This material deals with MERS’ obligation to record an assignment in the land records when the beneficial interest in a note is transferred to a non-MERS member, and the fact that this isn’t being done. It also addresses the utter lack of reliability of the MERS computer system and how MERS is being used by its members.
I believe MERS has really stepped in it.
In his declaration, William Hultman, a ‘real’ MERS’ corporate officer and not a straw one, in “Mitchell”, the well known Nevada case, (dkt No. 74 in the bk court, 07-16226, and again as an exhibit in the Mitchell appeal by MERS to the District Court), stated that when the note is transferred to a non-MERS’ member, MERS is compelled by the terms of its membership contract to record an assignment of the deed of trust to that non-MERS’ member in the land records. Hultman declaration p.1:25-27 and p.2:1-3:
“AS LONG AS THE SALE OF THE NOTE INVOLVES A MEMBER OF MERS, MERS REMAINS THE BENEFICIARY OF RECORD ON THE DEED OF TRUST AND CONTINUES TO ACT AS NOMINEE FOR THE NEW BENEFICIAL OWNER.
IF A MEMBER IS NO LONGER INVOLVED WITH THE LOAN AFTER IT IS SOLD (read note sold to non-MERS member such as a trust – sic), AN ASSIGNMENT OF THE LIEN FROM MERS TO THE NON-MERS MEMBER IS RECORDED IN THE COUNTY WHERE THE PROPERTY IS LOCATED, AND THE MORTGAGE LOAN IS DEACTIVATED FROM THE MERS SYSTEM. “
Commentator: This provision is in fact found in MERS’ contract. It isn’t happening, though, so Mr. Hultman recites only that which should be done, but isn’t.
The reason it must be done is because MERS no longer has nominee or beneficiary status ( pick one) and cannot act for the non-MERS member (assuming arguendo it could in the first place). In other words, they are at that point ‘toast’ pursuant to MERS’ own contract, and probably also would be toast as a matter of law for reasons outside this discussion.
The first important thing to recognize and remember here is that when a note is transferred to a non-MERS member, MERS embers are by its own contract and very likely as a matter of law toast, and MERS members are also compelled to record an assignment of the deed of trust in the land records.
MERS contract did not address "reestablishment" of its nominee /beneficiary status once the note left a/the/any MERS’ member. The truth must be that they neglected to even consider the matter for the formation of the membership contract, and thus did not (if they could) provide for such an event: They did not provide, nor perhaps could they have, for ‘re-establishment’ of MERS’ (alleged) nominee / beneficiary status when the note’s ownership returned (if ever) to a MERS’ member. What does this mean? It means MERS alleged status is extinguished forever when the note no longer is owned by a member.
(The note probably never has returned to any MERS’ member in the first place once it has ‘left’, but that’s another story.)
The same William Hultman made another declaration in In re Walker, 10-21656, October 21, 2010, BK Court, Eastern Division, CA at Sacramento (apparently he’s been assigned this task)
The declaration.is troubling. Really. It is full of half-truths if not lies. Hultman declaration, P. 2:8-11:
“WHEN THE BENEFICIAL INTEREST IN THE LOAN IS SOLD, THE PROMISSORY NOTE IS STILL NEGOTIATED PURSUANT TO THE UNIFORM SECURITY CODE, BUT MERS MEMBERS ARE OBLIGATED TO NOTIFY MERS OF THE TRANSFER SO THAT IT CAN BE ELECTRONICALLY TRACKED ON THE MERS SYSTEM.”
Commentator: Yes, that’s probably how it’s supposed to work, but because MERS is no more than a computer system and a contract, and does no diligence, MERS has no way of knowing if proper entries are made by its members or not.
Declaration at P. 2:20-23:
‘THE MERS TERMS AND CONDITIONS ……PROVIDE THAT ‘MERS SHALL AT ALL TIMES COMPLY WITH THE INSTRUCTIONS OF THE HOLDER OF MORTGAGE PROMISSORY NOTES’.”
Commentator: “MERS shall ..comply”? MERS per se doesn’t comply with anything. It’s REAL officers and computer-techies do nothing. They make no entries of transfers of notes, they prepare and execute no documents. It is only MERS’ members who make entries and only the straw officers at its members or those members’ foreclosure mills who actually prepare and execute assignments of deeds of trust (and even to themselves), and this is generally based on what those members have and have not entered into the computer system. But WHO WOULD KNOW WHAT IS ENTERED AND WHAT IS NOT AND IF IT’S ACCURATE AND COMPLETE? MERS has no way to know if the members are entering the transfers of notes to non-MERS’ members, or even to other MERS’ members. Whether the members are or are not making these entries is downright suspect. Regardless, no evidence is ever submitted to address the accuracy of MERS’ ‘records’, i.e., its members entries. Nor unfortunately have I seen this particular issued addressed by an opponent. MERS records are simply not reliable. Nor then are the alleged assignments done by its members just on that score.
