THE ROOT OF FORECLOSURE DEFENSE

The Pooling and Servicing Agreement (PSA) is the document that actually creates a residential mortgage backed securitized trust and establishes the obligations and authority of the Master Servicer and the Primary Servicer. The PSA is the heart and root of all securitized based foreclosure action defenses.  The PSA establishes that mandatory rules and procedures for the sales and transfers of the mortgages and mortgage notes from the originators to the Trust. It is this unbroken chain of assignments and negotiations that creates what is called “The Alphabet Problem.”

In order to understand the “Alphabet Problem,” you must keep in mind that the primary purpose of securitization is to make sure the assets (e.g., mortgage notes) are both FDIC and Bankruptcy “remote” from the originator. As a result, the common structures seek to create at least two “true sales” between the originator and the Trust.

You therefore have in the most basic securitized structure the originator, the sponsor, the depositor and the Trust. I refer to these parties as the A (originator), B (sponsor), C (depositor) and D (Trust) alphabet players. The other primary but non-designated player in my alphabet game is the Master Document Custodian for the Trust. The MDC is entrusted with the physical custody of all of the “original” notes and mortgages and the assignment, sales and purchase agreements. The MDC must also execute representations and attestations that all of the transfers really and truly occurred “on time” and in the required “order” and that “true sales” occurred at each link in the chain.
Section 2.01 of most PSAs includes the mandatory conveyancing rules for the Trust and the representations and warranties. The basic terms of this Section of the standard PSA is set-forth below:

2.01 Conveyance of Mortgage Loans. (a) The Depositor, concurrently with the execution and delivery hereof, hereby sells, transfers, assigns, sets over and otherwise conveys to the Trustee for the benefit of the Certificateholders, without recourse, all the right, title and interest of the Depositor in and to the Trust Fund, and the Trustee, on behalf of the Trust, hereby accepts the Trust Fund.

(b) In connection with the transfer and assignment of each Mortgage Loan, the Depositor has delivered or caused to be delivered to the Trustee for the benefit of the Certificateholders the following documents or instruments with respect to each Mortgage Loan so assigned:

(i) the original Mortgage Note (except for no more than up to 0.02% of the mortgage Notes for which there is a lost note affidavit and the copy of the Mortgage Note) bearing all intervening endorsements showing a complete chain of endorsement from the originator to the last endorsee, endorsed “Pay to the order of _____________, without recourse” and signed in the name of the last endorsee. To the extent that there is no room on the face of any Mortgage Note for an endorsement, the endorsement may be contained on an allonge, unless state law does not so allow and the Trustee is advised by the Responsible Party that state law does not so allow. If the Mortgage Loan was acquired by the Responsible Party in a merger, the endorsement must be by “[last endorsee], successor by merger to [name of predecessor]“. If the Mortgage Loan was acquired or originated by the last endorsee while doing business under another name, the endorsement must be
by “[last endorsee], formerly known as [previous name]“;

A review of all of the recent “standing” and “real party in interest” cases decided by the bankruptcy courts and the state courts in judicial foreclosure states all arise out of the inability of the mortgage servicer or the Trust to “prove up” an unbroken chain of “assignments and transfers” of the mortgage notes and the mortgages from the originators to the sponsors to the depositors to the trust and to the master document custodian for the trust. As stated in the referenced PSA, the parties have represented and warranted that there is “a complete chain of endorsements from the originator to the last endorsee” for the note. And, the Master Document Custodian must file verified reports that it in fact holds such documents with all “intervening” documents that confirm true sales at each link in the chain.

The complete inability of the mortgage servicers and the Trusts to produce such unbroken chains of proof along with the original documents is the genesis for all of the recent court rulings. One would think that a simple request to the Master Document Custodian would solve these problems. However, a review of the cases reveals a massive volume of transfers and assignments executed long after the “closing date” for the Trust from the “originator” directly to the “trust.” I refer to these documents as “A to D” transfers and assignments.
There are some serious problems with the A to D documents. First, at the time these documents are executed the A party has nothing to sell or transfer since the PSA provides such a sale and transfer occurred years ago. Second, the documents completely circumvent the primary objective of securitization by ignoring the “true sales” to the Sponsor (the B party) and the Depositor (the C party). In a true securitization, you would never have any direct transfers (A to D) from the originator to the trust. Third, these A to D transfers are totally inconsistent with the representations and warranties made in the PSA to the Securities and Exchange Commission and to the holders of the bonds (the “Certificateholders”) issued by the Trust. Fourth, in many cases the A to D documents are executed by parties who are not employed by the originator but who claim to have “signing authority” or some type of “agency authority” from the originator. Finally, in many of these A to D document cases the originator is legally defunct at the time the document is in fact signed or the document is signed with a current date but then states that it has an “effective date” that was one or two years earlier.
Hence, we have what I call the Alphabet Problem. Now, I want to admit that I have never been strong in math or in spelling. But, the way I see all of this spells out the word FRAUD.

FOR FULL INFORMATION ON THIS SUBJECT GO TO:

WWW.FORECLOSURESELF-DEFENSE.COM

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FORECLOSURE ATTORNEYS-THE NEW BREED OF VULTURES

WHEN HIRING AN ATTORNEY THE TWO MOST IMPORTANT THINGS TO REMEMBER ARE THESE:

NUMBER 1– WILL THE ATTORNEY TAKE THE CASE ON A CONTINGENCY FEE BASIS. IN OTHER WORDS, IF THE LAWYER DOESN’T WIN THE CASE AND GET YOU MONEY, NEITHER DOES THE LAWYER.

