MERS, Mortgage Electronic Registration Systems and You
by Kevin Lamson
Basic Corporate Information
•MERS is incorporated within the State of Delaware.
•MERS was first incorporated in Delaware in 1999.
•The total number of shares of common stock authorized by MERSʼ articles of incorporation is 1,000.
•The total number of shares of MERS common stock actually issued is 1,000.
•MERS is a wholly owned subsidiary of MERS Corp, Inc.
•MERS principal place of business at 1595 Spring Hill Road, Suite 310, Vienna, Virginia 22182
•MERS national data center is located in Plano, Texas.
•MERS serves as a “nominee” of mortgages and deeds of trust recorded in all fifty states.
•Over 55 million loans have been registered on the MERS system.
•MERS federal tax identification number is “541927784″.
The Nature of MERSʼ Business
•MERS does not take applications for, underwrite or negotiate mortgage loans.
•MERS does not make or originate mortgage loans to consumers.
•MERS does not extend any credit to consumers.
•MERS has no role in the origination or original funding of the mortgages or deeds of trust for which it serves as “nominee”.
•MERS does not service mortgage loans.
•MERS does not sell mortgage loans.
•MERS is not an investor who acquires mortgage loans on the secondary market.
•MERS does not ever receive or process mortgage applications.
•MERS is simply named as a nominee and its parent company MERS Corp Inc., maintains an electronic registry, tracks changes in the ownership of mortgage loans and servicing rights related thereto.
•MERS© System is not a vehicle for creating or transferring beneficial interests in mortgage loans.
•MERS is not named as a beneficiary of the alleged promissory note.
Ownership of Promissory Notes or Mortgage Indebtedness
•MERS is never the owner of the promissory note for which it seeks foreclosure.
•MERS has no legal or beneficial interest in the promissory note underlying the security instrument for which it serves as “nominee”.
•MERS has no legal or beneficial interest in the loan instrument underlying the security instrument for which it serves as “nominee”
•MERS has no legal or beneficial interest in the mortgage indebtedness underlying the security instrument for which it serves as “nominee”.
•MERS has no interest at all in the promissory note evidencing the mortgage indebtedness.
•MERS is not a party to the alleged mortgage indebtedness underlying the security instrument for which it serves as “nominee”.
•MERS has no financial or other interest in whether or not a mortgage loan is repaid.
•MERS is not the owner of the promissory note secured by the mortgage and has no rights to the payments made by the debtor on such promissory note.
•MERS does not make or acquire promissory notes or debt instruments of any nature and therefore cannot be said to be acquiring mortgage loans.
•MERS has no interest in the notes secured by mortgages or the mortgage servicing rights related thereto.
•MERS does not acquire any interest (legal or beneficial) in the loan instrument (i.e., the promissory note or other debt instrument).
•MERS has no rights whatsoever to any payments made on account of such mortgage loans, to any servicing rights related to such mortgage loans, or to any mortgaged properties securing such mortgage loans.
•The note owner appoints MERS to be its agent to only hold the mortgage lien interest, not to hold any interest in the note.
•MERS does not hold any interest (legal or beneficial) in the promissory notes that are secured by such mortgages or in any servicing rights associated with the mortgage loan.
•The debtor on the note owes no obligation to MERS and does not pay MERS on the note.
MERSʼ Accounting of Mortgage Indebtedness / MERS Not At Risk
•MERS is not entitled to receive any of the payments associated with the alleged mortgage indebtedness.
•MERS is not entitled to receive any of the interest revenue associated with mortgage indebtedness for which it serves as “nominee”.
•Interest revenue related to the mortgage indebtedness for which MERS serves as “nominee” is never reflected within MERS bookkeeping or accounting records nor does such interest influence MERS earnings.
•Mortgage indebtedness for which MERS serves as the serves as “nominee” is not reflected as an asset on MERS financial statements.
•Failure to collect the outstanding balance of a mortgage loan will not result in an accounting loss by MERS.
•When a foreclosure is completed, MERS never actually retains or enjoys the use of any of the proceeds from a sale of the foreclosed property, but rather would remit such proceeds to the true party at interest.
•MERS is not actually at risk as to the payment or nonpayment of the mortgages or deeds of trust for which it serves as “nominee”.
•MERS has no pecuniary interest in the promissory notes or the mortgage indebtedness for which it serves as “nominee”.
•MERS is not personally aggrieved by any alleged default of a promissory note for which it serves as “nominee”.
•There exists no real controversy between MERS and any mortgagor alleged to be in default.
•MERS has never suffered any injury by arising out of any alleged default of a promissory note for which it serves as “nominee”.
MERSʼ Interest in the Mortgage Security Instrument
•MERS is named on the mortgage as nominee for the owner of the promissory note.
•MERS, in a nominee capacity for lenders, claims that it merely acquires legal title to the security instrument (i.e., the deed of trust or mortgage that secures the loan).
•MERS claims that it holds legal title to mortgages and deeds of trust as a nominee for the owner of the promissory note.
