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Judge Finds MERS Has No Right To Transfer Mortgages, Finds Entire MERS Process Illegal
There was a time when news, especially very bad news, moved stocks. The last time that occurred was in the middle of 2009, before most robots had any idea just how massive the chairsatan's schizoid break with reality was. Now, that the appropriate sociopathology is fully priced in, bad news tends to have an even more profound upside impact on stocks than good news, as it guarantees that the Zimbabwe stock market will be upon us far sooner than if the economy were to have to go through another inter-QE episode. Which is why the just released news out of US Bankruptcy Judge Robert Grossman of Central Islip, New York, that MERS lacks rights to transfer mortgages will likely send the entire S&P circuit breaker up.
From Bloomberg:
“Merscorp Inc., operator of the electronic-registration system that contains about half of all U.S. home mortgages, has no right to transfer the mortgages under its membership rules, a judge said...U.S. Bankruptcy Judge Robert E. Grossman in Central Islip, New York, in a decision he said he knew would have a “significant impact,” wrote that the membership rules of the company’s Mortgage Electronic Registration Systems, or MERS, don’t make it an agent of the banks that own the mortgages..."
“MERS’s theory that it can act as a ‘common agent’ for undisclosed principals is not supported by the law,” Grossman wrote in a Feb. 10 opinion. “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.”
“MERS and its partners made the decision to create and operate under a business model that was designed in large part to avoid the requirements of the traditional mortgage-recording process,” Grossman wrote. “The court does not accept the argument that because MERS may be involved with 50 percent of all residential mortgages in the country, that is reason enough for this court to turn a blind eye to the fact that this process does not comply with the law.
“An adverse ruling regarding MERS’s authority to assign mortgages or act on behalf of its member/lenders could have a significant impact on MERS and upon the lenders which do business with MERS throughout the United States,” Grossman wrote. “It is up to the legislative branch, if it chooses, to amend the current statutes to confer upon MERS the requisite authority to assign mortgages under its current business practices.”
“Without more, this court finds that MERS’s ‘nominee’ status and the rights bestowed upon MERS within the mortgage itself, are insufficient to empower MERS to effectuate a valid assignment of mortgage,” the judge wrote. “MERS’s position that it can be both the mortgagee and an agent of the mortgagee is absurd, at best.”
And with MERS now found to be a fraud, we expect MERS Commercial authority to be likewise eliminated. Which means that the entire US mortgage market, both residential and commercial, is a lie, and built on fraudulent foundations, and that every single MERS-mediated transaction will likely have to be unwound.
In reality what will happen, is that the Banker lobby will have to purchase a few more Appelate Judges, and in the worst case, a SCOTUS dude here and there, appeal the ruling to death, and end up victorious. After all, it is only taxpayer money.
BTFD.
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The pure gall of these bastards!!
More Food Stamps!!
More Un-Employment!!!
Hurry, we have to be able to blame the people why we can not afford this at the Federal Level...
Food Stamps / Un-employment Checks and Jerry Springer keep all the fat, stupid and otherwise engaged Americans entertained while the World ignores Gravity all around them.
So yes our forefather’s would say we have ignored the obvious and will suffer the consequences of doing so.
$800 Billion dollars in TARP (Banker Hand Outs, the 1st go round)…
Would cover…
20% Un-Employment (at a cost of $2 billion dollars a month) for 15 fucking years…
10% Un-Employment for 30 fucking years…
The Trillions of dollars used to carry the bonus monies of the Bankers… would carry Un-Employment Benefits for well over 100 fucking years..
So, it really isn’t the lil guys fault now is it?
This ruling made my day, perhaps my week.
It was a wonderful Valentine's Day present and I don't usually go for the Hallmark holidays - champagne tonight!
The question here is if Congress can both amend the law to make MERS legal, AND make it retroactive?
by Milestones
on Mon, 02/14/2011 - 16:37
#961222
United States Constitution Article I Section 9 (3) Attainder -ex post facto law. No bill of attainder or ex post facto law ( after the fact) shall be passed.
Sorry, wrong number!! No can do. Milestones
Besides that, the individual States have jurisdiction on Real Estate law!
It doesn't have to be retroactive. The banks and MERS can pull all their filings and file again when the new law is passed.
