Tag Archives: pooling and servicing agreement

WHY UNDATED INDORSEMENTS FAIL

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.”

What the homeowners’ attorneys miss … 
The bigger picture here is the agency relationship claimed to have been possessed by MERS at the time of assignment.  Because the note indorsements are never dated, there’s no proof of when the effective date of transfer occurred.  Thus, in the foregoing instance, WHEN did Bank of America possess the Note?
Before, or after, it filed the complaint.  If the Warehouse Lender agreement says the Borrower, isn’t YOU, but the originating broker, and the interim funding lender is not the party you got the loan from,
As Bob Janes, J.D. has noted, agency must be proven by the Grantor, not the Grantee.  That means that MERS cannot self-authenticate its own agency relationships by and through its officers or through its counsel (“just take my word for it, your Honor”).  As much as you don’t trust lenders, their agents don’t fare much better if the lender lies and the agent repeats the lie in court.
I hardly ever see anyone specifically arguing UCC in court, let alone an undated indorsement and its relevant meaning when it comes to being able to enforce the note.  There is plenty of existing case law … and Hawaii just set another prime example of such.  This may mean a fight for another day, but when it comes to the recorded assignments involving MERS, one has to understand that the people in Reston, Virginia did not dot all their “i’s” and cross all their “t’s” when it came to allowing servicers to run rampant, using the MERS® System to defraud homeowners by publishing information on the MERS website to mislead homeowners, and then use contrived “Certifying Officers” (when the agency relationship of these employees, of the Servicer) is in question. We may not be able to challenge the assignment in every State, but then again, did the attorney even try to depose the robosigner and the notary to get more details.
UPDATE: 
I have had many folks present me with scenarios wherein the Allonge or “extra page” containing a blank indorsement was used at trial.  If you examine most of the case rulings, certain courts have presented us with commentary (discussion) on the subject of what constitutes a proper allonge under the Uniform Commercial Code.
EXTRA PAGES
These could involve document manufacturing, which might be sufficient to create issues of material fact necessary to avoid summary judgment and/or a motion to dismiss:  (1) what was scanned by the servicer (because that’s where we are assuming the copy of the note came from) that shows up as an extra page was either (a.) an extra page attached to the note that was separate to the note pages themselves, “created out of thin air”; (b.) an extra page attached to the note that was not a separate page from the last page of the Note, but was actually the “back side” of the note, which could be challenged as improper, as anyone could have rubber-stamped an indorsement onto the back page; or (c.) the document manufacturing by the servicer (of which we know Ocwen for example, does, because of reports indicating the same borrower’s note in 4 different stages of manufacture) in an attempt to create standing for its client lender.  The multiple creation of different notes has found its way into certain proceedings, which is enough to ask: Which one is the real note?
UNNAMED ALLONGES

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.
DOCUMENT EXAMINATION

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.

SECOND UPDATE: 

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:

Carty v. Bank of America, NA, Fla: Dist. Court of Appeals, 4th Dist. 2017 – Google Scholar

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!

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Filed under Chain of Title Education, Debt Collection and Foreclosures, Op-Ed Piece

POINT – COUNTERPOINT: SECURITIZATION FAILURE EXPLAINED

“JANE … YOU IGNORANT SLUT!”

(As exclaimed by Dan Akroyd to Jane Curtin on Saturday Night Live …)

Sorry … I had to do that because you can’t say that to opposing counsel in foreclosure court … as much as you’d like to!  Still, I’m not an attorney, I can’t render legal advice, but I have been listed on at least one attorney’s “expert witness list” for upcoming trials! 

My blood boils when I’m consulting at a foreclosure trial and I hear the bank’s attorney claim that the borrower has nothing to do with the PSA because I know damned well that the borrower (nor his counsel) has a comeback that they can waylay on the bank’s attorney in point-counterpoint fashion, which is why I went with the opener that I did.

The bank’s attorney doesn’t want the borrower opening up the subject of securitization failure, because in so doing, the REMIC finds itself without standing to foreclose.  End of story … because the last attempt is always (when Fannie Mae and Freddie Mac aren’t involved) the use of MERS (through servicer fraud) “assigning” a note a mortgage years later into a REMIC trust. Securitization failure may look obvious on paper (what’s recorded in the land records) but it cannot account for the path the note didn’t travel.

The last trial I attended, I saw the bank’s attorney “step in it”.  You could hear her tiny little heels squish in the pile of dung she just sunk into asking the expert witness (who understands securitization) about the “closing date”, then suddenly realizing that she opened Pandora’s Box.  Sadly, the foreclosure defense attorneys need to climb on board with this thought process, as elaborate as it might be.  I’m going demonstrably put it into as easy a graphic as I can, using various scenarios (“submitted for your approval”, as the Twilight Zone‘s Rod Serling would say from the grave). You have to educate the judge!  You have to!  I don’t care if the other side jumps up and down with objections, you have to keep on keeping on.

FEW ATTORNEYS REALLY “GET IT”

First, let me share a pdf with you, written by (in my book) one of the most brilliant attorneys on record:

charlies-wallshein_securitization-fail-part-one-001

The foregoing even has “affirmative defenses” included in this paper, if you know what you’re looking for.  Thanks to Charlie, I used a chunk of his explanation and diatribe in a Texas Rule 736 motion I drafted for use by counsel, which, when coupled with a Rule 12 motion by the attorney (a motion demanding to know who the law firm was representing in its Application to foreclose), the law firm “non-suited” the foreclosure case (made it go away)!

I shall further elaborate, as I do in chain of title assessments where the last party to allegedly have the note and mortgage transferred to them is the REMIC … years after the fact.  The borrowers and their attorneys focus on the Pooling and Servicing Agreement and miss the whole enchilada completely.  It’s not just the PSA we’re talking about here folks!  It’s the entire “sales pitch” … I’m talking about the 424(b)(5) prospectus (and none other than).

The PSA does NOT contain your loan number!  The prospectus contains your loan number!

The prospectus contains well more of the governing regulations than the PSA, all neatly signed under penalty of perjury under the Sarbanes-Oxley Act!   When the bank’s attorney says the Borrower has nothing to do with the Assignment, why then are you stumped?  Why can’t your attorney object?  It can’t be because of ignorance, right?

