The Anti-MERS Mortgage Manifesto

http://mattweidnerlaw.com/blog/2010/02/the-anti-mers-mortgage-manifesto/

Greg Clark is a brilliant Clearwater, Florida attorney who has been a practicing title
attorney for 30 years. For hundreds of years, a title attorney’s job was to examine all of
the records that related to a property and then issue an attorney’s opinion of title or title
insurance policy confirming that if his client purchased the property or lent money
against the property, they were doing so free of any claims by another other person or
party who might claim an interest in the property. I say that the job “used to be” because
after the development of the Mortgage Electronic Registration System or MERS, no
attorney can tell you what other party might claim an interest in the property because that
information is locked away deep inside a private company…MERS. A mortgage is
recorded in the county public records, but who owns it and who may have any rights to
that mortgage is a closely held secret.

Kessler, Azize, New Millennial, BAC Funding The Cases That Crack MERS

A good example of what goes wrong in the secret system is a case called JP Morgan v.
New Millennial, a Pinellas County case that was decided correctly by Judge Douglas
Baird, who was unfortunately reversed by the Second District Court of Appeal. I’m
going to write a full post on this case later, but it is an important case to know and
understand so I post the entire case here. Support for Greg’s important argument is found
in a Kansas Supreme Court case, Kessler v. Landmark, which is found here. A
fascinating thing about the Kessler opinion out of way far away Kansas is that it cites
another Pinellas County Case, Azize v. MERS, found here. Now here’s what’s
fascinating about the Azize opinion. MERS “won” that case…the Second DCA found
that they could proceed with the foreclosure cases they had filed, but even though they
“won” the case, neither MERS nor lenders cite that case or want courts to pay attention to
that case. The reason why is found in footnote number 2:

Although the complaint does not allege how or why MERS came to be the owner
and holder of the note, the trial court’s dismissal wasnot based on this deficit.Since
the trial court did not base its ruling on this issue,we offer no opinion as to whether
the complaint fails to
properly plead a cause of action without this information being alleged.

By now everyone’s read the BAC Funding case, so I won’t waste time with the opinion,
what I will share is the appellate brief that most people haven’t read. The brief answers
many of the questions that are not adequately explained in the Order, and the brief is the
important, “secret” information…the “secret” brief can be found here. This brief should
be provided to every judge who hears foreclosure cases to help them apply the BAC
opinion to cases in their courtroom that match the facts described in the BAC brief.

What do we know about secrets when they relate to public policy? What place do
secrets have in our of public court systems?
Secrets are bad news in almost every context, but they’re especially bad when it comes to
matters of public policy and our court systems. So anyway, Greg Clark makes a brilliant
argument that the MERS system is a total violation of real property laws that have existed
for literally hundreds of years and that the consequences of this system that violates the
law are going to be catastrophic. Greg posted a comment to my recent questions about
the MERS system….I struggled with his argument at first, but as he explains below, the
problem is not all that complex and the fundamental violations of law are pretty clear:

Let me give you the short answer to your question of “why the MERS assignments”, if
Johns Gillian and its progeny applies: IT DOESN’T and the higher ups, who didn’t want
to spend $10.50 (to our clerks of court) to do just one extra assignment, know it.

You see, the original introduction of MERS was post closing, that is, the note and
mortgage were, at inception, put into the name of the original lender so you had
compliance with the rule of common law, of unity of title of the note and mortgage into
one holder. It was after that that the unenforceable attempt at splitting the note from the
mortgage, by assignment, occurred, which assignment Florida law holds as a nullity (see
Vance, Sobel, etc.).

So the assignment being invalid simply means that you go back “revert’ to the original
transaction which was clean and unified in one holder, thus John/Gillian would have
applied.

But now it doesn’t because of that extra $10.50 the lenders and mers wanted to pocket.
Almost immediately after they started the post closing assignments lenders saw that
$10.50 expense and decided to instead split the note and mortgage at the closing, AT
INCEPTION, and, in essence, keep the money for themselves (ah, multiplied by 50 or 60
million loans that works out to 5 or 6 billion dollars if my math is right). Problem is that
Florida law, which follows the common law of almost every state in the union states that
bifurcation of the mortgage from the note renders the mortgage unenforceable, a nullity,
was ignored.

This basic principal against note/mortgage splitting was reiterated in the U.S. Supreme
court in the Carpenter case a long time ago, even before Johns/Gillian. To date their
exists no statutory or case law abrogating this fundamental concept of property law,
which we inherited from English common law, unmodified.

MERS and the foreclosing lender proxies simply hoped (and still hope) they can
moonwalk away from the scene of this title failure with these invalid assignments hoping
no one notices the fact that an assignment can rise no higher in dignity that the failure of
title upon which it is based.

Whats more, even poetic, is that the “MERS mortgage” (even if the court wants to ignore
this fundamental failure of title at inception) contains no right, in the grant of the
mortgage, allowing MERS to assign its duties as NOMINEE or to transfer or otherwise
assign the mortgage.
They have painted themselves into a legal corner.

I’ve been practicing dirt law for some 30 years, writing title, crafting grant language, and
chaining ownership, etc. and I understand that most if not all judges were former
litigators who simply have no knowledge beyond their law school years in this
subcategory of transactional practice and procedure, other than rubber stamping SJs
presuming the plaintiffs bar will not lead them into error. (see and read the recent BAC
Funding case out of our 2d DCA)

Its the same reason most people sit down and sign closing papers without thinking or
reading them: because we have (or had) a solid and fair system or real property law in
place for nearly a thousand years behind it each and every one of those deals.

It is now in great doubt whether it is fair or solid or even legal, with the disabling
injection of the MERS mortgage and invisible lender lien holder now clouding our record
titles.

Anyhow, what mystifies me most is why they took such a big chance. You would have
thought that they would have at least tried to adopt nationwide recording/title law
changes to allow the MERS mortgage splitting concept. I mean, they undertook the UCC
article 9 changes which passed the 50 states to allow the securitization of debt, but they
forgot to include the MERS configuration into the changes. They just assumed the real
estate mortgage would simply tag along like a caboose into article nine. They rolled the
bones that they could circumvent each states legislature and do a private deal with
MERS. They likely feared the states would object to the degradation of their record title
statutes and the evisceration of their public recording systems, not to mention the loss of
recording fee revenue.

MERS, by the way is a privately owned company funded and financed by the big box
lenders and, guess who else? The major title insurance companies and ALTA (American
Land Title Association). This conflict of interest relationship does not allow for the
independent accounting or transparency the public should have when it comes to the
biggest investment of our lives. A guy like me who wants to investigate title to make sure
my client gets a clean and clear deed or new mortgage can’t determine by relying on the
public title records who owns the old mortgage loan that needs to be paid off. We simply
run into the MERS strawman and have to hope they give us true and accurate info – if
they give us any info at all – as to who to payoff to free title.

MERS is not a government agency looking out for the interests of the public. MERS is a
profit driven closely held corporation. They openly seek to privatize all of our public
records as they relate to real estate mortgages. Absolute power through control of
information.

Absolute power, vested in the hands of private corporate interests.

Hardly egalitarian in a free democracy and open economy.

And this is why note/mortgage splitting, something that is already in derogation of our
common law, should not be allowed.

Its just bad business.

JEDTI

G.

http://www.gregorydclarklaw,com