NUMBER 2– SEE NUMBER 1

ALL PERSONAL INJURY ATTORNEY WEIGH THE MERITS OF YOUR CASE AND ONLY TAKE THE CASE IF THEY THINK THEY CAN WIN. THEY HAVE AS MUCH AT STAKE IN THE SUCCESS OF YOUR CASE AS YOU DO. THEREFORE, THEY WILL ALWAYS TRY HARD TO WIN YOUR CASE.

YOU SHOULD APPLY THE SAME PRINCIPLES TO FORECLOSURE DEFENSE ATTORNEYS. IF THEY DON’T THINK YOU HAVE A STRONG CASE ALL THEY WILL DO IS BUILD UP BILLABLE HOURS, FILE SEMI-FRIVOLOUS MOTIONS, DISCOVERY AND PLEADINGS WITH HEARINGS TO MATCH. ALL YOU WILL BE ACCOMPLISHING IS PAYING FOR THEIR MERCEDES, SENDING THEIR CHILDREN TO COLLEGE, OR EXCLUSIVE SUMMER CAMPS. WITH ALL THE EVIDENCE AVAILABLE REGARDING “FRAUDCLOSURE“, AND MORE COMING EVERYDAY, IF YOU HAVE BEEN THE VICTIM OF FORECLOSURE FRAUD OR ROBO-SIGNING, ANY DECENT ATTORNEY SHOULD AND WOULD KNOW IT IMMEDIATELY. IN FACT, YOU DON’T EVEN NEED AN ATTORNEY TO FIND THIS INFORMATION, THERE ARE DOZENS OF WEBSITES THAT WILL GIVE YOU THAT INFORMATION FOR FREE. ANOTHER SOURCE IS YOUR STATE ATTORNEY GENERAL, THEY WILL BE ABLE TO TELL YOU IF THE LAW FIRM OR COMPANIES SEEKING TO FORECLOSE ON YOU ARE CURRENTLY UNDER INVESTIGATION.  H.U.D. IS ANOTHER GOOD SOURCE.

IF DELAYING YOUR FORECLOSURE IS YOUR INTENT, THEN YOU PERSONALLY CAN DELAY A FORECLOSURE LONGER THAN AN ATTORNEY. THE REASON FOR THIS IS ATTORNEY HAVE CERTAIN ESTABLISHED STANDARDS SET BY THEIR BAR ASSOCIATION THEY MUST ADHERE TO OR RISK SANCTIONS OR EVEN DISBARRMENT.

THERE IS SO MANY WEBSITES, NON-ATTORNEY RUN, THAT CAN YOU CAN OBTAIN FREE LEGAL INFORMATION FROM. THIS WILL ALLOW YOU CAN TO BUDGET YOURSELF AND NOT PAY FOR ATTORNEY FEES FOR ACTIONS YOU CAN PERFORM ON YOUR OWN.

THE INTENT OF THIS WRITING IS NOT TO ADVISE YOU IN HIRING AN ATTORNEY, FAR FROM IT. THERE ARE MANY THINGS AN ATTORNEY CAN DO FOR YOU AND YOUR CASE, HOWEVER, WHEN THE ATTORNEY ASKS FOR A “MONTHLY FEE” (USUALLY BETWEEN $150-$350) TO “HANDLE YOUR CASE, BE CAUTIOUS. IF THEY WANT AN UNUSUAL HIGH FEE TO “GET STARTED” (USUALLY BETWEEN $1500-$5000) BE CAREFUL AND RELUCTANT. IN ADDITION, FIND OUT HOW LONG THE ATTORNEY HAS BEEN DOING FORECLOSURE DEFENSE. WITH THE GLUT OF FORECLOSURES, MANY, MANY ATTORNEYS AND ENTIRE LAW FIRMS HAVE RECENTLY SWITCHED THEIR EFFORTS AND CONCENTRATION TO FORECLOSURE DEFENSE WITHOUT THE EXPERIENCE OR PROPER KNOWLEDGE NEEDED TO PROTECT YOUR BEST INTEREST.

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INDICATORS YOU MAY HAVE FRAUDULENT FORECLOSURE DOCUMENTS

100% of readers think this story is Fact. Add your two cents.
  

TOP INDICATORS/SIGNS YOU PROBABLY HAVE A FALSE DOCUMENTS AND A VICTIM OF FORECLOSURE FRAUD

1.    Any document signed by an officer of MERS. MERS states at www.mersinc.org that: Employees of the servicer will be certifying officers of MERS. This means they are authorized to sign any necessary documents as an officer of MERS. The certifying officer is granted this power by a corporate resolution from MERS. In other words, the same individual that signs the documents for the servicer will continue to sign the documents, but now as an officer of MERS.

2.    The signor of the document states that they are acting “solely as nominee” for some other party.

3.    The document was notarized in Dakota County, Minnesota

4.    The document was notarized in Hinnepin County, Minnesota

5.    The document was notarized in Duval County, Florida

6.    The document was notarized in Palm Beach County, Florida

7.     The document was notarized in Pinellas County Florida

8.    The document was notarized in San Diego, CA

9.     The document was notarized in Fulton County, GA

10. The document was notarized in Polk County, IA

11. The document was notarized in Travis County, Texas

12. The document was notarized in Harris County, Texas

13. The document was notarized in Salt Lake County, Utah

14.The document was execute the same day it was filed with the Court

15.The party who signed the document executed it as “an authorized agent” for the servicer or the Plaintiff.