However, just because your loan number is listed within the prospectus doesn’t mean that your loan is actually in the pool (or made the pool before the cut-off date).  Look at it in the simplest of terms:

  1. Why do lenders use the MERS® System?  

The lenders use the MERS® System as a means to register and securitize mortgage notes within the secondary markets.  However, before the note (and its accompanying electronic paperwork) can be traded (transferred, sold, resold, multiple times over), it has to be digitally uploaded into the MERS® System, which was created for the purposes of electronically transferring the note!  

This is why (when you look at your loan on the MERS® Servicer ID page, the loan reads “ACTIVE”.   That means, it’s “actively” being transferred (potentially multiple times over) from one entity to another while the Servicer’s name remains constant.  When you see the word “INACTIVE”, it means the loan is no longer being traded, most likely because it is NON-PERFORMING!  Who could get away with selling non-performing loans?  Only in the securities market can you get away with that!  This goes back to the late Judge Arthur Schack in the HSBC v. Taher case, which was reversed and assigned to another judge, because the powers that be (the Appellate Department) said Schack went too far (in vetting the truth about robosigning using parties claiming to be officers of MERS). So, as long as the note doesn’t end up in its “final resting place” (as claimed by REMICs in millions of foreclosures), we have an “ACTIVE” note trading within the MERS® System.

2. The servicers who subscribe to the MERS® System purposefully abuse it!

The MERS® System, as I have previously noted in other posts, as well as in the OSCEOLA COUNTY FORENSIC EXAMINATION, allows servicers and their minions and subordinates within their default divisions or their contracted third-party document mills, to “manufacture” standing by creating assignments out of thin air, utilizing the name Mortgage Electronic Registration Systems, Inc., accompanied by what is proclaimed an “official title”, with only flimsy, non-notarized proclamations by William Hultman or his “successors” within MERSCORP Holdings, Inc. potentially attached to the pleadings as a means of “verification” of the use of the title by the “nominee” (who also thinks it’s a beneficiary, which it’s not).

Regardless of their “signing authority” or other Limited Power of Attorney proof of anything (as Limited Powers of Attorney can be falsely created to reinforce a claim by the REMIC that certain servicers are covered to do exercise certain powers under the power of attorney), there is nothing in the MERS Rules of Membership that forces the users of the MERS® System to “play by the rules”.  In fact, all of the users of the MERS® System have to “indemnify” MERS and its parent of any liability in connection with the creation of these documents, which means it’s “open season” in the fraud department in the creation of these documents.

   3. Parties outside of the MERS® System are allowed to participate with the servicers in creating the documents employing the use of the MERS® System! 

During the Osceola County Forensic Examination, my team discovered (in hundreds of assignments) the use a law firm in the creation of the assignments.  Many times, the assignment itself contained the words, “Prepared by:”, with either the name of the law firm, a law firm attorney or a non-lawyer working for the law firm.  My take here is that this is where you have RICO issues because the servicer, a law firm, a notary and multiple employees of both, are tasked with the creation of the document.  We are not just talking civil RICO issues here, but also criminal RICO, because the document is generally created under the direction of the law firm handling the foreclosure (in mortgage states), or in the alternative, a document processing company (e.g. LPS, CoreLogic, etc.) being involved in engineering the “proper parties” onto a piece of paper that is going to be relied upon in court to foreclose on the property.  The law firm handling the foreclosure will then rely on an assignment that it was involved in creating to steal the home, knowing full well that the assignment contains multiple misrepresentations which are not provable because the assignments clearly show the note and mortgage were transferred into the REMIC years after the Cut-off Date!

This is why I intend to write a follow-up paperback aptly titled, “How To Screw MERS!” (or something like that), to explain how to circumvent the MERS®System in your dealings in real estate (part of your due diligence before you buy a piece of property using a “MERS Member”, which is false, because the alleged “MERS Members” aren’t really “members”; they’re user-subscribers of the MERS® System, through the use of an executory contract with MERSCORP Holdings, Inc. (which is nowhere to be found on your note, your security instrument or the assignment).

4. The “Electronic Tracking Agreement – Warehouse Lender” clearly shows who the “players” are … and MERSCORP Holdings, Inc. is one of them!

If you look at the attached: eta_warehouse_template_v6-mers-and-borrower4, you will see what I am describing here, as to who the “electronic agent” really is. Is this disclosed to you at closing?  Hi there boys and girls, can you say “Truth-in-Lending Act violations right out of the gate?” … sure you can!  (playing on Mr. Rogers’ voice).

Do you see where your “name” is inserted as to “Borrower”?   Didn’t think so.  That’s because you’re not the Borrower, the originating lender or mortgage broker (like that pesky “Rocket Mortgage” and other digital online services that make it so easy to “get approved in minutes” for a mortgage loan).

Notice in the third paragraph where it says, “the Borrower is obligated to pledge the Mortgage Loans to the Lender”?  Notice the term used “Loans” is in the plural?  That’s because the “Borrower” in this agreement is the originating mortgage broker/lender and the “Lender” in this agreement is the “Interim Funding Lender” (like Countrywide, WaMu, IndyMac, etc.).  Look who the “Electronic Agent” is:  MERSCORP Holdings, Inc.!   What is an agent?  (hint: a nominee)

Then why isn’t MERSCORP Holdings, Inc. (the parent of MERS, the entity with all the money) plainly stated on your loan paperwork, including your Note? Where is the Truth-in-Lending Act when you need it regarding non-disclosure of the real “truth”.  It was hidden from you at closing?  That might even bring about suspicion for a RESPA violation as well.

Notice within Paragraph 4 of this agreement where it says that the “Lender and the Borrower desire to have certain Mortgage Loans registered on the MERS® System (defined below) such that the mortgagee of record under each Mortgage (defined below) shall be identified as MERS;”   Did you ever sign a paper like this at closing?   I’ll save you the time looking for it.  You didn’t.  That’s because the “Borrower” in this agreement, involving the placement of your loan into the MERS® System IS NOT YOU!  Did you agree to that?   Didn’t think so.  But it sure the hell explains how your loan got “registered” on the MERS® System, doesn’t it?

