Will MERS Exam Be a Whitewash?

The Wall Street Journal real estate blog reports that Federal banking regulators will conduct an examination of MERS, the electronic mortgage and servicing rights data service (hat tip ForeclosureHamlet). As much as scrutiny of MERS is very much in order, it remains an open question as to whether this effort is serious.

One impetus for this review is an article by Chris Peterson, which was very critical of MERS’ inconsistent roles. For instance, the manner in which MERS registers mortgages in local courthouses is problematic:

MERS’s rights vis-à-vis mortgages registered on the MERSCORP database have created a conundrum for courts, borrowers, and foreclosure attorneys. In boilerplate security agreements included in mortgages and deeds of trust around the country, lenders include this clause:

“MERS” is Mortgage Electronic Registration Systems, Inc. MERS is a separate corporation that is acting solely as nominee for Lender and Lender’s successors and assigns. MERS is the mortgagee under this Security Instrument….

On the one hand, MERS purports to be acting as a nominee—a form of an agent. On the other hand, it also is claiming to be an actual mortgagee, which is to say an owner of the real property right to foreclose upon the security interest. It is axiomatic that a company cannot be both an agent and a principal with respect to the same right.19 In litigation all across the country, attorneys representing MERS frequently take inconsistent positions on the legal status of the company, depending on the legal issue at hand.

Both the MERS-as-an-agent and the MERS-as-an-actual mortgagee theories have significant legal problems. If MERS is merely an agent of the actual lender, it is extremely unclear that it has the authority to list itself as a mortgagee or deed of trust beneficiary under state land title recording acts. These statutes do not have provisions authorizing financial institutions to use the name of a shell company, nominee, or some other form of an agent instead of the actual owner of the interest in the land. After all the point of these statutes is to provide a transparent, reliable, record of actual—as opposed to nominal—land ownership.

Conversely, if MERS is actually a mortgagee, then while it may have authority to record mortgages in its own name, both MERS and financial institutions investing in MERS-recorded mortgages run afoul of longstanding precedent on the inseparability of promissory notes and mortgages. Since the 19th century a long and still vital line of cases has held that mortgages and deeds of trust may not be separated from the promissory notes that create the underlying obligation triggering foreclosure rights.2

As troubling is MERS’ lax corporate governance. The parent, MERSCORP, has under 50 employees; the subsidiary MERS, which is the database, has no employees. It instead relies on the peculiar procedure of having employees of MERS members (typically, bank servicing units and foreclosure mills) temporarily become MERS officers for the sole purpose of taking action in MERS’ name:

As a practical matter, the incoherence of MERS’ legal position is exacerbated by a corporate structure that is so unorthodox as to arguably be considered fraudulent. Because MERSCORP is a company of relatively modest size, it does not have the personnel to deal with legal problems created by its purported ownership of millions of home mortgages. To accommodate the massive amount of paperwork and litigation involved with its business model, MERSCORP simply farms out the MERS, Inc. identity to employees of mortgage servicers, originators, debt collectors, and foreclosure law firms.22 Instead, MERS invites financial companies to enter names of their own employees into a MERS webpage which then automatically regurgitates boilerplate “corporate resolutions” that purport to name the employees of other companies as “certifying officers” of MERS.23 These certifying officers also take job titles from MERS stylizing themselves as either assistant secretaries or vice presidents of the MERS, rather than the company that actually employs them. These employees of the servicers, debt collectors, and law firms sign documents pretending to be vice presidents or assistant secretaries of MERS, Inc. even though neither MERSCORP, Inc. nor MERS, Inc. pays any compensation or provides benefits to them. Astonishingly, MERS “vice presidents” are simply paralegals, customer service representatives, and foreclosure attorneys employed by other companies. MERS even sells its corporate seal to non-employees on its internet web page for $25.00 each.24 Ironically, MERS, Inc.—a company that pretends to own 60% of the nation’s residential mortgages—does not have any of its own employees but still purports to have “thousands” of assistant secretaries and vice presidents.

To be more precise, in Senate testimony earlier this week, MERS president R.K. Arnold said MERS has over 20,000 certifying officers.

To give you an idea of how little control MERS has over the activities of its supposed officers, consider this discussion from a November 11, 2009 deposition of MERSCORP’s William Hultman by Nick Wooten (see page 148):

