Commentary by George W. Mantor
Excerpts from the report…
MERS was back in the news again last week with the announcement that they were making additional information on the MERS “secret” system available to mortgagors.
That’s according to a press release issued by the Reston, VA-based data bank late last Friday afternoon to make sure as few people as possible actually saw it.
“Mortgage Electronic Registration Systems, (MERS) announced today that investor information for loans registered on the MERS® System is now available to borrowers at no charge.”
We aren’t looking for the investor; they may or may not have a beneficial interest in the loan.
The originator doesn’t have a beneficial interest in the loan because the originator received the money before the borrower was ever identified.
The announcement is just another misdirection that allows MERS to continue the deception regarding the true creditor by illegally and fraudulently misrepresenting that someone other than the true creditor has a beneficial interest.
Here’s the challenge of the day: I’ll offer five MERS Identification Numbers (MIN) with signed borrower authorizations and see if I can be provided with the information they claim to track, the assignments of the note all the way from the borrower to the current holder and true beneficiary. They have yet to make that information public or provide it in discovery.
I believe the reason they won’t do that is that they know that this would reveal evidence of the note being duplicated and going to multiple pools. Not only were the loans designed to fail, but the scarcity of borrowers meant that many of them were used to fulfill more than one pool. If it’s all fraud, why not counterfeiting too?
MERS’ announcement is just another attempt to hide the information we already know. It’s like a bikini; what it reveals is interesting, but what it conceals is vital.
Eventually, a litigant or a government agency is going to get to the bottom of this and a whole lot of disturbing information is going to come to light. IF MERS were sincere, they would simply open their entire database to everyone.
The article can be read in its entirety here…
George Mantor is a nationally respected authority on all areas of real estate and is frequently quoted in a wide range of publications. He is an oft invited guest of Fox Business Network and for many years, he was the host of “Keepin’ It Real…Real talk about the real thing, real estate” on KCEO radio.His articles have also recently appeared in Real Estate Finance, The Real Estate Professional, National Real Estate Investor, Broker Agent News, and Realty Times. His blog is http://www.realtown.com/gwmantor/blog.
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How can two different loans originated in different years have the same min.
I’m in a big mess and do not know what to do or who to turn to.
My story:
My now X husband talked me in to a $60,000.00 mortgage on my paid childhood home in 2006. My home was rented out and we lived 3 hours away. He promised to pay it off in 1 year & started a business with that money…. I left him after he beat me up, thankfully my renter had moved out. I moved my then 2 year old daughter & myself back to my childhood home. He stopped paying child support in 2008, etc. I pulled my home of the auction block, by selling items, that was Sept 09. A man who was going to purchase my house at auction, did his research on my home.
He found that:
1. I purchased my property from myself as an investment property. He said that is not legal in the state of Texas (sure enough, I did).
2. He said by law I could have only been given a home equity loan (the house was in my name from my deceased Mother).
3. He said I then transfered my homestead to a different town, which I signed that form, but I did not own any property in that other town. However, it was never taken off the homestead at my appraisal district, it stayed homesteaded all this time.
4. I also found that I agreed not to live in my “investment property”, we’ve been there since 2008.
5. My home was back on the auction block June 1, 2010.
6. Chase Home Finance pulled it off the auction May 18, 2010 and never told me. ???
7. I spoke with them as to why. They said “for review”.
Now I’m being told of MERS and they are the people listed as my Original Mortgagee on the foreclosure paper work.
I do not know what to do or not do.
I was told if I “dirty” my title, I would not be able to sell my home with a clear title and a bank would not finance anyone to purchase (if that’s the way I have to end up going).
I have not made a payment in a year on my home. I filed bankruptcy June 1, 2010 to stop the foreclosure & buy me some time. I plan on doing a loan modification, but have not yet.
I can’t afford an attorney, due to my X husband, a 18 month divorce, no child support, we are living below proverty.
Does anyone out there have any advice??? I know somethings wrong; Chase did not pull my home from the auction block out of the kindness of their hearts… Please, ANY ADVICE. Thank you so very much, Cheryl
After I heard about the MERS new system to check who the records I decided to see what was up.
I went to the site, followed the directions to search and came up with…NOTHING.
It’s so cute, you give them the info and you may get a listing of the lenders but no connection between what lender and what note or what property.
Just a short list of lenders.
Or nothing at all, no name, no anything, no matter which kind of info you input.
I think that is so special to waste our time and teasing us with the promise of information that they really have no intention of giving out.
Why am I not surprised?