•MERS claims that it immobilizes the mortgage lien while transfers of the promissory notes and servicing rights continue to occur.
•The lender or investor continues to own and hold the promissory note, but under the MERS® System, the servicing entity only holds contractual servicing rights and MERS holds legal title to the mortgage as nominee for the benefit of the investor (or owner and holder of the note) and not for itself.
•MERS claims that one of the advantages of its paperless systems is that the mortgage lien becomes immobilized by MERS continuing to hold the mortgage lien when the note is sold from one investor to another via an endorsement and delivery of the note or the transfer of servicing rights from one MERS member to another MERS member via a purchase and sale agreement which is a non-recordable contract right.
•MERS claims that the legal title to the mortgage or deed of trust remains in MERS after such transfers and is tracked by MERS in its electronic registry.
Beneficial Interest in the Mortgage Indebtedness
•MERS claims to hold legal title to the mortgage for the benefit of the owner of the note.
•The beneficial interest in the mortgage (or person or entity whose interest is secured by the mortgage) runs to the owner and holder of the promissory note and/or servicing rights thereunder.
•MERS has no interest at all in the promissory note evidencing the mortgage loan.
•MERS does not acquire an interest in promissory notes or debt instruments of any nature.
•The beneficial interest in the mortgage (or the person or entity whose interest is secured by the mortgage) runs to the owner and holder of the promissory note (NOT MERS).
MERS As Holder
• MERS is never the holder of a promissory note in the ordinary course of business.
•MERS is not a custodian of promissory notes underlying the security instrument for which it serves as “nominee”.
•MERS does not even maintain copies of promissory notes underlying the security instrument for which it serves as “nominee”.
•Sometimes when an investor or servicer desires to foreclose, the servicer obtains the promissory note from the custodian holding the note on behalf of the mortgage investor and places that note in the hands of a servicer employee who has been “appointed” as an officer (vice president and assistant secretary) of MERS by corporate resolution. This technique is used by attorneys who purport to be representing MERS to feign standing by MERS to foreclose the mortgage by claiming that MERS is the holder of the promissory note. When in fact MERS, by its inventors design is never the holder of the promissory note.
•When a promissory note is placed in the hands of a servicer employee that employee will then assume the position as a MERS officer de jour and pretend that this transfer of custody of the note into the hands of this nominal officer (without any transfer of ownership or beneficial interest) renders MERS the holder.
•No consideration or compensation is exchanged between the owner of the promissory note and MERS in consideration of this transfer in custody. MERS is a bankruptcy remote corporation, and does not have any assets.
•Even when the promissory note is physically placed in the hands of the servicers employee who is, at best, a nominal MERS officer, MERS has no actual authority to control the foreclosure or the legal actions undertaken in its name.
•MERS will never willingly reveal the identity of the owner of the promissory note unless ordered to do so by the court. Nor will the law firms who pretend to represent MERS.
•MERS will never willingly reveal the identity of the prior holders of the promissory note unless ordered to do so by the court. Nor will the law firms who pretend to represent MERS.
•Since the transfer in custody of the promissory note is not for consideration, this transfer of custody is not reflected in any contemporaneous accounting records. MERS does not hold any loans nor pay any legal fees to foreclose any loans. MERS is essentially a shell.
•MERS is never a holder in due course when the transfer of custody occurs after default.
•MERS is never the holder when the promissory note is shown to be lost or stolen.
•So-called “certifying officers” of MERS have submitted thousands if not tens of thousands of affidavits in Court proceedings falsely claiming that MERS was the holder of the promissory note or that the note had been lost.
•An increasing number of courts have learned of the fast and loose practice of various foreclosure attorneys preparing and the submitting affidavits signed by “certifying officers” of MERS wherein the statements contained in these affidavits are “disingenuous and/or outright misrepresentations”
•Courts which have actually scrutinized the statements contained in these certifying officers affidavits have determined that these affidavit statements were not admissible because they were signed by people who had no personal knowledge of the facts
•contained in the affidavits. They were therefore not competent to testify to the alleged facts.
•The Hon. Linda B. Riegle, U.S. Bankrutpcy Judge, recently took issue with several affidavits that had been filed in support of several Motions for Relief from Stay by attorneys purporting to represent MERS. Judge Riegle refused to accept the affidavits of people claiming to be “Certifying Officers of MERS” which were submitted by attorneys purporting to represent MERS in an attempt to feign standing by pretending to be a holder of notes. Hawkins 2009 WL 901766 (Bkrtcy-D.Nev. March 31, 2009) The Court found that the affiants were not competent to testify concerning the underlying loans. “Ms. Mechs bald assertion that she has “reviewed the loan file” is inadequate to show that she is personally knowledgeable of the facts”.
