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Banks Foreclosing on Homes They Never Held the Note On

Judges Starting to Question MERS Mortgage “Robo-Signing” Scheme

By: David Deschesne

Fort Fairfield Journal, September 19, 2012

If the fraud of fractional reserve banking (described later, herein) isn't enough, banks are now foreclosing on homes that they never even held the note on because of a tangled mess created by the Mortgage Electronic Registration System (MERS).

According to Bruce Jacobs & Associates, Attorneys at Law, “MERS was created back in the late 1990s as a way of electronically buying and selling mortgages, much in the same way that Wall Street buys and sells stocks electronically. Before the invention of MERS, if one investor sold a mortgage loan to another, there were documents that had to be filed in the county where the property was. What MERS essentially did was allow the mortgage companies to bypass millions of dollars in recording fees that they would have otherwise had to pay to counties across the country.”

MERS was created to provide an efficient way for Wall Street investors and banks to package and repackage mortgages and sell them as Collateralized Debt Obligations (CDOs) or Credit Default Swaps (CDS) - also known as “derivatives” on the open market without having to go through all the trouble of doing a title search at the local County registrar's office.

“The eighteen digit MIN - MERS Identification Number appears near the document title on most mortgages. MERS doesn't have anything to do with the actual mortgage note itself,” said David Krieger, author of the new book, Clouded Titles, in a recent interview on the Alex Jones Show. “MERS is only a computer database that, for all intents and purposes, tracks the sales of these mortgages repetitively as they occur on Wall Street between the parties. The unfortunate thing about MERS, which it admits, by the way, is it is not a substitute for the land records. All it is is an electronic database that is used by its membership subscribers,”

MERS acts for bank mortgages as Credit Bureaus do for their subscribers. Member subscribers report their data in to either the credit bureau or MERS and the data is compiled for use by other members. MERS is not considered official land records, but Wall Street investors have become lazy and rely on MERS as the last word on who owns the note on a piece of real estate. However, unlike credit bureaus which have a dispute process to deal with inaccurate information, the MERS system has no checks and balances, or any process to correct erroneous information.

“The notes on Wall Street are being spun over anywhere from nine to thirty times, maybe more, we don't know because they're in the MERS system. The MERS electronic database keeps track of all the transfers but none of these are recorded in the land records and this is what's causing the problems with the system,” said Krieger.

Investment banks, and private investors alike, are foreclosing on houses that at times, they never even had a mortgage on. They would simply rely on the MERS system to let them know they had purchased a piece of real estate within a bundle of Collateralized Debt Obligations, or other type of derivative from the Wall Street derivatives market, and without searching the actual land records, foreclose on a home they had never loaned any money on.

“I was talking to a title guy in Cleveland and he told me we see a lot of problems and mistakes that were done when somebody was preparing the warrantee deed put the wrong legal description on and when they filed the warranttee deed it looked like there could be a potential slander of someone else's title so when you're looking at a legal description that should say, 'Lot 6, block 7,' but instead says, because they were having a bad day and looking cross-eyed at the computer and didn't have enough coffee, 'Lot 7, block 7,' all of a sudden we have a lien on the wrong property.”

Many banks today take homeowners to court with only the flimsiest of evidence that they hold a note. In today's adversarial court system, the facts no longer matter. Instead it's who has the best argument and all evidence presented is presumed to be true unless otherwise properly rebutted. Essentially, banks (and credit card companies) can go to court with the back of a cracker jack box and sue somebody for money or to foreclose on their home and if nobody rebuts their claims, they will win - usually in Summary Judgement - a property or money they never really had any legal right to becauser they either never held the note; never had their name filed on the deed; had the wrong house or name listed; or at the worst, never even extended the money to begin with (well, under today's fractional reserve banking system, banks do not actually loan any of their own, or depositors', preexisting money from an account already established in the bank; instead, the create new “money” in the form of a ledger entry that never existed before and loan that fake, artificially created ledger “money” to the homeowner. Thus, when they do foreclose on a home, they get the home for nothing because the loaned money was created out of nothing and never came out of any previously existing account in the bank. But, this is another bank-initiated fraud separate from the MERS system). “The biggest part of the problem that we're seeing now is when people bring stuff into court the judges basically buy whatever evidence has been presented that hasn't been objected to,” said Krieger, “the bigger problem that we're running into is a lot of people that go in there get out-procedured by the banks. The banks have a specific game plan. They have a network across the country of foreclosure mills that all band together and share information; this is called network sharing.”