Thank you for your articles! We learn something new everyday. People in foreclosure, check your MIN with MERS, if your Mortgage is not registered and you have no Servicer – house is yours! Do not pay anything and fight back. We have no money for lawyers and they often betray us. How to do it by yourself? Go to: http://www.jurisdictionary.com/index.asp?refercode=CM0010. It is AMAZING COURSE & easy understandable. You will need it to use in any situation, no matter if you are Plaintiff or Defendant. Do not be blind! Study Rules & Statutes of your State you can find on-line in your State Bar. Best wishes to all!
I get what you are saying about the banks and investors, but what about the homeowner who has been faithfully paying the mortgage every month, for 5-10 years?
Are they going to lose that money? Doesn’t that make it a rightful claim on the home?
I count that on my sister’s house she has paid at least $50k for the time she has been in the house.
That’s not counting that she was charged 10% interest because they said her credit score was too low, it was 740. Not counting that the rate shot up to 13% when the ARM reset, or that she was still making the payments while trying to get a modification or refi.
Then to add insult to injury, the value of the home and those surrounding hers, dropped 80% last year.
She’s not underwater, she’s drifting along on the sea bottom!
They sick part is that the servicer calls her at work, at home and on her cellphone day and night demanding more money.
What about the homeowners, what can they do now?
Have had the same question as Charles.. as I now know for a fact that our AAA pro-forming loan was used in a number of pools, sometimes as a JUMBO Loan which it was not and sometimes for the amount of the “appraised value” which it was way below.. but then when I understood how the insurance on “senior traunches” were paid off via insurance CDO, swaps and the like when pool defaults were triggered by non-pro-forming sub-prime etc.. it became clear. I think.
But given the mounting “investor suits” to examine pool’s makes this pretty clear. SEC 15 B filings on MBS pools also makes this pretty clear… when all public disclosure is erased. Suddenly various pools where loans existed are now “private”….
Oh ya and another thing. The reason MERS was created was to hide the circulation of the promissory notes themselves. It was never about mortgage assignments . Does anyone believe banks really where so concerned about little $75 – $125 fees for recording. No they weren’t it’s about the Notes. That’s why they’ve been disappeared. The massive CIRCULATION of notes acted as a circulating currency. Just like Federal Reserve NOTES. What happens when you transfer Federal Reserve Notes…. they are taxed to the Fed because they are the payor. What about all the individuals out there that had their notes circulated. There should be a tax back to them. Hide the circulation and hide the tax liability. The income tax is a excise tax also known as a use tax. They are taxing the usage of their currency. People have the same right. This was a massive new issue of currency with the FED hypothecating property they don’t own. Promissory notes where converted directly to Federal Reserve Notes and those newly printed notes are what paid the seller.. point blank. Anyone wants the law?
Public Law 106–122
106th Congress
An Act
To amend the Federal Reserve Act to broaden the range of discount window loans which may be used as collateral for Federal reserve notes. <<<<<———
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled, That the
third sentence of the second undesignated paragraph of section
16 of the Federal Reserve Act (12 U.S.C. 412) is amended by
striking ‘‘acceptances acquired under the provisions of section 13
of this Act’’ and inserting ‘‘acceptances acquired under section 10A,10B, 13, or 13A of this Act’’.
Approved December 6, 1999.
f
Federal Reserve Act
Section 10B. Advances to Individual Member Banks
a) Any Federal Reserve bank, under rules and regulations prescribed by the Board of Governors of the Federal Reserve System, may make advances to any member bank on its time or demand notes having maturities of not more than four months and which are secured to the satisfaction of such Federal Reserve bank. Notwithstanding the foregoing, any Federal Reserve bank, under rules and regulations prescribed by the Board of Governors of the Federal Reserve System, may make advances to any member bank on its time notes having such maturities as the Board may prescribe and which are secured by mortgage loans covering a one-to-four family residence. Such advances shall bear interest at a rate equal to the lowest discount rate in effect at such Federal Reserve bank on the date of such note.
The reason they can't produce the note is it has already been monetized and is most likely backing the money in your pocket.
indio007…Very well stated…Thank-you!
NP What I really want to know is this. When the “originating” bank sells the promissory note to another party or into an MBS or whatever, how is that reported to the IRS? There is account the funds that pay the seller come from. The banks aren’t paying the seller off out of their own assets. So where does the new money come from? How is that reported on taxes if the note is simply monetizes at the discount window? They would basically be getting the note for free., monetizing it to fund the seller and then selling it off to a third party. Some of these notes were sold in hours, before the right to cancel (the seller or buyers) even expired.
There is no way around it , someone in the chain gets something for free.
