Bombshell Ruling on MERS. It’s illegal, absurd and may make every one of its own mortgages unenforceable!
A recent ruling by Judge Robert E. Grossman in the United States Bankruptcy Court, Eastern District of New York in the chapter 7 case, In Re: Ferrel L. Agard sets forth a ruling based on very common sense, simple logic that the MERS business model is illegal, absurd and may have made every MERS mortgage unenforceable!
Here are some of the key quotes from the ruling:
“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. Adding to this absurdity, it is notable in this case that the Assignment of Mortgage was by MERS, as nominee for First Franklin, the original lender. By the Movant’s and MERS’s own admission, at the time the assignment was effectuated, First Franklin no longer held any
interest in the Note. Both the Movant and MERS have represented to the Court that subsequent to the origination of the loan, the Note was assigned, through the MERS tracking system, from First Franklin to Aurora, and then from Aurora to U.S. Bank. Accordingly, at the time that MERS, as nominee of First Franklin, assigned the interest in the Mortgage to U.S. Bank, U.S. Bank allegedly already held the Note and it was at U.S. Bank’s direction, not First Franklin’s, that the Mortgage was assigned to U.S. Bank. Said another way, when MERS assigned the Mortgage to U.S. Bank on First Franklin’s behalf, it took its direction from U.S. Bank, not First Franklin, to provide documentation of an assignment from an entity that no longer had any rights to the Note or the Mortgage. The documentation provided to the Court in this case (and the Court has no reason to believe that any further documentation exists), is stunningly inconsistent with what the parties define as the facts of this case.
However, even if MERS had assigned the Mortgage acting on behalf of the entity which held the Note at the time of the assignment, this Court finds that MERS did not have authority, as “nominee” or agent, to assign the Mortgage absent a showing that it was given specific written directions by its principal. This Court finds that MERS’s theory that it can act as a “common agent” for undisclosed principals is not support by the law. The relationship between MERS and its lenders and its distortion of its alleged “nominee” status was appropriately described by the Supreme Court of Kansas as follows: “The parties appear to have defined the word [nominee] in much the same way that the blind men of Indian legend described an elephant – their description depended on which part they were touching at any given time.” Landmark Nat’l Bank v. Kesler, 216 P.3d 158, 166-67 (Kan. 2010).”
“MERS would have this Court cobble together the documents and draw inferences from the words contained in those documents. For example, MERS argues that its agent status can be found in the Mortgage which states that MERS is a “nominee” and a “mortgagee of record.” However, the fact that MERS is named “nominee” in the Mortgage is not dispositive of the existence of an agency relationship and does not, in and of itself, give MERS any “authority to act.” See Steinbeck v. Steinbeck Heritage Foundation, No. 09-18360cv, 2010 WL 3995982, at *2 (2d Cir. Oct. 13, 2010) (finding that use of the words “attorney in fact” in documents can constitute evidence of agency but finding that such labels are not dispositive); MERS v. Saunders, 2 A.3d 289, 295 (Me. 2010) (designation as the ‘mortgagee of record’ does not qualify MERS as a “mortgagee”). MERS also relies on its rules of membership as evidence
of the agency relationship. However, the rules lack any specific mention of an agency relationship, and do not bestow upon MERS any authority to act. Rather, the rules are ambiguous as to MERS’s authority to take affirmative actions with respect to mortgages registered on its system.”
“MERS argues that notes and mortgages processed through the MERS System are never “separated” because beneficial ownership of the notes and mortgages are always held by the same entity. The Court will not address that issue in this Decision, but leaves open the issue as to whether mortgages processed through the MERS system are properly perfected and valid liens. See Carpenter v. Longan, 83 U.S. at 274 (finding that an assignment of the mortgage without the note is a nullity); Landmark Nat’l Bank v. Kesler, 216 P.3d 158, 166-67 (Kan. 2009) (“[I]n the event that a mortgage loan somehow separates interests of the note and the deed of trust, with the deed of trust lying with some independent entity, the mortgage may become unenforceable”).”
