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KABOOM | NY Appellate Division | Bank of NY v Silverberg - MERS Does NOT Have The Right to Foreclose on a Mortgage in Default or Assign That Right to Anyone Else
Appeals Court Clarifies MERS Role in Foreclosures
The
ubiquitous Mortgage Electronic Registration Systems, nominal holder of
millions of mortgages, does not have the right to foreclose on a
mortgage in default or assign that right to anyone else if it does not
hold the underlying promissory note, the Appellate Division, Second
Department, ruled Friday. "This Court is mindful of the impact that this
decision may have on the mortgage industry in New York, and perhaps the
nation," Justice John M. Leventhal wrote for a unanimous panel in Bank of New York v. Silverberg,
17464/08. "Nonetheless, the law must not yield to expediency and the
convenience of lending institutions. Proper procedures must be followed
to ensure the reliability of the chain of ownership, to secure the
dependable transfer of property, and to assure the enforcement of the
rules that govern real property." The opinion noted that MERS is
involved in about 60 percent of the mortgages originated in the United
States.
From the ruling...
(Emphasis added by 4F)
Decided on June 7, 2011
SUPREME COURT OF THE STATE OF NEW YORK
APPELLATE DIVISION : SECOND JUDICIAL DEPARTMENT
ANITA R. FLORIO, J.P.
THOMAS A. DICKERSON
JOHN M. LEVENTHAL
ARIEL E. BELEN, JJ.
2010-00131
(Index No. 17464-08)
[*1]Bank of New York, etc., respondent,
v
Stephen Silverberg, et al., appellants, et al., defendants.
LEVENTHAL, J.This matter involves the enforcement of the rules that govern real property and whether such rules should be bent to accommodate a system that has taken on a life of its own.
The issue presented on this appeal is whether a party has standing to
commence a foreclosure action when that party's assignor—in this case,
Mortgage Electronic Registration Systems, Inc. (hereinafter MERS) —was
listed in the underlying mortgage instruments as a nominee and mortgagee
for the purpose of recording, but was never the actual holder or
assignee of the underlying notes. We answer this question in the
negative.
...
On appeal, the defendants argue that the
plaintiff lacks standing to sue because it did not own the notes and
mortgages at the time it commenced the foreclosure action. Specifically,
the defendants contend that neither MERS nor Countrywide ever
transferred or endorsed the notes described in the consolidation
agreement to the plaintiff, as required by the Uniform Commercial Code.
Moreover, the defendants assert that the mortgages were never properly
assigned to the plaintiff because MERS, as nominee for Countrywide, did
not have the authority to effectuate an assignment of the mortgages. The
defendants further assert that the mortgages and notes were bifurcated,
rendering the mortgages unenforceable and foreclosure impossible, and
that because of such bifurcation, MERS never had an assignable interest
in the notes. The defendants also contend [*3]that the Supreme Court
erred in considering the corrected assignment of mortgage because it was not authenticated by someone with personal knowledge of how and when it was created, and was improperly submitted in opposition to the motion.
...
Here,
the consolidation agreement purported to merge the two prior notes and
mortgages into one loan obligation. Countrywide, as noted above, was not
a party to the consolidation agreement. " Either a written assignment
of the underlying note or the physical delivery of the note prior to the
commencement of the foreclosure action is sufficient to transfer the
obligation, and the mortgage passes with the debt as an inseparable
incident'"
...
Therefore, assuming that the
consolidation agreement transformed MERS into a mortgagee for the
purpose of recording—even though it never loaned any money, never had a
right to receive payment of the loan, and never had a right to foreclose
on the property upon a default in payment—the consolidation agreement
did not give MERS title to the note, nor does the record show that the
note was physically delivered to MERS. Indeed, the consolidation
agreement defines "Note Holder," rather than the mortgagee, as the
"Lender or anyone who succeeds to Lender's right under the Agreement and
who is entitled to receive the payments under the Agreement." Hence,
the plaintiff, which merely stepped into the shoes of MERS, its
assignor, and gained only that to which its assignor was entitled
(see Matter of International Ribbon Mills [Arjan Ribbons], 36 NY2d 121,
126; see also UCC 3-201 ["(t)ransfer of an instrument vests in the
transferee such rights as the transferor has therein"]), did not acquire the power to foreclose by way of the corrected assignment.