You know what? I am in foreclosure proceeding: I stop to pay because I discovered that my Apraisal fraudulent: Bank of America took Fees for this “service” & gave me old Apraisal – it included two lots but I have only one. It was hard to get even copy of Apraisal Report (I got it in two years!). Then I tried to communicate with Bank but with no result (they ‘re always right!). Moreover they set for me Hazard Insurance which covers nothing but extremely expensive. I NEVER had the Policy as well. So, I contacted the Balboa Insurance Group directly and they DID NOT FIND such customer like me, no Policy Number, no nothing! I just get mad! And stopped to pay anything ….for two years! “Plaintiff” in my Foreclosure is not BOA but WELLS FARGO BANK. Lawyers tried to push quickly, but it doesn’t work – one Law Firm withdrawn immediately and I filed the Motion to disqualify the Judge, who pretended that he does not understand my accent and dismissed every my Motion. He is gone! I moved for Production of ORIGINAL documents (transfer, assignments and so on), Request for Admission, and Written Interrogatories and they produce “ZERO”! So, I went to the OFFICE of BOA and found that I STILL CUSTOMER OF BANK OF AMERICA. They NEVER transfer my loan to anyone! Then I went across the street to the Wells Fargo Office. i gave my ID, number of Loan, SS# and system of this Bank cannot find me! So, be carefull! Do not trust banks – verify, verify, verify! Learn how to sue them for big $$$-s at: http://www.jurisdictionary.com/index.asp?refercode=CM0010. Good luck!
Your completely correct about running out of borrowers. That’s why they invented the “synthetic” CDO . There was no more real estate to securitize. The they made up a strawman instrument to track against existing mortgages. They would through in 10% of the value in real assets to make it legal and not a completely speculative gamble.
Great article, but can someone explain how the lenders can benefit from selling the same note to multiple buyers if there is only one income stream resulting from each note? A book that should be required reading is The Big Short by Michael Lewis, which discusses the securitization build up leading to the crisis and talks about how the demand was so great, there weren’t enough borrowers to satisfy it. I just can’t get past the question I’ve raised.
Maybe this will help answer that question…
Via Neil Garfield Livinglies
Many questions are coming after yesterday’s post. The main point is that there is no paper trail because nobody wanted it. Up at the top of the “securitization chain” fabricated by the securitization documents, nobody was checking loans at the level of actually looking at the loan documents, so they never asked for the loan documents, much less any assignments, indorsements or evidence of delivery or transfer.
With nobody asking — no demand — for the paper trail, there was no reason to produce one. But there is another reason as well. In order to move the “assets” around into mortgage bonds, CDOs composed of mortgage bonds, credit default swaps (the equivalent of buying the bond if you sold a CDS) and synthetic CDOs composed of credit default swaps, total flexibility was needed to make sure that when called upon to do so, they could produce a clear chain of title.
That is why they used MERS as a cover for constant transfers, resales, and multiple sales. You must remember that MERS is neither the business record of any of the players nor public record. It is worthless as evidence since it is a virtually unsecured proprietary database that owns nothing, transfers nothing, never comes into possession of the documents, and never touches the money as a conduit or otherwise.
Thus the Achilles heal of the would-be foreclosers is that no paper trail exists on any loan. By that I mean, nobody, authorized or not, executed any assignments, endorsements, or transmittals for delivery of the loan documents. Nobody.
This is where the sleight of hand occurs. The securitization structure is established by the pooling and servicing agreement and perhaps the assignment and assumption agreement, and maybe even the prospectus to investors. As near as I can tell they never actually issued bonds except at the very beginning, circa the year 2000.
These were all book entries that were the only evidence of the lender receiving a non-certificated bond or ownership interest in the pool that was completely dependent upon the actual receipt of money arising from payments made in connection with mortgage loans. Those payments were from borrowers, insurers, etc.
So the securitization structure was established — but that is like building the outside of a house and never putting anything on the inside. Like a trust can be established, but if it is not funded — i.e., if nothing is actually put into it —- it might exist in the technical sense but the trust doesn’t own anything and therefore the Trustee has no duties to perform, and the “beneficiaries” actually exist but they don’t get anything.
What I am saying is that the mortgage mess is far simpler than what it appears.
The position of the borrower should be that he/she/they did business with XYZ Mortgage Inc. which for all times material to the life of the loan was the only record holder of an interest (as “LENDER”) in the security instrument (mortgage or deed of trust) and the only payee under the terms of the written evidence of the obligation (the note). That interest was never transferred in any manner, shape or form. And like one creative lender lawyer found out recently, courts will NOT recognize anything even smelling like an “equitable transfer.”
So where does that leave us? In the same place with a different focus than what I have been writing about up until now. The real parties are clearly identified at the closing of the loan. Different parties have flooded the room — substitute trustee, Trustee for the Pool, Servicer, Master Servicer, Trusts, Investors, etc.
Just like the era before securitization, a Bank might lend money to a person, then sell the loan to another bank. The new bank and the originating bank would both send the borrower a notice saying the loan had been assigned.