This was all created to be part of the securitization process.  This is why the entire process is flawed … and why it needs to be eliminated … and why the parties who created it need to be in prison!  The MERS®System is the platform through which the RICO acts were committed.  Indemnification or not, the platform is there … and it’s knowingly being abused.

YOUR NAME AND ORIGINAL LOAN NUMBER IS ON THE ASSIGNMENT!

This begs the question: How can you NOT be involved?  The assignment is talking about your very loan and mortgage (or deed of trust) being conveyed by the employees of the mortgage loan servicer (who can’t get the originating lender to do it because it’s more than likely defunct), whose employees create the document out of thin air, under the instruction from: (a.) one of the major title companies; (b.) the foreclosure mill attorneys involved in the litigation; and (c.) a third-party document mill tasked by the servicer to keep the transaction at arms length to avoid suspicion.  In any case, the document is a fraud.  They know it. And you know it.  But the judges don’t know it because no one knows how to tell the judge a thing or two about the real aspects of securitization because they know that 99% of these assignments are fraudulent and by ruling against the bank on securitization failure, they would open up a “three-ring circus” in their courtroom while jeopardizing their political futures.

The servicer uses its own “loan number” which generally does not match yours.  But when the bogus assignment is drafted (and many times backdated for a purpose) by the servicer’s employees or that of the law firm or third-party document mill, your original loan number and name is on the assignment.  Why not simply ask the judge to take your name off that document (since you’re not involved in it) and we’ll call it a day?   You know how that will end up, right?

You first have to object to the attorney’s comment that you’re not involved in the PSA, because technically, the PSA talks in general about operations within the REMIC itself.  If you’re going to enter the PSA as evidence, you’re shortchanging yourself and your case.  What you should be entering is the entire 424(b)(5) prospectus.  It still costs $4.00 a copy from sec.gov on their forms page.  They have a contract with United Parcel Service to ship it to you at no charge.  You pay $4.00.  Get the whole prospectus.  The front end of the prospectus is what contains the cut-off and closing date, not the PSA.  Have you ever noticed that, or did you just take someone’s word for it?

exhibit-9_occ-asset-securitization-comptrollers-handbook

Notice the foregoing “Page 8” and where it came from … the 1997 Comptroller’s Handbook issued by the Office of the Comptroller of the Currency.  This handbook was issued before MERS Version 3 came into being.  Notice how the first paragraph below the diagram talks about the Borrower being a party to the securitzation chain?   Do you understand why?  Because in simple fashion, in order to make the chain work (the whole system), the Borrower’s payments facilitate the income stream to the investors, who received non-recourse bonds on the Closing Date (or Start-up Date, according to IRS terminology) of the REMIC.

That is, unless securitization failure occurred at the Start-up Date.  This begs the use of an expert witness at trial to can testify as to the facts, followed by the use of depositions of the parties creating the document (the assignment) to reinforce the fraud being plied on the court.

Actually, securitization failure occurred BEFORE that!  It occurred at the Cut-off Date!

It couldn’t have happened because after the note and mortgage was uploaded into the MERS® System database (owned by now-MERSCORP Holdings, Inc.), I believe the original paperwork was no longer needed and was shredded.  My forensic examiners and I have heard this on more than one occasion, right out of the mouths of the bankers!  Thus, when the Borrower went into default: (a.) the servicer handling the loan dummied up an assignment, knowing already that it didn’t have the original loan; (b.) the servicer went into the MERS® System and downloaded the “uploaded electronic copy” and printed it out and took it into court (after adding a bunch of other “allonges”, “indorsements” to the note to try to tie the chain of title together with the chain of custody of the note.

Let me be clear here!  I do not believe that the allonges and the indorsements were completely added until AFTER the original note was retrieved from MERS. The latest article by Neil Garfield, which contains a statement: “I have obtained confirmation from a large bank vendor (Visionet Systems, Inc.) that it rectifies “lost notes” by reapplying the “signature images” upon stored copies. –Bill Paatalo, December 10, 2016.” goes to the core of the following scenario:

My wife and I attended a trial in Fort Myers, Florida where Bill Paatalo was admitted as an “expert witness”.  I went for two reasons.  First, I wanted to see what kind of questions the bank’s attorney and the judge were going to ask Bill about his expertise and the facts of the case; and second, we had dinner with Bill after that to further discuss the case, which ended up without a Final Judgment being issued that day (in court) because the judge wanted more education, in the form of trial briefs by the attorneys, which were due yesterday (I have not seen the brief).

This clearly also shows that the Notes were, at one time (as I suspected) electronic copies.  And riddle me this (as the Riddler said to Batman) … where do you think Visionet Systems, Inc. got the copy of the note?  Visionet is NOT a user of the MERS® System (check for yourself like I did) and therefore, they had to get the note from somewhere (more than likely the servicer, who IS a user of the MERS® System).  This now begs the deposition of someone at Visionet Systems, Inc. to verify this chicanery.

There are at least two cases supporting this conclusion! 

If you’ll simply Google a pdf of “In re Saldivar” (Texas) and “Glaski v. Bank of America” (California), you can see from these two cases that the court finally recognized that if the note and mortgage (or deed of trust) weren’t assigned until years after the Cut-off Date”, there is no verifiable evidence of WHEN or IF the note and security instrument actually “made it into the pool of loans” within the REMIC trust! This is what Bill Paatalo testified to at trial in Fort Myers.  When attacked by the bank’s attorney on the possibility that the note and mortgage made the cut-off date and that the assignment was strictly a memorialization of that fact, Paatalo responded to the “fact” that the assignment itself shows the date of the assignment being two years after the REMIC closed; thus, there is no possibility that the governing rules of the REMIC were complied with.  I am referring to the entire 424(b)(5) prospectus here, NOT just the PSA!

The OCC clearly contemplated that the Borrowers were the parties signing the notes and security instruments, which contained the provision (in paragraph 19 or 20, depending on which long form security instrument was employed at that time) that “the note, or a partial interest in the note” may be sold or transferred. It says nothing about the parties involved in that transaction, the “boss of the note” at foreclosure proceedings, or securitization of the loan.

Not only is the chain of title screwed up (because the right hand doesn’t know what the left hand is doing), certain parties came in contact with each other to “dummy up” paperwork to steal the house.  It’s that plain and simple.

