WHAT'S ON YOUR TITLE? LET THE TRUTH BE KNOWN ABOUT YOUR LOAN!

MERS Scandal Exposed and Explained

Posted on December 9, 2008 by livinglies

Kevin Lamson Said,

So can anyone guess the name of “organization” that was formed by
Countrywide’s, Anthony Mazillo and Fannie Mae’s, James Johnson ten
years ago it start with an M? No not the Mafia. It’s Mortgage
Electronic Registration Systems Inc. commonly referred to as MERS. Yes
that’s right Countrywide and Fannie Mae were the lead organizers of
MERS and are shareholders and “members” of MERS. Here are excerpts from
an investigative report on MERS I have been working on for the last
several months. This may help shed some much needed light on MERS and
the cozy relationships many of its so-called ‘members” have between
each other and with our congress. It may also explain why no one in
congress has bothered to investigate MERS and it crazy “paperless”
system that these greedy mortgage executives invented so they could
line their pockets by originating and flipping phony mortgage loans
into so-called mortgage backed security trusts and then selling
trillions of dollars of bonds to investors around the world. By
reporting false profits from these sales Fannie Mae’s and Countrywide’s
executives were able to make hundreds of millions of dollars in
“bonuses”.

Given the extremely close relationship that MERS, its many corporate
members have with the politicians who run our state and federal
governments, it is not surprising that MERS and it members were able to
pull off this gigantic global financial scheme without raising the brow
of a State or Federal law enforcement or regulators. Only now are a few
politicians and regulators paying lip service to what they refer to as
the “Mortgage Meltdown”. What no politician or regulator ever seems to
mention is that a millions of the mortgages that “melted down” have the
name Mortgage Electronic Registration System Inc. on them.

· The Fundamentals:

In the period beginning in 1999 and ending in March of 2008,
Mortgage Electronic Registration Systems Inc., a/k/a/ MERS, has been
named as a “mortgagee” on over fifty million mortgages. Yet MERS has
never originated a single mortgage loan nor loaned a dime to a single
borrower. In 2001 the New York Supreme Court ordered the Suffolk County
Clerk to accept MERS mortgages for recording as a purely ministerial
duty. However the Court denied MERS request for a judgment declaring
that MERS mortgages were “lawful in all respects”. The New York Court
of Appeals affirmed the Supreme Court’s order directing the County
Clerk to record MERS mortgages. The Court of Appeals did not reverse
the Supreme Court’s denial of MERS request for a judicial declaration
that MERS mortgages are “lawful in all respects”. MERS, for obvious
reasons, did not want a published opinion determining that MERS
mortgages are legal nullities and/or that MERS has no standing to
enforce a mortgage when it is not a creditor entitled to collect a
debt. The New York Court of Appeals did address and frame these two
issues but left them to be decided at a future date.

MERS members, mortgage industry executives, invented the so-called
MERS paperless system to short cut standing mortgage lending safe
guards and circumvent the legal requirements for originating mortgage
loans and/or for selling and transferring these loans to subsequent
holders. This would allow MERS members like Countrywide Financial,
Fieldstone Mortgage, and Option One Mortgage to make loans to anyone
with a heart beat and then quickly flip these questionable loans to
other MERS members such a Fannie Mae, Freddie Mac, Bear Stearns,
Merrill Lynch, Lehman Brothers to name just a few. (”Secondary Mortgage
Market Players’)

MERS and its so-called “system” was driven the strong desire of its
founding “members” strong desire to report billions in profits as can
be seen, in part, from a highly critical report issued by the Office of
Federal Housing Enterprise on May 23. 2006, detailing what it called
“an arrogant and unethical corporate culture where Fannie Mae employees
manipulated accounting and earnings to trigger bonuses for senior
executives from 1998 to 2004″. . . “The image of Fannie Mae as one of
the lowest-risk and ‘best in class’ institutions was a facade,” . . .
“Senior management manipulated accounting; reaped maximum, undeserved
bonuses; and prevented the rest of the world from knowing”. . . “Our
examination found an environment where the ends justified the means”.
The Ohio Attorney General recently sued another MERS founding member,
Freddie Mac, alleging and its top executives for fraud with very
similar allegations to the fact found by OFHEO relating to Fannie Mae.