16.The party who signed the document executed it as “an attorney in fact” for the servicer or the Plaintiff.

17.The name of the signing party is stamped on the documents in block letters.

18.The name of the servicer or Plaintiff is stamped on the document in block letters.

19. The document appears to be a standard form with “fill-in-the-blanks” for the names of the signors and entities.

20. The paragraph numbers are not consistent (for example the first page may end with paragraph 7 and the second page may start with paragraph 10)

21. The party who signed the document and the notary are the same person.

22. You cannot read the signature of the signor and the name is not printed out on the document. (some people refer to these a “squiggle marks”) The bottom line is you cannot decipher any name or word on the document.

23. The signature on the document consists of one loop in the shape of an “S” or something that looks like an “8”.

24. The date of the signature and the date of the notarization are not the same.

25. The same “officer” or Vice President” of a mortgage company or lender is also the “Vice President” or “officer” of many other entities or lenders in the chain of assignments or endorsements.

26. The same “officer” or “ Vice President” of a lender signing the documents is located in various cities throughout the United States.

27.  The document includes numerous pre-stamped names and signatures.

28. The document includes a second page or last page notarization that does not conform in type font, style, format, texture, age, from the primary pages of the document.

29. Backdating effective dates on assignments.

30. Signatures of officers are dated years after an entity has been out of business, merged with another company or filed for bankruptcy.

31.  The party who signed the document executed it as a representative of the servicer.

32. The notary failed to attach a notarial seal.

33. The notary failed to sign the notarization.

34. The name of the party appearing before the notary is blank.

35. The name of the party appearing before the notary is block stamped.

36. The endorsement is not at the foot of the note, but on a separate page or allonge to the note. (if there is room at the foot of the note, the endorsement must appear there. An allonge may only be used if there is insufficient room at the foot of the note for the endorsement)

37. The document purports to assign the mortgage or the deed of trust from the originator directly to the trust.

38. The document that purports to assign the mortgage of deed of trust to the Trust is dated BEFORE the Trust was registered with the SEC.

39. The document that purports to assign the mortgage of deed of trust to the Trust was signed AFTER         the cut-off date for the transfer of all such to the  Trust pursuant to the Pooling and Servicing Agreement.

40. The origination date on the mortgage note is not within the origination and cut-off dates provided for by the terms of the Pooling and Servicing Agreement.

41. The mortgage note is assigned rather than endorsed from Party “A” to Party “B” or from any party to another party or entity.

42. The mortgage note is endorsed from the originator to the securitized Trust.

43. The mortgage note is endorsed from the originator to the current mortgage servicer.

44. The mortgage note is endorsed from the originator to the depositor for the securitized trust.

45. The affidavit is a “Lost Note Affidavit” filed by the mortgage servicer.

46. The affidavit is a “Lost Note Affidavit” filed by the Trustee for the securitized Trust and claims they never received the original Note. ( You can only file a lost note affidavit under the UCC if you possessed the Note before it was lost)

47. The assignment of mortgage or deed of trust was filed or signed after the filing of the bankruptcy case.

48.The assignment of mortgage or deed of trust was filed or signed after the foreclosure proceeding began/was filed.

49. The assignment of mortgage or deed of trust was filed or signed after the filing of the Motion for Relief from Stay in Bankruptcy Court.

50. The affidavit was signed by an employee  MR Default Servicers or has the MR Default Servicers information on the document as an identification number.

51. The affidavit was signed by an employee  Promiss Solutions or has the Promiss Solutions information on the document as an identification number.

52. The affidavit was signed by an employee  NDEx Technologies, LLC or has the NDEx  information on the document as an identification number.

53. The affidavit was signed by the same attorney that signed the foreclosure complaint.

54.The affidavit was filed by an employee of the attorney that filed the foreclosure complaint.

55. The documents are clearly two photocopies of the same document with different information filled in regarding the names of the assignore and assignee.

56.The Note is stamped with the following: “Certified True Copy”.

57. The signature of the Vice President states that they are a Vice President of Lehman Brother Holding Company, but the printed or stamped name on the document is Lehman Brothers Bank, FSB.

58. The document is signed by a “Bank Officer” without any designation of the office/position held.

59. The affidavit is signed by the “designated agent” of any entity or party.

60. The affidavit includes one or more bar codes. ( Similar to the bar codes you see on items at the grocery store, etc)

61. Any document signed by an individual who states that they are the “legal coordinator” for any entity involved in the lawsuit or chain of custody.

62. The return address on the Assignment or affidavit is to a third party provider, such as Financial Dimensions, Inc, FANDO or FNFS.

63. The transferor and the transferee  have the exact same physical address including the same street and/or P.O. box numbers.

64. The document bears the image: “This is not a certified copy”

65. The document refers to a Power of Attorney, but no such document is attached or filed and recorded.

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BANKS START TO TURN AGAINST EACH OTHER

  

If the homeowner thinks they are the only people that have problems obtaining documents (discovery) from the mortgage companies/banks, so do the banks.

JPMorgan Chase & Co.’s EMC Mortgage, facing homeowner lawsuits over foreclosures, was sued by the trustee of a mortgage portfolio for refusing to turn over documents detailing the quality of loans bought by the trust.