So, again, at least if a transfer to a non-MERS member has not been entered by say, Wells Fargo, B of A, etal, the member (who was to record the transfer to a non-MERS member on the MERS system or even to another member, but didn’t) is pretty much free to assert any position they choose, standing on what is merely ALLEGED to be (or perhaps hiding) on the MERS’ computer system. WHO WOULD KNOW? Because there is no diligence, NO ONE would.
And the only ‘ledgers’ I have seen (not MERS’ computer records, but the docs which supposedly identify the loans in a trust) which purport to demonstrate that a particular note went into a particular trust don’t do much more than identify the loan by a zip code and a loan amount. (Can you imagine running your business with ‘records’ like this?)
More Walker declaration:
“AS OF THE DATE OF THE ORIGINATION OF THE NOTE AND DEED OF TRUST, Bayrock Mortgage was a MERS member, and pursuant to the MERS’ rule of membership, Rule 2, Section 5, Bayrock Mortgage appointed MERS to act as its agent to hold the deed of trust as nominee on Bayrock’s behalf. ……… Bayrock subsequently transferred the note to EMC. As of the date the note was transferred , EMC was a MERS member……..EMC subsequently transferred the note to Citibank……as of the date the note was transferred to Citibank, Citibank was a MERS member…..On March 5, 2010, MERS executed an assignment of the deed of trust to Citibank.”
Commentator: The date of the assignment of the deed of trust to Citibank is the only date mentioned by Mr. Hultman in regard to transfers. Does he not know the others? He then attached an alleged copy of Bayrock’s membership dated January 2007. The note and deed of trust were dated November of 2006!
Mr. Hultman’s declaration is first of all hearsay. He has no personal knowledge of the ‘facts’ he alleges. Further, while some rules allow testimony, essentially, by way of declarations, there are also rules in place to object to declarations. For instance, declarations do not give an opponent an opportunity to examine the declarant……a declaration cannot be cross-examined.
This is one of the reasons it is so very difficult for pro se litigants. They can very easily get lost in the sea of rules of evidence and a lack of knowledge of the rules of procedure can be fatal. . The attorneys who get ‘this stuff’ and the rules mostly work for the other team and they are privy to any number of missives to manipulate the court and the opposition, including the “White Paper”. It’s my opinion a lot of them are liars for hire, and apparently they are all part of the MERS’ attorney-network.
As to Mr. Hultman’s allegation that the ‘”note was transferred to Citibank” No, it wasn’t, not the beneficial interest, anyway. The note was transferred to the trust (well in essence should have been), a non-MERS member for which Citibank alleged it was the trustee. I don’t believe at that time any evidence was submitted to support a finding that the Walker note was in fact in the trust. And, Citibank may have been a MERS member, but some may argue “Citibank as Trustee” is not a member since there is no entity called ‘Citibank as Trustee’, and at any rate, the trustee does not have the beneficial interest in the note.. If anyone, it is the trust, a non-MERS member. (I say ‘if anyone’ in deference to some people’s thought that the note is destroyed by the conversion to securities.)
But a big problem here, of course, is that Bayrock was in fact not a MERS member on the date the loan was originated. WHO WOULD (NORMALLY) KNOW? IT’S ALSO SAD BUT TRUE THAT MERS BEING NAMED ON THE DEED OF TRUST IS IN FACT NOT EVIDENCE OF THE / ANY LENDER’S MEMBERSHIP IN MERS.
The next big problem in Walker for MERS is that the beneficial interest in the note has been transferred to a non-MERS member, the trust, yet no assignment of the deed of trust was recorded in the land records at the time of the transfer. MERS’ attorneys are fond of reciting certain state statutes alleging recordation is not necessary. Yet, by the terms of its own contract, MERS knows its members are to record assignments under certain circumstances. Further, as I have previously stated, some if not all states – I really don’t know which, one should read one’s own state statutes regarding recordation – have statutes which provide that an unrecorded interest in real property is ONLY binding on the parties to that unrecorded interest (such as NRS 111.315). This means that an unrecorded interest is not binding on the homeowner, who is a third party, and NOT a party to the instrument which created that interest in the homeowner’s property. If it’s not binding on the homeowner, an unrecorded assignment is surely not enforceable against the homeowner.
Mr. Hultman stated that the assignment was done “pursuant to the MERS contract”, which must be MERS-speak for “because the beneficial interest in the note had been transferred to a non-MERS member and an assignment should have been recorded in the land records and wasn’t.” Mr. Hultman’s actual words are not quite a lie, but they are nonetheless dishonest. He does not tell the court of this mandate. He does not want the court to know of the non-MERS members’ interest in the chain of the note’s ownership. This information appears to have been willfully kept from the court, the argument was framed in a manner to willfully mislead the court, and the intent to do so can be found in the words used and those not used.. This non-MERS member ramification is one of the reasons MERS and its members fight discovery so vehemently. It’s also the real reason MERS elected not to disclose the names of the note owners in “Mitchell”. They claimed it was a ‘test’ case. Not. This didn’t really cost them much in the big picture. MERS was simply denied relief from stay in Nevada bankruptcy court. No problem. Right after a collective yawn, different mauraders went in with their bogus assignments.