How many Congressmen and Senators would live if they voted in such a bill? Milestones
As cited by another poster above somewhere, the Constitution prohibits it. Because Congress does not give a rat's ass about the Constitution, they will pass a law to make the fraud legal.
"It's just a goddamned piece of paper." GWB
Booby Aderholt (AL - R) tried to pass HR 3808 interstate commerce robo-signer bill - so they will surely try again. But property rights are state laws. MERS never asked permission from any of the states to steal the revenues (fees for assignments/transfers) of the county recorders. There are qui tam actions against MERS in several states.
plans are already in the works for this judge to become victim of an unfortunate, fatal accident.
Just like John Roll?
I wonder what Snooki will do on Jersey Shore tonight
Poppin' big booty pills.
Who the F is snooki? And why should I care? Christ, for that matter, who the F is Lady Gags?
You have ALL missed the venue. MERS is designed to circumvent STATE law, NOT FEDERAL law. CONgress can't do shit about it, because title recording laws are in the purvue of states, NOT the federal government.
MERS would need to go to 49 states to get laws retroactively passed to ameliorate this ruling. For those of you in Minnesota, tough shit because your bankster-knob-licking legislators already sucked up to MERS and validated it. Congratulations.
For residents of the other 49 states, if you have MERS anywhere in your paperwork, you won the lottery because your mortgage has now become an unsecured loan. Hurry up and file a quiet title action and stick it to your favorite bank.
While there is strong merit to the legal proposition-turned-argument that since real property title issues are governed by state law as they're 'In Rem' issues over which state courts have exclusive jurisdiction, don't be surprised at some wild ass and laughably bizarre federal issue claims being tossed about by the banksters, and maybe being rubber stamped in twisted and tortured logic by the SCOTUS, in order to validate the MERS system.
This is Amerika, after all...
Commerce Clause...
You're fuckin' Aye Right, skipjack. Let's see how big Moynihan's (BAC CEO) balls are. State laws and the states aren't going to be bought off easily. Hundreds of thousands of homes F&C with no mortgage debt. Ought to be right up Ben and Timmah's baliwick: good for the economieeee!
State's rights: Got any?
Wrecked neighborhoods and communities. Got any?
Higher property taxes. Got any?
MERS has screwed every homeowner.
Of course, MERS is a front company for . . . the banksters.
How long before we have to bail out the insolvent MERS-scum banks?? I know who's NOT paying for this...
Obama veto'd the bill that would have legitimated MERS.
http://www.whitehouse.gov/blog/2010/10/07/why-president-obama-not-signing-hr-3808
http://www.govtrack.us/congress/bill.xpd?bill=h111-3808
That was the robo-signing issue. Related, but not the same thing at all.
Yes, this is a different issue.
I think the banks will be in big trouble if the MERS system is rejected by the courts (and if this becomes commonly known). One thing that could still save them would be a rapid increase in real estate prices (possibly from QE?).
However, I read a posting on Gonzalo Lira's blog that describes how real estate prices went down, not up, in Argentina's hyperinflation.
MERS CEO RK Arnold jumped ship recently. Did he know in advance that an ill wind was going to blow into his garden of good fortune?
Great glad they can live there FREE.
Our slobs in D.C. do nothing except get rich doing nothing, about time for a little LOVE.....Feel it?
Housing Bubbles Crash... ALWAYS...http://apeakunderthehood.blogspot.com/
we hope you enjoy zero hedgers. Thanks for a great site
Interesting. The last time we had an adverse ruling against the on-going mortgage fraud, was Rhode Island. A day or 2 later, Ms Giffords was shot, thereby knocking the RI story off the front page. Maybe they're related, maybe not, but it is an interesting set of circumstances just the same.
I'm glad someone else thinks like I do! :) Always something to take our eyes off the ball...
Obama wants to give them retroactive immunity!
How do you know?
How do you know?
who cares, legality has no place in today's business, especially at such a high level, this will get taken care of some how....
Well this is simply stating the obvious. Of course they will change the rules. Don't they do this with everything where catastrophic loss may occur or people may legally be charged with fraud?
You know the US is fast becoming a country that resembles a third world dictatorship versus a sound, capitalisitc, environment where the guilty are charged and the consitution of the country is strictly upheld.
