Understanding Mortgage Transactions, to fully understand the difference between an assignment of mortgage (or deed of trust) and endorsement of the note, you must understand the basic terms and documents involved in a residential mortgage transaction. In a mortgage, a mortgagee is the lender. The mortgagee gives the loan to the mortgagor, who is the homeowner/borrower. The loan transaction consists of two main documents: the mortgage (or deed of trust) and a promissory note. The mortgage (or deed of trust) is the document that pledges the property as security for the debt and permits a lender to foreclosure if you fail to make the monthly payments, whereas the promissory note is the iou that contains the promise to repay. The purpose of the mortgage (or deed of trust) is to provide security for the loan that is evidenced by a promissory note.
Mers, can't do foreclosure
I don't believe the assignments currently being executed in mers' name are legitimate, and certainly not when they purport to assign the promissory note, as well. . Is there another way? Financial obligations have to be taken seriously. No one would argue otherwise, but it's very difficult to have sympathy for an industry which willfully operated with its eyes wide-shut and which continues to spurn the implementation of the billions of hamp and other program dollars intended to help Americans retain their homes. Ludden has written a more lengthy and detailed missive regarding mers, and while i don't agree with everything he opines, i think it's worth a read. It can be found here: rating: 27 views 0 comments log in or register to post a comment. Banks use assignments and endorsements to transfer mortgages, deeds of trust, and promissory notes to other banks. When you take out a loan to purchase a home, you are required to sign two documents: a promissory note and a mortgage (or deed of trust). Assignments biographies and endorsements are the ways that these documents are transferred between banks. If you're facing a foreclosure and the foreclosing bank doesn't have the proper endorsements and assignments, you might have a defense to the foreclosure. Read on to learn the difference between an assignment of mortgage (or deed of trust) and an endorsement of the note.
The provisions of the ucc, not to mention Trust Law, which would define the real owners of these notes appear to have been of no moment to them when dealing with loans on the way to securitization. Was this as rampant as now reported? Hard to say, but many, many instances of noncompliance have certainly come to light and are the topic of many lawsuits. These actors nonetheless rely on the ucc now, specifically possession of bearer notes, when it allows them to take collateral. Even if the law provides shredder for enforcement by one in possession of a bearer note, that possessor, in the absence of (all the) legitimate assignments of the dot, has no more than an unsecured note. . no where in the history of this country has one party's right to affirmative defenses been so negated and sadly, for many homeowners, overlooked. The real facts surrounding this securitization scheme, and I believe that's an appropriate description, has lead to an unprecedented economic and moral morass in our country's history. If my assessment of this situation is accurate, the good men and women of our judiciary have a lot of work. They appear to be the last bastion, charged with the task of sorting out and dealing with this horrendous maelstrom, a task none of us can envy.
However, the bottom line is that the mandates of the statute of frauds, which regulate interests in real property, are not open to equitable considerations, which is generally implemented only in the absence of existing, controlling law. Mers' nominal status in public record didn't change the need for assignments by the true, not nominal, beneficiary, even if the assignments were to remain unrecorded pending the need for enforcement or the time to get them recorded. But, since foreclosures may not be done in mers' name any longer, which schematic was at the very heart of the mers'. O., and that which had to be done appears to not have been done, what else are the members to do? The original plan was to enforce the deed of trust by mers' members in its name. Now that that is no longer available, another schematic has taken its place: the self-assignment of the collateral instrument, the deed of trust, by members in mers' name. Mers' members now wish to rely on the very same legal tenets, those found in the ucc, which they summary eschewed for one reason or another in their rush to the big bucks.
Since "mers" foreclosure mandate, apparently the members have decided it's the only thing they can do to try to establish rights under the deeds of trust: the assignments are going right from the alleged nominal beneficiary to the trust or loan servicer by way. I don't believe these assignments are legitimate. . even if the assignments were actually, literally, executed by mers, there's still plenty of room for doubt that anything would be conveyed. First of all, mers has no authority to execute an assignment. Secondly, mers is at best a nominal beneficiary for public record and nominal anythings have nothing to assign, having no real interest. Mers itself has made it perfectly clear it has no real interest; mers says it merely holds legal title to the interest of another. Mers might appropriately relinquish its nominee status by quit claim, but the true beneficiary is the only one who may assign its interest. That it isn't done strikes me as fatal to the enforcement of these collateral instruments, a fact courts of equity grapple with daily.
Mers, admits It Can't Assign Note, deed, of, trust (Real Estate)
Many of those active in foreclosure defense refer to these appointees by the common parlance "straw officers". A straw man is generally defined as "a front for grey somebody, someone who acts for another for the other's questionable and even illegal activities". Is this an unfair description of the 20,000 officers appointed by mers at its members? In this particular instance, it's difficult to separate the appointment from the reason for and the gravity of the appointment. Mers has no employees to execute the millions of documents executed in its name. Are member' employees the proper people to do so?