Q. Is there anyone at MERS who verifies that the acts being undertaken in the name of MERS by its certifying officers are acts which are authorized by this corporate resolution?
A. There’s no one at MERS other than the officers who generally oversee the activities of the certifying officers. However, there are employees of the parent corporation MERSCORP that regularly audit the activities of our members to ensure that they are complying with our rules and procedures in our agreement with them.
Q. Who are those employees?
A. They are the people who work in the law department and the people who work in the products performance division — department.
Q. How many of those people are they?
A. I think there is, there are seven in the law department, and product performance department’s probably, and that — I don’t know off the top of my head because I haven’t looked at the org chart lately, but there’s probably seven or eight or nine people there.
Q. Well, let’s just go with the highest number. Seven in law and nine in product performance. So 16 people out of 47?
A. Give or take, yeah.
Q. And you say those 16 people are involved in auditing the thousands of transactions executed daily by the thousands of certifying officers of MERS?
A. I didn’t say that….
Q. Okay. How much time in a typical day do those 16 people spend auditing the activities of certifying officers?
A. I have no idea.
Q. You are in charge of the law department, aren’t you?
A. No.
Q. You are in charge of what department?
A. I’m in charge of the corporate group or the corporate division.
Q. Does that include the law department?
A. It does.
Q. Who’s in charge of the law department?
A. Sharon Horstkamp.
Q. Does Sharon Horstkamp report to you?
A. She does.
Q. Okay. Do you receive reports on the frequency of audits undertaken by her department?
A. I do not….
Q. Right. And so again my question is there are 16 people designated to look at that issue, and you have thousands of certifying officers; correct?
A. Are you asking me if I have thousands of certifying officers?
Q. Yes.
A. Yes.
Q. You have 16 people who look at their compliance with this resolution?
A. Generally, yes.
Q. And do you have any idea daily how many transactions are taken in the name of MERS by these thousands of corporate certifying officers?
A. Generally, no.
Q. Okay. Is there any way that MERS is able to track every transaction conducted in the name of MERS by a certifying officer?
A. Only to the extent that it’s reported to us either systematically or it’s reported to a certifying officer within the organi- — the servicing organization.
Q. So I mean I guess again my point is there are thousands of transactions on a daily basis that MERS has no record of; right?
A. I don’t know that there are thousands of transactions being taken daily by the certifying officers.
Q. Well, let’s just talk about this affidavit we were discussing with respect to the Harmon Law Offices. Do you have any records in MERS system of the number of affidavits of nonmilitary status executed on a daily basis?
A. In which systems are we speaking?
Q. In MERS system.
A. In the MERS, the computer automated systems?
Q. In any method of storage, retrieval, archiving that is available to you and that you use, do you have any record of the number of affidavits of nonmilitary status executed by a certifying officer on a daily basis in this country?
A. Only to the extent that that information has been reported to another certifying officer of the servicer.
Q. Okay. And how would you obtain that information?
A. I would call the servicer up.
Q. Okay. So that is not a MERS record?
A. Well, to the extent that it’s in the custody of the MERS certifying officer we would consider that a MERS record.
Q. Outside of the servicer’s own system — well, first of all, let me ask it this way. Is the servicer required to report these activities to you on a daily, weekly, monthly basis?
A. Which services?
Q. Affidavits of nonmilitary status.
A. They are not required to report that to us.
Q. Do they report that to you?
A. They do not.
Q. Okay. And on your own systems do you have any records of the number of affidavits of nonmilitary status that are executed on a daily basis?
A. If you’re talking about the MERS system, no.
Q. Okay. What about any other system owned or operated by MERS?
A. Generally, no.
Q. Okay. What about assignments of mortgage or deeds
of trust?
A. What about them?
Q. Do you have any idea how many of those are done on a daily basis by MERS certifying officers?
A. I do not.
Q. Do you have access to that through the MERS system or any other system maintained, owned, controlled and operated by MERS?
A. Only to the extent that we ask the servicer they provide that information to us.
Q. So they do not put that information on the MERS system as a matter of course?
A. Put what stuff on?
Q. I’m sorry. Let me try to ask a better question. Assignments of a mortgage or a deed of trust are not generally reported to MERS on a daily basis, are they?
A. Correct.
Q. And MERS has no records of its own about how many mortgage assignments or assignments of deeds of trust are undertaken in its name on a daily basis, does it?
A. Only to the extent that that information is not in the hands of the MERS certifying officer for a particular servicer.
Q. If you wanted to stop this deposition and go call someone at MERS and say how many assignments have been done in our name today of a mortgage or deed of trust, you could not get that information that simply, could you?
A. I could get the information, but it might take some time.
Q. So there’s nothing in your system that catalogs how frequently that occurs?
A. There’s nothing in the MERS system or the automated systems that we operate for our members that has that information readily available.
Q. And you rely on the servicers to keep any records of that if any records are kept?
A. Yes.
Q. How about foreclosure deeds? Do you have any record of how many foreclosure deeds are executed in the name of MERS on a daily basis in this country by certifying officers?
A. No….
Q. — I mean do you have any idea how many endorsements are done in the name of MERS?
A. No, I do not.
Q. Do you have any idea how many proofs of claim are filed in the name of MERS on a daily basis?
A. I do not.