Wells Fargo & Co., the trustee, is seeking access to files for more than 2,000 underlying mortgages in the Bear Stearns Mortgage Funding Trust 2007-AR2, according to the complaint filed today in Delaware Chancery Court in Wilmington.

“The trustee has repeatedly requested that EMC provide access to the subject documents,” Wells Fargo said in the complaint. “EMC has played proverbial ‘rope a dope’ and otherwise continued to drag its feet, and has produced nothing.”

Claims of wrongdoing by banks and loan servicers triggered a 50-state investigation last year into whether hundreds of thousands of foreclosures were properly documented as the housing market collapsed. Lending practices have also pitted mortgage-bond investors against banks over misrepresentations such as overstatements of borrowers’ income and inflated appraisals.

Christine Holevas, a spokeswoman for New York-based JPMorgan, declined to comment.

Wells Fargo said it needs access to the documents to answer “serious” questions raised by investors in the trust about whether EMC breached representations and warranties regarding the quality of option-adjustable rate mortgage loans the trust bought.

Investor Questions:

An investor in the trust, who owns 42 percent of the outstanding face amount of the portfolio’s certificates, questioned the condition of underlying loans, Wells Fargo said in the complaint, citing an August letter it received from David Grais, the investor’s attorney.

Grais, a partner at New York-based Grais & Ellsworth LLP, represents the federal Home Loan Banks of Seattle and San Francisco and Charles Schwab Corp. in litigation seeking to force banks including Bank of America Corp. and JPMorgan to repurchase mortgage-backed securities because they allegedly misrepresented the quality of the loans.

In a September interview, Grais said he was also working with two hedge funds that hadn’t filed suits and had contacted trustees with similar complaints. He wouldn’t name the funds.

In the Aug. 31, 2010, letter to San Francisco-based Wells Fargo, Grais said he had investigated 1,317 of the loans held by the trust and determined that EMC appeared to have violated its representations with respect to 938 loans, according to the complaint.

Grais didn’t immediately return a phone call today seeking comment on the complaint.

Wells Fargo began requesting the documents in January last year and reached an agreement with EMC in December on access to files for 400 loans. EMC had until Jan. 12 to produce documents on the first 100 loans, according to the complaint.

EMC failed to produce the documents “culminating more than a year of good-faith negotiations and misplaced patience by the trustee in a futile attempt to avoid litigation,” Wells Fargo said in the complaint.

The case is Bear Stearns Mortgage Funding Trust 2007-AR2 by Wells Fargo Bank N.A. as Trustee v. EMC Mortgage Corp., CA6132, Delaware Chancery Court (Wilmington)

All links are contained at www.foreclosureself-defense.com. Foreclosure Self-Defense derives no compensation whatsoever, the sole intent is to provide information to the general public and especially distressed homeowners.

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FLORIDA BAR PROTECTS ITS OWN DESPITE CLEAR & CONVINCING EVIDENCE

Wednesday, January 19, 2011 1:27 

Foreclosure lawyers’ misdeeds ignored in Fla.?

Florida courthouses are rife with evidence of errors and fabrications made by attorneys handling foreclosure cases, and yet so far no lawyers have been disciplined.

With pressure mounting to police its own members, the Florida Bar established a special category of complaints listed as “foreclosure fraud.”

But in 20 complaints investigated in that category, the Bar has not found cause to discipline anyone — even lawyers who admitted to breaking ethical rules. Even with admissions, the Bar takes no actions whatsoever.

Some observers say that early track record of ignoring misdeeds by its members raises questions about whether the system of self-policing for lawyers can handle the depth of wrongdoing in the foreclosure crisis.

The complaints have been filed by judges, lawyers, homeowners and the Florida Bar itself, and reflect the issues seen in courtrooms almost daily for the past two years, including forged signatures and backdated documents used to improperly seize homes in foreclosures.

In addition, attorneys for lenders have filed false motions, left out important information that would hurt their case, or skipped mandatory mediations and court hearings. All clear violations of the Florida Bar Ethics regulations.

The state Attorney General’s Office is investigating and found the same evidence of wrongdoing. But with no known criminal investigations launched into the behavior, the public and the court system must rely on the Florida Bar to stop bad behavior by attorneys.

Dozens of complaints against foreclosure lawyers are still pending, including complaints against the head of the four law firms that handled the vast majority of Florida’s foreclosures and often had multiple attorneys handling one file.

Links herein were derived from the Florida Bar site and www.foreclosureself-defense.com.. No compensation whatsoever is derived from this links to either entity. 

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LEGAL INFORMATION FOR JUDGES AND HOMEOWNERS-MERS

The Creation of the Mortgage Note and Security Instrument
Uniform Commercial Code and state recordation requirements

The Homeowner (Obligor) signs a Mortgage Note and a Security Instrument. Upon signing of the Security Instrument and by operation of law, the Security Instrument is automatically attached to the Mortgage Note and temporary perfection is established. The Security Instrument when filed in public records transforms a temporary perfection into a permanent perfection and is notice to the world. Regardless of whether the Mortgage Note is sold to a subsequent purchaser, recordation of the Security Instrument is required to permanently perfect the lien. The Security Instrument affects title to Real Property, and as such, the laws of local jurisdiction govern and such requirement to comply with local laws of jurisdiction is contained within the Security Instrument itself. The filing of record serves a second and distinctive purpose: it creates the priority of perfection among subsequent purchasers of the Mortgage Note and is not addressed further in this document. Upon attachment and perfection of the Security Instrument to the Mortgage Note, the Mortgage Note becomes an indebtedness that is “Secured.