...
In sum, because MERS
was never the lawful holder or assignee of the notes described and
identified in the consolidation agreement, the corrected assignment of
mortgage is a nullity, and MERS was without authority to assign the
power to foreclose to the plaintiff. Consequently, the
plaintiff failed to show that it had standing to foreclose. MERS
purportedly holds approximately 60 million mortgage loans (see Michael
Powell & Gretchen Morgenson, MERS? It May Have Swallowed Your Loan,
New York Times, March 5, 2011), and is involved in the origination of
approximately 60% of all mortgage loans in the United States (see
Peterson at 1362; Kate Berry, Foreclosures Turn Up Heat on MERS, Am.
[*6]Banker, July 10, 2007, at 1). This Court is mindful of
the impact that this decision may have on the mortgage industry in New
York, and perhaps the nation. Nonetheless, the law must not yield to
expediency and the convenience of lending institutions. Proper
procedures must be followed to ensure the reliability of the chain of
ownership, to secure the dependable transfer of property, and to assure
the enforcement of the rules that govern real property.
Accordingly, the Supreme Court should have granted the defendants'
motion pursuant to CPLR 3211(a) (3) to dismiss the complaint insofar as
asserted against them for lack of standing. Thus, the order is reversed,
on the law, and the motion of the defendants Stephen Silverberg and
Fredrica Silverberg pursuant to CPLR 3211(a)(3) to dismiss the complaint
insofar as asserted against them for lack of standing is granted.
FLORIO, J.P., DICKERSON, and BELEN, JJ., concur.
ORDERED
that the order is reversed, on the law, with costs, and the motion of
the defendants Stephen Silverberg and Fredrica Silverberg pursuant to
CPLR 3211(a)(3) to dismiss the complaint insofar as asserted against
them for lack of standing is granted.
Full opinion below...
It is well worth the read...
www.4closureFraud.org
»
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Something tells me that the US Supreme Court will end up reversing this ruling.. Afterall, didn't they rule last year that MERS is a person too and accorded rights as such? I mean, they can spend as much money as they like supporting (er.. buying) the candidates of their choice in the next election cycle to make all of this go their way.
It's a state issue. I believe the N.Y. Supreme Court is the final authority on N.Y. real estate law.
No no, judge Sotomayor is known to be a people's judge.
She has more empathy for the squatters than, say, Rehnquist.
Kinda like saying she's more compassionate than Stalin.
Tovarish Stalin liked ALL people !
But he liked some people more than others.
A-hahahahaha !
Jeezuz. Who was supposed to mail Leventhal his check this week? Call him and tell him it's in the fucking mail already.
Miss one "payment" and these pukes go all activist on your ass.
This just got very interesting very quickly.
It's the Bozo the Clown nekler cloud again.
This is a big deal either way chips fall. If the verdict is upheld, it's a good day for the sane transfer of property and enforcement of lawful contract. If it's not, it's game over for private property and contract.
Good work w/the updates 4Closurefraud
Also, is it me, or is there a clownface in the mushroom cloud?
For those of us who can remember, Bozo the clown. Nice catch.
Looks like Ronald Mcdonald face...
No way there would be a clown face there.
But I once saw a regular cloud with the face of Alan Greenspan in it. Over Detroit. He was laughing.
Banks will get congress to pass a new law
It will be retroactive
It will absolve them of wrong-doing
It will only cost them a few billion in campaign funds
That outcome is assured.
Banks will get congress to pass a new law
It will be retroactive
---------
I suppose they could once again violate Article I Section 9 of the Constitution and pass an Ex Post Facto law. And if they did this there would be no question who Congress represents.
