WHO IS MERS
Mortgage Electronic Registration System
Although only bankers are aware of it, there is a second wave of economic disaster starting to build up that will make the earlier one pale into insignificance. Let us start out with MERS, shall we?
MERS – Mortgage Electronic Registration Inc. – holds approximately 60 million American mortgages and is a Delaware corporation whose sole shareholder is Mers Corp. MersCorp and its specified members have agreed to include the MERS corporate name on any mortgage that was executed in conjunction with any mortgage loan made by any member of MersCorp.
(UPDATE 12/13/2010: 66 MILLION American Mortgages)
Thus in place of the original lender being named as the mortgagee on the mortgage that is supposed to secure their loan, MERS is named as the “nominee” for the lender who actually loaned the money to the borrower. In other words MERS is really nothing more than a name that is used on the mortgage instrument in place of the actual lender. MERS’ primary function, therefore, is to act as a document custodian.
MERS was created solely to simplify the process of transferring mortgages by avoiding the need to re-record liens – and pay county recorder filing fees – each time a loan is assigned. Instead, servicer’s record loans only once and MERS’ electronic system monitors transfers and facilitates the trading of notes. It has very conservatively estimated that as of February, 2010, over half of all new residential mortgage loans in the United States are registered with MERS and recorded in county recording offices in MERS’ name
MersCorp was created in the early 1990’s by the former C.E.O.’s of Fannie Mae, Freddie Mac, Indy Mac, Countrywide, Stewart Title Insurance and the American Land Title Association. The executives of these companies lined their pockets with billions of dollars of unearned bonuses and free stock by creating so-called mortgage backed securities using bogus mortgage loans to unqualified borrowers thereby creating a huge false demand for residential homes and thereby falsely inflating the value of those homes. MERS marketing claims that its “paperless systems fit within the legal framework of the laws of all fifty states” are now being vetted by courts and legal commentators throughout the country.
The MERS paperless system is the type of crooked rip-off scheme that is has been seen for generations past in the crooked financial world. In this present case, MERS was created in the boardrooms of the most powerful and controlling members of the American financial institutions. This gigantic scheme completely ignored long standing law of commerce relating to mortgage lending and did so for its own personal gain.
That the inevitable collapse of the crooked mortgage swindles would lead to terrible national repercussions was a matter of little or no interest to the upper levels of America’s banking and financial world because the only interest of these entities was to grab the money of suckers, keep it in the form of ficticious bonuses, real estate and very large accounts in foreign banks. The effect of this system has led to catastrophic meltdown on both the American and global economy.
MERS, as has clearly been proven in many civil cases, does not hold any promissory notes of any kind. A party must have possession of a promissory note in order to have standing to enforce and/or otherwise collect a debt that is owed to another party. Given this clear-cut legal definition, MERS does not have legal standing to enforce or collect on the over 60 million mortgages it controls and no member of MERS has any standing in an American civil court.
MERS has been taken to civil courts across the country and charged with a lack of standing in reposession issues. When the mortgage debacle initially, and inevitably, began, MERS always routinely brought actions against defaulting mortgage holders purporting to represent the owners of the defaulted mortgages but once the courts discovered that MERS was only a front organization that did not hold any deed nor was aware of who or what agencies might hold a deed, they have routinely been denied in their attempts to force foreclosure.
In the past, persons alleging they were officials of MERS in foreclosure motions, purported to be the holders of the mortgage, when, in fact, they not only were not the holder of the mortgage but, under a court order, could not produce the identity of the actual holder. These so-called MERS officers have usually been just employees of entities who are servicing the loan for the actual lender. MERS, it is now widely acknowledged by the courts, has no legal right to foreclose or otherwise collect debt which are evidenced by promissory notes held by someone else.
The American media routinely identifies MERS as a mortgage lender, creditor, and mortgage company, when in point of fact MERS has never loaned so much as a dollar to anyone, is not a creditor and is not a mortgage company. MERS is merely a name that is printed on mortgages, purporting to give MERS some sort of legal status, in the matter of a loan made by a completely different and almost always,a totally unknown entity.
The infamous collapse of the American housing bubble originated, in the main, with one Angelo Mozilo, CEO of the later failed Countrywide Mortgage.
Mozilo started working in his father’s butcher shop, in the Bronx, when he was ten years old. He graduated from Fordham in 1960, and that year he met David Loeb. In 1968, Mozilo and Loeb created a new mortgage company, Countrywide, together. Mozilo believed the company should make special efforts to lower the barrier for minorities and others who had been excluded from homeownership. Loeb died in 2003
In 1996, Countrywide created a new subsidiary for subprime loans. Countrywide Financial’s former management
- Angelo R. Mozilo, cofounder, chairman of the board, chief executive officer
- David S. Loeb, cofounder, President and Chairman from 1969 to 2000
- David Sambol, president, chief operating officer, director
- Eric P. Sieracki, chief financial officer, executive managing director
- Jack Schakett, executive managing director, chief operating officer
- Kevin Bartlett, executive managing director, chief investment officer
- Andrew Gissinger, executive managing director, chief production officer, Countrywide Home Loans
- Sandor E. Samuels, executive managing director, chief legal officer and assistant secretary
- Ranjit Kripalani, executive managing director and president, Capital Markets
- Laura K. Milleman, senior managing director, chief accounting officer
- Marshall Gates, senior managing director, chief administrative officer
- Timothy H. Wennes, senior managing director, president and chief operating officer, Countrywide Bank FSB
- Anne D. McCallion, senior managing director, chief of financial operations and planning
- Steve Bailey, senior managing director of loan administration, Countrywide Home Loans
The standard Countrywide procedure was to openly solicit persons who either had no credit or could not obtain it, and, by the use of false credit reports drawn up in their offices, arrange mortgages. The new home owners were barely able to meet the minimum interest only payments and when, as always happens, the mortgage payments are increased to far, far more than could be paid, defaults and repossessions were inevitable.