2. Tangible – Personal Property versus Real Property
Failure to Maintain Continuous Perfection

The Mortgage Note and the Security Instrument are Tangibles and Personal Property and we shall consider the two items in tandem to be called the “Mortgage” and such “Mortgage” is Tangible and Personal Property. One must not forget the terms contained within the Security Instrument affect an interest in Real Property and these terms require compliance with all applicable, federal, state and local laws and the language contained within the Security Instrument itself. Failure to comply with the laws governing the contents of the Security Instrument or language within the Security Instrument would render the Security Instrument a nullity. If such Security Instrument becomes a nullity, then the classification of the Mortgage Note is reduced in status from “Secured” to “Unsecured” and as a result of the Security Instrument becoming a nullity the “Power of Sale Clause” contained within the Security Instrument would also be nullity.

The Mortgage being a Payment Intangible can be negotiated by possession and the security for this Payment Intangible is the right to collect monies from the (Mortgage Note secured by the Security Instrument as collateral). Thus, the (Mortgage Note and Security Instrument as collateral) is security for the Payment Intangible and it is this security that follows the Mortgage (Payment Intangible) where the Mortgage is the owner of the Mortgage Note and what should be a valid perfected Security Instrument. Again, the Mortgage is nothing more than a Payment Intangible (Personal Property) and the security for this Payment Intangible is the right to collect monies noted in the Payment Intangible’s security, the Mortgage Note. The Payment Intangible’s security also consists of a valid perfected Security Instrument along with any valid Assignment of Mortgage filed of record to transfer lien rights in accordance with laws that govern the Security Instrument.

Regardless of the hierarchy of ownership of the Payment Intangible, Mortgage, Mortgage Note or Security Instrument, the terms contained within the Security Instrument must be complied with, and this author has not seen a Security Instrument that does not itself require compliance with federal, state or local laws. Failure to comply with the laws of local jurisdiction that govern the terms within the Security Instrument would render the Security Instrument a nullity and the Mortgage Note would then be reduced to “Unsecured” and the Mortgage (Payment Intangible) would then be left without a valid perfected lien to allow foreclosure of the Real Property. Additionally, if the Security Instrument was rendered a nullity by failure to comply with the laws or the terms contained within the Security Instrument, the secondary market has not purchased a “Secured” indebtedness and any claim made by a subsequent purchaser including Trusts are without rights to enforce the “Power of Sale Clause” and no foreclosure is possible. This failure to provide a complete Mortgage to the secondary market is the real fraud that the financial institutions are trying to conceal.  Even with a nullified Security Instrument, if a valid Mortgage Note with a complete Chain of Indorsement is proved, the Holder/Owner with right as Holder in Due Course could sue for equity in a court of jurisdiction.

So when it is said the Mortgage follows the Note, one must remember that the Security for the Payment Intangible follows the Payment Intangible without filing of record, and therefore, the underlying Mortgage Note would be followed by a valid continuous perfected Security Instrument if there were compliance with applicable laws to maintain perfection of the Security Instrument.

3. Original Obligee (Lender) Takes Possession of the Secured Mortgage
Note

Proper Parties

Original Obligee takes possession of the Mortgage Note and permanently perfects the Security Instrument by filing of record in the Original Obligee’s name. Failure to name the correct parties could possibly be a fatal to the enforcement of the terms in the Mortgage Note or Security Instrument.

4. Original Obligee (Lender) Sells The Secured Mortgage Note
Obligee Indorses Mortgage Note to “In Blank” Indorsee

The Original Obligee sells the Mortgage to a subsequent purchaser. Proper procedure is to negotiate the Mortgage Note under cover of a Bailee’s Letter to the subsequent purchaser and then transfer the rights to the Security Instrument by filing of record the name of the subsequent purchaser who purchased the Mortgage Note and completing the Mortgage Note negotiation by noting the owner name in the blank.

Original Obligee indorses the Mortgage Note and delivers the same to the subsequent purchaser (Second Obligee). Second Obligee then completes the negotiation by filling in the blank, if negotiated in blank, then files of record an assignment of the mortgage to transfer and perfect the Security Instrument’s lien into the Second Obligee’s name. If the Second Obligee fails to complete the negotiation by noting ownership in the “blank,” then the Second Obligee may have become the holder of the note but has not become the owner of the note and has not achieved holder in due course with rights to enforce the Mortgage Notes terms or the terms within the Security Instrument. Additionally, failure to file of record the Assignment of the Security Instrument fails to transfer lien rights and this failure to transfer lien rights has rendered a once secured Mortgage Note to “Unsecured.”

5. Original Obligee (Lender) Sells an Unsecured Mortgage Note
(MERS as Nominee)

MERS Hides the Fraud

Where MERS is filed of record as the Mortgagee as Nominee for a lender and lender’s assigns, and where the first negotiation of the Mortgage Note is executed “In Blank,” one has to inquire how MERS would represent an unidentified Indorsee. In most cases this unidentified Indorsee ceases to exist after the creation of the security trust and may not have existed upon the closing of the loan. This unidentified Indorsee and subsequent unidentified Indorsees would constitute a break in the “Chains.” There are two distinct Chains. One chain is that of indorsements noted on the face of the Mortgage Note and the publicly recorded chain of title that transfers lien perfection. This Paper will not dwell into to the details of the “Chains.” As MERS claims to be the Mortgagee of record for lender and lender’s assigns and as the Mortgage Note is negotiated in blank through a number of unidentified indorsees, it is clearly observable from the facts that continuous perfection of the Security Instrument has not been in compliance with the laws of local jurisdiction which govern the Security Instrument. The chain of indorsements use of “In Blank” is also fatal as an “IN BLANK” unidentified party cannot negotiate the Mortgage Note.