Krieger says it's going to take at least a century to fix this problem if we can stop MERS now. “I know that there is a movement afoot by several legislatures to cut the MERS process out of the equation.”

Attorneys are starting to file non-disclosure suits because the banks did not adequately disclose all the terms and conditions of the contract. However, the maxim “buyer beware” is also at play because most people do not read their mortgage contract, much less understand it. “People go in and they're so interested in getting the keys, they sign their life away. You could literally put in the mortgage, 'borrower agrees to give us his first-born one year after this loan is in force and effect,' and they would just sign it; they don't read it and that's the problem, people do not read and understand what they're signing. The only thing we can do is say no to MERS mortgages. Just say I'm sorry, but I'm not going sign any mortgage paperwork where MERS is involved.”

According to a recent press release from Service Employees International Union (SEIU), “The Wall Street banks’ foreclosure system is a mess. Their total disregard for mortgage laws and standards is what created the foreclosure epidemic in the first place. Now, their total mismanagement is catching up to them. As of today, some of the largest mortgage lenders – JPMorgan Chase, Bank of America, and GMAC (now called Ally) – have been forced to halt foreclosures in 23 states and growing. We can’t rely on Wall Street banks to follow basic rules. We have to hold them accountable. At very least, they must provide the mortgage notes.”

The SEIU goes on, “When Wall Street banks securitized, packaged, sold, and resold our mortgages, they created a system where it is often impossible to figure out who actually owns mortgage notes and therefore has the authority to foreclose on properties. But the big banks are getting tangled up in their own web. Recent events have exposed a handful of banks that are throwing families out of their homes even though they don’t have the mortgage note that proves they actually have a legal right to do so. There have been instances of two banks trying to foreclose on the same home, and in at least one case, of a bank trying to foreclose on a house where the homeowner had never even taken out a mortgage with anyone in the first place.”

The SEIU explains, “a mortgage note is the document you signed when you purchased your home loan. Mortgages contain lots of paperwork – but only the original mortgage note with your signature is proof that you owe the debt. That’s why banks need the note to prove that they own the loan and can collect payments from you. The problem is, banks now buy and sell mortgages up and down Wall Street – slicing them up and repackaging them to sell to other banks. The bank you bought your mortgage from two years ago may not be the bank that owns it today. But, in all the shuffle, the mortgage notes often don’t get transferred along with your debt.”

In a recent court case, Eaton v. Federal National Mortgage Association, (also known as Fannie Mae), at issue are two documents borrowers sign to get a home loan. The first is the mortgage establishing the right to seize a property. The second is the promissory note that creates an obligation to pay the debt. While the servicer had the mortgage when it foreclosed, it didn’t have the note. One without the other is known as a naked mortgage.

The Massachusetts Supreme Court recently ruled that the vast majority of the foreclosures that took place in the Commonwealth (and likely in most other states) within the past five years are illegitimate because the banks did not, and do not, actually hold the promissory notes for the properties. “This means that all mortgage payments made to banks for illegitimately foreclosed upon properties are fraudulent since such banks do not technically own the properties in question,” writes Ethan Huff, from “It also means that anyone who purchased a foreclosed property, or who is threatened currently with potential foreclosure, does not necessarily have a legal obligation to continue paying their mortgage.”

About 5 million homes have been lost to foreclosure in the U.S. since 2006, according to Irvine, California-based RealtyTrac Inc. Lenders slowed the pace of seizures last year as they negotiated with attorneys general across the U.S. over allegations of faulty and fraudulent paperwork used to repossess homes.



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