This last quote was a footnote in the ruling which leaves open for discussion whether the very use of MERS in any mortgage makes that mortgage unenforceable. The mortgage is supposed to be collateral for the note holder only and MERS is undisputedly not the note holder. For this reason, a note cannot be separated from a mortgage but it seems clear that MERS is doing just that in every one of its mortgages. As per long standing Supreme Court law, “[t]he note and mortgage are inseparable; the former as essential, the latter as an incident. An assignment of the note carries the mortgage with it, while an assignment of the latter alone is a nullity.” Carpenter v. Longan 83 U.S. (16 Wall.) 271 (1872). Read the full ruling here: http://www.scribd.com/doc/48827432/In-Re-Agard-48750818-US-Bankruptcy-Court-New-York-Memorandum-Decision
Evan M. Rosen
Rosen & Rosen, P.A.
4000 Hollywood Blvd, #725-S
Hollywood, FL 33021
954-981-1852(Phone)
954-981-4610(Fax)
www.rosenandrosen.com
Evan Rosen Blogs About a New Government Audit Which Reveals An Incredibly High Percentage of Foreclosure Fraud
Rarely do I actually blog anymore. My seven day work week with very often 12+ hour days is best spent fighting for clients while squeezing in the time it takes to read all the latest developments in case law, proposed legislation, and various other news stories affecting the foreclosure crisis. Typically forwarding links to all the articles I read via twitter and Facebook to help keep others informed is the best I can do.
However, last night, I read an article about an audit that was prepared by county officials in San Francisco of approximately 400 cases in which people had lost their home in foreclosure between January 2009 and November 2011. The results are simply mind blowing. “84 percent of the files contained what appear to be clear violations of law” and “in 45 percent of the foreclosures, properties were sold at auction to entities improperly claiming to be the beneficiary of the deeds of trust.” Put another way, in 45 percent of the cases the county reviewed, a “stranger” was allowed to take someone else’s property without any showing of a legal right to do so.
In 6 percent of the cases the same mortgage, or “deed of trust” as it’s called in California and various other states, was assigned to two or more different entities, which raises serious doubts about who actually had the right to foreclose. The article goes on to state that, “many of the foreclosures that were scrutinized showed gaps in the chain of title, the report said, indicating that written transfers from the original owner to the entity currently claiming to own the deed of trust have disappeared.”
The audit also revealed that 58 percent of the loans that were listed in the MERS database showed different “owners” than what was reflected in the foreclosure documents and public records. This only further serves to confirm the absolute mess that MERS has made of our long standing, previously very stable method of recording property information in our county recorders’ offices.
We regularly see banks and servicers attempting the same feat in our cases but not once has one been able to do so. For the full article, please read here:
We’re Not Even Half-Way Out of The Woods
According to a recent study done at University of North Carolina at Chapel Hill, roughly 42.2 million Americans took out a mortgage between 2004 and 2007. As of February of 2011, 2.7 million or only 6.4% of those loans were lost to foreclosure. The study conservatively estimates that another 8.3% or 3.6 million households are at "immediate, serious risk" of losing their homes. This would add up to mean only @ 14.7% of all loans entered into during the last few years of the real estate bubble are going to end up in foreclosure. By their own study, that would mean we still have more than half way to go.
However, in my humble opinion, these numbers are extremely conservative. If approximately 1 out of every 2 mortgages in Florida are for more money than the property is worth and approximately, 1 out of every 8 mortgages, are in default, why would only 14.7% be lost to foreclosure. No one has a crystal ball, but I would propose that the number of people in default and in foreclosure is higher for those who took out loans at the peak, than those who took out mortgages before it. No matter how you slice it, even under conservative estimates, we have at least as much to go as we’ve been and so far it’s been over three years. Add on the problems of robo-signing, numerous lawsuits, class actions, the beginning of criminal prosecutions, and an understaffed judiciary, and that number swells even more. Even the researches of the study admit that their estimate is "probably low balling the problem."
On a side note, the spokeswoman for the study noted, "It’s industry which has painted this picture of ‘oh, it’s the borrower’s fault,’ that the homeowner is behind on mortgage payments," "But they do that to deflect attention from the unbelievably irresponsible lending they were doing."
To read the entire story click here: http://www.huffingtonpost.com/2011/11/17/foreclosure-crisis-center-for-responsible-lending_n_1099120.html
Evan M. Rosen
Rosen & Rosen, P.A.
4000 Hollywood Blvd, #725-S
Hollywood, FL 33021
954-981-1852(Phone)
954-981-4610(Fax)
www.rosenandrosen.com
The MERS incomprehensible response to all the lawsuits piling up!
Some very interesting spin in this one from MERS spokesperson Janis Smith.