6. CONFUSION
Hiding the Fraud

Wall Street is buying a Payment Intangible (Personal Property) and as such is the owner and holder of that Payment Intangible and the laws that govern the Payment Intangible allow for negotiation by possession. The Payment Intangible’s security is the Mortgages (Personal Property) contained within the collateral pool. Remember, the Mortgage actually consists of two parts, the Mortgage Note and a lawfully continuously perfected Security Instrument. So it is now safe to say the security follows the note, yep, but the security that follows the note may in fact be a nullity by the hierarchy ownership’s failure to comply with laws that govern the Security Instrument. Bottom line, the Mortgage Note maybe proved up with a proper chain of indorsements years after the trust creation but loss of perfection can never be proved up once lost and therefore Wall Street may have only bought an unsecured Mortgage Note. The author will not comment on REMIC IRS tax issues. To further complicate the issue, multiple purchases by Wall Street may have not been that of the Mortgage Notes but that of a Transferable Record which is registered within the MERS system.

7. Why the Investor
Does Not Own the Mortgage Note and Security Instrument
The Mortgage Note Does Not Identify the Subsequent
Owner & Holder of the Mortgage Note or the Security Instrument

As stated, the Mortgage Note and the Security Instrument is Personal Property and is commonly called the “Mortgage.” This Mortgage which is personal property is offered up as collateral to the Payment Intangible in the formation of the Trust. To explain, we must present the Trust in reverse order. Investors purchase a beneficial interest in Trust Certificates. The Trust owns the right to the monies collected from the Payment Intangible. The Payment Intangible owns the right to collect monies owed under the Mortgage Note(s). The Certificates and Payment Intangibles are personal property; the local laws of jurisdiction that affect real estate do not apply in a direct manner. The Trust documents provide a precise mechanism for negotiating the Mortgage Note and Security Instrument into the Mortgage (Payment Tangible) Pool. The majority of notes this author has reviewed reflect a single indorsement in blank from the Original Obligee, which raises severe concerns that a chain of indorsements is missing from the Mortgage Note to show a complete chain of negotiation that is required by law to be within public records to show a true “Chain of Title”. The “Chain of Title,” an Assignment of Mortgage (The Security Instrument)) that is properly filed of record would be notice of a perfected lien and the priority of those subsequent purchasers of the Mortgage Note. Filing for transferring perfection of the lien (Security Instrument) and filing for notice of priority to subsequent purchasers of the Mortgage Note to establish who has priority lien rights is not one in the same. Failure to properly negotiate does not transfer “Holder in Due Course” (ownership/status/rank/qualification/legal status etc., according to the UCC governing law) to a subsequent party not named on the Mortgage Note.

8. The First Negotiation in Blank
Or How Not To

Where the Mortgage Note was being used as collateral in a Mortgage Backed Security (MBS), and an unknown “Indorsee in Blank” would need to be the first entity in the MBS creation, thus the “In Blank” should contain the identity of that party to allow additional negotiation of the Mortgage Note to further the creation of the Trust. Additionally, we must question the means and the methods employed by MERS to be a Mortgagee of record as “Nominee” for an unidentified “In Blank” or any type of agency relationship to an unidentifiable “In Blank.” Currently, one example, the only means offered to identify an unidentified “In Blank” is contained within a Pooling and Servicing Agreement (PSA). The PSA identifies all the parties that would need to appear in the chain of indorsements and chain of title, this required chain of indorsement is not what is usually found on the face of the Mortgage Note. The Mortgage Note being negotiated by a single “In Blank” through multiple unidentified indorsees is not in compliance with the PSA, the UCC or the states equivalence of the UCC, and the failure to file of record the named party Indorsee , “In Blank” party also creates a break in the chain of title in public records. The frog’s bottom: the parties that can be identified on the face of the Mortgage Note, chain of indorsements, does not match the chain of title filed of record. “Rivet, Rivet,” add an allonge and affix it.

9. WHY THE CHAINS DO NOT MATCH
“MERS”

How would one record of record an unidentified Indorsee “In Blank”? The unidentified Indorsee “In Blank” is not a real person, not a company; in fact, the unidentified Indorsee “In Blank” is a non‐existent party, or is it?  The evidence offered to identify the Indorsee “In Blank” appears in third party contracts used in the creation of the investment vehicle and this unidentified “In Blank” Indorsee by admission of MERS can be located within the MERS system and would appear in a MERSAudit Trail. As it can be seen, MERS can track an unidentified Indorsee “In Blank;” but can an unidentified Indorsee “In Blank” be named as a party and filed of record? This is one reason the Chain of Indorsements on the face of the Mortgage Note does not match the Chain of Title filed in public records which filing of record would note the legal party entitled to a continuous perfected lien. The Security Instrument filed of record converts a temporary perfection and attachment into a permanent perfected lien, while the filing of record of an unidentified Indorsee “In Blank” transfers nothing. In the author’s opinion, MERS alludes that they are the Mortgagee of Record as a means to avoid the problems with filing of record an unidentified Indorsee “In Blank.” The process of indorsing in blank raises one serious question, how does an unidentified Indorsee “In Blank” indorse a note in blank to a subsequent unidentified Indorsee “In Blank” and comply with local laws of jurisdiction governing the Security Instrument that was to secure the Mortgage Note?