These Secondary Mortgage Market Players would claim to package
millions of these loans, with or without being delivered the promissory
notes, into loan pools or “mortgage backed security trusts” and then
flip the loans by selling trillions of dollars of bonds to investors
around the world. The bonds were touted by Secondary Mortgage Market
Players as producing safe yet high returns. The investors who bought
these bonds included many of the world’s largest national banks.
Initially MERS members reported windfall profits year after year by
quickly originating, packaging into pools and then flipping trillions
of dollars of mortgages loans to investors. Other MERS members, such as
title insurance companies, also took their cut from each of the fifty
million loans that were made while this high speed gravy train was
rolling. MERS itself would earn over a billion dollars a year by
charging its members $250.00 for each mortgage that MERS would be named
as “mortgagee”.

The reported profits from the sale of these mortgaged backed
securities would result in billions of dollars of salaries and bonuses
being paid to the senior executives of many of MERS member
corporations. Ultimately the bond investors who actually provided all
the money would learn that their “safe” investment was anything but
safe. As hundreds thousands and then millions of these loans fell into
default. These bondholders would lose hundreds of billions of dollars.
As of April 1, 2008, the largest banks around the world had already
written off losses of one hundred and fifty billions dollars relating
to bonds they had purchased. One Swiss bank, U.S.B., has recently
reported 40 billion dollars in losses. These loses may only be the
beginning. What many people refuse to admit is that because of the
so-called MERS paperless “system” many of the so-called mortgage backed
security trusts do not actually hold the promissory notes which
evidence the debts that are supposed to be backing the bonds purchased
by these investors. The situation is reminiscent to the Great Olive Oil
Scandal in the late 1800’s when banks were duped into investing
millions of dollars into Olive Oil only to later discover that the
tanks which were supposed to be holding millions of gallons of olive
oil backing their investments were mostly empty.

A June10, 2007 article in Forbes magazine details the carelessness
in the securitization process by which mortgage loans were packaged and
sold off to mortgage pools is now coming back to bite the trustees of
these mortgage backed trusts who are now seeking to foreclose millions
of loans that are in default:

· The financial engineering (i.e. mortgage securitization) helped
oil the housing boom by making credit more available. But stalled
housing prices and rising defaults have revealed a mess: In the rush to
flip paper, lots of the new lenders or pools don’t have the proper
paperwork to show they even hold the mortgage.

It appears that after MERS mortgage loans are flipped to the
mortgage backed trusts the promissory notes are not actually delivered
to the trustees. Nor are assignments of mortgages executed and
delivered which evidence the fact the original lender has transferred
the debt which is secured by the mortgage. This leaves the trusts with
absolutely no paper evidence of ownership of the secured debt it
purportedly owns. One informed lawyer who represents homeowners in
Florida, April Charney, had foreclosure proceedings against 300 clients
dismissed or postponed in 2007 for lack of standing. She is quoted as
saying that “80 percent of them involved lost-note affidavits”. . .
They raise the issue of whether the trusts own the loans at all,”
Charney said. “Lost-note affidavits are pattern and practice in the
industry. They are not exceptions. They are the rule.” Ms. Charney
started challenging MERS and it members lost note affidavits after
becoming skeptical of the lender could possibly lose hundreds of
promissory notes.

At least two Florida judges shared Ms. Charney’s skepticism
regarding the copious amounts of MERS lost note affidavits and they
issued show cause orders, sua sponte, challenging MERS to show proof
that it held and/or lost notes in numerous actions. After evidentiary
hearings these two alert judges dismissed twenty nine (29) MERS actions
to foreclose for lack of standing. One judge struck MERS pleadings as
being sham.

A South Carolina court dismissed a MERS action to foreclose for lack
of standing even though MERS filed an affidavit wherein a person
claiming to be an officer of MERS claimed that MERS was holding a
promissory note. The South Carolina court vetted the MERS affidavit
claim that it was the holder of the note after the Court was apprised
of the fact that MERS had previously told the Nebraska Court of Appeals
that it never held promissory notes.