Her statement…
“The MERS System is not a legal system of record or a replacement for public land records. No interests are transferred on the system—they are only tracked,” Smith, Merscorp vice president of corporate communications, wrote in a response to emailed questions. “MERS does not have or maintain any document recording system, public or private, and does not do anything to compete with or supplant the public records for land located in the County records.”
She then goes on to say…
MERS is the true owner of the mortgage, and is not, in the complaint’s words, a “straw man” placeholder listed in public records.“The ‘owner of the loan’ is the party who has possession of the promissory note, but the promissory note is not, and has never been, and is not required to be disclosed or filed in the public records”
Evan M. Rosen
Secret Docs Show Foreclosure Watchdog Doesn’t Bark or Bite
“For two years, they’ve (the treasury department) known how abysmal servicers were performing, and decided to do nothing,” said Neil Barofsky, the former special inspector general for the Troubled Asset Relief Program, better known as TARP or the bank bailout, which provided the money for HAMP.
“It demonstrates that if you have a set of rules for which compliance is completely voluntary and no meaningful consequences for those who violate them, having all the audits and reviews in the world are not going to make a bit of difference,” he continued. “It’s why the program has been a colossal failure.”
see the rest of the article here:
http://www.propublica.org/article/secret-docs-on-foreclosure-watchdog
Evan M. Rosen
Rosen & Rosen, P.A.
4000 Hollywood Blvd, #725-S
Hollywood, FL 33021
954-981-1852(Phone)
954-981-4610(Fax)
www.rosenandrosen.com
NOTICE: The information contained in this electronic mail transmission is intended by, Rosen & Rosen, P.A. for the use of the named individual or entity to which it is directed and may contain information that is privileged or otherwise confidential. It is not intended for transmission to, or receipt by, anyone other than the named addressee (or a person authorized to deliver it to the named addressee).Dissemination, distribution or copy of this communication is strictly prohibited. If you have received this electronic mail transmission in error, please delete it from your system without copying or forwarding it, and notify the sender of the error by reply email or by calling Rosen & Rosen, P.A. at 954-981-1852, so that our address record can be corrected.
The Push for Swift Foreclosures So Banks Can Profit While Sweeping American Justice Under the Rug is ON!!!
I can hardly believe an economist said this:
"Right now you’re prolonging the agony. Do you want to take the Band-Aid off your arm slowly so you can feel each hair being pulled out by the root, or do you want to do it quickly and get it over with?" said Sean Snaith, an economist at the University of Central Florida. "For the state’s economy as a whole, it’s a positive development."
This is about so much more than just getting it over with; it’s about this still being the United States of America and in this country, our citizens are entitled to due process, an opportunity to be heard and a fair day in court. If someone is not paying their mortgage, not living up to their obligations to pay then under the terms of their agreement, they will lose their property but only to the party who can very simply prove they are entitled to it. In our country no one should be allowed to take your property unless they have the right to do so via agreement, assignment or in any other legal way! Certainly, our country does not stand for the idea that some bank or lender can take your property and obtain a judgment against you based on fraudulent documents and affidavits founded on lies!
For more read here:
http://www.tampabay.com/news/courts/floridas-gop-lawmakers-float-foreclosure-reforms/1192843
Evan M. Rosen
Rosen & Rosen, P.A.
4000 Hollywood Blvd, #725-S
Hollywood, FL 33021
954-981-1852(Phone)
954-981-4610(Fax)
www.rosenandrosen.com
NOTICE: The information contained in this electronic mail transmission is intended by, Rosen & Rosen, P.A. for the use of the named individual or entity to which it is directed and may contain information that is privileged or otherwise confidential. It is not intended for transmission to, or receipt by, anyone other than the named addressee (or a person authorized to deliver it to the named addressee).Dissemination, distribution or copy of this communication is strictly prohibited. If you have received this electronic mail transmission in error, please delete it from your system without copying or forwarding it, and notify the sender of the error by reply email or by calling Rosen & Rosen, P.A. at 954-981-1852, so that our address record can be corrected.
Inspector General of Troubled Asset Relief Program Calls Bank Problems “Systemic Fraud in the System”, Not Just Improperly Stapling Documents Together
Here’s the full quote: "You’re not talking about improperly stapling together two documents; you’re talking about systematic fraud in the system," said Neil Barofsky, the former special inspector general for the U.S. Treasury’s Troubled Asset Relief Program. "What this shows is that before the financial crisis, the banks were essentially lying to the purchasers of the mortgages about the quality."