It gets even better. Between this deposition, and an earlier one of MERSCORP president R.K. Arnold by Nick Wooten, one get a more complete picture of how lax MERS’ operational controls are. MERS does keep a record of who its certifying officers are, but it has not record of what actions any particular certifying officer has taken. This would seem to be a fatal shortcoming in conducting any kind of audit. Arnold maintained that MERSCORP did various quality reviews, but was unable to say what they consisted of or even who on his team was responsible for them.

Both depositions make clear that the integrity system rest entirely on timely and accurate entries by MERS members. Since MERSCORP lacks access to any of the underlying records, it is impossible for it to vet accuracy even if it wanted to absent extensive cooperation with the servicer and document custodian.

For those of you who have the patience, below are the depositions.
September 25. 2009 Deposition of R.K. Arnold, MERSCORP

November 11. 2009 Deposition of William Hultman, MERSCORP

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42 comments

    1. i on the ball patriot

      It won’t be a whitewash if you don’t let it be one.

      Defending the validity of MERS in the bankers war on the people — and it is a war on the people with millions of casualties across the nation — is like defending the validity of torture in the bogus corporate war on terror.

      The wealthy elite corporate butt sucking John Yoo type lawyers need to be painted for the scum that they are, and those that expose the fraud in MERS as true heroes of humanity.

      The homeowners now become, in a slower more subtle form of torture, the abu Ghraib prisoners as they are driven into the streets, tent cities, and under the bridges to die …

      http://www.google.com/images?um=1&hl=en&newwindow=1&safe=off&rls=ig&biw=1020&bih=619&tbs=isch%3A1&sa=1&q=homeless+in+america+2010&aq=f&aqi=&aql=&oq=&gs_rfai=

      Capitalize on the notoriety of the despicable John Yoo and liken the MERS defenders to him. Flood the hearings and media with pictures of abu Ghraib and the homeless juxtaposed one against the other and make the connection in the minds and eyes of the public. This is the scum bag wealthy global elite and their traitorous butt sucking minions against the rest of humanity.

      Deception is the strongest political force on the planet.

    2. ExaminerCarter

      Yves and Fresno Dan,

      I think that there are some important things to consider here that indicate it is a serious effort.

      First, the fact that this is a joint examination by the OCC, the Federal Reserve, the Federal Deposit Insurance Corp. and the Federal Housing Finance Agency is pretty much unprecedented.

      Second, MERS itself is not a bank; it is not regulated directly by any of the four agencies listed. This exam appears as if it is being conducted under the Outsourced Service Provider provisions of the Bank Service Company act.

      Third, if it wasn’t going to be credible, why would OCC’s Walsh announce it publicly and subject the agencies to scorn.

      Finally, most of the examiners I know are serious people who take their responsibilities very seriously. As examiner we may make mistakes like other people, but please don’t impune our motives.

      1. Walter Wit Man

        I think the public has every reason to be suspicious. The Congress is owned by the banks, as even ranking members of Congress have admitted, and HR 3808 sailed through Congress without a vote and almost became law. Congress clearly tried to help fix the problems of MERS.

        Sure, maybe MERS itself is simply a empty vessel with no real political power so the legislators will be happy to assign blame to MERS and let it take the fall. So maybe we will finally get an honest examination for once.

        But should we assume honest intentions from the government players? Hells no. One has to be a dupe or a partisan of either party to pretend that Congress has any integrity or that the agencies have any integrity. There may be good people in the rotten system but the more important consideration is that the system is rotten!

        1. ExaminerCarter

          By all means, be suspicious (actually one of the best traits for a bank examiner to have!). I am not trying to minimize the possible serious nature of the questions that have been raised and the behavior that has been alleged. All I am suggesting is that you, Fresno Dan, Yves and others examine the facts carefully before jumping to conclusions.

          Yves statement that “it remains an open question as to whether this effort is serious” and Fresno Dan’s comment “Will MERS Exam Be a Whitewash? Yes, yes it will be.” presupposes that it is a politically-motivated effort, and I am trying to provide some facts that might suggest otherwise. You don’t have to accept that the facts lead to the conclusion I suggest, but they are facts (and facts are stubborn things).

          Bank examiners take their responsibilities (and independence from political interference) quite seriously.

          1. LJR

            Suppose that you examiners find evidence of serious wrongdoings? What happens next? To whom do you report and to what extent must they take you seriously? If they do take you seriously then what power do they have to enforce corrective measures that lobbyists can’t defeat?

          2. ExaminerCarter

            LJR,
            Examiners hold the banking institutions responsible for activities conducted by their outsourced service providers. It is likely that a report would be prepared on the service provider and forwarded to the banks that use that provider.

            Where we observe weak practices, it is possible that we would look to take remedial action with the banking firms themselves. This can range from the simple findings in a report of examination, to private, non-public supervisory actions, and even to public supervisory actions and cease-and-desist orders if the practices are sufficiently egregious.

            Also note that the examiners are not the police. If we came across breaches of law, these would be referred to the appropriate authority for investigation.

