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MERS Unraveling

Posted by Neil Garfield | October 17, 2017

"Aside from the inappropriate reliance upon the statutory definition of "mortgagee," MERS's position that it can be both the mortgagee and an agent of the mortgagee is absurd, at best."— Judge Grossman, Federal Bankruptcy Court

The Court recognizes that an adverse ruling regarding MERS's authority to assign mortgages or act on behalf of its member/lenders could have a significant impact on MERS and upon the lenders, which do business with MERS throughout the United States.

However, the Court must resolve the instant matter by applying the laws as they exist today. It is up to the legislative branch, if it chooses, to amend the current statutes to confer upon MERS the requisite authority to assign mortgages under its current business practices.

MERS and its partners made the decision to create and operate under a business model that was designed in large part to avoid the requirements of the traditional mortgage recording process. This Court does not accept the argument that because MERS may be involved with 50% of all residential mortgages in the country, that is reason enough for this Court to turn a blind eye to the fact that this process does not comply with the law.

See In re: Ferrel L. Agard, Debtor, Chapter 7, United States Bankruptcy Court, Eastern District of New York, The Honorable Robert E. Grossman.

NOTE: Emergency bells when off when Grossman rendered his decision. Grossman’s decision was subsequently overturned by the Federal District Court Judge. But the logic expressed in Judge Grossman’s reasoning cannot be assailed. And it has been followed in numerous instances — in and out of court like where MERS has been banned from the Courtrooms in certain states.

The Wall Street business model for multiple sales of the same loans, derivative products sold as hedges or minibonds, is completely dependent upon the ability of the Banks to insert themselves into a loan transaction by separating the actual lender(s) and borrowers so far that neither one knows about the other.

The Banks step into the void they created and claim ownership of all the money advanced by investors, all the mortgage backed securities ever “issued” and all of the notes and mortgages that were signed by homeowners.

A crucial component of this business strategy is the ability to create the illusion of ownership in both primary market lending and secondary markets where loans and securities are bought and sold. It all falls apart if each (or some) transfer of the loan is faked. In order for the banks to have succeeded in their strategies they needed to convince everyone that they were, in fact, the only parties authorized to do business in connection with the existence of any loan.

The vehicle for creating this illusion is an intermediary who is presented as an alternative to the county records where deed and mortgages are filed. As a former president stated, “if you tell a lie that is big enough it will be accepted as truth and the truth will be accepted as false.”

The primary vehicle was MERS. (Chase used another similar vehicle that only Chase controlled). MERS is a real live corporation whose ownership is complex — involving the largest players on planet Earth. It consists of a handful of people who maintain an IT platform that is a cross between a database for identifying members and a chat room for conspiracy.

People with no affiliation with MERS enter the IT platform with a login and password. Once inside they appoint themselves as officials of MERS and then execute documetns on behalf of MERS. Transfers are sometimes logged into the database and sometimes they are not. But when it comes time that a MERS member would like to assume control of an alleged loan and foreclose on it, an entry is made showing that member as the latest transferee of the mortgage, thus giving the appearance of a party entitled to enforce.

The problem, identified by Judge Grossman, is that MERS although self described in the mortgage as “mortgagee” and as “nominee” for the mortgagee is that this is doublespeak. In fact, it is neither an agent for the actual lender whose existence is withheld and hidden, nor is it the lender, and hence MERS does not qualify as a mortgagee under statutory definitions.

This is no technicality. Becuase MERS expressly disclaims anny right, title or itnerest in the money, the debt , the note and the mortgage. It is directly expressed on the MERS websites, the MERS agreements and anything else you can run across where an official MERS notice or statement appears. ANd there is a reason for this. The Banks made sure that (1) they were in complete control of MERS and (2) there had to be no doubt that if MERS ended up in litigation or someone declared bankruptcy, there would be nothing in the bankruptcy estate in which MERS owned any asset or possessed any right to enforce a mortgage. The banks wanted that all for themselves.

The Banks made sure that (1) they were in complete control of MERS and (2) there had to be no doubt that if MERS ended up in litigation or someone declared bankruptcy, there would be nothing in the bankruptcy estate in which MERS owned any asset or possessed any right to enforce a mortgage. The banks wanted that all for themselves.

Outside the Wall Street bubble, this strategy came under fire and was actually banned in some states. MERS was personna non grata. The basic element to the MERS strategy is that documents could be fabricated and robo-signed to create the appearance of an assignment of a mortgage. THAT could only be true if MERS was either (a) the mortgagee or (b) the agent for a mortgagee. It has never been either one. And the transfers made the original entries in the MERS IT platform increasingly remote from the real world.

In the real world neither MERS nor the “lender” identified on the mortgage deed owned the debt , note or mortgage. So MERS could not very well execute any paper that conveyed a greater interest than what it possessed, which was nothing.

Thus in all cases involving a “MERS mortgage” the party seeking to enforce the mortgage instrument should be required to prove their interest with actual evidence of a purchase and sale and not just a paper instrument that essentially says “Trust me, I’m a bank.” In theory it shouldn’t be hard to come up with that evidence. But in reality, outside the Wall Street bubble, it is crystal clear that there were no purchases, there were no sales of the debt,

But in reality, outside the Wall Street bubble, it is crystal clear that there were no purchases, there were no sales of the debt, note and mortgage because the “origination”, “aggregation,” or “acquisition” of the loan was long ago funded not by the parties stated on the note and mortgage but by the investors who were barred from knowing how their money was being used. And the borrowers, in most cases were signing notes and mortgages in favor of companies that had not made any loan to them. And that is the real derivation of a “free house.” Except that it applies to the banks and not the homeowners.

The moral of the story is that neither borrowers nor their lawyers should assume that just because something is scribbled on paper doesn’t make it real and certainly doesn’t mean that any of the presumptions that you would ordinarily make about the isntrument are true and correct.

The importance of this revelation is simple. By inserting themselves, MERS, LPS, and servicers into the grey cloud of mortgages and foreclosures, the banks have interfered with the relationship that arose when the borrowers received money from the investors through multiple conduits that neither the investors nor the borrowers knew existed. The borrowers have always maintained that they wanted to do a workout with the real creditors, but they are prevented from doing so because the identity of the investors continues to be hidden.

But for the interference from the banks and the fraudulent business plan they pursued inc reating completely fake loan accounts, the number of foreclosures woujld have been a tiny fraction of what has occurred in real life with real lies. It is continuing. And decisions like this one are breaking the ice allowing homeowners a chance to successfully confront the fraudulent foreclosure practices.

And as for the free house, most homeowners only want to work out the terms of a real note and a real mortgage and pay back the money that the investor would otherwise lose if that portion of the loan that has not already been paid as “settlement” when the investors discovered what had been done with their money.

 

 

 

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