In late 2007 three Federal Court Judges in Ohio dismissed over fifty
law suits brought by trustees of mortgage backed trusts where they
could not produce the original promissory notes. Following these
decisions the Bankruptcy Court in Los Angeles, California adopted a
rule of practice which requires all foreclosing trustees or other
plaintiffs to produce the original promissory note when bring an action
to foreclose a debt or face sanctions for not doing so.

It is disturbing to know that National Banks are the trustees of
thousands of trusts that may be missing millions of promissory notes.
This might explain why, to date, not a single National Bank has
publicly disclosed the fact that they are not actually holding what may
be millions of promissory notes which evidence ownership of debts
supposedly owned by their respective trusts. An independent audit of
these trusts would probably be quite revealing. This writer is also
unaware of any such audits that have been performed to date. These
National Banks, as trustees are accountable and therefore liable for
missing trust property or the documents evidencing ownership.

As more borrowers, lawyers and judges learn that neither MERS nor
these trustees are actually holding the promissory notes evidencing the
debts they seek to collect through foreclosure, dismissals of these
foreclosure actions for lack of standing will become routine. This will
also means that bondholders from around the globe will be seeking to
recover their loses from the National Bank trustees.

American courts should no longer tolerate or close a blind eye to
the fact that the MERS has no standing to commence any legal actions
relating to peoples properties because they do not hold any legal or
equitable interest in the debt or in the properties. The Court’s must
protect the integrity of our court system by enforcing our laws of
commerce as they have existed and not allow parties to come into our
courts and commence actions relating to debts that they do not own
and/or have no proof of ownership.

MERS founders and members went about foisting their so-called
“paperless” system on the American economy and indirectly upon the
global economy. MERS studiously avoided seeking any legislative changes
of long standing commercial laws relating to promissory notes,
mortgages and public recording of assignments in any of the 50 states
that it would ultimately be operating. It is possible that this blatant
abuse, of the UCC and state recording laws might have passed itself off
as the new way off doing business in our computer age. But MERS member
companies, under clear instructions from their leaders, guarantied
disaster by pumping up and them dumping these shaky loans onto
investors through trust they set up for this purpose. These
investor/bondholders are jut now discovering that they were duped. They
just don’t know how badly they were duped.

Perhaps this is what the global economy is really all about. Seeing
who can dupe international banks and governments out of trillions of
dollars depositor and taxpayer money and do so with complete impunity.
Yet, to my knowledge, after learning that they invested trillions of
dollars into these questionable loan pools n/k/a/ cesspools, not a
single National Bank has ordered an audit of these cesspools or trusts
to determine the actual contents and the value.
As a matter of sound public policy our courts should not allow MERS or
its so-called “members” to circumvent and/or violate long standing laws
of commerce, simply because some greedy mortgage executives thought
they could shoe-horn their so-called “paperless system” into the
framework of our current system of commerce. Our system still requires
such sundry instruments as promissory notes be used to evidence debts
and also requires that these instruments to change hands when sold or
transferred to a new owner. Our system also requires a new holder of a
promissory note to record an assignment of security interest or
mortgage in order to enforce a lien which secures the debt evidenced by
the promissory note. No one should be able to simply ignore these long
standing laws just so they can reap billions of dollars in illicit
bonuses by quickly originating and then flipping loans without the
attendant delivery of notes and assignments of mortgages. Our system of
commerce does not operate this way. This is because we have laws of
commerce including the UCC which regulates our system of commerce.