            The examiners will be reviewing the practices that are observed, but are not experts in the law, and will not be making legal judgments – those are for the judicial system to work through.

    3. HYDROGENE JOHNSON

      FRESNO DAN,

      I’M IN FRESNO, WE NEED TO TALK, I’VE BEEN FIGHTING THE BANKSTERS SINCE OCT 2007.

      I TESTIFIED AT THE OBAMA MORTGAGE FRAUD SUMMIT IN FRESNO ON SEP.29,2010 AT THE NEW FEDERAL BUILDING.

      GOOGLE: FEDS HOLD MORTGAGE FRAUD SUMMIT IN FRESNO
      WATCH THE VIDEO AND READ THE ARTICLE.

      ARE YOU AN ATTORNEY ?

      PLEASE CALL ME GENE 907 7623

      THANKS

    4. davidgmills

      I have said it before on this website…. The purpose of my own case in Tennessee is to demonstrate that: the MERS system of listing a strawman as a lienholder, changes a transparent open and public system, into a private and secretive one.

      When the lienholder is a strawman, it is no longer possible for the property owner, a title company or a prospective purchaser to go to the deed records and identify the person or entity who needs to be paid to satisfy the lien.

      When a strawman is lienholder there is no way to know whether a release of the lien was signed by the party who holds the note. There is a huge gap in the chain of title.

      This system radically changes hundreds of years of property recording law and transfers a governmental function to the private sector.

      It is far worse than we have been led to believe by the bankers.

      1. tom bokuniewicz

        I just closed on my house in Tenn. despite the fact no one could identify what legal entity owned the note on my real property. The new mortgage bank, Bank of America, and the title insurance company for the buyer both said everything was ‘okay’ because they were going to have a record of the book and page being paid. I kid you not. Being a lawyer (but not a Tenn. lawyer), I tried to point out that saying they paid the book and page number is no answer to note holder if the wrong note holder is paid.
        I also pointed out that a previous release of a lien was by MERS and was probably void. They didn’t care. Also a previous lien from six years ago had not had a release filed but the note had been transferred without notice. There is a release of lien (never recorded) by that new company without any record of a sale of the note; or any recording thereof. They were happy because the lien had a book/page number on it; even though USBank cannot find a record of any sale to the alleged new note holder.
        But everyone was eager to go; so I gave them a four page letter (it could have been 100 pages, really) explaining why they are all crazy.

        But they all think I am just a pain in the ass and in Tenn. we do things OUR way.

        Oh, the stupidity….

      2. Barry in Tacoma

        David,

        I followed your case with First Tennessee and have read your actions for QT. How did it go? Have you got any advice for QT?

        I’m a big fan of Dave Krieger and his QT method at Cloudedtitles.com, but am anxious to see how others fared, and I like your writing.

  1. attempter

    http://attempter.wordpress.com/2010/10/26/the-corporatism-of-mers/

    This is the trend of all corporations. Wherever possible, as per the Rule of Rackets (the capitalist-to-oligopolist imperative and prerogative), the goal is to become a “brand” and delegate all the actual work, if any, to subcontractors. This is also intended to “legally” put buffers between the corporation and its responsibility for anything at all, for example using something close to slave labor. (See Naomi Klein, No Logo.) Or, as in our mortgage conveyor belt example, to buffer the originator, i.e. a big bank or subsidiary thereof, from legal liability for the bogus quality of its mortgage loans when that same bank later stands as trustee for the MBS derived from them. The bank’s liability is supposed to have been laundered in both directions through the conveyor process. MERS facilitated this.

    MERS is also used to illegally assign mortgages after an originator had gone bankrupt, when only the bankruptcy trustee could have such authority. But this crime would regularly be committed, whenever the trust belatedly needed such an assignment. The system’s opacity was intended to cover this up.

    It would stand to ”own” the land wherever a foreclosure was to take place. This is the logic of separating useful work on the land (the original kernel of the ultimately fraudulent labor theory of property itself) from legal ownership. Today we reach the point where temporarily unwanted land can be consigned to humanless corporate “ownership”. This is the better to relinquish responsibility for maintaining the foreclosed land and paying property taxes on it until the next buyer is found. Beleaguered towns and cities, facing fiscal disaster and whole neighborhoods falling into neglected semi-vacancy and the squalor that follows, have had great trouble trying to find out who really ”owns” these vacant, unmaintained houses. (The same trouble the individual foreclosee often has.)

    These phenomena describe the full logic of corporate personhood. The goal is for none of us human beings to have any legal rights vs. the corporation, but for it to have total rights vs. us. The goal is for none of us to be “employees” of the corporate entity, but just deputized laborers. Have you seen the impoverished day laborers who stand in a parking lot waiting for some guy to come around in a pickup truck? The goal is for all workplaces to become like that in essence, just piling into the pickup truck. (That is, for the diminishing number of us who’ll have a job at all.) You’ll get your meager pay, but beyond that you won’t exist, in the eyes of either the corporation or the law, as a human being. You’ll be a deputized cog at work, and outside work you simply won’t exist at all, other than as a criminal.