That my friends, is a short-form explanation of the formula for securitization failure in roughly 3200 words, despite the fact I’m not an attorney nor do I render legal advice.  Share this with everyone because the life you save may be that of someone you don’t know that desperately needs to view this educational post!

BTW: For those of you wanting a progress report on the new FDCPA book I’m working on … I’ve about 40 pages to go!  I’m trying to get it done by the end of the year!  It contains some real damning information every “consumer” should know about, from foreclosures, to credit cards and car loans to student loans … all of which have been securitized … including relevant case law to back up the education I provide in this book! 

Dave Krieger, Clouded Titles

 

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Filed under Chain of Title Education, Op-Ed Piece

WELLS FARGO, CARRINGTON MORTGAGE SERVICES GET A $5,000,000+ BEAT DOWN BY HOUSTON, TEXAS JURY!

The issues discussed in this post are for educational research purposes only and does not constitute the rendering of legal advice.

It was a glorious day for David and Mary Ellen Wolf when a Houston, Texas jury awarded them in excess of $5-million in damages in their case against Wells Fargo Bank, N.A. and Carrington Mortgage Services.  See the Charging Instrument here: Wolf v Wells Fargo Bank et al_2011-36476_Nov. 6, 2015_Charge of the Court

At issue for the jury to determine was whether the Assignment of Lien was valid under Texas Law … you be the judge: Wolf-Transfer-of-Lien-NCMC-to-WF-10.15.2009

If you’ll notice the robosigned signature of Tom Croft, claiming to have some authority vested in him by the then-defunct New Century Mortgage Corporation, it contains rubber stamped “markers” on the document and is overwhelmingly TOO LATE to be transferred into the Carrington Mortgage Loan Trust, Series 2006-NC3, whose cut-off date was August 1, 2006, as shown on page 9 of the pooling and servicing agreement (“PSA”), attached here: SEC Info – Carrington Mortgage Loan Trust, Series 2006-NC3 – ‘424B5’ on 8:8:06.

If you’ve never read a PSA, you’ll find it in an easy-to-read format on SECINFO.COM.  Once you get inside of the trust pool (all you have to do is conduct a search using the series number of your trust, e.g. “2006-NC3”) information, look up the “424(b)(5) prospectus” information.  The PSA is buried inside of that document, as attached above in the Wolf case.  Some of you may have had the pleasure of navigating this site already, so please forgive my indulgence on behalf of those who have not done so.

The reason these documents have to be filed with the trust by the Cut-Off Date is because on the Closing Date, which is the start-up date of the REMIC trust, the bond certificates are issued by the Trustee of the Trust to the certificate holders (the investors who put their money into the REMIC that allegedly funded your mortgage loan).  For those of you who do not know, “REMIC” is an acronym for Real Estate Mortgage Investment Conduit.

All documents, including the Assignment or Transfer of Lien, and the Note, have to be conveyed BY THE CUT-OFF DATE (which in this case was August 1, 2006) into the trust pool in order to be accepted into the REMIC and receive tax-exempt status, according to the Internal Revenue Code and through congressional mandates found in 17 CFR 210, 228, 229, et seq.  This CFR reference (Code of Federal Regulations) is a 127-page document that was given legal effect when in was published in the Federal Register.  You can find it online simply by Googling it and asking for it in “pdf” format.  This is one of the items we will be sharing with you in more detail in the upcoming online COTA Workshop, being published in sections, on the CloudedTitles.com website.  I highly encourage you to sign up for it if you haven’t attend a live COTA Workshop in the past.

There are many of you reading this blog for the first time that may not even know that DK Consultants LLC has held workshops of this nature since May of 2012.  We no longer hold them in live fashion because of the out-of-pocket expenses for the attendees for coming to these 3-day events.  However, the Quiet Title Workshops have been fine-tuned to a 2-day event (Saturday and Sunday), to allow you to fly or drive into an area and stay a night or two if that’s your choosing (and your schedule can accommodate it).  We are finalizing the 2016 Quiet Title Workshop schedule for the following cities and months:

  1. Redondo Beach, California (Crowne Plaza Hotel & Marina), January 30-31, 2016
  2. Tampa Florida, Tampa Airport Marriott Hotel, April 2-3, 2016
  3. Chicago, Illinois, May, 2016 (location TBA soon)
  4. Las Vegas, Nevada, July, 2016 (location TBA soon)
  5. Baltimore, Maryland, September, 2016 (location TBA soon)

Now that you have the tentative scheduling, you can make plans to attend one or more of these workshops. Al West and I will be lecturing at these events.  You get to ask questions about quiet title actions and learn how they are processed.  Subscribe to these posts for more updated information as it becomes available.

Sum and Substance of the Transfer of Lien

The problem with the transfer of the lien in the Wolf case is that the jury determined the transfer was fraudulent at the time the document was executed and the parties executing it knew it was fraudulent when they executed it.

This is one of the key issues portrayed in the OSCEOLA COUNTY FORENSIC EXAMINATION conducted by DK Consultants LLC, released to the Clerk of the Circuit Court on December 30, 2014.  You will also notice that the law firm’s name is mentioned on the Transfer of Lien as well.  This was done for a purpose: to create standing for the named entity (the “assignee”) to foreclose on the Wolf’s property.  Whenever a law firm’s name is mentioned on any assignment, you can bet: (1) the law firm had a hand in drafting the assignment; (2) the law firm had a hand in directing the execution of the assignment; and (3) the law firm had a hand in causing the assignment to be recorded in the land records where the property is located. This would make the law firm criminally liable under the RICO statutes.  There are over two dozen law firms mentioned in the Forensic Examination from Osceola County, Florida that are soon-to-be-scrutinized by the Justice Department, who the report was recently referred to by Congressman Alan Grayson’s office.

One of the other patterns demonstrated in the Forensic Examination was that it was customary to see an assignment “pop up” shortly BEFORE or AFTER the foreclosure sale or judicial foreclosure action was commenced in order to facilitate “phony standing” for the foreclosing party.  Ask yourself, “Why did it take them so long to issue the assignment, if they knew exactly when the transfer of the note and mortgage took place”?  Because the parties executing the assignment DID NOT KNOW WHEN the actual transfer occurred!  How can you testify to something you have no knowledge of?  I think there’s enough case law establishing that.  Give me any state, I’ll find you a case that says that you can’t testify to something you have no knowledge of.  This could be construed as hearsay, which is inadmissable in court in virtually all instances.

