payments, and other correspondence received by MERS with respect to mortgage loans registered on the MERS® System for which Mortgage Electronic Registration Systems, Inc. serves as mortgagee of record.
—————————————————————————–
Section 2. MERS shall provide to Members certain standard reports concerning
information contained on the MERS® System, as specified in the Procedures, and such other reports as MERS may determine from time to time.
—————————————————————————–
(b) In non-judicial foreclosure states, if the Member chooses to foreclose in MERS name under the power of sale provision in the security instrument and is not seeking a deficiency judgment, then the note does not need to be in the possession of the Member’s MERS Certifying Officer when commencing the foreclosure action; provided, however, that under no circumstances may the Member allege that the note is in their possession unless it so possesses.

Signors in Fabricated Documentation reported

This is an example of the information I am requesting that everyone send in so we can pool information. I am entering the names and parties in key words so you can search for them. My goal with HERS is to have an ever increasing database that will speed the research for forensic analysts and lawyers.

The following six orders by Judge Arthur M. SCHACK, of King, should be of interest:

American Brokers Conduit v ZAMALLOA, Judge Arthur M. SCHACK, Kings, Index No. 07206/2007 (11 Sep 2007)
In American Brokers Conduit v ZAMALLOA, on September 11, 2007, Judge SCHACK denied an application for a judgemnt of foreclosure and sale of a Kings County property without prejudice due to the plaintiff’s lack of standing.  The plaintiff American Brokers Conduit instituted suit on February 28, 2007, but did not receive an interest in the mortgage which is subject of the suit until a March 5, 2007 assignment (CFRN 2007000169450).  This case is a little bizarre in that American Brokers Conduit seems to have assigned the mortgage to ITSELF at a different address in Melville, New York.  The case does have a good discussion of the case authority requiring a plaintiff to have standing.
American Brokers Conduit v ZAMALLOA, Judge Arthur M. SCHACK, Kings, Index No. 07206/2007 (28 Jan 2008)
In American Brokers Conduit v ZAMALLOA, on January 28, 2008, Judge SCHACK denied an application for an order of reference due to the plaintiff’s failure to include an affidavit of merit by the party.  Rahter than having an officer of American Brokers Conduit execute the affidavit of merit, the plaintiff submitted an affidavit of merit excuted by a Robert HARDMAN, who identified himself as Vice President of Mortgage Electronic Registration Systems, Inc. (MERS).
Aurora Loan Services, LLC v SATTAR, Judge Arthur M. SCHACK, Kings, Index No. 15208/2007 (09 Oct 2007)
In Aurora Loan Services, LLC v SATTAR, Judge SHACK denied an application for an order for service by publication and dismissed the complaint by Aurora Loan Services, LLC, due to the plaintiff’s lack of standing.  The plaintiff pled a promissory note and mortgage iin which the promissory note was in favor of First Magnus Financial Corporation and the mortgage was recorded in favor of MERS.  Judge SCHACK notes that there is no evidence whatsoever within the record that the mortgage was assigned in favor of the plaintiff and notes that no such mortgage assignemnt was either pled or recorded.  Judge SCHACK goes on to note that First Magnus Financial Corporation had gone out of business in AUgust 2007 and filed for bankruptcy on August 21, 2007.  The opinion then contains a thorough discussion of the case authority requiring a plaintiff to have demonstrable standing in order to be eligible to maintian a suit.  In addition to dismissing the suit, Judge SCHACK also cancelled the notice of pendency.  Judge SCHACK also found the original complaint and suit to be frivolous, but declined to impose sanctions upon the law firm filing the suit because it was the first instance that the Court had noted such conduct.
Bank of NY NA v OROSCO, Judge Arthur M. SCHACK, Kings, Index No. 32052/2007 (19 Nov 2007)