    1. DownSouth

      attempter said:

      The system’s opacity was intended to cover this up.

      It would stand to ”own” the land wherever a foreclosure was to take place… This is the better to relinquish responsibility for maintaining the foreclosed land and paying property taxes on it until the next buyer is found. Beleaguered towns and cities, facing fiscal disaster and whole neighborhoods falling into neglected semi-vacancy and the squalor that follows, have had great trouble trying to find out who really ”owns” these vacant, unmaintained houses. (The same trouble the individual foreclosee often has.)

      Ah, yes, that perennial problem about the ownership of land.

      From Europe’s landed aristocracy to Benjamin Franklin finding himself in Paris thinking “often of the happiness of New England, where every man is a Freeholder, has a vote in publick Affairs, lives in a tidy warm House, has plenty of good Food and Fewel…”

      How far the nation traveled between Franklin’s days in Paris and the days after the Civil War when America’s corporations began the inexorable accumulation of land. The Populists of the late 19th century were certainly aware of the social, cultural, economic and political implications of the concentration of land ownership into fewer and fewer hands. As Lawrence Goodwyn explains in The Populist Moment, the “failure to provide short-run credit for seventy years” to family farmers “would seem to be the operative ingredient” of this travesty perpetrated against the American people. Goodwyn continues:

      The process of extending credit, first to the nation’s most affluent large-scale farming interests, and then in the 1920s to sectors of the agricultural middle class—-while at the same time denying it to the “whole class” of Americans who worked the land—-had the effect of assisting large-unit farming interests to acquire title to still more land at the expense of smallholders… In many ways, land centralization in American agriculture was a decades-long product of farm credit policies acceptable to the American banking community.

      The GFC unveiled the double standard operative here: Regardless of how corrupt and incompetent the banksters are, they are always flush, thanks to the boundless largess of the federal Government. Of course the rest of us are served up nothing but austerity.

      Chris Peterson (cited by Yves in her post) says:

      These statutes do not have provisions authorizing financial institutions to use the name of a shell company, nominee, or some other form of an agent instead of the actual owner of the interest in the land. After all the point of these statutes is to provide a transparent, reliable, record of actual—as opposed to nominal—land ownership.

      As Goodwyn observes, this isn’t the first time this issue of who owns what has become contentious in American politics:

      In the absence of significant literature on the subject, land centralization is a process that remains obscure to most Americans, but one they may feel no right to inquire into—-given the fact that land centralization is sanctioned by the culture itself. Indeed, the remarkable cultural hegemony prevailing militates against serious inquiry into the underlying economic health of American society, so this information is, first, not available, and, second, its non-availability is not a subject of public debate. Large-scale property ownership in America is a legal secret secluded in “trusts,” “street names,” and “nominees” beyond the reach of any democratic institutions in the society*. Though Populists had the self-possession to struggle against land syndicates, Americans no longer contest the matter.

      *Informed research in this area has not yet begun—-and cannot be—-until the disclosure laws are reformed. See U.S. Congress, Senate Committee on Government Operations, “Disclosure of Corporate Ownership,” Staff Report of the Subcommittee on Budgeting, Management, and Expenditure, 93rd Congress, 2nd session, May 4, 1974; U.S. Congress, House Committee on Banking and Currency, “Commercial Banks and Their Trust Activities, Emerging Influence on the American Economy,” Staff Report for the Subcommittee on Domestic Finance, 90th Congress, 2nd session, July 8, 1968.

      1. attempter

        In the absence of significant literature on the subject, land centralization is a process that remains obscure to most Americans, but one they may feel no right to inquire into—-given the fact that land centralization is sanctioned by the culture itself. Indeed, the remarkable cultural hegemony prevailing militates against serious inquiry into the underlying economic health of American society, so this information is, first, not available, and, second, its non-availability is not a subject of public debate.

        He sure got that right. Even on the blogs I frequent, when I propose land reform: crickets.

  2. Pagar

    Why isn’t every single person connected with this Mafia type takeover already in jail. IMO, there is no legal basis for any action by MERS. State laws to handle the processing of real estate records are being violated by every action taken by people who claim they have some kind of unwritten legal basis because they paid $25 for MERS stamp. MERS = FRAUD!

  3. JC

    From the Peterson paper:

    “For centuries American mortgage lenders have eagerly recorded their mortgages loans with county recorders because of incentives created by state land title laws. For example, if a mortgagee fails to properly record its mortgage, and then someone subsequently buys or lends against the home, the subsequent purchaser can often take priority over the first mortgagee.9 Similarly, where a mortgagee assigns a mortgage to an investor, that investor would eagerly record documentation reflecting the assignment to protect herself from the possibility that the original mortgagee would assign the same mortgage to a different investor.”