Retroactive laws are specifically prohibited by our constituion, the federal government is prohibited from passing ex post facto laws by clause 3 of Article I, section 9 of the U.S. Constitution and the states are prohibited from the same by clause 1 of Article I, section 10.
That was funny... I'm wondering what part of it they DO follow...
probably something in there about not being able to assassinate citizens by executive order without appeal too but that hasn't stopped ole hope n change.
Billion? Lobbying is the single most efficient return on investment. I would estimate the cost at a few MILLION.
Yeah, pretty much that.
You know, you can't get any serious work done in Amerika until it's an election year and the pols are calling everyone for money.
Barry needs a cool B-note by twenty-twelve does he. Sweetness. Means this banking thing is going to be cake.
cougar_w
Interesting, if one realizes that the FraudusPotus will do anything to advance himself...
Thanx for tha mindtickle.
We're all doing God's work now.
"Justice John M. Leventhal wrote for a unanimous panel....."
Of special note, there were no dissenters in the decision.
Note that costs were awarded too.
I guess I should:
1) Confirm if my bank even has the note?
2) Then stop paying
Got it.
How do you plan to confirm that they hold the note? Ask and they will lie to you. You might ask MERS but they will not take your call. The only way to really know is stop paying and when they go to evict you in a few years THEN demand they show the original note. Perhaps this is why my bank told me a couple weeks ago that my foreclosure had been cancelled.
Banks are about to take it up the Butt...until The Bernank hands them another Bailout (+Bonuses, of course).
The corollary is that The Banks have no incentive to clean up the mess since they are on Easy Street handed Billions from the Fed every week (+Bonuses, of course).
This also means millions will continue to live "rent free" for years and the housing prices will continue to fall for years as the whole mess clogs the system. I have read several stories where a person bought a house only to have the seeler then sue to take it back due to a faulty title closing or foreclosure.
This mess needs to be cleansed some how or RE will never progress forward again.
Ruh-roh.
This is going to put the banks in the US under.
Appeal it to the supremes...they're in the pocket.
"This is going to put the banks in the US under."
And it couldn't happen to a nicer bunch of fellas.
Thank the good Lord, there is still a rule of law in this country. Maybe there is still a sliver of hope. And congrats to Karl Denninger, who has been pounding on this particular drum for a couple of years.
1) The banks can appeal to the NY Court of Appeals.
2) They may desperately seek to change the law, calling in the legislature and governor at gunpoint if needed.
3) They may seek for a Federal intervention to change the law. Obama will pledge Social Security to Boehner to get
this deal.
4) Bernanke can oil the presses.
Nope....the taxpayer will bail out the banks.
nope...the FED will "buy" all to-be-foreclosed properties...and allow the banks to repurchase them from the FED, at a discount, while Treasury issues more bonds using the properties as collateral...THEN the taxpayers will pay for it all.
Yup...they won't allow it to crash and burn...it MAY crash and burn...but not with their blessing or their doing everything in their power to prevent it.
This will be QE3 emphasis...mortgages to MERS properties...fed will just buy them all and seel them back at discount. What % do you think they'll get off? What kind of a deal will the taxpayer give them?
.
Excuse me folks but this is how I get my kicks:
reply flag as junk (0)
by zaknick
on Mon, 06/13/2011 - 13:52
#1365267
by SoNH80
on Mon, 06/13/2011 - 11:47
#1364890
True, but it isn't enough to balance the insane costs of the ME-NA wars, occupations, kinetic non-war military actions, etc. etc. The Saudis fear their own people, they fear Iran, that's why they are so cooperative with the U.S. government, their ultimate insurance policy. Back in '73-'74, before the Iranian Revolution, the Saudis were kicking the U.S. in the butt over the Yom Kippur War. Now, times have changed. It's a Faustian bargain for both sides IMHO.
reply flag as junk (0)
Wars are winding down? I only see escalation. Where do you see all the wars winding down?