•Similarly the Hon. Terry L. Meyers, U.S. Chief Bankruptcy Judge, recently rejected a post hearing submission of an affidavit sign by a lawyer purporting to represent MERS in motion to lift stay. Judge Meyers enumerated six (6) reasons that he was rejecting the affidavit which had been submitted in a last ditch attempt by legal counsel purporting to represent MERS to establish standing for MERS by claiming MERS was the holder of the underlying promissory note. Judge Meyers found the affidavit statements by counsel claiming to represent MERS was inadmissible because the lawyer as a witness was not competent to testify regarding various documents and a note the lawyers sworn statements “appeared to be based nit on the affiants (counsel) personal knowledge button the assertions of someone else . . . . the proffer of this “new” note as the “original” note directly contradicts MERSʼ prior representations that the Note attached to the Motion was true and correct and the operatice document in this matter”
MERSʼ Role in Mortgage Servicing
•MERS does not service mortgage loans.
•MERS is not the owner of the servicing rights relating to the mortgage loan and MERS does not service loans.
•MERS does not collect mortgage payments.
•MERS does not hold escrows for taxes and insurance.
•MERS does not provide pr perform any servicing functions on mortgage loans, whatsoever.
•Those rights are typically held by the servicer of the loan, who may or may not also be the holder of the note.
MERSʼ Rights To Control the Foreclosure
•MERS Corp. must all times comply with the instructions of the holder of the mortgage loan promissory notes.
•MERS Corp. only acts when directed to by its members and for the sole benefit of the owners and holders of the promissory notes secured by the mortgage instruments naming MERS as nominee owner.
•MERS Corp. members employ and pay the attorneys bringing foreclosure actions in MERS name.
MERS Access To or Control Over Records or Documents
•MERS has never maintained archival copies of any mortgage application for which it serves as “nominee”.
•In its regular course of business, MERS as a corporation does not maintain physical possession or custody of promissory notes, deeds of trust or other mortgage security instruments on behalf of its principals.
•MERS as a corporation has no archive or repository of the promissory notes secured by deeds of trust or other mortgage security instruments for which it serves as nominee.
•MERS as a corporation is not a custodian of the promissory notes secured by deeds of trust or other mortgage security instruments for which it serves as nominee.
•MERS as a corporation has no archive or repository of the deeds of trust or other mortgage security instruments for which it serves as nominee.
•In its regular course of business, MERS as a corporation does not routinely receive or archive copies of the promissory notes secured by the mortgage security instruments for which it serves as nominee.
•In its regular course of business, MERS as a corporation does not routinely receive or archive copies of the mortgage security instruments for which it serves as nominee.
•Copies of the instruments attached to MERS petitions or complaints do not come from
MERS corporate files or archives.
•In its regular course of business, MERS as a corporation does not input the promissory note or mortgage security instrument ownership registration data for new mortgages for which it serves as nominee, but rather the registration information for such mortgages are entered by the “member” mortgage lenders, investors and/or servicers originating, purchasing, and/or selling such mortgages or mortgage servicing rights.
•MERS does not maintain a central corporate archive of demands, notices, claims, appointments, releases, assignments, or other files, documents and/or communications relating to collections efforts undertaken by MERS officers appointed by corporate resolution and acting under its authority.
Management and Supervision
•In preparing affidavits and certifications, nominal officers of MERS, including Vice Presidents and Assistant Secretaries, making representations under MERS authority and on MERS behalf, are not primarily relying upon books of account, documents, records or files within MERS corporate supervision, custody or control.
•Officers of MERS preparing affidavits and certifications, including Vice Presidents and Assistant Secretaries, and otherwise making representations under MERS authority and on MERS behalf, as a matter of routine do not furnish copies of these affidavits or certifications to MERS for corporate retention or archival.
•Officers of MERS preparing affidavits and certifications, including Vice Presidents and Assistant Secretaries, and otherwise making representations under MERS authority and on MERS behalf are not working under the supervision or direction of senior MERS officers or employees, but rather are supervised by personnel employed by mortgage investors or mortgage servicers.
“I sincerely hope that dissemination of the aforementioned information concerning MERS will help educate and inform all Americans, including lawyers, judges, legal scholars and perhaps even the mainstream media as to just what MERS is and more importantly what it is not. I am hoping that this information will dispel any misconceptions that MERS is a mortgage lender, a creditor or the holder of any promissory note. Accordingly MERS, or more correctly, lawyers claiming to represent MERS are commencing legal actions in MERS name when in fact MERS has no pecuniary interest in the underlying debt and therefore has absolutely no standing to bring any legal action which is based upon an indebtedness that is owed to someone other than MERS.
Lastly it appears that most suits that have been brought on behalf of MERS are lawyer initiated with no authorization, control or involvement from MERS. Legal fees for these MERS suits are never paid for by the MERS, but are paid either by the actual lender or creditor or the servicer of the loan who may of may not be holding the original promissory note. Foreclosure lawyers and law firms scattered around the country have been able initiate tens of thousands foreclosure actions, and eviction actions under the name of MERS because until recently most people thought MERS was a creditor, lender or servicer with standing to foreclose and officers who could testify as to the underlying loan. The many recent decisions dismissing MERS actions for lack of standing and courts taking issue with affidavits submitted in conjunction with these pretended and unauthorized suits indicates a growing awareness of the MERS ruse.”