So the sum and substance is (for your direct benefit) … always check the real property records at or near the time of foreclosure to see WHAT “pops up”.  You may have similar issues as the Wolf’s.  They were lucky in the civil realm that this case went before the jury. You can bet Wells Fargo will appeal the verdict as will Carrington.  I still want to see criminal indictments handed down for the fraudulent filings because there are criminal penal codes in place for that very reason. I’ll bet you do too!

 

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Filed under Breaking News, Chain of Title Education, Financial Education, Quiet Title Education

Servicers and Loan Mods = Wolves in Sheep’s Clothing

The author of this blog post is a paralegal and cannot render legal advice. The items of interest shared in this article are his own opinions and do not guarantee any kind of legal outcome or draw any conclusions of law.

On many an occasion, I will talk to a property owner who will tell me that they are frustrated with the company that has been contacting them regarding their mortgage payments.  They are even more frustrated because many of them are upside down in their mortgages (versus what the home is worth) and want to modify their loan somehow.  I would like to share a few thoughts on that subject.

(1) When a homeowner signs a mortgage or deed of trust (both of these being Security Instruments which pledge the property as collateral), he places his property in what I like to call “legal limbo” for the purposes of granting a lien interest to a foreign counterparty (lender, who allegedly lends him money to buy the property in the first place).  Since homeowners are human too, they like to take the road of least resistance and generally wind up with whatever will get them into a property with the least amount of down payment at whatever terms are available. Sadly, this is what got them into trouble in the first place … and the lenders knew it when they made the homeowners their loans.

(2) What the homeowner does NOT understand is that when MERS (Mortgage Electronic Registration Systems, Inc.) is involved, the intent of the Lender is to securitize the borrower’s paper.  Once the Borrower submits the Form 1009 Loan Application, the mortgage broker (who at every instance comes off as the  borrower’s friend and buddy) is shopping this loan (with the Borrower’s private personal identifying information … date of birth, social security number, credit and debt history, etc.) to every aggregate fund manager out there with a trust REMIC full of money.

(3) Most of the time, the Borrower does not understand the function of MERS or what a REMIC is.  None of this is explained to them at closing.  This too is by design. Until they’ve researched the subject (because they’re forced to) they still do not understand what has happened to them.  By the time they’re standing in front of a “foreclosure mill judge” (like the one’s in Florida that I read about that are denying homeowners due process in their kangaroo-style courtrooms), it’s too late.  Now I’m not saying that every judge in America is a bad judge; it’s just that many of them have “agendas”.  Getting screwed over and over doesn’t make sense until you’ve been bled out of every cent you’ve got and you’re facing one of these judges for the last time.

(4) In order to avoid this scenario, the upside-down already stressed-out borrower will do almost anything to stay in their home if given the chance. By the time the loan is in default (or alleged default), a new Servicer (I called them “bottom-feeders” because of where their noses typically sit at the point in time where they begin the process of stealing whatever’s left from the homeowner’s gains) is assigned to deal with the scenario.  The ambition of the new “servicer” is to drag you on and on, giving you false hope, racking up servicing fees, leading you to believe that a loan modification is available when the servicer and its employees know that a loan mod will never happen.

(5) Servicers are in business to make money.  They make money every month you don’t make a mortgage payment. They have $9/an hour cubicle employees (whether they’re a major bank or strictly just a plain old “servicer”) that are trained to string you along. What they really like is when they can use their “power over” techniques to either get you further into debt or take whatever savings or retirement money you’ve got access to and to send it to them, knowing that you will never recover, especially if you’ve been stuck with an interest-only loan (told by your friendly mortgage broker that you can refinance your loan in two years, only to find out that the intention from the beginning was to simply drain you of all your hard work and equity) or some other type of predatory lending device.

(6) I’ve heard horror stories of people draining their 401(k)’s and whatever IRA money they had stashed away for retirement to throw at interest-only notes they signed.  This does NOTHING to alleviate the problem.  It only makes it worse because whatever “escape and restructure” money you have available is also now in the hands of these unscrupulous servicers.  If this was me, I would NEVER give these people a dime of what’s in my savings (that includes liquidating other real estate to pay down on the primary issue). In a majority of the instances involving predatory loans, the servicing fees have been racked up to the point where the servicer already knows that the borrower will never recover no matter what and they can count on getting the borrower’s house too!

(7) Because the borrower’s note has been “securitized” (sold many times over BEFORE the borrower even affixes their signature to the loan documents at the closing table), a REMIC trust allegedly owns the borrower’s paper.  Or do they?  Every REMIC trust is governed by what is known as a Pooling and Servicing Agreement (“PSA”).  You will hear that term bandied about the more research you do.  These PSA’s can sometimes be as much as 500 pages in length, designed to run your attorney around in circles and drive up your legal costs in research time.  This is also by design.  Why do you hear of stories where investor groups are now suing the sponsor-sellers of these REMICs for fraud and misrepresentation on the prospectuses they relied on to make their investment decisions?  Because of new “news” coming out from whistleblower ex-rating company employees who now claim Moody’s Investor Service was in on the “scam” to grade all of the bonds issued to investors as AAA-rated when they knew in fact all of the bonds were based on junk loans, made to people just like you … who the sponsor-sellers and their “servicers” also take for granted … and screwed you … the homeowner … on your end … just like they screwed the investors on their end.  What’s worse, the investors bought “non-recourse” bonds, which means the PSA generally does NOT allow you to get a loan modification … EVER!  The servicer hopes you’ll never figure this out, because the more they can string you along, the more money they make when they finally do get your house!

(8) Servicers also play another game … switching servicers at the last minute.  How and why does this happen?  Simple.  You have been promised a loan mod from Servicer A, who has (under HAMP and other guidelines) only a certain amount of time to “make it work”.  Only the Servicer knows that’s not going to happen because they’ve been instructed to promise you the moon to string you along even further until their “time” is up.  Then, right as a decision has to be made (after they’ve continually lost all of your submitted forms and paperwork), they change servicers and start the “HAMP Clock” all over again!  This is by design folks!   When are you going to stop believing in these liars and start taking your futures into your own hands so you don’t end up in front of a judge like Diane Lewis?  Based on what I’ve read, you and your attorney will meet with “blind justice” if you end up in her court.