In Bank of NY NA v OROSCO, Judge SCHACK denied an application for an order of reference due to the plaintiff’s failure to demonstrate ownership of the mortgage for the subject property.  The plaintiff pled an assignment from MERS to Bank of New York dated August 21, 2007, but Judge SCHACK noted that this assignment had never been recorded.  But Judge SCHACK went on to note that Bank of New York also pled an affidavit executed by a person who is identified as Keri SELMAN.  Judge SCHACK notes that while in her affidavit in the OROSCO case she identified herself as an Assistant Vice President for Bank of New York, in another case before Judge SCHACK Keri SELMAN had signed an affidavit identifying herself as a Vice President of “Countrywide Home Loans, Attorney in Fact for Bank of New York”.  Judge SCHACK ordered that Ms. Keri SCHACK furnish an affidavit describing her employment history for the previous three years. [In point of fact, this would seem to be Keri or Kerri L. SELMAN (b 26 Aug 1969 – Los Angeles, CA), formerly Keri Lynn ATWOOD, of McKinney, Texas.  She seems likely to be an employee of Countrywide, which has a large servicing facility near where Ms. SELMAN lives.]
Deutsche Bank v CASTELLANOS, Judge Arthur M. SCHACK, Kings, Index No. 22375/2006 (11 May 2007)
In Deutsche Bank v CASTELLANOS, on May 11, 2007, Judge SCHACK denied an application for a judgment of foreclosure and sale due to the plaintiff’s lack of standing.  Judge SCHACK noted that the foreclosure was commenced in July 2006 by Deutsche Bank.  After obtaining an order of reference (November 16, 2006) and after preparing an affirmation of regularity (January 10, 2007) and during the pendency of the action, Deutsche Bank seems to have assigned the mortgage to MTGLQ Investors, L.P. on January 19, 2007 (recorded February 7, 2007). Judge SCHACK therefore denied the plaintiff’s application for a judgment of foreclosure and sale without prejudice expressly inviting the Plaintiff to amend its pleadings to appropriately to correct the identity of the plaintiff. Judge SCHACK cites Gretchen Morgenson’s April 6, 2007, New York Times article “Fair Game; Home Loans: A Nightmare Grows Darker” in his opinion.
Deutsche Bank v CASTELLANOS, Judge Arthur M. SCHACK, Kings, Index No. 22375/2006 (14 Jan 2008)
In Deutsche Bank v CASTELLANOS, on May 11, 2007, Judge SCHACK denied a renewed application for a judgment of foreclosure and sale due to the plaintiff’s lack of standing (see case above).  He noted that the defects identified within his May 11, 2007, order remained unaddressed.  In addition, he noted the presence of a affidavit of merit executed by a Mr. Jeff RIVAS, who was identified as Deutsche Bank’s “Vice President Default Timeline Management”.  He then notes the presence of mortgage assignment within the files executed the same date which identifies Mr. Jeff RIVAS as the “Vice President Default Timeline Management” for Argent Mortgage Company, LLC, the assignor of a the mortgage to Deutsche Bank.  Judge SCHACK points out that if Mr. RIVAS was acting as an officer of both the grantor and the grantee of the assignment that this would create a conflict rendering the conveyance VOID.  Judge SCHACK then directs that Mr. RIVAS’ employment history be clarified in any future application for a foreclosure order.  Judge SCHACK then goes on to note that Deutsche Bank and MTGLQ Investors, L.P. are also shown to share the same address at 1661 Worthington lioad, Suite 100, West Palm Beach, where suspicious transactions executed by one Scott ANDERSON seem to be occuring.  Judge SCHACK then also demands an explanation as to WHY so many corporations seem to be sharing the SAME suite in West Palm Beach.

Judge Arthur M. SCHACK is a Justice of the Supreme Court of New York for King County. [See http://www.nycourtsystem.com/Applications/JudicialDirectory/Bio.php?ID=7029077 ]

Livinglies Posts $100 Reward for HERS Fabrication Index

Announcing the establishment of the Homeowners Electronic Registration System (HERS) to assist in mortgage negotiations, litigation, foreclosures and modifications. HERS v MERS, Get It?

