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In Re FERREL L. AGARD | MERS "Process Does Not Comply with the Law"
UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF NEW YORK
In Re FERREL L. AGARD
The memorandum below is 37 pages and the judge painstakingly analyzes the arguments presented by MERS that it is authorized to assign the mortgage. It should be noted that MERS opened itself up to this adverse ruling by interjecting itself in the bankruptcy proceeding. I doubt MERS will ever do that again.
Although the ruling is unfavorable to this debtor, it is not for all that come after them.
The full memorandum is well worth the read but here are some excerpts...
Although the Court is constrained in this case to give full force
and effect to the state court judgment of foreclosure, there are
numerous other cases before this Court which present identical issues
with respect to MERS and in which there have been no prior dispositive
state court decisions. This Court has deferred rulings on dozens of
other motions for relief from stay pending the resolution of the issue
of whether an entity which acquires its interests in a mortgage by way of assignment from MERS, as nominee, is a valid secured creditor
with standing to seek relief from the automatic stay. It is for this
reason that the Court’s decision in this matter will address the issue
of whether the Movant has established standing in this case
notwithstanding the existence of the foreclosure judgment. The Court
believes this analysis is necessary for the precedential effect it will
have on other cases pending before this Court.
The Court
recognizes that 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. However, the Court must resolve the
instant matter by applying the laws as they exist today. 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. 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. This Court does not accept the argument that because MERS may
be involved with 50% 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.
MERS moved to intervene in this matter pursuant to Fed. R. Bankr. P. 7024 because:
12. The Court’s determination of the MERS Issue directly affects
the business model of MERS. Additionally, approximately 50% of all
consumer mortgages in the United States are held in the name of MERS,
as the mortgagee of record.
13. The Court’s determination of the MERS Issue will have a
significant impact on MERS as well as the mortgage industry in New York
and the United States.
14. MERS has a direct financial stake in the outcome of this
contested matter, and any determination of the MERS Issue has a direct
impact on MERS.
Permission to intervene was granted at a hearing held on December 13, 2010.
By MERS’s own account, it took no part in the assignment of the Note in
this case, but merely provided a database which allowed its members to
electronically self-report transfers of the Note. MERS does not confirm
that the Note was properly transferred or in fact whether anyone
including agents of MERS had or have physical possession of the Note.
What remains undisputed is that MERS did not have any rights with
respect to the Note and other than as described above, MERS played no
role in the transfer of the Note.
The documentation provided to the Court in this case (and the Court has no reason to believe that any further documentation exists), is stunningly inconsistent with what the parties define as the facts of this case.
However, even if MERS had assigned the Mortgage acting on behalf of the entity which held the Note at the time of the assignment, this Court finds that MERS did not have authority, as “nominee” or agent, to assign the Mortgage absent a showing that it was given specific written directions by its principal.
This Court finds that MERS’s theory that it can act as a “common agent” for undisclosed principals is not support by the law. The relationship between MERS and its lenders and its distortion of its alleged “nominee” status was appropriately described by the Supreme Court of Kansas as follows: “The parties appear to have defined the word [nominee] in much the same way that the blind men of Indian legend described an elephant – their description depended on which part they were touching at any given time.” Landmark Nat’l Bank v. Kesler.
Conclusion
For all of the foregoing reasons, the Court finds that the Motion in this case should be granted. However, in all future cases which involve MERS, the moving party must show that it validly holds both the mortgage and the underlying note in order to prove standing before this Court.
Full memorandum below...
4closureFraud.org
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Down with the FED!! Down with the BANKS!!! Down with the LOBBY who paid for this mess!!!!!
F.H. and Bronzie I was trying to be sarcastic with the "may". You guys are right. I'm just a retired guy trying to make some sense of WHY they needed to do this. Why do they need to make the notes/mortgages disappear? I think it dovetails with the FNM/FRE legacy. RE became a widget selling business instead of an investment. Few had any skin in the game at the end including the TBTF banks. Everyone was too busy funneling shit to FNM/FRE to collect the the fees. I think Karl Denninger may be onto it. According to his blog the head mortgage guy at C came before congress and stated that as many as 60% of the loans did not meet the requirements for insertion into these various entities and that a year or so later it had risen to 80%. So someone had to be altering the applications in order for FNM/FRE to accept them. In another entry, KD posits the folowing: that no one will work for zero pay. My take from what he said is that the MBSs are structurally flawed. That at the end of the day if you had 100 mortgages in a MBS and it went to the end and eveyone paid off the their mortgage accordin to the schedule that someone (investor) is still left being owed money. That could be the "why" the documentation can't be found in some cases. Now what are derivatives plus leverage worth if the underlying is based on fraud? I'm probably just full of it. What say you all?
Deflationary washout in housing is not an "if" but a "when." The banks know this hence the huge cash reserves.
They should beware the 112th.
.. described by the Supreme Court of Kansas as follows: “The parties appear to have defined the word [nominee] in much the same way that the blind men of Indian legend described an elephant – their description depended on which part they were touching at any given time.”
That is priceless.
'the investors may find they're holding "nothing but air"'
this statement is true for several hundred trillion dollars worth of derivatives currently circulating on this planet - eventually all of this worthless paper will have to be written down to zero
As I've said before, if they audit the trusts holding these note/mortgages for the MBS's the investors may find they're holding "nothing but air".
May?
May?!
They absolutely, positively will find they don't own jack because the instruments were never properly transferred. There's no doubt that that's the case in the majority of MBS.
A planned fraud from the beginning; people who don't understand this are delusional. Follow the bouncing ball from the establishment of MERS in the 1990's to subsequent FED policy thereafter. They needed a bubble for derivatives; boy did they get one!!! And the arrogance to think they can escape from the ramifications thereof.
Just pay your mortgage on time. It will greatly simplify your life.
A simpleton and his money soon part.
Just like these military families did?
J.P. Morgan Acknowledges Wrongful Military ForeclosuresNEW YORK—J.P. Morgan Chase & Co. admitted that it wrongly foreclosed on 14 active-service military families and overcharged thousands more on their mortgages, a continuing internal bank review has found.
http://online.wsj.com/article/SB10001424052748704678004576090224257754378.html
what were they thinking when they started MERS......seriously !
Let's save those $50 or $75 fees for recording things correctly! That's wasted bonus money if it gets spent anywhere else!
IMO, MERS was a bureaucratic solution that required more intelligence and disipline than the structure was able to muster. Organizing for it in a CDO wouldn't be simple. It is what happens when a grand idea requiring a complex solution gets deligated to the peanut vendors.
We are too big to fail....We have no effective regulation....We own Congress....We own the President...Ect Ect