    Now we are hearing reports that some mortgages may have been pledged to more than just one trust…..wait, I thought MERS was supposed to provide transparency…..

    1. CingRed

      They are providing transparency… in the same manner as the Obama administration and the Fed is providing it. We live in a banana republic and an issue of significance can not be held in the brain of a citizen for more than 30 seconds because we’ve been conditioned to move on queue with the CNBC sound bites. It’s not an issue if it WILL be white washed… they are just seeing if they can set a new speed record for the white washing.

  4. dejavuagain

    If MERS is going to be allowed to continue to exists, its operations should be as public and definitive as a recorders office.

    Public access to the database for all records.
    Images to be filed.
    All transactions and assignments of mortgages and notes must be filed with MERS immediately.
    No data may be erased by MERS or a members.

    There should be penalties for maintaining inaccurate or incomplete data – to the borrower. (Same kind of penalties when a borrower misses a payment date by 32 seconds).

    Etc.

    The point to make when debating MERS is to show out all of the differences between MERS and a public recorders office.

  5. Pearl

    I will leave this for you smart people to figure out–but this strikes me as unabashedly improper.

    The following is a link to an August 2010 Fannie Mae Bulletin, in which MERS assignments are discussed in quite a cavalier manner.(I have posted a couple of paragraphs below, but to get the full gist, you should actually click the link. You will need to scroll down pretty far to find the MERS info.)

    https://www.efanniemae.com/sf/guides/ssg/annltrs/pdf/2010/svc1010.pdf

    “Clarification Regarding Foreclosure Actions in the Name of Mortgage Electronic Registration System (MERS)

    Announcement SVC-2010-05, Miscellaneous Servicing Policy Changes, provided that effective with foreclosures referred on or after May 1, 2010, MERS must not be named as a plaintiff in any foreclosure action, whether judicial or non-judicial, on a mortgage loan owned or securitized by Fannie Mae. The Announcement further stated that the assignment from MERS to either the servicer or Fannie Mae must be recorded before the foreclosure begins.

    Fannie Mae is clarifying the requirement that the assignment from MERS to the servicer or Fannie Mae be recorded before the foreclosure begins in certain circumstances as set forth below. This revised guidance replaces in its entirety that set forth in Announcement SVC-2010-05.

    Effective May 1, 2010, MERS must not be named as a plaintiff or foreclosing party in any foreclosure action, whether judicial or non-judicial, on a mortgage loan owned or securitized by Fannie Mae. When MERS is the mortgagee of record, the servicer must prepare an assignment from MERS to the servicer and bring the foreclosure in its own name unless Fannie Mae specifically allows the foreclosure to be brought in the name of Fannie Mae. In that event, the assignment must be from MERS to Fannie Mae, in care of the servicer at the servicer’s address for receipt of notices. The assignment must be prepared and executed before the foreclosure begins.

    (More at same link)

    https://www.efanniemae.com/sf/guides/ssg/annltrs/pdf/2010/svc1010.pdf

    1. Fractal

      Excellent find! I wonder which federal regulation, if any, or which portion of their contracts with originators & servicers, allowed FNMA to issue such an order to servicers? IOW, what was the underlying legal authority? Did FHFA order FNMA to issue that May 2010 order? Excluding and/or limiting the involvement of MERS in foreclosures in the manner you described strongly implies that MERS has no standing to foreclose. What legal analysis did FHFH or FNMA employ to reach their apparent conclusion that MERS lacks standing?

  6. Paul Repstock

    Well, the markets tell the tale. They say the “Fix” is in. This started last night in Europe and showed in the currencies. This AM opening in NY has all the captives pushed up. art of it is apparently based on an Irish “Europhoria”?? Nothing has changed or will change substantively for some time.

    I doubt the markets can be made to hold for long. Markets, in the end alays rely on the very bottom tier. John Q. Public must be made to believe that he/she is missing an opportunity by not investing/buying. (Inspite of of HFT’s and large portfolios, investment funds and institutional brokers cannot maintan a market price by themselves, They need the confirmation of trades by the lower order.) That may be a very hard sell in a tight money environment where the game is more obviously rigged every day.

    1. Paul Repstock

      Clarification: I do not recomend a short stance at this moment, unless you wish to support the market. There is plenty of empty air below. The Market will show when it is falling. The signal will come on the short squeezes.

  7. Sinaptics

    During previous research, I read a statute that lays out what constitutes proof of a lost note. One of the provisions was a clear process not subject to fraud. The above testimony would seem to violate that provision.

    However, after 30 or so minutes of searching, I’m unable to find the relevant statute again. Anyone know what I’m talking about?

