If your home or client’s home is being foreclosed by MERS you

may have won the lottery.  The article below explains why

MERS can’t foreclose and why Lenders can’t collect.   Basically,

MERS does not hold the note.  In Michigan, to foreclose one needs

to have the underlying mortgage note to assign and/or t

foreclose.   If taken to court MERS says they have the note,

 but it is all a bluff and a charade.  MERS is basically a computer.  Read on:

Friday 16th July

“California Court Rules:

MERS Can’t Foreclose,
Citibank Can’t Collect

“Any attempt to transfer the beneficial interest of a
trust deed without ownership of the underlying note is VOID under
California Law.”

If you read that sentence and thought… “MERS,” then you’re already
in the club.  If you’ve never heard of MERS, and have no idea what is
meant by being “in the club,” don’t worry, this is a club that just about
every homeowner is invited to join.  In fact, you may already be a
member and not even know it.

Call Dave Brigle if you have questions about this topic “MERS”

Foreclosure Prevention Institute, LLC

1.800.826.1929

271 Viking Dr

Battle Creek, MI  49017

brigle@appraisaloffice.biz

30 plus years in the real estate and foreclosure arena

Rated with BBB

MERS is the acronym used to describe Mortgage Electronic Registration Systems, Inc.

 Best I can tell, our friends in the mortgage banking industry created MERS to make it

easier for banks and servicers to sell and transfer our mortgages at the speed of light

 during the real estate bubble. According to the company’s Website:

MERS was created by the mortgage banking industry to

streamline the mortgage process by using electronic commerce

 to eliminate paper. Our mission is to register every mortgage

loan in the United States on the MERS^® System.

MERS acts as nominee in the county land records for the lender

 and servicer.  Any loan registered on the MERS^® System is

 inoculated against future assignments because MERS remains

the nominal mortgagee no matter how many times servicing is traded.

I have to tell you… I hate these guys already.  Their attitude alone bothers me. 

I looked at pictures of their three top executives on their Website and thought

 to myself… “No way I’d be friends with these guys.”  Probably not very fair of me,

but as far as I’m concerned, when it comes to anything that talks like that and

was created by the mortgage banking industry… “fair,” is where you go on Sunday

 to have popcorn and cotton candy.  Just so we’re clear.

MERS, which is a company that I hear doesn’t even have employees, has been

about as controversial as you get ever since houses started dropping like flies

into foreclosure back in 2007-08.  God forbid you find yourself losing your

home to foreclosure, you’ll very likely find a representative from MERS looking

 smug and acting like the owner of your mortgage.  But, MERS is not the owner of

your mortgage, of course, and now a bankruptcy court judge in the Eastern District

of California has officially said that he agrees.

MERS is a relatively new development in the mortgage world, and as the

 foreclosure crisis began the courts pretty much let them do whatever they

 wanted to do, as the party in interest in a foreclosure action.

But, that was before the foreclosures became a full fledged tsunami, and

homeowners watched the bankers first get bailed out, and then pay out billions

in bonuses before treating every single American homeowner/taxpayer who

 applied for a loan modification like insignificant garbage.

In response, homeowners, having been trained for over 200 years in the fine

 art of pushing back when shoved, went to their lawyers, and those lawyers

 started asking questions, as they are prone to do.  Many started with questions like:

 “Who the heck is this MERS guy and why does he think he has any right to be

foreclosing on my client’s home?”

For almost two full years, it seemed to me that judges, who frankly weren’t

used to foreclosures being challenged, basically yawned and gave the house back

to the bank.  Then, starting about a year ago, give or take, things started to change. 

Judges started to listen to the points being raised as related to MERS showing up

as the party in interest ready to foreclose, and the more the judges learned, the

 more they saw problems with what MERS was doing.  As time went on the tide

seemed to shift a bit and several decisions weren’t falling as MERS would have

liked for one reason or another.

According to the company’s Website, MERS “is a proper party that can lawfully

 foreclose as the mortgagee and note-holder of a mortgage loan.”  Here’s what

it says on the MERS Website:

FORECLOSURES

(“MERS”) is In mortgage foreclosure cases, the plaintiff has standing

as the holder of the note and the mortgage. When MERS forecloses,

 MERS is the mortgagee and it is the holder of the note because a MERS

officer will be in possession of the original note endorsed in blank,

 which makes MERS a holder of the bearer paper.