The MERS paperless system simply provided an expedient way for MERS
and its members to fleece the investor on a global basis, by loaning
money to people who couldn’t or wouldn’t pay the money back and then
flipping trillions of dollars of these bogus loans to third party
investors. The MERS system does not comply with our current laws of
commerce. While the computer age has admittedly changed how business is
transacted it has not eliminated or replaced the legal requirement for
such things as promissory notes, mortgages and assignments of
mortgages, when a loan is made, a mortgage given and the loan is
subsequently sold and/or resold. This is precisely why a competent and
prudent lender who makes a loan to a qualified borrower takes back a
promissory note and if the loan is to be secured the borrower executed
a mortgage or security agreement naming the lender as the mortgagee or
secured party. The lender must then record or file its mortgage or
security agreement to prefect its lien. If the lender decides to sell
the debt it is owed to a third party it must endorse and deliver the
promissory note to the third party. And in order for the third party to
enforce either a mortgage lien or security interest the original lender
must execute an assignment of mortgage or security interest, which must
then be recorded or filed by the third party to give evidence and
public notice of its status as assignee of the lien securing the debt
it had purchased. Only the holder of the promissory note is entitled to
enforce the note and/or any lien which secured the debt.

Given the extremely close relationship that MERS, its many corporate
members have with the politicians who run our state and federal
governments, it is not surprising that MERS and it members were able to
pull off this gigantic global financial scheme without raising the brow
of a State or Federal law enforcement or regulators. Only now are a few
politicians and regulators paying lip service to what they refer to as
the “Mortgage Meltdown”. What no politician or regulator ever seems to
mention is that a millions of the mortgages that “melted down” have the
name Mortgage Electronic Registration System Inc. on them. American
courts should no longer tolerate or close a blind eye to the fact that
the MERS has no standing to commence any legal actions relating to
peoples properties because they do not hold any legal or equitable
interest in the debt or in the properties. The Court’s must protect the
integrity of our court system by enforcing our laws of commerce as they
have existed and not allow parties to come into our courts and commence
actions relating to debts that they do not own and/or have no proof of
ownership.

This writer has been investor in real estate since 1976, and has
owned properties in eight states and three countries. Over the last
thirty two years I have witnessed and heard of many illegal or
fraudulent schemes involving real estate finance. The MERS “paperless
system” is the kind of scheme that is hatched in some internet boiler
room in Nigeria, not in the boardrooms of our once prestigious American
financial institutions. This gigantic scheme completely ignored long
standing law of commerce. The effect of the system has already had a
catastrophic effects on both the American and global economy. Yet many
of the investment “trusts” which supposedly hold thousands of original
promissory notes are hard pressed to produce them when legally required
to do so. MERS admittedly does not hold any promissory notes. A party
must have possession of a promissory note in order to have standing to
enforce and/or otherwise collect a debt that is owed to another party.
Given these facts how will these investors ever recoup there
investments if the debt they were suppose to own can not be legally
enforce or collected? What will be the status of title to properties
that were purportedly foreclosed by MERS where MERS admittedly had no
legal right to foreclose or otherwise collect debt which are evidenced
by promissory notes held by someone else. Please feel free to contact
me with any comments or questions you may have: kev_o_shanter@yahoo.com.

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One thought on “WHAT'S ON YOUR TITLE? LET THE TRUTH BE KNOWN ABOUT YOUR LOAN!

  1. yep – here in Illinois MERS transfers and conveys, for value and consideration, without warrantee or recourse, mortgage, premises, and promissory notes to Wells Fargo (only when the homeowner contests the foreclosure Wells Fargo files). The MERS officer who makes the sworn affidavit of assignment and records it is always the foreclosing attorney for Wells Fargo. MERS is represented as a nominee of the Lender at closing – but, it should lose the nominee status under the lender once the lender sells the loan (at closing!). Here, MERS is assigning the mortgage, the PREMISES, and the note in it’s own name – pretty rediculous, especially the conflict of interest caused by the MERS officer/Wells Fargo attorney/debt collector – and a fraudulent conveyance of the PREMISES, and a note MERS never held – ha! The whole ballgame here seems to be that since the bankers ran out of properties to mortgage, they had to get more – what better way to protect your game by causing a setup – MERS gets the mortgages in the end – and the bank keeps whatever was paid, gets the house back, refinances to another sucker and forecloses, over and over again through MERS – the negotiable instruments are NEVER returned, even if one pays the house in full…I’ve noticed in Cook County that when a loan gets paid off by a borrower, the MORTGAGE is released by MERS, but never by the true assignee, and the note is still owed!

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