There are multiple discussions of the final disposition of In re Walker online, fyi.
It is an outrage and nothing short that MERS’ straw officers purport to “assign the note” along with the deed of trust in many of the assignments. Since this is entirely impossible, it is also a violation of state recording laws because a false instrument has been submitted for recordation. A false instrument is also being submitted to the court. If the courts ever get this, and it doesn’t shock their conscience, I don’t know what would.
So now we know that when the beneficial interest in the note goes to a non-MERS member, an assignment of the deed of trust must be recorded in the land records and MERS may no longer act as nominee,or beneficiary, or agent, or whatever they are calling themselves today. But then, when a member deems it a necessary part of its taking someone’s home, the member’s straw officer executes an assignment to its employer or to another MERS member in the name of MERS. BUT THEY CAN’T, because MERS is FOREVER TOAST since MERS’ status canNOT be re-established.
Therein lies the REAL RUB for MERS and its members: their contract does not provide for MERS’ re-establishment, so when a member either gets or alleges possession of the note endorsed usually in blank, or even to itself AFTER the note has been owned by a non-MERS member (Trust), they are ‘messed’, because there is no re-establishment of MERS’ (alleged ) status in the deed of trust. Perhaps the realization of MERS’ loss of status and the subsequent failure of re-establishment of that (alleged) status came too late, and by then, a zillion foreclosures had been done in MERS’ name by the straw officers/ member-employees or foreclosure millhouses. MERS did not provide for re-establishment in its contract with its members, (nor perhaps could they have as a matter of law). MERS and its members know this now if they didn’t.
IF MERS started out ‘straight’, if it had been created in good faith (which some of us think is dubious), it is actually now a pawn, as its members have gotten way out of control, starting with NOT making the entries into the MERS’ system when notes are transferred. Theories on why these entries were and are not made as well as why the deed of trust assignments were then not recorded abound, from sloppiness to the most brazen of criminalities.
Even if MERS did have beneficiary /nominee status or w/e,
when the NOTE GOES TO A NON-MERS MEMBER, THE TRUTH IS, THE DEED OF TRUST ASSIGNMENT SHOULD AND MUST BE EXECUTED CONCURRENTLY (which is how it was done in the ‘old’ days).
Why? Because otherwise MERS’ members are without authority since MERS MEMBERS MAY ONLY ACT IN MERS’ NAME WHEN THE BENEFICIAL INTEREST IN THE NOTE IS IN A MERS’ MEMBER. Once it isn’t, the member may not act in MERS name and thus may no longer even purport to assign a deed of trust.
One might next consider the matter of bifurcation of the note and deed of trust. It may be that the the bifurcation argument only works IF MERS IS actually the beneficiary / nominee on a deed of trust, because then argument is reasonably made that the note and dot are actually bifurcated, and certainly when the beneficial interest in the note is in a non-MERS’ member. That may not be true if a dot follows the note. BUT, then, significantly, if the dot follows the note and the note is securitized or otherwise with a non-MERS member, then MERS is/was still TOAST and an assignment should have been recorded to the non-MERS member and the loan should have been de-activated from MERS’ computer system. .
This would be true at least for every single loan where the beneficial interest in the note is held or was held in the chain by one or more non-MERS-member-Trusts.
The significance of this cannot be underscored, the fact that MERS is TOAST and also that MERS straw officers (assuming arguendo MERS ever had any authority to assign a deed of trust and that’s a big assumption) must record an assignment in the land records when the note is transferred to a non-MERS’ member, and the ramifications of this. As I understand MERS’ membership contract, the only time a member is actually authorized to execute an assignment is when the beneficial interest in the note is transferred to a non-MERS member.
MERS has been divested of its alleged status in the deeds of trust by the transfers of the beneficial interest in the notes to non-MERS’ members. MERS overlooked this circumstance in their contracts and the (alleged) status which was lost was not and cannot be re-established.
It’s possible they may not have realized this until many, many foreclosures had been done under color of their (alleged) status in the deeds of trust. Mr. Hultman’s declarations, however, points to their knowledge that what they are doing was and is wrong.
I have come to believe one must approach MERS, etal’s pleadings as a criminal defense attorney would. One must know the rules of evidence in order to accomplish this.
Entries were not made and assignments were not recorded when they should have been. MERS’ alleged status in the deeds of trust cannot be re-established once lost. MERScannot control the actions of its members. The tail is wagging the dog. The members have carte blanche whether by design or as an unforeseen consequence. MERScorp created a monster, MERS is being had by its members (and so are we), and short of litigation against its own members for the next millennium, MERS is helpless to stop it. MERS then in my opinion has chosen to knowingly participate in an errant and unlawful course of action to cover up the wrongful foreclosures which it knows has already occurred and for which there is no curing the "deficiencies", and that course is to continue the charade. ‘