(9) There’s also another issue you need to be aware of: Servicer Drive-By’s.  This is also another scam on the homeowner.  The reason the servicer claims they’ve hired a person to “drive by” your house is to: (a.) hang a notice on your door, telling you to contact your lender, which is really the servicer, not the lender; (b.) check to see if you’ve moved out yet (What? Really? You give up pretty quick, huh?); and (c.) because a computer in the servicer’s back office automatically tacks on fees in a timely manner, whether the “drive by” has actually occurred or not!  According to one attorney I’ve talked to, discovery on Bank of America servicing activities has actually produced computer-generated statements showing these fees added on when the “drive by” never actually happened!

(10) The servicers also own “auction houses”.  Nationstar owns “Auction.com”.  When foreclosure occurs, these people all run into court claiming they “own your loan”, when in fact, all that was assigned to them were the mortgage rights, not the notes.  People who rely on these “auction houses” for a “deal” on an REO are in for a rude awakening because title is probably NOT CLEAR!  Did you hear me on that one?  Many investors think they can simply rent out the property until it falls apart, whether they get clear title or not. That’s part of the game folks.  How can one minimize risk?   That’s what investors look at before they buy your house.  If there is any instance where title is clouded because of the behavior of MERS, the originating lender or the lender’s successors and assigns, you can bet the only argument you’ll get from their attorneys in court (who 90% of the time bring in false affidavits and make slanderous statements about “all they want is a ‘free house’ your Honor!”) is that you didn’t make your payments.  All the bank-owned judges care about is “meeting out bank justice”!  All “honest” judges are scolded for making “right” decisions.  The status quo out there wants your house so the collective body of banking entities can turn us all into a nation of renters and debt slaves!

(11) Ignoring the servicer isn’t going to make your problems go away.  What I’ve seen some folks do is sue the servicer in court on FDCPA claims (Fair Debt Collection Practices Act, 15 USC 1692 et seq) for claiming to own a debt they don’t really own.  As time passes, you’ll see more and more of these suits being filed, because these are the only federally-based suits that seem to be working in slowing down or stopping foreclosures.  Yet, this too seems to only be a delay tactic, when loan modification is being dangled in front of you and your attorney by a servicer that knows what the “end game” is.  Sadly, most attorneys don’t get this ploy either.

(12) If you think you’ve gotten a “loan mod”, think again.  Have you ever read the terms and conditions of one of these creatures?  First, the servicer is NOT the real party in interest, so what right does it have to grant you a loan mod?   I’ve seen recorded loan mods where MERS claims to be the “lender”!  Attorneys who claim they have gotten loan mods for their clients will probably see them again in short order, because the loan mods are designed and structured to force the borrower to generally pay higher rates than what they were paying before.  The unfortunate thing here is … all of the servicers’ fees continue to get racked up.  You see … what the servicer really wants is your house.  They don’t care if you get a loan mod, because the loan mod is structured to fail just like the original loan you signed failed.  The servicers knew this when they baited you with the loan mod!

If you can tell I’ve nothing kind to say about these people, you’re right.  You could have demanded proper terms on a short-term, fixed rate and bought less house, but NO!  This is America, home of the over-achiever and dreamer.  This is how the government (who is in bed with these people) structured the whole deal to help the banks get where they are today.  You see, the government protects the banks … because the government (who most ignorant homeowners blindly trust) is in hock to the banks in debt it can never repay!  Thus, my 12-step, uh, er, 12-point description of servicer behavior only scratches the tip of the iceberg.  The way to NOT get involved with these people is to pay cash or structure your short-term (15 years or less) to succeed.  Buy only the house you can really afford, even in hard times.  If you are facing these situations, do your homework.  Visit my website at http://www.cloudedtitles.com for more information.  Feel free to download our FREE Chain of Title Assessment (COTA) Checklist from the SERVICES link on our corporate website, http://www.dkconsultants.us.

Good luck in your decision-making processes.  Once these servicers really get involved in your life, it is time to consider other options.

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MERS-Related Assignments & PSA Non-Compliance

In October of 2012, my firm (DK Consultants LLC) took an audit team into the Williamson County, Texas Courthouse Annex (not so much under stealth) and spent time auditing a batch of 5, 278 MERS-related assignments that were recorded in the Clerk’s official property records from 2010 – 2012.  The results were published and released to the media on January 29, 2013 after an exhaustive review of nearly 1,600 assignments, all with the same types of so-called “markers” of document manufacturing.  These same examination processes were utilized in the newly-released Osceola County, Florida Forensic Examination, which you can download a copy of here: OSCEOLA COUNTY FORENSIC EXAMINATION

In order for us to find the issues within the examination, we had to look at the weak link in the chain of title: MERS.  Based on attorney Al West’s presumptions that MERS’s business model obfuscates the potential adverse claimant’s perfected interest in the real property records of the county the subject property is located in, most people doing the same research we are doing will find a big “gap” between the originating lender and any assignment involving MERS (as an assignor/assignee, mostly as a standalone), which immediately points to the servicer’s employees’ illicit (and potentially criminal) behavior.  While people within our own “defense” industry attempt to discredit everything because of their own negative consequences, most borrowers are communicating with me, asking about rehypothecation of their mortgage loan, which is a viable possibility.  For the purposes of the audits and forensic examinations however, the only viable methods we have to uncover the “garbage” created by MERS in the real property records is based on our current research.  This includes the willingness by homeowners to pay attorneys to conduct depositions of these individuals and get the low-down of HOW the document manufacturing processes work in an attempt to impeach the assignment.

The common denominator in document manufacturing here was basically involving self-assignment, wherein a member of MERSCORP (because MERS itself has no members), through its supervisory personnel, directs its $10/hr. employees to sign documents as “Vice Presidents” or “Assistant Secretary” of Mortgage Electronic Registration Systems, Inc. (“MERS”).

