Cross posted with permission from Chink in The Armor
By Ken Dost and Vermont Trotter
What is MERS? This question has confounded legal minds for the last five years. After intense study over the last three years, the answer seems to be: It all depends upon who is asking and more importantly, why. Then and only then will they give you an answer.
A couple of cases in point. When asked by the Nebraska State Banking Commission for the purposes of taxation, MERS answered that in no uncertain terms does MERS have any involvement in the note. They do not service notes, they do not originate notes, they have no beneficial interest in the note.
When asked in deposition in September of 2009, RK Arnold, the former CEO of MERS denied any interest in the mortgage itself. Here are the pertinent passages:
Page 53 Line 10 Through page 54 Line 3
Q: Because, in fact, what you’re claiming is in fact ownership of the lien; right?
A: No. We’re – we are the mortgagee in the land records and we have duties that go along with that. And we carry out those duties according to what we’ve agreed to do
Q: Okay, Is it not your testimony that MERS owns the lien?
A: I don’t know what that means. We are the mortgagee in the land records. We were made mortgagee by the borrower on a security instrument.
Then again on page 59 Line 14 through Page 60 line 1
Q: Well, let’s talk about the mortgagee interest. Define that for me.
A: I think of the mortgagee interest as being just bare legal title.
Q: When you say bare legal title, is that merely being the name in the land records?
A: Yes.
Q: That is not ownership of the lien which secures the payment of the promissory note?
A: No, not in my mind.
So we know what they don’t do. They don’t own the note, they don’t own the lien. Then just what do they do?
Page 138 Line 17 through Page 140 Line 5
Q: And in describing any other kind of interest you have in the promissory note, I think you were answering that in your view, MERS does have an interest in the Ukpes’ promissory note, is that correct?
A: What I’m saying is we have – we are the agents of the note holder holding title to the mortgage, securing the repayment of the promissory note when the borrower pledges the property to them.
Q: When you’re saying the agent of the note holder, as of March, 2008, who held the note?
A: I don’t know. I would have to look.
A: How do you know you’re the agent of the note holder as of March 13, 2008 if you don’t know who the holder is?
A: Because the terms of the mortgage provide that.
Q: The terms of the mortgage provide that you’re going to be the mortgagee of record as nominee for the lender, correct?
A: And the lender’s successor it assigns. So whenever the note transfers to whoever transfers, we become the new agent of the new note holder.
Q: So if I understand you, if the note is assigned from A to B to C to D, you automatically under the terms of the agreement become D’s agent?
A: The borrower when he executes the mortgage has granted us in conveyance of the property in which we hold title to the security interest as agent for the benefit of the note holder and note holder successor it assigns, so when they endorse and deliver the note to their subsequent purchaser, then we become their nominee or agent. It is a synonymous term.
Q: Is there an agreement between MERS and the successor in this case that you can continue to operate as their agent?
A: There’s two agreements. There’s the membership agreement between us and our members and there’s the mortgage itself.
People have been struggling to understand these concepts for years. One thing it means is that when we sign on the dotted line of the mortgage, we are unwittingly signing on to another contract between MERS and their members, a contract of which we have no knowledge, yet a contract whose terms and conditions bind us.
There are other contracts that come into play here, contracts which we can never be aware of yet contracts which bind us anyway. It is here that we start to come to understand just who and what MERS really is.
MERS is a 1031 exchange, literally a Bourse. It is a place where the various (empty) REMICS can go to replace properties which fall out of favour with one that is essentially the same. MERS is what is known as an EAT, an Exchange Accommodating Titleholder for a 1031 Exchange.
A 1031 exchange is a section of the IRS rules which allows you to exchange a piece of investment property, say, cut over timberland with no immediate value but held for investment purposes, for one that has similar value but might be more interesting, say, a car wash which washes quarters and dollar bills in addition to cars.
Some specific verbiage which might help you better understand:
Enter the EATs or the Exchange Accommodating Titleholder. An EAT is where you go to find a new property to replace your old one so you can wash different properties through your investment fund and delay capital gains taxes indefinitely.
MERS is an EAT. Like all EATs, they don’t own anything and they have no interest in the security instruments. They merely act as a place holder, an accommodating titleholder so a REMIC who might need to dump one piece of property can replace it with another while suspending capital gains taxes indefinitely.
So if you want to know how this mortgage banking system became dominate, now you know. EAT your MERS if you want to grow up to be big and strong.
For the rest of this series, please go to the homepage at Chink in the Armor
© 2010-19 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.
MERS only needs to explain how they are foreclosing for Ginnie Mae or assigning the debt to Wells Fargo Bank in all of the Washington Mutual Bank government insured mortgage loan.
Problem is that they cannot explain this crime and they are done!