I believe in the US (even though I am from Canada) and I believe in its people, but not a day goes by now where there isn't some sort of fraud or rule altering taking place to undermine the rest of the worlds confidence in the US economy and legal system. If I were investing in Argentina or say Brazil I might expect such brazen disregard for legal policy. However I find it both troublesome and frustrating to see this open and illegal activity going on as if it were simply a part of every day life now.
Rules and laws are all we have that separate an advanced economy from a third world free for all. These rules are the very reason why investors feel confident enough to invest in a country. Without which the money leaves. I know all too well how business works all over the world and in truth a little corruption in not a bad thing, however this ongoing atrocious behavior that is being committed by people passing themselves off as leaders is beyond appaling. If it weren't so pathetic it would almost be a comedy of errors.
It is a comedy, and I am laughing all the way nearly to the bank (I don't put my money in there), and whistling past their graves.
That is so misguided. Keep all your money in the scum banks; it's a liability for them. Constantly getting calls to move it to something they can call an asset. Plus, where will I get a cashier's check within an hour to cover my next Rule-T violation?
Mickey Mouse malicious MERS mostly made mortgages more murky, magnifying mal-practice manipulative monopolistic moves.
No comprende 'illegal'. Is that like unconstitutional? Since when does legality have to do with anything? Some trio of morons in the 9th will straighten it all out.
This is a well-reasoned opinion but don't make more of it than it is. This judge lays out his objections to how MERS and lenders have done things, but nothing in that decision will prevent MERS and lenders from changing their procedures a bit to come into compliance. This is a warning shot by this bankruptcy judge for the lenders to have all their paperwork when they show up in his court. It will cost the lenders a bit more to comply, but that's all.
Don't believe it? Try actually reading the opinion. The judge practically gives the lenders instructions on how to get their paperwork straight.
BTW, if you'd read the opinion you'd also have noticed that the poor bastards in this specific case LOST. Their house is gone.
That's cuz they filed BK after foreclosure was ruled. Pay attention.
I did pay attention. And those people don't have a house.
All this ruling means is that in that particular court the lenders and MERS can't rely on their 'membership agreement'. MERS will need to get specific written instructions from the note-holder to make assignments valid. That's a pretty low hurdle. Might cost an extra $100 to $200 on each foreclosure (at most).
The legal processes to perfect the mortgagee's title already exist. The lenders are just trying to find a cheap, quick way around them. I'm glad that more judges are slapping these bastards down and making them go the slightly longer, slightly more expensive route of actually complying with the law.
Don't for a minute think that this is going to change the ultimate outcome for more than a handful of special cases.
If you read the ruling you should have noticed the court found MERS does nothing to verify who the note holder actually is. That is to say they rely on nothing but a self-serving entry into their database "I own this mortage". This in not curable. Especially when the assignments are broken at origination and the originator is bankrupt.
+++
Is Old Trooper a bankster?
Does anyone have a link to a site keeping track of the number of trial court opinions in favor/against MERS?
I've seen one & it may take me awhile to find it and post for you, but meanwhile here is a good blog (if you are interested).
http://chinkinthearmor.net/
I think this ruling may go just a tad beyond the side-stepping of taxes, court costs and ownership transfer involved with MERS.
The creation of a nominee company to receive and pay out assets is prevalent for all broker street name nominees and probably all other warehousing techniques (including Fed buy out ones).
MERS should have either used the street nominee name system used by brokers to hold/transfer cash and stock or the usage of these street names is also made illegal.
“The court does not accept the argument that because MERS may be involved with 50 percent of all residential mortgages in the country, that is reason enough for this court to turn a blind eye to the fact that this process does not comply with the law."
I would have thought that a perfect reason to turn a blind eye.
I wonder how they arrived at the 50%? Some say its a lot more. I agree on the blind eye and the other eye is jaundiced toward the homeowner.
It may pass muster as a policy argument to implement remedial legislation, which may then be applied retroactively...
A few months ago, I did a title chase and found out MERS and BAC were the holders of my mortgage (sold within a few months by Countrywide).
BoA were my servicers, so I asked to see the note, they didn't have it but threatened me and finally told me Fanny Mae held my mortgage (not on the title).
So I'm suing their arses (filed a few weeks ago in Suffolk County) for fraud, on top of that, BAC has never paid taxes in New York...and MERS is illegal, it is a good day.