The assignment of the security instrument (mortgage or deed of trust) would be recorded, and the borrower would start making payments to the second Bank. In foreclosure, the second bank would have the loan documents, would have a full accounting from both banks, and would simply instruct the trustee to sell the property in non-judicial sale or instruct its attorneys to commence the foreclosure proceedings.
If the borrower challenged a non-judicial sale the second bank would produce the proof that it paid for the loan, and a full accounting, together with all the necessary paperwork including the recorded assignment, the original note etc.
If the second bank commenced a foreclosure suit it would attach as exhibits and plead allegations that the first bank originated the loan, then it was assigned, the assignment was recorded, the borrower was notified, etc. It would all be laid out nice and pretty ready for a Judge to rubber stamp it.
What I am saying is that the would-be forecloser must meet the same standards in the so-called world of securitized mortgages. The fact that they intended to assign and indorse, and deliver does not mean they did it.
If they didn’t do it, then they can’t enforce the debt or foreclose on the property. If they did, then they must produce the documentation and recording. There’s the rub.
They can’t produce the documentation without creating it for purposes of litigation. Each non-performing loan only has a demand for the paper trail if it is claimed to be in default, is in litigation, and the lawyer for the would-be forecloser needs something to show the judge. Each such loan transaction is THEN subject to an assignment that was created, fabricated and forged long after the cutoff date and possessing the single quality (being in alleged default) that makes it ineligible for assignment into a pool or to anyone without changes in the negotiability of the instrument.
So there is no assignment, indorsement or delivery and even if there was, there are provisions in every PSA that a bad loan will be replaced by cash or a “good” loan. This is what has pissed off so many judges now. every time a judge examines the paperwork it doesn’t add up. The Judge feels tricked and sometimes, like in Massachusetts they levy $800,000 fines against both lawyer and client (Wells Fargo) was misrepresenting facts they knew to be false.
So in the end you have two things. A “lender” (at the closing and on record) who isn’t owed anything because they got paid in full and have suffered no loss and a “lender” (the investor who purchased the MBS) who actually funded the loan and suffered a loss.
Of course you also have the borrower who has suffered a major loss through appraisal fraud etc. People forget that the borrower has paid money upon moving into the house or just by going into the closing. The presumption that there are borrowers with nothing invested in the house is dead wrong unless it was a completely fabricated loan using a dead person as the borrower.
The reason the lender/investors are not suing the homeowner is that they don’t actually have the paperwork to back it up. And they can’t get it. So they are suing the investment banks for appraisal fraud, securities fraud etc. The actual lender has elected their remedies, and perhaps they will pursue the borrowers under some equitable theories. But one thing is sure: the original obligation to the lender of record has been extinguished along with the security instrument (mortgage or deed of trust). None of the borrowers did this nor had any hand in the handling, creation or recording of the paperwork.
The fact that the securitization parties chose not to assign, indorse, deliver or record should not be rewarded by title to a house in which they have no investment based upon a non-existent loss. The borrower has money into the house even if there was no down payment. The securitization parties have nothing invested into the house and in fact, quite the reverse, were paid handsomely to create this mass illusion. Thus the only party seeking and getting a free house are those intermediary parties who neither funded nor bought the loan.
Hi Charles,
I’ve wondered about that too. One of the things that I have learned in researching this is there is often more than one “how” and when you had them together a pattern starts to emerge. Even without the luxury of the necessary discovery to prove this, one is often left with no other reasonable conclusion than multiple pools securitized by the same loans.
Here are some thoughts:
1.) They never loaned all of the money so they could cover a shortfall on revenue for a couple of years. Sometimes called a service release premium or par gap it is a spread created between interest paid and interest received. I borrow $5 and offer a safe 25 cent return. Then, I convince a borrower to pay me 32 cents for three dollars. The difference between paying 5% and lending out at 8%. That money buys time and because they know its designed to default, it’s only a matter of time and they stop paying on not just the non performing loans but all loans in the pool and keep the performing revenue stream and collect on credit default swaps. In some case the investors were also insured.
2.) Some loans went bad without a single payment ever being made. Who does that? Rarely someone with a real interest in the property. THere never were any payments because of double funding through two different warehouse lenders, each of whom recieves an identical loan file. One of those won’t be getting a payment from the borrower.
3.) I am told by an insider that loan docs were digitized and the paper destroyed.
4.) Two original notes in Florida? If there are two notes, one or both fraudulent. Remeber the mantra of biased documentary makers as they edit out unfavorable footage, “They’ll never know what they didn’t see.”
For anyone who needs an excuse to come to southern California I will be doing a free workshop this Saturday, July 31, at Coastline Baptist Church, 557 Vista Bella, Oceanside, CA 92057 from 10:00 AM to noon. There is plenty of room and no reservation required. Ya’ll come, now, ya hear?