    1. Paul Repstock

      Fraud?? What Fraud?
      Don’t you know that every single one of those “Lost Notes”, had been stored in the ‘supposedly’ fireproof vaults in the sub basement of WTC #2..Darn..:( ..Even the ones which weren’t written till 2006. Go figure eh!!

      Oh well stranger things have happened…lol

      1. DownSouth

        Exactly! Fraud? What Fraud?

        Judge Soud—-super-star of Florida’s rocket docket—-declares in this video that there has been no fraud perpetrated on the court. What is being classified as fraud, he says, is mere “neglect” and “sloppiness.”

        1. Paul Repstock

          Welll….That looks like a sound “Financail” (judgement)..heehee

          Yes Monkey number one. What do you want?
          —-Teacher teacher..I see no Robo Signers..
          ah ok.

          Yes Monkey number two what do You want?
          —-Teacher teacher…I haven’t heard about any Robo Signers..
          ..well ofcourse not!

          Yes Monkey number three, what have you to add?
          —-Teacher teacher…there is a new law!
          Yes number three. What is the ne law about?
          —-Well, ah, it’s………………………………..
          …………..
          Speak up number three!!
          —-Ah ..ummm…it’s about…….you know….
          ABOUT WHAT?
          —-Ahh..OH I KNOW… It’s about making certain that the signatures of witnesses to legal documents are legible. The mortgage companies have been working overtime to restore these signatures to their original beauty!

          Excellent children!
          See, I told you there was no fraud in the Financial System!

  8. MichaelC

    Seems to me the AGs first order of busininess is to agree MERS has no standing in any state to foreclose.

    MERS smells just like the CDO ‘managers’ used to manage the IBs toxic CDOs. Empty vessels.

  9. Fractal

    If the examiners who investigate MERS are as stupid as the Treasury witness currently in the chair before the House subcommittee, not only will the “investigation” of MERS be a whitewash, we will be conned into doing the whitewash ourselves and paying Huckleberry Finn for the privilege to whitewash the fraud.

    This Phyllis Caldwell witness from Treasury stubbornly insists Treasury cares about the homeowners and has punished mortgage servicers for violations of HAMP requirements, but cannot provide any evidence of actually imposing any of the “sanctions” or “penalties” provided in the statute. Also, so far, no excuse for spending only one percent (1%) of the federal funds appropriated for HAMP, either from Treasury (Caldwell) or OCC (Walsh) or FHFA (Demarco).

    Links to PDFs of written testimony are here:

    http://financialservices.house.gov/Hearings/hearingDetails.aspx?NewsID=1376

  10. Fractal

    Check this out:

    “For the banks, the immediate cost of halting foreclosure is not significant. Brian Moynihan, the chief executive of Bank of America, said it totaled $10 million to $20 million a month. Bank of America has frozen foreclosures in 27 states.

    “A far greater threat to the broader financial system is the possibility that investors will force financial institutions to buy back hundreds of billions of dollars in soured mortgages, according to a Congressional Research Service report prepared for Thursday’s hearing and obtained by The New York Times.

    “Loan buybacks could shift $425 billion in losses on mortgage-backed securities from the investors that owned them to the banks that helped originate or assemble the securities, according to the report, far more than most estimates floated on Wall Street.

    “ ‘Loan buybacks have the potential to cause the banking system to become undercapitalized once again or to cause individual large banks to fail,’ the report says, ‘even if that outcome is unlikely.’ ”

    http://www.nytimes.com/2010/11/18/business/economy/18mortgage.html?pagewanted=print

    Holy Shit! This will be the headline tonight if any witness testifies to that number today in the House hearing. I cannot fathom why CNBC or Bloomberg has not picked up this FOUR HUNDRED TWENTY FIVE BILLION DOLLAR

  11. Fractal

    Check this out:

    “For the banks, the immediate cost of halting foreclosure is not significant. Brian Moynihan, the chief executive of Bank of America, said it totaled $10 million to $20 million a month. Bank of America has frozen foreclosures in 27 states.

    “A far greater threat to the broader financial system is the possibility that investors will force financial institutions to buy back hundreds of billions of dollars in soured mortgages, according to a Congressional Research Service report prepared for Thursday’s hearing and obtained by The New York Times.

    “Loan buybacks could shift $425 billion in losses on mortgage-backed securities from the investors that owned them to the banks that helped originate or assemble the securities, according to the report, far more than most estimates floated on Wall Street.

    “ ‘Loan buybacks have the potential to cause the banking system to become undercapitalized once again or to cause individual large banks to fail,’ the report says, ‘even if that outcome is unlikely.’ ”

    http://www.nytimes.com/2010/11/18/business/economy/18mortgage.html?pagewanted=print

    Holy Shit! This will be the headline tonight if any witness testifies to that number today in the House hearing. I cannot fathom why Bloomberg has not picked up this FOUR HUNDRED TWENTY FIVE BILLION DOLLAR potential liability. CNBC ran the NYT story at 11 am this morning:

    http://www.cnbc.com/id/40253939/print/1/displaymode/1098/

  12. ScottS

    Our man Bill has a B.S. in physics and worked for the RTC during the S&L crisis. How he doesn’t spot dodgy banking, I have no idea. Maybe knows it’s all dodgy, and found a way to make a buck on it. But he sure comes off sounding like an idiot in that deposition. Alberto Gonzales would be proud!