The use of the MERS System is limited to members of MERSCORP.  The MERS System is owned by MERSCORP.  Member lenders and servicers pay to join this system and they pay again when they log into the MERS website, which is owned by MERSCORP Holdings, Inc.  MERS is broke.  MERSCORP has all of the money.

Many attorneys make the mistake of suing MERS.  MERS attorneys claim that MERS was given certain undefined contractual rights to participate in what amounts to (over time) 70-million mortgages and deeds of trust throughout the country.   In these security instruments, MERS claims it is the beneficiary; however, in at least one notable Nebraska case, MERS claims it’s not a lender.  Thus, it would appear that the courts across the country would be confused as to what MERS’s definition of a “beneficiary” really is, since it’s not defined in the contract.  MERS attorneys basically argue whatever they want to argue to the courts to win cases, even if it means using legal doublespeak.  MERS also claims to be a nominee for the lender and the lender’s successors and assigns.  It amazes me that MERS thinks that its name can be repeatedly used over and over again to convey the mortgage (or deed of trust) and note as many times as it wants to (or its MERSCORP member lenders want to in the name of MERS) using the MERS System as a “place card in the land records”.  Already, some states have taken issue with MERS use of the term beneficiary, as well as what rights it should be accorded as a nominee (a simple agent or “straw man”).

This post concerns the issue of the use of MERS to completely skip over the assignment of the chain of players as promulgated by the pooling and servicing agreement (PSA) for the trust vehicles (tax-exempt REMICs) that MERS allegedly is used to electronically track transfers in and out of.  The audit revealed dozens of conveyances by MERSCORP member employees into what appear to be tax-exempt REMICs on Wall Street.

Every trust vehicle that is registered with the U. S. Securities and Exchange Commission has a cut-off date and a closing date within the governing PSA (pooling and servicing agreement) for each trust.  This means, under the “assignment” section of said governing documents (generally in Section 2.01), that the “depositor” shall convey to the trustee on or before the cut-off date … yet it’s never the depositor that we see on assignments that MERSCORP members are recording in the land records!  I might also add that the Closing Date is the same as the Start-Up Date for the Trust REMIC, wherein the certificates are issues to the bondholders.

It appears that MERSCORP members tell their employees to draft assignments from the original lender (even if the original lender is bankrupt) directly to the trustee; thus skipping over the sponsor-seller and the depositor.  So instead of the assignments conveying the mortgage and note from the originator (A) to the sponsor-seller (B); and from the sponsor-seller (B) to the depositor (C); and from the depositor (C) to the trustee of the trust (D) … B AND C ARE LEFT OUT of the assignment pattern as mandated by the PSA! 

This is misstep #1 in non-compliance of the PSA.  The second misstep occurs when the assignment takes place well after the closing date as specified in the PSA; many times years later!  I doubt that any attorneys have even thought why the document manufacturing and recordation of these assignments occurs well after the closing date of the trust.  I have my suspicions … so if this will work for you in discovery … let ‘er rip!

(1) It is no secret that the MERS MIN number (owned by MERSCORP) is placed upon the mortgage or deed of trust document BEFORE the Borrower signed the documents at closing!

The title companies are all too accommodating in rushing the borrower through the closing process and if the borrower ever questions who MERS is, the title company dismisses it as “nothing”.  This is because the big title companies are “all in on the scheme”.  The less the borrower knows that his signature seals the deal to securitization of his note and conversion of it into an electronic security, the better.  None of this is stated on the borrower’s unilateral adhesion contract (the security instrument) which is recorded in the land records of the county that the subject property is located in.  Thus, the borrower doesn’t even know that MERS is a “shell” and that the real parties in interest have contractual relationships with MERSCORP Holdings, Inc.!  MERSCORP is not stated anywhere in the security instrument, is it?   There’s a reason for that.  It’s called exposure.  Only the “shell” (who is broke and thus judgment-proof) is exposed; thus, unless the attorney litigating against the agent understands the true position of the agent, they won’t understand the tricks being played upon the borrower, the court and the land records.  This is why more and more litigants are suing MERSCORP Holdings, Inc.

(2) The borrower’s loan has been sold multiple times (and possibly fractionalized multiple times) in the MERS System (by MERSCORP members) from the point of loan approval BEFORE the Borrower signs the loan at closing!

This fact was admitted by Bank of America’s attorneys in the Taylor Bean & Whitaker bankruptcy proceedings in Florida!  This means that the Borrower’s note could have been split up a dozen times, a portion of each placed into a securitized tranche of alleged loan numbers, and packaged into a credit default swap which (upon the Borrower’s alleged default) paid out multiple times, making a certain portion of the trust pool whole!  If the trust pool is made whole, then who is the trustee foreclosing on behalf of?

(3) If the trust is ever challenged, MERS’s and the MERSCORP member attorneys argue that the Borrower has no standing to argue on the assignment transfer into the trust pool because it doesn’t involve the Borrower!

If that is so, then why did U. S. Bank publish a brochure stating just the opposite?   If that is so, then if the Borrower signed the note at closing, and the folks involved in the securitization chain had until the closing date to put the note into the trust pool, then why didn’t they convey it properly into the pool?  I’ll explain that reasoning shortly!

(4) Imagine a 100% failure rate of any given trust pool.  What would cause that failure besides predatory loans that were designed to fail at a certain point?

There are multiple reasons for this:

(a.) The entire MERS conveyance is a sham because of PSA non-compliance in the violation of established parameters involving the closing date of the trust;

(b.) As established by Bellistri v. Ocwen Loan Servicing, LLC and other cases, MERS cannot convey something it does not have an interest in; thus, the conveyance itself (into the trust) is suspect;

(c.) Without the Borrower’s signature, the entire promissory note would be unenforceable, so the Borrowers certainly ARE involved, aren’t they?

(d.) When you see MERS conveying anything, it is generally the servicer trying to cover up the chain of custody of the note by abusing the use of the MERS “place card” to convey the mortgage and note into the trust, while fooling the chain of title using that same “place card”.  In order to do this, document manufacturing is generally involved, which includes robosigning, false swearing, false notarization, surrogate signing and potential notary fraud; and

(e.) The entire conveyance itself violates the PSA’s conveyance provisions due to the fact that the note itself does NOT contain the required PROPER indorsements to satisfy the chain of custody transfer of the note; also problematic is the fact that in a majority of the instances reviewed, there is no indication as to WHEN the transfer actually occurred!