                Failure to follow the terms within the Security Instrument would breach the Security Instrument contract and render the Mortgage Note unsecured. Not only was the Mortgage Note not properly negotiated to the Wall Street trusts through multiple unidentified “In Blank” Indorsees, but there was also a failure to transfer a perfected lien to the Wall Street trust. Note: these conditions also apply to Fannie Mae, Freddie Mac and certain private investments and also affect Commercial Mortgage Backed Securities.

10. The Second Negotiation in Blank
Unidentified Indorsee “In Blank” Indorses “In Blank”

Still Using the First “In Blank” Indorsement­Failure to Negotiate

The second negotiation in the Mortgage Note negotiation would be from the creator of the trust to the depositor of the trust, but in actuality the “First Indorsement in Blank” is utilized for this negotiation. Again, there is an unknown party alleging to be the Holder and Owner of the Mortgage Note by a negotiation “In Blank.” This negotiation is usually indorsed “In Blank” utilizing the “In Blank” from the Original Indorser and no record is filed of record to transfer lien rights to the second “In Blank” Indorsee.

 

11. MERS and Transferable Records

 For a moment we have to step back to the “Original Obligee” to understand the movement of the Mortgage Note. This author has noted some commentators are adamant that the Mortgage Notes are not destroyed at any step in the process and we shall follow that reasoning for the moment. In concession of conversation it is somewhat agreed that the Mortgage Notes are placed within custody of a Document Custodian. With that said, we have to address many court filings of copies of the Mortgage Notes submitted by the financial institutions where the originals cannot be found and it is common to only see an “Indorsement in Blank” from the Original Obligee. One has to ask why and how this possibly occurred. Simply, if the Original Obligee placed the Mortgage Loan package within the custody of a custodian and the MERS system tracked a “Transferable Record” alleging to be the lawful negotiation of the Mortgage Note and if a need was required for proof, the current entity claiming rights would retrieve whatever documents resided with the original custodian.

12. The Third and Fourth Negotiation in Blank

Subsequent Negotiation by an Unidentified Subsequent Indorsee “In Blank” to additional
Subsequent Purchasers “In Blank”

The third step in the Mortgage Note negotiation would be from the depositor of the trust to the Trustee of the Trust, but again, in actuality the “First Indorsement in Blank” is utilized for this negotiation. Again, there is an unknown party alleging to be the Holder and Owner of the Mortgage Note by a negotiation “In Blank.

The fourth step in the Mortgage Note negotiation would be from the trustee of the trust to the Trust, but again, in actuality the “First Indorsement in Blank” is utilized for this negotiation. Again, there is an unknown party alleging to be the Holder and Owner of the Mortgage Note by a negotiation “In Blank.

13. Holder, Owner and Holder in Due Course, Innocent Purchaser

(A) One can be the holder of the Mortgage Note

and not be the owner or have rights as holder in due course.

Servicers and trustees possibly could become the holder of the note and claim they represent the owner and the holder in due course, however, if proper negotiation of the Mortgage Note was not followed as required, the trusts that these trustees represent do not hold sufficient legal rights to enforce the terms in the Mortgage Notes, much less enforce the terms in a nullified Security Instruments.

(B) One can be the owner of the note

and not be the holder or have rights as holder in due course.

The trust may claim to own the Mortgage Note but this would be a misconception. The trust where MERS is involved owns the rights to a “Transferable Record” where that record reflects who has control over a custodian that holds the Mortgage Note, if and when a vaulted copy does exist, and control over MERS as a so called mortgagee of record.

(C) Holder in Due Course

 Holder in Due course where proper negotiation was not followed would still reside with the Original Obligee, but issues still exist as to a continuous perfected Security Instrument.

Under the Uniform Commercial Code a subsequent purchaser could not achieve “Holder In Due Course” where fraud was committed by one of the Unidentified “In Blank” Indorsees as it affected the Mortgage Note.

(D) Innocent Purchaser

As to an innocent purchaser, a party to the creation of the trust where MERS is involved and named in the PSA or other documents of incorporation has actual notice of MERS’s involvement and therefore cannot claim to be an innocent purchaser.

14. Closing Statement

One has to consider under Title 15 USC, 77, the filing of compliance reports is not in compliance based on the procedural actions that were implemented in the creation of secondary market trusts by the financial institutions. Fannie Mae’s and Freddie Mac’s role in creating securitized trusts as additional fraud creation practices are not addressed in this writing.

With all the failure of compliance with law in the creation of the secondary market trusts, the “Robo‐Signing” and “Robo‐Verification” will only serve the financial institutions with a diversionary method to conceal a greater fraud. The “Robo” actions and accounting for all previous failure to comply with laws of governance  show proof the financial institution will commit any number of frauds to protect their Friday Paycheck and Crystal Tower Bonuses.

It may be, just may be possible to prove up the Mortgage Note but you can “NEVER” prove up a lost “Perfection of Lien.” Regardless of the number of Affidavits filed with the courts and regardless of the number of Assignment of Mortgages filed of record, none of these actions will perfect a lien once perfection has been lost. Proper procedure for default recovery of an unsecured note‐‐suit for monies: “but you cannot foreclose.” “THEY ARE SUING UNDER A CAUSE OF ACTION THAT IS NOT AVAILABLE,” if filing for foreclosure. Nobody will have gotten anything for free, the home is without a lien secured to the Mortgage Note and the bank can still sue under the default on the Mortgage Note if such note has not been discharged by willful intentional act as noted in the UCC.