The full article is here:
http://www.tampabay.com/news/business/banking/mortgage-foreclosure-crisis-cost-five-lenders-65-billion/1192022
Evan M. Rosen
Rosen & Rosen, P.A.
4000 Hollywood Blvd, #725-S
Hollywood, FL 33021
954-981-1852(Phone)
954-981-4610(Fax)
www.rosenandrosen.com
There is a huge lull in foreclosure filings but all experts agree that won’t last for very long…
From a recent Florida newspaper article:
"But at some point those foreclosure filings will make it to the market, said Jack McCabe, a Deerfield Beach real estate consultant.
"They are definitely going to hit this fall, and we will also see an increase in short sales in those cases where lenders are unable to get their paperwork in order," McCabe predicted.
With another wave of adjustable-rate mortgages resetting this year, McCabe said foreclosure filings will increase through the end of 2012.
"There may be a lull for a month or two here or there, but they’re coming," McCabe said.
For the entire article read here:
http://www.heraldtribune.com/article/20110915/ARTICLE/110919787/2416/NEWS&tc=email_newsletter?p=1&tc=pg
Evan M. Rosen
Rosen & Rosen, P.A.
4000 Hollywood Blvd, #725-S
Hollywood, FL 33021
954-981-1852(Phone)
954-981-4610(Fax)
www.rosenandrosen.com
Fannie and Freddie go on the offensive for being sold “sacks of —-” by the big banks
Here are the highlights of the article linked below:"The Federal Housing Finance Agency suits, which are expected to be filed in the coming days in federal court, are aimed at Bank of America, JPMorgan Chase, Goldman Sachs and Deutsche Bank, among others, according to three individuals briefed on the matter."
"The suits will argue the banks, which assembled the mortgages and marketed them as securities to investors, failed to perform the due diligence required under securities law and missed evidence that borrowers’ incomes were inflated or falsified. When many borrowers were unable to pay their mortgages, the securities backed by the mortgages quickly lost value."
"Fannie and Freddie lost more than $30 billion, in part as a result of the deals, losses that were borne mostly by taxpayers."
"In July, the agency filed suit against UBS, another major mortgage securitizer, seeking to recover at least $900 million, and the individuals with knowledge of the case said the new litigation would be similar in scope."
"…last month, the insurance giant American International Group filed a $10 billion suit against Bank of America, accusing the bank and its Countrywide Financial and Merrill Lynch units of misrepresenting the quality of mortgages that backed the securities A.I.G. bought."
"“While I believe that F.H.F.A. is acting responsibly in its role as conservator, I am afraid that we risk pushing these guys off of a cliff …"
"The suits are being filed now because regulators are concerned that it will be much harder to make claims after a three-year statute of limitations expires on Wednesday, the third anniversary of the federal takeover of Fannie Mae and Freddie Mac."
"As of June 30, Freddie Mac holds more than $80 billion in mortgage securities backed by more shaky home loans like subprime mortgages, Option ARM and Alt-A loans. Freddie estimates its total gross losses stand at roughly $19 billion. Fannie Mae holds $38 billion of securities backed by Alt-A and subprime loans, with losses standing at nearly $14 billion."
Read the full article here:
Evan M. Rosen
Rosen & Rosen, P.A.
4000 Hollywood Blvd, #725-S
Hollywood, FL 33021
954-981-1852(Phone)
954-981-4610(Fax)
www.rosenandrosen.com
What impact does a short sale, foreclosure or deed-in-lieu have on your credit score?
FICO, the leading provider of consumer credit scores conducted a study and found:
All in all, we saw:
- The magnitude of FICO® Score impact is highly dependent on the starting score.
- There’s no significant difference in score impact between short sale/deed-in-lieu/settlement and foreclosure.
- While a score may begin to improve sooner, it could take up to 7-10 years to fully recover, assuming all other obligations are paid as agreed.
- In general, the higher starting score, the longer it takes for the score to fully recover.
- Even if there’s minimal difference in score impact between moderate and severe delinquencies, there may be significant difference in time required for the score to fully recover.
Evan M. Rosen
Rosen & Rosen, P.A.
4000 Hollywood Blvd, #725-S
Hollywood, FL 33021
954-981-1852(Phone)
954-981-4610(Fax)
www.rosenandrosen.com