reply flag as junk (0)
by SoNH80
on Mon, 06/13/2011 - 12:15
#1364958
Africa and Latin America. Remember the Angola war? The Guatemala/El Salvador/Nicaragua war? The Congo war? The East Timor war? They've all ended. Even the Sudanese war has ended. Things are heating up in the Middle East, but in many ultra-poor nations, things have gotten a bit more peaceful. People are slowly rebuilding their lives. The world is bigger than the U.S., Europe, and the ME-NA trainwreck.
by SoNH80
on Mon, 06/13/2011 - 11:53
#1364924
Or, does the U.S. taxpayer serve as Santa Claus for the world? Worth a thought...
reply **JUNK** (3)
Well, let's see here. Most of the wars you mention were AmeriKKKan bankster induced, especially the ones in the Americas. The 1973 oil embargo was a coordinated effort by the banksters and their puppets to save the recently dirty floated dollar after France and others demanded gold and the US defaulted. The highest ranking CIA officer to renounce their ways and publicly denounce them, John Stockwell (YouTube), was the guy heading the troublemaking for CIA banksters in Angola. All those piss poor countries you mention are really full of wealth to be raped except it's now called mining and free trade.
The Saudi's ultimate insurance policy against Iran is ISI and/or Chinese nukes. The Chinese already sold them the long range, nuke capable missiles.
The US taxpayer as Santa Claus? I really hope you stick to AMazon, Apple, LinkedIn, The Facebook & Netflix cause you know jack shit about the real world, the dollar or much of anything else.
Bit of advice: when attempting to formulate a cogent view of any real world situation, don't just stick to Murdoch's WSJ.
I bet you're one of those morons on tv asking Obamao,Palin etc for an autograph!
Matrix zombie opines arse with such gravitas and expounds at length on his own stupidity!
What's your point?
RIP, bitchez!
Why is that? Until all the holders in NY have to adjust the value of their notes on their books, this is a non-issue... going to take years for the putbacks to work their way through the system...
This stuff was always baked in folks... it's just taking a really, really long time to work itself through. People have little faith in the judiciary, but this sort of thing is largely cut and dry and their hands are tied... that's not to minimize the efforts of the defendant attorneys, but it was ruled on as a matter of law... the law is pretty clear... [part of the reason it is taking so long to work through is that through the boom years, no one gave a crap about MERS or anything else... however, once the apple cart falls over...]
Whenever Bush's stimulus checks went to pay down debt and didn't stimulate the economy, the death bell was rung... and, living on borrowed time, these entities have become nothing more than conduits for obscene private and personal gain, while at the same time funnelling public funds. It's kind of like those phone-boothy machines that blow air around you and you have to stuff as much money in your pockets before the buzzer sounds... same thing... except now the audience is counting down til the buzzer. I just wish more of us got a shot at the money grab in the booth (presuming there must be a booth).
Is it just me or can everyone see the clown face in the atomic explosion?
And do you think it influenced the court?
Krusty has gone nuclear!
That's the collective spirit of all the slugs who are living large and rent free in Barney Frank cribs celebrating the fact that crime does pay.
You don't have to be a slug to quit making payments on realestate to someone who lacks the ability to give you clear title to that realestate.
It's just you dude, and I want some of whatever good drugs you are on. I also want a ride on your pygmy pony when you go out to harvest your dental floss.
Sorry man, Mighty Little is a one man hoss.
The Klown is there, I am telling you.
The only think that will make reality to come back is Mark to Market accounting. On its own would destroy:
Fed
ECB
Freddie and Fannie
TBTF banks
Is the major string of fraud holding the puppets together, that is the same reason governement will never go back to real accounting.
We are condemed to a life in fraud accountings.
Yes, I saw it immediately before scrolling down to the posts, but thought it would be too silly to mention.
You must trade chart patterns, right?
I do trade charts but I'm not sure my imagination is a plus.
There is this Mickey Mouse pattern that has made me some money. . . .