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MORTGAGE ELECTRONIC REGISTRATION SYSTEMS

MERS, a creation of the mortgage banking industry, has effectively destroyed the institution of private property in America. Ironically, MERS was created to facilitate quick and easy and cheap securitization of mortgages — what are called mortgage-backed securities. In fact, what it did was to eliminate any backing of the securities by mortgages. Of the total securitized asset universe, $7 trillion are (supposedly) backed by residential mortgages. That would create the largest single transfer of wealth in the history of mankind. However, MERS helped to delink the securities from the mortgages. At best, they are unsecured debt — there is no property backing the securities. What this means is that foreclosure is not permitted. As I have said before, it is likely that most or even all foreclosures occurring in the US are illegal seizures of property — home thefts. We are talking about 100,000 completed home thefts per month, with another 250,000 new foreclosures started to steal homes every month. Projections are that 13 million homes will have been “foreclosed” (read: stolen) by 2012.

Worse, from the perspective of the banks, they’ve got to take back all the fraudulent MBSs, most of which are toxic.

In what follows I want to present the most favorable case for the mortgage industry. That is to say, I will ignore fraud and criminal conspiracies. Let us look at the current predicament as if it resulted from a series of monumental errors. With that in mind, what is the best-case scenario?

First a caveat: I have relied on my perusal of reported evidence, personal observations, plus  discussions with various attorneys in the related field, Wall Street investment consultants and a social scientist’s convincing argument that the securitizations of mortgages resulted in securities that are not backed by mortgages.

With that caveat, let us work through the problems now facing the banks.

1. A valid “mortgage” requires a (“wet signature”) note and a security instrument; these must be kept together, and any subsequent transfer of lien rights to the security instrument must be recorded at the appropriate public office. The mortgage note must be properly indorsed each time the mortgage is transferred. In the era of securitized mortgages this can be a dozen times or more. If ever presented for foreclosure, endorsements should demonstrate a clear chain of title, from origination through to foreclosure; and this should match the records at the public office.

2. MERS intended to provide an electronic registry of all mortgages. By appointing a “vice president” in every financial firm, it believed that all transfers of lien rights among these firms were “in house”. Hence it operated on the belief that no subsequent public recording was necessary, and no further endorsement of the mortgage note was necessary for in-house transfers of the payment intangible as it kept a record of transfers of the mortgage. It claimed to be a nominee of these firms (purported to hold the mortgage) but also to be the holder of the mortgages including the “Unidentified Indorsees In Blank” — mortgages that were never properly endorsed over to purchasers. We know, however, that MERS recommended that mortgage servicers retain notes, so MERS‘s claim to be the holder rests on its claim that appointed VPs are employees. But these employees are not an agent/employee of the “Unidentified Indorsee in Blank”, nor are they paid by MERS or in any way supervised by MERS.

3. This practice is in violation of numerous laws. Property law requires filing sales in the public record. Notes must be affixed (permanently) to the security instrument — a mortgage without the note has been ruled a “nullity” by the Supreme Court. MERS’s recommended business practice (with the servicer retaining the note) would make the mortgages a “nullity”. A complete chain of title is required to foreclose on property — every sale of a mortgage must be endorsed over to the purchaser, and properly recorded. Without this, it is illegal to foreclose on property — no matter how many payments the homeowner has missed.

4. However, if the notes can be found and if MERS can provide records, it is possible that the mortgages can be made valid (“proved up”) for purposes of collecting upon the indebtedness, but foreclosure would not be possible without a valid continuous perfected mortgage showing a chain of title from origination through to the current party trying to enforce the mortgage note. Any break in the chain of endorsements along with any break in the chain of title renders the Power of Sale clause in the security instrument to be a nullity and therefore no party can foreclose on the real property. So long as there is no fraud affecting the mortgage note, then rights to enforce the indebtedness can be further negotiated. If there is no break in the chain, when fraud is shown affecting the security instrument (such as robo-signers, etc), this does not affect the rights to enforce the mortgage note — but such fraud will affect the validity of the security instrument perhaps making foreclosure impossible. Fraud affecting the mortgage note would affect the right to foreclose.

5. If the notes cannot be found and a Lost Note Affidavit cannot reestablish the indebtedness, then foreclosure is not possible and collecting of the indebtedness is also not possible. Homeowners still can be sued for collection of owed moneys upon a “proved up” note or lost note affidavit but a current perfected lien is required to foreclose.

6. However since the mortgage-backed securities are governed by PSAs (pooling and service agreements), the practices above make the securities unsecured debt and there is no solution. The securities are no good. (This would be a Representation & Warrant violation as the MBSs stated that a secured indebtedness was to be purchased, but since the Trustees of the securitization would not have the notes, the securities cannot be “secured”.)

What does all this mean? In plain simple language, the banks are royally screwed. They cannot foreclose on the properties. Holders of the “mortgage-backed” securities can turn them back to the banks because they are actually unsecured debt. In previous pieces I have also explained why MERS’s recommended practice also violates US tax code — so back taxes are owed. And we know that the mortgages stuffed into the securities did not meet the “reps” of the PSAs.

So, in short, banks have got to take the whole lot of toxic waste securities back. Trillions of dollars worth. There is no cooking of the books that will turn this blackened toast back to bread.

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