(5) There are only account numbers in the trust pool … no res!  There never has been any “res” (value) in the trust pool, despite the number of loans each pool claims to have underwritten … it doesn’t necessarily mean that the notes were effectively conveyed into the pool!

It would be impossible if the transfers (the assignments) were ineffective and thus void.  That’s where the 100% failure rate comes from that investor suits like Phoenix Light asserted against the sponsor-sellers of these trust pools.  If the PSA was violated, the transfer did not occur.

The Borrower thus could not be involved in the actual transfer if the transfer did not occur in the first place!

So why then, does the assignment occur years after the closing date, in violation of the PSA?

I was saving the best for last!

There are three (3) key reasons WHY I believe this is so:

(a.) In order for the MERS System to work, the collateralized debt obligations must continually be “in play”.  The pool of notes cannot be continuously “in play” if the trust pool actually owns them!   If the transfer were to occur like it was supposed to, the whole game would be over because there would be one “boss of the note”.  Whether or not the alleged “boss of the note” could be proven because of PSA non-compliance is another story.  Yet this is NOT what happened, is it?  Thus, the trust has no “res” and no standing.  Any claimed standing would violate the provisions of the trust’s tax-exempt status and eliminate the trust’s ability to operate for the purposes for which it was created.  Thus; the pools are empty (only full of meaningless loan numbers).  That’s their “accounting system” folks!

Maybe the Commissioner of Internal Revenue should be brought in as a third party defendant on negligence claims for failing to enforce the Internal Revenue Code when one of these trusts acts da fool, d’ya think?

(b.) When the assignment actually occurs, it is not so much the contents that matter here but rather the actual DATE OF RECORDATION!  In order to be PSA compliant, the document had to have been recorded BEFORE the closing date of the trust; in some cases, up to 90 days thereafter.  But there is a cut-off date for when this has to stop!  According to IRS Publication 938 (thanks to Florida attorney Matt Weidner for that tip), the start-up date of the trust (when the trust is closed and thus operating as a distribution vehicle to investors) IS THE CLOSING DATE OF THE TRUST as shown in the PSA! This is what makes the REMICs tax-exempt! Thus, the REMIC itself cannot be the owner of the note, otherwise, its tax-exempt status could go out the window!

(c.) The assignment into the alleged trust pool doesn’t seem to occur until there are no payments coming into the trust to distribute to the investors.  Remember, in the REMIC: (1.) the funds flow from the investors to the closing table via the loan originator BEFORE the trust pool closes; (2.)  The signed note and security instrument are then tendered to the trust via the originator (to the sponsor-seller, to the depositor, to the trust itself); and (3.)   The trust then closes and starts functioning, sending the Borrowers’ payments back to the investors with interest according to the tranche set-ups, beginning at the distribution date as outlined … where?  In the PSA!

If an alleged default occurs, the PSA generally stipulates that the Master Servicer will make the first payment (so there actually isn’t a default on the part of the Borrower) and any subsequent payments are usually taken care of by the credit default swap (the side bet that lenders and hedge funds made $53-trillion dollars playing in between 2003 and 2008).  I believe that the first payment is made so the trust pool can line up all of the assignments and record them and pull all of the transfers off of the MERS System to send the “GO” signal to the REMICs and their servicers to start the theft processes of the properties in question!

This shady dealing all boils down to the lack of a paper trail.  Of course, in order for the trust to be able to allege it owns the note, the assignment has to be recorded right?  At that point, the trading game stops in the MERS System because the alleged “boss of the note” has to come forward to foreclose.  We can’t have multiple intervening assignees all foreclosing on the same property at once now, can we?   LOL  (It has happened folks!)

So … at this point … the trust must now “look like” it owns the Borrower’s loan with the right to enforce, right?

Unfortunately, the emperor wears no clothes.

There was never any actual “res” in the trust pools.  If there was, the pools would have been quick to show off all of their accounting; thus, dispelling any rumors of shady dealing and securities fraud.  So the attorneys for the lenders do the next best thing … take their clients’ word for the fact the trust owns the note, which it cannot; otherwise, the IRS regulations governing the REMIC would be violated and the REMIC would then not be able to function for the purposes for which it was created.

Since the investors bought non-recourse bonds, they don’t have enforcement rights!  So when the servicer (the party claiming to represent the alleged lender) comes to the Borrower and says, “the investors don’t agree to your loan mod” … the servicer is full of shit!   The investors have no say; they have no clothes either!

Thus, the theft of the home moves forward because the attorneys argue that the borrower has nothing to do with the assignment into the trust.

That’s funny!   Don’t I see the Borrower’s name on the assignment?  Isn’t the security instrument listed on the assignment “together with the note” the Borrower signed?  I find it hard to believe that the court systems haven’t figured this out yet!

The whole securitization scheme is a sham.  Investor money may have funded the Borrower’s loans.  The banks put themselves (with MERS) in the middle of it all as “middlemen” by contract.  The investors got left out in the cold when the trust pools suffered credit events (multiple collapses of the allegedly defaulting loans); however, those hedging their bets on credit default swaps … who knew the loans in the pools were structured to fail upon their resetting dates … who the investors now claim have a 100% failure rate …

Hey!  Wait a minute!  Isn’t that insider trading?   These are securities, right?

Makes you wonder why the SEC and the DOJ aren’t prosecuting, doesn’t it?

As Paul Harvey once said, “Now you know the rest of the story.”  At least that’s the way I figure it happened.  Got a better idea?  That’s what “comments” and “feedback” are for.

Of late, a lot of you have been getting negative blowback from the courts regarding the Borrower’s involvement in the PSA.  This may appear justified; however, this does NOT mean that the Borrower is NOT a party to the securitization process (see the OCC Comptroller’s Handbook, November 1997 … download it here:   OCC Asset Securitization Handbook  Look at the flow chart in the front end of the book.  This is what the OCC contemplated BEFORE the Glass-Steagall Act was repealed.

For the sake of brevity, I am going to save the discussion of rehypothecation for another day, however scandalous it may be.

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