We are looking for someone to go through the comments and blog posts that give the name of an officer or other person signing any paper involved in the mortgage or foreclosure of property and to create a index using EXCEL or ACCESS cross referencing the state, financial institution, actual employer etc. that was revealed. If you are successful we will set up a subscription site for people to pay for the inquiries and you will receive income from that site.

You must submit your resume and all relevant contact information to ngarfield@msn.com by March 31, 2010. And you must commit to having the project in final form, subject to continuing revisions no later than April 30, 2010. Upon your selection you will receive a check for $100 in advance.

Good Comment from Rand:

It’s a good idea but you should put a few more requirements for the database. It’s not enough to simply look at the affidavits of indebtedness. Any affidavit filed is worthy of note because if you can establish than any of them were signed by a questionable, including an affidavit by another law firm or attorney verifying the validity of the attorneys fees being sought as reasonable (requirement here in FL to get attorneys fees) then you can through the entire case in doubt.

Example, bad attorney who gets cited personally by a judge or the local bar, any case he’s signed an affidavit in is questionable. I don’t know say “Coucgh”ivd “hack”ern. or the elk.

Finally, there is no such thing as narrowing the focus to filings withing a state. With due respect Ian the person who signs for PA probably also signs for FL, CA and anywhere else that’s not within 100 miles of where they live in MO. However, it’s important to not only note who signs, but when and where. How else could the sign in two different states on the same day? Better be ready to show plane tickets.

MERS Defined in GARFIELD GLOSSARY

see mers-admits-no-interest-in-mortgage-and-no-loss-on-default

see glossary-mortgage-meltdown-and-foreclosure

MERS

(Mortgage Electronic Registration Systems, MERSCORP):

A technology platform in which “members” gain access through password and user ID. Estimated number of employees is 17. Estimated number of “officers” self appointed is in the thousands. The platform is devoted to “servicing” participants in the securitization chain of mortgages. The platform allows members to enter data without any verification for authenticity or veracity and is frequently changed to reflect a member’s needs in litigation, foreclosure or other matters. Members also are allowed to appoint themselves as executives or employees of MERS for the purpose of executing assignments and other documents relating to mortgages, investor distributions etc.  The sole purpose of MERS is to circumvent the recording statutes in states, tax evasion, evasion of RICO enforcement, and to create a veil preventing the borrower from discovering the identity of creditors and to prevent a complete accounting for the securitized transaction. MERS is often named on Deeds of Trust as the beneficiary despite the fact that it has no financial interest in the obligation, note or mortgage and promises not to assert any such claim as part of its contract with members. MERS is also named as Mortgagee in Mortgages. In all cases, MERS is named as “nominee” allowing members to privately record transfers of notes and other indicia of ownership of the loan, despite the fact that the creditors are neither the members nor MERS. MERS is also used after the closing documents are executed by “assignment.” Verification of the above definition can be found on the MERS website at www.mersinc.org. See also mers-admits-no-interest-in-mortgage-and-no-loss-on-default

Marti Noriega Signor for MERS is Litton Employee

You referenced ‘one Noriega’ on a post today. May I presume that to be the ‘Marti Noreiga’ who has already been ‘outed’ for her signatures as a MERS employee when her own Facebook and Linkedln pages declare she is a Litton or CBASS employee (CBASS being the corporation that owns Litton)?

Do we have any KNOWN valid signatures of Marti’s that can be used to validate that she did sign these documents? I know the MERS-employee documents with her signature are fraudulent. In my case Litton is the very company who is now in charge of servicing of my mortgage. Is Litton a target for legal action for the fraudulently signed docs bearing their employee’s name?

MERS History Re-Re-Revised

Several comments have been posted in addition to other information about MERS which is bringing the entire MERS issue over the brink of the absurd. Who, what where is MERS? Write in with your MERS stories. Take note that we are dealing with at least four entities that I am now aware of —MERS, MERSCORP, Mortgage Electronic Registration Systems, Inc., (note plural), Mortgage Electronic registration System, Inc. (note singular). Who are they? What are they in this shell game of “bankruptcy remote vehicles and why are the courts so deaf to the obvious implications of this game on the quality of title on each and every one of the 60 million homes that MERS alleges to have in its data base? Is our judiciary being run by politics — the one branch of government that is supposed to be independent of the executive and legislative branches that have been so useless in this crisis?