But, in this latest decision, the bankruptcy judge in California didn’t agree,

writing in his opinion:

“Since no evidence of MERS’ ownership of the underlying note has

 been offered, and other courts have concluded that MERS does not

own the underlying notes, this court is convinced that MERS had no

interest it could transfer to Citibank. Since MERS did not own the

underlying note, it could not transfer the beneficial interest of

the Deed of Trust to another. Any attempt to transfer the

 beneficial interest of a trust deed without ownership of the

underlying note is void under California law.”

Did you get that?  Since MERS didn’t own the underlying note, it couldn’t

transfer the beneficial interest of the Deed of Trust to Citibank.

According to several attorneys, this opinion should serve as legal basis

to challenge a foreclosure in California that has been based on a MERS

assignment.  It could also be used when seeking to void any MERS

 assignment of the Deed of Trust, or the note, to a third party for purposes

 of foreclosure; and should be sufficient for a borrower to obtain a TRO

against a Trustee’s Sale, and a Preliminary Injunction preventing any sale,

pending litigation filed by the borrower that challenges a foreclosure

 based on a MERS assignment.

In this decision the court found that MERS was acting “only as a nominee,”

 under the Deed of Trust, and that there was no evidence of the note being

 transferred. The judge’s opinion in this case also said that “several courts

 have acknowledged that MERS is not the owner of the underlying note and

 therefore could not transfer the note, the beneficial interest in the deed of

trust, or foreclose on the property secured by the deed”, citing cases of: In

Re Vargas, California Bankruptcy Court; Landmark v. Kesler, Kansas decision

as to lack of authority of MERS; LaSalle Bank v. Lamy, a New York case; and In

Re Foreclosure Cases, the “Boyko” decision from Ohio Federal Court.

And the court concluded by stating:

“Since the claimant, Citibank, has not established that it is the

owner of the promissory note secured by the trust deed, Citibank

 is unable to assert a claim for payment in this case.”

Oh my… well, that really is something.  MERS can’t foreclose and Citibank

can’t collect?  I believe you would have to say that MERS and Citibank were

already in a hard place when the judge inserted a rock.  MERS can’t foreclose

and Citi can’t collect… I am absolutely loving this, I have to say, but I suppose

giddy would be an inappropriate response, so I’ll just say, “how interesting”.

This decision means that if a foreclosing party in California, that is

not the original lender, claims that payment is due under the note, and

that they have the right to foreclose on the basis of a MERS assignment,

they’re wrong… based on this opinion.  The bottom line is that MERS has no

 authority to transfer the note because it never owned it, and that’s a view

that even seems to be supported by MERS’ own contract, which says that

“MERS agrees not to assert any rights to mortgage loans or properties

mortgaged thereby”.

What this may mean to California’s homeowners in bankruptcy court…

• It should serve as a legal basis to challenge any foreclosure

in California based on a MERS     assignment.

• It should serve as the legal basis for voiding a MERS assignment

 of the Deed of Trust, or the     note, to a third party for purposes of foreclosure.

• It should be an adequate basis for obtaining a TRO against a Trustee’s Sale
• It should be the basis for a Preliminary Injunction barring any sale

pending litigation filed by the borrower that challenges a foreclosure based

on a MERS assignment.

In addition, some lawyers believe that this ruling is relevant to borrowers

 across the country as well, because the court cited non-bankruptcy cases

related to the lack of authority of MERS, and because this opinion is

 consistent with prior rulings in Idaho and Nevada Bankruptcy courts

 on the same issue.

I don’t know about you, but I feel like watching a marching band.

 76 trombones, baby, 76 trombones.

 Mandelman Matters:  “When the going gets weird, the weird turns pro.”"  Hunter S Thompson

1.800.826.1929  Stop Foreclosure Today!!!

Call Dave Brigle, Managing Member of Foreclosure Prevention Instiute, LLC

regarding questions on this topic “MERS.”  30 plus years in the real estate

and foreclosure market.  Rated with the BBB.

Foreclosure Prevention Institute, LLC

271 Viking Dr

Battle Creek, MI  49017

brigle@appraisaloffice.biz

1.800.826.1929

This entry was posted on Friday, July 30th, 2010 at 12:38 am and is filed under Foreclosure, Foreclosure Prevention, Loss Mitigation, Mortgages. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.