    From http://www.mersinc.com/about/full_bio.aspx?id=26:
    Name: Bill Hultman
    Title: Senior Vice President & Corporate Division Manager

    Phone: 800-646-6377
    Fax: 703-748-0183
    Email: billh@mersinc.org

    Summary: Bill joined MERS in February, 1998. He brings more than 14 years of broad experience in finance and treasury. Before joining MERS, he served as Director of Asset Liability Management for Barnett Banks, Inc., Asset Liability Manager at Marine Midland Bank and Treasurer of Empire of America FSB. As a conservator for the FDIC, he managed insolvent institutions for the Resolution Trust Corporation.

    Prior to his experience in the financial services industry, Bill was a partner in the law firm of Moot and Sprague, as well as an attorney at Forest Oil Corporation, specializing in the areas of securities and corporate law.

    Bill holds a B.S. in Physics, a M.S. in Statistics and a J.D. from the State University of New York.

    1. Paul Repstock

      The physics classes were the important part…There he learned that an object in motion at the speed of light is invisible., and that an object at rest (ignoring everything else)is damnabley hard to dislodge. The BS was merely icing on the cake..:)

  13. RegReader

    Lost Note Affidavits: I’ve worked in financial services for years. There are two situations where lost note affidavists are used: 1 of them is when the original note is lost but there are exectued copies of it. This I’m fine with as the terms are clearly stated. 2 – where the note is lost and there are no copies. This is something I’m not comfortable with as usually the note is the only document that has the critical information on what the borrower and lender agree to do and not do.

    The mortgage, which gets recorded, only addresses what the collateral is and how it will be handled. In most states the mortgage has no info about the paymetn terms.

  14. Paul Repstock

    Thanks Down South, I replied to your post with my best effort on short notice.

    Perhaps judges have no room under law but to approve these forclosures. However, it gives little comfort in the essential goodness of humankind, to see these judges come out of retirement to gain fat paychecks by rubber stamping peoples lives out of existence at the rate of 25 cases per hour. One wonders how much they would have to be paid to up the ante and just condemn the people to death??

    Do I hear 30 shekels??

    DownSouths’ youtube link;
    http://money.cnn.com/video/news/2010/11/15/n_fla_foreclosure_court.cnnmoney/

  15. Virginia

    I am a nobody, but I am watching this potential whitewash closely…so please keep the spotlight on this issue. I learn very little from the newspapers and suspect they are complicit in overlooking fraud in order to “stabilize” the banking system. We’re not all dummies out there who can be hoodwinked.

    1. Paul Repstock

      :) Greetings fellow nobody. You seem to have it figured.

      You are in good company. There are some very bright stars here, but most like me just appreciate having a place to air ideas and get feedback.

  16. caveman

    How can a corp. ‘hire’ people without providing for with holding for the IRS, fica, umemployment tax and medicare? This is clearly fraud and I cannot understand why the IRS is not involved. ().

  17. Anonymous Comment

    Thanks Yves, for more deep reporting.

    I want to say something about having a corporate resolution which assigns an individual to a temporary role in a company or as an agent of another individual for the purpose of conducting some part of a transaction… which role expires at the end of the transaction. It’s normal and common in business. Just think about real estate agents. You sign documents to put them under contract with you, after the deal is done – they’re back to a regular person.

    If it’s done appropriately it protects all parties involved and aids the ability for people to conduct business at distances that prohibit travel, even just for convenience in modern times. It’s not THAT they assigned temporary roles for the robo-signers that’s the problem. It’s who they assigned to which roles. [32-vice-president guy, anyone?] Nincompoops, instead of experts in the field who would insist on it being done right.

    Please don’t generalize to villify temporary assignment of agent. The problem is that they assigned people to do complex legal tasks who had no expectation of having the required knowledge to complete the task. The system was used to put non-competent people in charge of important stuff that was being done all wrong… the reasons we can all assume/guess.

    Calling all the angels.

  18. Snady

    I was stunned when Arnold admitted under oath at the hearing on Nov. 18 (the one with Maxine Waters) that with MERS the note and mortgage “come together at foreclosure.” If the two come together, that means he admitted they were separated prior to foreclosure. Does that split make the mortgage a nullity in all MERS cases? Isn’t that the real issue with MERS–that the note goes one way and the mortgage goes another?

    His personal testimony in writing does not have that statement. (See the video at 2:41:30 on the slider.)

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