The United States Bankruptcy Court for the Eastern District of California has issued a ruling dated May 20, 2010 in the matter of In Re: Walker, Case No. 10-21656-E-11 which found that MERS could not, as a matter of law, have transferred the note to Citibank from the original lender, Bayrock Mortgage Corp. The Court’s opinion is headlined stating that MERS and Citibank are not the real parties in interest.
The court found that MERS acted “only as a nominee” for Bayrock under the Deed of Trust and there was no evidence that the note was transferred. The opinion also provides that “several courts have acknowledged that MERS is not the owner of the underlying note and therefore could not transfer the note, the beneficial interest in the deed of trust, or foreclose on the property secured by the deed”, citing the well-known cases of In Re Vargas (California Bankruptcy Court), Landmark v. Kesler (Kansas decision as to lack of authority of MERS), LaSalle Bank v. Lamy (New York), and In Re Foreclosure Cases (the “Boyko” decision from Ohio Federal Court).
Indeed.
I have noted this repeatedly – that MERS own web site claims that it is exists for the purpose of circumventing assignments and documenting ownership!
MERS is an innovative process that simplifies the way mortgage ownership and servicing rights are originated, sold and tracked. Created by the real estate finance industry, MERS eliminates the need to prepare and record assignments when trading residential and commercial mortgage loans.
Sorry, but “creating a real estate finance industry device” does not obviate state law, no matter how much you might wish it did.
From the opinion cited:
The opinion states: “Since no evidence of MERS’ ownership of the underlying note has been offered, and other courts have concluded that MERS does not own the underlying notes, this court is convinced that MERS had no interest it could transfer to Citibank. Since MERS did not own the underlying note, it could not transfer the beneficial interest of the Deed of Trust to another. Any attempt to transfer the beneficial interest of a trust deed without ownership of the underlying note is void under California law.”
Looks pretty basic to me: You can’t transfer what you don’t have, and creating a database for tracking purposes does not create an ownership interest.
As I noted in “And The Housing Fraud Continues” on May 31st there are plenty of reasons to doubt whether or not any of these notes are recoverable.
But whether something is difficult to unwind and put right legally doesn’t have a thing to do with whether or not a note is legally enforceable. It either is or it is not.
When will we see Attorney General Holder open a criminal investigation into this matter? Is there not sufficient question as to whether or not the very existence of these so-called “transfer systems” evidences an enterprise between multiple parties formed for the very purpose of circumventing state law, and that such systems, inherently being formed and operated in interstate commerce,are certainly within the realm of Federal Government jurisdiction.
There are many who will argue that this is “just” a civil matter. I disagree. The intentional creation of these devices as an enabler to alleged value where none exists is not a civil matter. Nor is creating securities where one represents that a particular interest exists for the purchaser, when in fact it does not.
Wake up America – and if the United States AG will not act, then the State Attorneys General must.
In the meantime if you are facing a foreclosure and MERS was involved in some fashion, either in assignment of the paper just before the suit was filed or worse, in bringing the suit itself, you need competent legal advice right now.
You may be able to stop the foreclosure dead in its tracks.
A few weeks ago, Fannie Mae issued an outright threat to homeowners in this country, creating a new rule that would punish anyone who stops paying their mortgage and walks away from their home, referred to as a “strategic default,” by not allowing those who choose that path to get a Fannie Mae loan for seven years.
They call it their “Seven-Year Lockout Policy for Strategic Defaulters,” and if you haven’t realized it already… look what’s been accomplished here: Homeowners have scared the heck out of industry giant, Fannie Mae. I mean… these guys are shaking like leaves, absolutely running scared. I know homeowners have been feeling like they have no power against the bankers, but this should prove otherwise. It’s like we pushed the bully, and the bully ran home and got his Mom to come lay down a new rule in response.
On Fannie’s Website, Terence Edwards, Executive Vice President for Credit Portfolio Management has the following to say about the new rule:
“Walking away from a mortgage is bad for borrowers and bad for communities and our approach is meant to deter the disturbing trend toward strategic defaulting.”
Bad for borrowers, Terrence? Really, how so? Are you trying to say that people who walk away from their underwater mortgages are doing it because it’s bad for them? Because I don’t think they think that, Terence. I’m pretty sure that those that choose to walk away from their mortgages do so because they’ve figured out that it’s better for them… in their own best interests, as they say.
Hey Terrence, you disingenuous prick, I understand that my walking away from my mortgage is bad for you, but that’s only because my house is now worth half of what I owe. You wouldn’t mind if I walked away from my mortgage if I had equity, right? So, in other words, you want me to lose the couple hundred grand instead of you, does that about sum up your position here? Yeah, well… I’m sure you do. But I, on the other hand, would prefer that you lose the money instead of me. Sorry about that.
Terrence, last I checked you’re just a giant failed mortgage lender who is as much a part of why we’re in this mess as any, and you’re going to need $1.5 trillion in taxpayer dollars to bail you out.
I’m a taxpayer, Terrence… isn’t that enough of a loss for me to take on your behalf? You want me to contribute my tax dollars and probably my child’s future tax dollars to your $1.5 trillion bailout. And on top of that, you also want me to eat the loss of a couple hundred grand on my house?
Geeze… when are you guys planning to kick in on this? Your CEO gets a $6 million a year salary, I looked it up, and best I can tell he gets paid to say “yes” to just about everything. I don’t know, Terrence, but I’m pretty sure that I could have bankrupted Fannie Mae for a lot less than $1.5 trillion.
Walking away from a $500,000 mortgage on a house that’s now worth $250,000 isn’t bad for the borrower, it’s good for the borrower… it makes all the financial sense in the world, for the borrower. I mean, would you recommend that someone hold onto a stock that’s lost half its value.
Any News Media Outlet…do you think maybe getting an interview with Sen Bernie Sanders to tell the truth the whole truth and nothing but the TRUTH?
He GETS IT!
Sen. Bernie Sanders (I-VT) discusses greed and the foreclosure crisis, and calls for a “new Wall Street” during a recent conversation at Brave New Studios in Culver City, CA. Produced by Brave New Foundation. We must put a human face on the foreclosure crisis affecting millions of families. Go to
FightingForOurHomes.com