Are they mers' officers? They don't work for mers, they're not paid by mers, they don't show up at mers' offices to report for work or attend meetings. Their sole "mers" function is to execute assignments and other documents in mers' name at the behest of their true employers. Does this arrangment actually comport with the law? Whether or not it should be influential, it can't be forgotten that we are talking about the largest and most significant asset most of us will ever have - our homes. Is an assignment of a deed of trust to one's employer in the name of mers a legitimate assignment? . Most courts are not apprised that these assignments are self-instigated and self-executed assignments.
In my opinion, it's really necessary to understand this, the basic, original. O., that is, the mers' foreclosure function and what unforeseen changes the consent Order has has occassioned. "now what to do?" If the paperwork weren't done, including the assignments of the deeds of trust and the endorsements on the notes on their way to securitization, who is going to foreclose now that foreclosures may not be done in mers' name? Further complicating the matter is the fact that many of the entities whose assignments and endorsements were neglected are out of business. The "what to do" answer has been to have the members assign the dots in mers' name by way of the members' or even non-member mers' officers.
Some of the members have argued that the dot follows the note, for which they assert possession, and maintain that the assignment of the deed of trust is superfluous. A deed of trust, however, unlike a note which is generally regulated by the ucc, is regulated by the statute of frauds which requires real property interests to be in writing. A note without a proper assignment of its collateral deed of trust is an unsecured one. . Unfortunately some investors who thought they were purchasing mortgage-backed securities find themselves with no collateral, and this unfortunate fact can only be the result of other parties' complacency and dereliction. The homeowner, likewise, had nothing to do with this business plan. Which brings me to legitimate question 1, one which begs an answer, and which answer is long overdue. . Is a member' employee a mers' officer? . mers has appointed over 20,000 of these officers at its members and elsewhere. These appointees execute the assignments of the deeds of trust from mers to members, generally to the appointee's actual employer or to the party who has hired them in the case of a law firm employee-appointment.
Wells Fargo bank
A duly appointed agent may bind its principal; principals do not bind agents. . If the true beneficiary were first named as such in the deed of trust, with mers then being appointed the agent of the beneficiary, and if mers actually had employees to margaret execute documents (which would remove the straw man issue raised below the relationship between. 3) Did the members have possession of the notes? The problem with that question is its answer, which is that no one would know. Mers had no way to assure compliance. Based on the rash of 'missing note' affidavits filed in subsequent litigation when possession was actually challenged, it isn't unreasonable to question whether or not those foreclosing parties actually had possession of the notes in prior actions. In 2011, mers entered the consent Order and thereafter issued its mandate to its members: no more foreclosures in its name. Problem is, in addition to providing relief from the time and expense of recording assignments in county land records, the mers' operation was structured around foreclosing in mers' name.
But even so, if mers is an agent, than the member is the principal. . The plan was to allow the principal / member to act in the name of the agent / mers, rather like, well, a club. . Principals don't act in the name of the agent (agents act in the name of the principal). I am at a loss to see how this relationship can be legally justified and I'm also at a loss to understand why it has stood for so long. This is (one of) torvald the largest flaws imo of the mers model: the principal is acting in the name of its alleged agent. Agents act in the name of the principal and not the other way around. This legal tenet is not peculiar to mers - it's Agency 101.
their operation, mers didn't. Apparently it was an 'honor system just as entries by members of sales of notes into mers' database is an honor system. 2) mers is named the nominal beneficiary in the dot. . mers' members have (post-Consent Order) alleged that that status is a de facto agency. It's my understanding there is no such thing as a de facto agency when it comes to real property. The expression and intent of real property agency may not be implied; it must be clearly articulated.
Mers is named the beneficiary as nominee of the lender in the deed of trust. What is not seen in that document, but is controlling nonetheless, is other language in another document: the mers' membership agreement. In that agreement, mers and the member agree that a member may foreclose on the deed of trust in mers' name if word the member has possession of the note. Note that's two things, not one. In all the foreclosures done in mers' name pre-mers' consent Order, the member tacitly implied to mers that it had possession of the note. . End of the story as to written documentation concerning mers which defines foreclosure rights. So what's wrong with this picture? 1) The member had agreed in the membership agreement that it would only foreclose in mers' name if the member is in possession of the note. .
Homeowners' rebellion: could 62 million homes be foreclosure-proof?
A look at Foreclosure post-mers' consent Order by john gault 2012/05/05, since mers entered the consent Order with the. Dept of the Treasury in April of 2011, its members may no longer foreclose in mers' name. . This book material looks at how the members are dealing with this situation. John gault's Blog : "Let's start at the very beginning. A very good place to start." "The language in the dot appears to grant mers the right to foreclose; Millions of foreclosures were done up until mid 2011 in mers' name. In April of 2011, mers entered into a consent Order with the dept of the Treasury. Thereafter, mers issued a mandate to its members for no more foreclosures in its name.