Good - give 'em Hell!
In my case I have a bankrupt originator on my DOT (along with MERS). No subsequent recorded assignments. Now in litigation, so they can't retroactively record. A to D claim with no B and C in between as those entities are also out of business. How could "they" have "transferred" the loan without the trustee's permission? There has never even been a first creditor meeting.
No surprise on the news blackout. TPTB are fearful of this conversation happening.
Do you have the MERS? No, What's the MERS? It's like the HIV for houses, and how do you know you don't have the MERS? Uh, I don't know, maybe because I've never heard of the MERS. When's the last time you check the county land records for your property? Uhhhh, never...........
The ruling is real simple . As per the Statute of Frauds, all conveyances of property must be in writing. If that conveyance is done by an agent his authority to convey that property must be in writing in addition to the conveyance being in writing. MERS is trying to use it's membership agreement as proof of authority. The problem is the borrower made MERS the nominee not the lender. ONly the borrowers name appears on the trust. They are the creator . There is no evidence whatsoever MERS has authority from a lender to convey a piece of property that lender specifically owned . Can you say third party interloper? Membership is not agency.
Psssst!!!
<hushed voice in D.C. underground parking lot, darkly lit>
Follow the money!
I asked this on the other thread as well:
Here's what I completely don't get. Cities, counties and states in serious financial trouble all over the map and nobody's making a peep about all the recording fees they were screwed out of? Further, I'm willing to bet that a look at all the HUD (closing) statements would show that recording fees were charged to the buyer or seller. Somebody took those fees. What am I missing?
They're probably making lots of peeps.
But never underestimate the desire, motivation and money the culpable parties have and are willing to deploy, by way of super-secret-cross their fingers negotiations, supported by the federal government and the Jekyl Island Central Bank, to infuse the states with moolah after the fact.
Think quiet and sober settlement talks with states' AG, banks, servicers, and the fed men.
The more quiet the resolution, with the fewer knowing, the better.
They're not screwed out of anything. Some states' recording acts allow assignments without recordation. Further, and as a rudimentary measure, even in states that require recording of all transfers, there is no requirement that an assigning party record a property transfer... Rather, such party simply takes the risk upon itself that its priority/lien will fall prey to other persons and/or entities. If this is a gamble worth $100/pop... then so be it... just be prepared to be divested of your priority if/when an intervening lienholder records. [remember a mortgage is valid as to the mortgagor, regardless of whether properly recorded].
In short, they are not entitled to any fees until the assigning parties say they are and record the transfer...
But, as I think the cases have been showing... the foreclosure issues are being heard in front of courts whose livelihood and salaries depend upon the transfer fees... not that I am alleging any have been subjective or come to a different conclusion than should have been reached... it's just additional fuel to throw on the fire.
PS, the settlement statement is issued on the initial transaction... we're talking about the subsequent sale of the notes/mortgages... you're getting confused.
Well, hate to rain on your parade, guys, but for those of you who don't know, Islip is a poor little black suburb in central Long Island with rampant subprime foreclosure. And though the judge's arguments about the letter of the law might have merit - I'm no lawyer - this is really a dispute over policy on how to deal with those foreclosures. This judge is obviously in the camp that wants greater debt forgiveness for everybody who took out excessive mortgages during the bubble. And that's just not going to fly on a national or even state or even county level.
The government is of course willing to discuss partial debt forgiveness. They had that HAMP thingie that had some effect. But all that was about was keeping as many people as possible paying on their underwater mortgages. Everybody paying on underwater mortgages is participating in the great voluntary bank bailout. We've got millions of people in this country contributing billions of dollars a year each to that wonderful charity. Good work, folks.
I personally don't mind if judges like this one defend all the people who are effectively squatting in homes that dumbass bankers ridiculously overpaid for at the peak of the bubble. Go on, screw those dumbass bankers harder. But the government is clearly on the banks' side, here, folks.
I would suggest quit crying over spilt milk and learn to play the game of musical houses. If the whole town of Islip defaults on all its mortgages, housing prices plunge to rock bottom, and you can all then actually own those houses, and not just nominally own them subject to a mortgage you can't afford. All you lefty anti-foreclosure activists don't even realize that the result of your work is to keep houses unaffordable for poor people.