Under the subject matter of Debt Collection, Foreclosures and Chain of Title Education … and Op-Ed as well:
UPDATED ON MARCH 19, 2017
The following diatribe is not to be construed as legal advice, but rather for educational purposes only.
A number of issues have surfaced in recent years, in light of the foreclosure crisis, two of which involvement indorsements on the promissory notes (or their respective allonges) and one regarding who the real parties in interest are when the MERS® System is involved. By no means is any of this finite, as research is continually ongoing as to the “flaws” in the MERS business model, which to me, is impliedly criminal in nature. I don’t care whether this “business model” has been trademarked either. It has left the door open for criminal RICO behavior and MERSCORP and its shareholders provided the platform for the thievery.
To me, the MERS® System was not only created as a platform by which to (as MERS’s own officers tell it) electronically transfer mortgages and notes within a database (owned by then-MERSCORP, Inc.), but also to act “as the getaway car” in the theft of tens of millions of residential properties across America ever since MERS became involved in mortgage foreclosures. Like it or not, this smacks of criminal RICO. MERS and its parent, of course, will deny any wrongdoing, like they did when I released the Williamson County Real Property Records Audit in January of 2013.
In fact, MERS was so vehemently upset with the release of the Williamson County Report that they caused to be published almost a full-page ad in the Austin American-Statesman newspaper on February 7, 2013, denying any wrongdoing and attempting to rebut the contents of the Report, which was reviewed by more than a half dozen foreclosure defense attorneys prior to its release and was accompanied by a legal opinion. One would have to ask, “How could little ole’ Dave Krieger write a report that would piss off the MERS hierarchy all the way to Reston, Virginia?”
I was inundated by phone calls from reporters at the time, attempting to elicit a comment as to MERS’s statement that “it didn’t do anything wrong”. My simple response to them was: “If MERS didn’t do anything wrong, then why is everybody suing them?” The reporters just laughed, affirmatively responding in kind and didn’t ask me any more follow-up questions.
In previous posts, I have attempted to identify who the real “agent” (MERSCORP calls it a “nominee”) is in the mortgage loan security instruments. The term used in MERS-related paperwork is “Electronic Agent”. There is only ONE “Electronic Agent” named in the back-office documents that virtually all foreclosure defense attorneys never get to see … and it’s NOT MERS. I personally asked for those documents when writing discovery to MERS and MERSCORP in the Robinson case, which by the way is protected by work product privilege. The Robinsons never got those documents because MERS and MERSCORP wouldn’t produce them. Does this sound familiar to you? Not if you didn’t know you had to ask for them, because they do in fact, exist. MERS just flat out want to verify its agency relationship with its members; frankly, because it doesn’t have any agency relationship with its members. If you read the DiLibero case in Rhode Island, the Supreme Court noted that the executory contract was with MERSCORP, Inc. … or didn’t you pay attention to that part? MERS obviously doesn’t want you to … and for good reason.
The “Electronic Agent” in the document I’m referring to is MERSCORP, Inc. (now MERSCORP Holdings, Inc.). The Agreement I’m talking about is attached here: eta_warehouse_template_v6-mers-and-borrower4
In the foregoing document, in order to be successful in discovery, research shows you have to have a completed document between MERSCORP and the “member-user” of the MERS® System. The differences in your understanding of how these documents work appears to determine whether or not you’ll win your foreclosure case. But that is only one element of liability here.
When I spoke of “the getaway car”, it generally means, an accomplice helped the robbers get away with the goods. The getaway car driver generally is considered equally culpable in the crime (in this case, the theft of property by fraud) and is generally sentenced to prison, along with the perpetrators and actual actors in the scheme (the MERSCORP member-subscribers who use the MERS® System). In criminal RICO, two or more actors are necessary, in a specific pattern of behavior, to orchestrate an act which results in an actual loss of money or property, which in this case, involved borrowers’ payments to a lender for a specific period of time, accompanied by a down payment (sometimes as much as 20% or more), in obtaining one of these so-called, MERS-originated Mortgages or Deeds of Trust.
I also have to mention identity theft here, because nowhere in any of these security instruments does it say that MERS, as an agent for the lender, should be allowed access to your social security number and other personal identifying information. This becomes evident when anyone gets on the MERS Servicer ID Search system and wants to know who their “investor” is, which in of itself also promulgates fraud because MERSCORP, who owns the site, disclaims the site for accuracy because it’s just the driver of the getaway car. The actual “actors” who perpetrated the fraud are the servicers who use the “System” to put whatever they want the borrower to see. Borrowers actually believe the shit these servicers post on that site and use it in court. This is exactly what MERSCORP wants you to do. And you fall for it? Apparently, even the foreclosure defense attorneys don’t know what a Warehouse Lender template form is, because if they did, they’d be using it to unravel the MERS® System in front of the judge, demanding a filled-out, signed copy of the bloody form! This is where the agency relationship was created folks … but not with MERS! It was created with MERSCORP … as the “Electronic Agent”! Nowhere in your security instrument does it say “MERSCORP” anywhere. Look at all the millions of homes that were stolen using MERS and MERSCORP as the getaway car (in all those purported MERS assignments) when in fact, the corporate resolution giving then-Secretary William Hultman has never surfaced, despite being demanded to produce in discovery in the Ukpe case in New Jersey.