In a classic reverse of fortunes, the bad guys have taken control of the dialogue and using legal technicalities and their formidable size and names to impress the judge that it is the hapless borrower who is trying to get away with something on a legal technicality. In a perversion of lady justice, these people take homes that satisfy no obligation and keep the proceeds as a tip for keeping their mouths shut about the pornographic profits earned by Wall Street when these financial products were sold upstream to investors and down stream to homeowners. It is hush money to maintain the cone of silence about the huge profits earned on the down side when the mortgages went into default, just as they were always planned to do.

One reader writes in about Ohio: “I find it very interesting that here in Summit County Ohio, MERS USED to be listed as the Plaintiff in foreclosure actions within our court system. NOW, they are always listed as a Defendant. It’s like playing a game of MONOPOLY with my little brother here. When he found himself on the losing end of the game, he simply changed the rules.They CANNOT have it both ways.”
Another reader wrote in that in Florida the ONLY way MERS is registered to do business is as registered agent to receive service of process. If that is true their representations in hundreds of thousands of foreclosures has been false, fraudulent and flagrant. But of course we know that isn’t the only reason their representations have been false, fraudulent and flagrant.

Yet Minnesota seems to be sensitive to the banking interests, passing laws and interpreting statutes to give MERS status it was never meant to have. Bypassing those annoying provisions of the 5th and 14th amendment about due process, and 500 years of common law, they allow MERS to foreclose on a home and keep the house distributing the title and proceeds anyway it wants even though no MERS entity has EVER put one dime into the transaction and even though MERS is a total stranger to the transaction other than being named, without its knowledge but with its consent in tens of millions of real estate closings.

And California is allowing Judges to abandon 500 years of common law in allowing someone who is a stranger to the transaction to make claims at the cost, detriment and prejudice to the real parties to that transaction. Further, California continues to allow the procedural shell game in unlawful detainers wherein they use the law that was meant to be used in normal evictions and misapply to foreclosures in which the actors are impostors, blocking the homeowner from access to the courts or the right to be heard, and preventing the exercise of his/her rights to due process.

How do we know? Because if you go to the MERS website they tell you. And what they tell you is that they are a bankruptcy remote vehicle to be utilized in evading or avoiding laws on taxes, recordation, fees, and reporting. They tell the banks not to worry, they will never make a claim for the mortgage or the note or the obligation. They say they are only a bookkeeping service.

And from other sources we know they have about 17 employees, they have an automated attendant system to deputize anyone who knows how to access their system, and that ANYONE can sign as an officer of MERS even if none of the 17 people who work there ever heard of you or ever will hear of you.
It’s a shell game, and lawyers and Judges should be concentrating on this not because it is a legal technicality but because if we are a nation of laws, the protection of ALL interested parties should be our paramount concern. In each and every legal action neither the borrower nor the actual lender who advanced the cash for the loan is part of that equation.

In a classic reverse of fortunes, the bad guys have taken control of the dialogue and using legal technicalities and their formidable size and names to impress the judge that it is the hapless borrower who is trying to get away with something on a legal technicality. In a perversion of lady justice, these people take homes that satisfy no obligation and keep the proceeds as a tip for keeping their mouths shut about the pornographic profits earned by Wall Street when these financial products were sold upstream to investors and down stream to homeowners. It is hush money to maintain the cone of silence about the huge profits earned on the down side when the mortgages went into default, just as they were always planned to do.

This isn’t hard to understand. It is hard to accept. It is a challenge to us as citizens regardless of our political persuasions, to break up the oligopoly that controls Washington in BOTH political major parties and reinstate government for the people and by the people. I’m doing my part, what are you doing?

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