I spoke with former federal prosecutor Mark J. Malone by phone about this “corporate resolution”, supposedly generated in April of 1998, which he doubt even exists … which is why MERS won’t produce it.
I put those results in the OSCEOLA COUNTY FORENSIC EXAMINATION and caused them to be released to the Clerk of the Circuit Court of Osceola County, Florida on December 30, 2014. After that Report was released to the public in 2015, there wasn’t a peep to be heard out of Reston, Virginia (where MERS and MERSCORP are headquartered), contrary to the stink they made when the Williamson County report was released. That’s because the Osecola County Report intimated criminal RICO, “getaway car” implications for MERS and its parent. Every one of the Board of Directors OF MERS and MERSCORP needs to be put in prison, and for well more time than what DOCX’s Lorraine Brown got. Lorraine Brown was only an ass-puppet for Lender Processing Services, Inc., who quickly dumped DOCX to decrease its potential liability. That’s pretty much like the CIA disavowing one of its agent’s actions when the agent is caught, to cut its ties to any potential liability down the road. Instead, the U.S. Department of Justice, along with the Tampa FBI and the Osceola County Sheriff’s Department, whitewashed the Report by attacking the Clerk and myself. It was more important to the Sheriff’s Department how much it cost to certify the 17 cases of evidence still in its possession, and who paid for it, rather than who was responsible for all of the criminal allegations that the Sheriff’s Department itself was involved in, because it got paid $90 per eviction, creating potential liability by extension of the fraud. No wonder they all wanted to bury this by smearing me and the Clerk in the media. This “issue” isn’t going to go away, because people (including attorneys and university researchers, are downloading this report and reading it in droves) are waking up to the real truths of the matter. Giving the Sheriff’s Department in Osceola County the investigative powers regarding this Report is like the “fox guarding the henhouse”.
Also bear in mind that then-9th Circuit States Attorney, Jeff Ashton, declined to investigate the report (obviously, because it would be political suicide for him to “grow a pair”) and turned it over to the Sheriff’s Department, claiming “you have to follow the chain of command. Meanwhile, Ashton decided that he’d rather “grow a pair”, among other things, viewing the AshleyMadison.com website on company time, which is one of the reasons he did not get re-elected in the Democratic Primary in 2016. This means that the new 9th Circuit States Attorney, Aramis Ayala, is going to have to come out strong in favor of the people of her Circuit and do the right thing by investigating this report and convening a grand jury to investigate its contents. If it means the Sheriff’s Department in Osceola County has to face civil litigation for its participation in eviction of all of those homeowners, so be it.
Look at your mortgage or deed of trust and tell me if you see MERSCORP listed as the “nominee”!
Now … what is non-disclosure to you?
Were you ever told that MERSCORP was the “Electronic Agent” behind the scenes? Of course not. Is the MERS® System patent a matter of public record in the U. S. Patent and Trademark Office? It sure is. Is that constructive notice in the land records where the property is located? Nope. That’s because the “driver of the getaway car” had to remain the real secret here.
This is why I also believe that once the documents (notes an mortgages) were uploaded into the MERS® System, they were no longer needed; and thus, were shredded. I know that there are other contradictory opinions out there, but I relied on the 2009 Florida Mortgage Bankers Association letter to Judge Jennifer Bailey that implied that they didn’t need the original documents anymore. Thus, I believe that there are no longer any original documents out there, just electronic copies that are reproduced for trial. And because of UETA and eSign acts, electronic copies conveniently fit the bill … but they’re not the originals, are they?
Now the indorsements …
In the most recent decision, the Supreme Court of Hawaii, in Bank of America, N.A. v. Reyes-Toledo (see the 28-page opinion here: 2017-feb-28-hsct-pulished-opinion) opined (in part) the following:
“Bank of America has maintained that it was the holder of the Note based on the Egan Declaration and the blank indorsement on the Note. Accordingly, we consider whether the Bank produced sufficient evidence to demonstrate that it was entitled to enforce the Note as a holder of the instrument at the time that the foreclosure proceedings were commenced. The negotiation asserted by Bank of America involved negotiation by blank indorsement and transfer of possession of the Note. In contrast, a special indorsement occurs if the indorsement is made by the holder of an instrument and theindorsement identifies a person to whom it makes the instrument payable. When an instrument is specially indorsed, it becomes payable to the identified person and may be negotiated only by the indorsement of that person. Id. A blank indorsement occurs when an indorsement is made by the holder of an instrument and is not a special indorsement; in other words, a blank indorsement is not payable to an identified person. When indorsed in blank, an instrument becomes payable to bearer and may be negotiated by transfer or possession alone until specially indorsed.
Here, the Note, which was attached to Bank of America’s motion for summary judgment as Exhibit A, contains two indorsements. One indorsement is a special indorsement by Countrywide Bank, FSB, to Countrywide Home Loans, Inc. The other is a blank indorsement by Countrywide Home Loans, Inc. Thus, because the Note was last negotiated by a blank indorsement, it may be negotiated by transfer of possession. Although Bank of America produced evidence that it possessed the blank-indorsed Note at the time it sought summary judgment, a material question of fact exists as to whether Bank of America possessed the Note, or was otherwise a holder, at the time it brought the foreclosure action. Indeed, the copy of the Note attached to the summary judgment motion does not reflect the date of the blank indorsement, and the Egan Declaration, which was made after the filing of the complaint in this case, does not indicate when the indorsement occurred. Further, there is no additional evidence in the record regarding the date of the indorsements or whether Bank of America possessed the Note at the time of the filing of the complaint. Thus, there is a material question of fact as to whether Bank of America was the holder of the Note at the time the foreclosure proceedings were commenced, which in turn raises the issue of whether Bank of America had standing to foreclose on the Property at the time it brought the foreclosure action.
Here, there is no evidence in the record, either through the Note itself, the Egan Declaration, or the other documents attached to the motion for summary judgment, showing that the blank indorsement on the Note occurred prior to the initiation of the suit. Consequently, there is a genuine issue as to whether Bank of America was entitled to foreclose when it commenced the proceeding. Thus, viewing the facts and inferences in the light most favorable to Homeowner, there is a genuine issue of material fact as to whether Bank of America held the Note at the time it filed the complaint. Accordingly, Bank of America failed to meet its burden of demonstrating that it was entitled to judgment as a matter of law, and the circuit court erred in granting Bank of America’s motion for summary judgment. For the reasons discussed, the ICA’s April 13, 2016 judgment on appeal is vacated. The circuit court’s December 9, 2014 Judgment is also vacated to the extent it grants summary judgment to Bank of America. The case is remanded to the ICA for a determination of whether the circuit court erred in dismissing Homeowner’s counterclaims.”
Most courts I’ve read up on have issued rulings specific to HOW allonges are supposed to be attached to promissory notes and WHEN they are supposed to be used. I would suspect that if a note has an extra page with no title on it (e.g., “ALLONGE TO NOTE”) that someone inside the servicer arbitrarily chose to attach an indorsement-in-blank stamp on an extra page to imply (or give the bank’s attorneys reason to imply) that it’s an allonge, when all it is, is a sheet of white paper with an indorsement stamp on it and does not constitute and allonge because it’s not properly labeled.
The other problem with allonges is that commonly, the space under the Borrower’s signature is supposed to be “filled up” with stamps BEFORE extra pages are being used. When there is a whole page of room for indorsement stamps, followed by an extra page (properly labeled or not) reeks of document manufacturing. In any case, there should be a specific objection made on the record … or someone needs to go back and research what constitutes a proper allonge.
I know of at least 3 document examiners across the U. S. that can show up in court and testify as to whether a note is “original” or not. I have to ask myself WHY lenders wait until the last minute to show up with the “original note” for the judge. In one case in New Jersey, the bank’s law firm showed up (via a cover lawyer and not the lawyer who filed the foreclosure complaint) with a “faxed copy” of the note, claiming that it was the original. That was objected to, of course, but the judge bought it anyway. That case is on appeal. With a document examiner at the ready when and if a hearing can be scheduled (or a deposition for production of the note for examination) to vet the document properly through an examiner, might scare the bank from bringing it in at all … which brings me to the last point.
THE REAL KEY REASON INDORSEMENTS FAIL
Let’s assume the 424(b)(5) Prospectus has been obtained in certified form from the SEC. I suggest using the entire prospectus because the Pooling and Servicing Agreement (“PSA”) just isn’t enough. The information within the Prospectus ties the Borrower’s loan to an “offering” through the sales pitch, which is the Prospectus to the investors, signed under penalty of perjury under the Sarbanes-Oxley Act. The PSA may contain the section, “Assignment of the Mortgage Loans” under § 2.01; however, the PSA does not make up the WHOLE of the document it is contained within, the Prospectus.
If there are 3 true sales, including transfer from the Depositor to the Trust, as prescribed by the governing regulations of the Trust under § 2.01, shown within the entire Prospectus, in the portion known as the PSA, then where in the chain of indorsements is the endorsement to the Depositor and from the Depositor to the Trust? The PSA is only a portion of the entire “picture”. Without the framework of the Prospectus to back it up, your evidence can be challenged by the bank’s attorneys. Oh, believe me, they had this whole thing figured out before the issues with REMICs ever surfaced in Court. No judge wants to read a 300+ page document. Someone has to.
In continuing the pattern of misbehavior, a most recent case out of Florida’s Fourth District Court of Appeals shows us multiple indorsements (albeit undated) present an entirely different issue as to standing. When a bank proffers more than one note and the indorsements are different, this provides us with more ammunition to rebuff its advances that it has standing to proceed against you in a foreclosure case, as demonstrated below, in a single-page ruling:
It’s not that we haven’t explored this avenue in previous posts. It’s just that the courts are now just starting to recognize that our arguments really do have merit!