Countrywide sold these mortgages to lower-tier banks which in turn, put them together in packages and sold them to the large American banks. These so-called “bundled mortgages” were quickly sold by these major banking houses to many foreign investors with the comments that when the payments increased, so also would the income from the original mortgage. In 1996, Countrywide created a new subsidiary for subprime loans.
At one point in time, Countrywide Financial Corporation was regarded with awe in the business world. In 2003, Fortune observed that Countrywide was expected to write $400 billion in home loans and earn $1.9 billion. Countrywide’s chairman and C.E.O., Angelo Mozilo, did rather well himself. In 2003, he received nearly $33 million in compensation. By that same year, Wall Street had become addicted to home loans, which bankers used to create immensely lucrative mortgage-backed securities and, later, collateralized debt obligations, or C.D.O.s—and Countrywide was their biggest supplier. Under Mozilo’s leadership, Countrywide’s growth had been astonishing.
He was aiming to achieve a market share—thirty to forty per cent—that was far greater than anyone in the financial-services industry had ever attained. For several years, Countrywide continued to thrive. Then, inevitably, in 2007, subprime defaults began to rocket upwards , forcing the top American bankers to abandoned the mortgage-backed securities they had previously prized. It was obvious to them that the fraudulent mortgages engendered by Countrywide had been highly successful as a marketing program but it was obvious to everyone concerned, at all levels, that the mortgages based entirely on false and misleading credit information were bound to eventually default. In August of 2007, the top American bankers cut off Countrywide’s short-term funding which seriously hindered its ability to operate, and in just a few months following this abandonment, Mozilo was forced to choose between bankruptcy or selling out to the best bidder.
In January, 2008, Bank of America announced that it would buy the company for a fraction of what Countrywide was worth at its peak. Mozilo was subsequently named a defendant in more than a hundred civil lawsuits and a target of a criminal investigation. On June 4th, 2007 the S.E.C., in a civil suit, charged Mozilo, David Sambol, and Eric Sieracki with securities fraud; Mozilo was also charged with insider trading. The complaint formalized a public indictment of Mozilo as an icon of corporate malfeasance and greed.
In essence, not only bad credit risks were used to create and sell mortgages on American homes that were essentially worthless. By grouping all of these together and selling them abroad, the banks all made huge profits. When the kissing had to stop, there were two major groups holding the financial bag. The first were the investors and the second were, not those with weak credit, but those who had excellent credit and who were able, and willing to pay off their mortgages.
Unfortunately, just as no one knows who owns the title to any home in order to foreclose, when the legitimate mortgage holder finally pays off his mortgage, or tries to sell his house, a clear title to said house or property cannot ever be found so, in essence, the innocent mortgage payer can never own or sell his house. This is a terrible economic time bomb quietly ticking away under our feet and if, and when, it explodes, another aspect of our former lives are but a fond memory.
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 MERS’ 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 MERSCorp, 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 50 million loans have been registered on the MERS system. (UPDATE 9/1/2010: 65 MILLION American Mortgages)
- MERS’ federal tax identification number is “541927784”.
The Nature of MERS’ 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 simply holds mortgage liens in a nominee capacity and through its 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.
MERS’ 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”.
MERS’ Interest in the Mortgage Security Instrument
- MERS holds the mortgage lien as nominee for the owner of the promissory note.
- MERS, in a nominee capacity for lenders, merely acquires legal title to the security instrument (i.e., the deed of trust or mortgage that secures the loan).
- MERS simply holds legal title to mortgages and deeds of trust as a nominee for the owner of the promissory note.
- MERS immobilizes the mortgage lien while transfers of the promissory notes and servicing rights continue to occur.
- The 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.
- In effect, 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.
- 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 holds 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.
- When a promissory note is placed in the hands of a servicer employee who is also an MERS officer, MERS asserts that this transfer of custody 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.
- Even when the promissory note is physically placed in the hands of the servicer’s employee who is 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.
- MERS will never willingly reveal the identity of the prior holders of the promissory note unless ordered to do so by the court.
- 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 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.
MERS’ 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 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.
MERS’ Rights To Control the Foreclosure
- MERS must all times comply with the instructions of the holder of the mortgage loan promissory notes.
- MERS 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’ 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 so 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, 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, do not routinely 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.
This should be a pretty good start for those of you faced with a foreclosure in which MERS is falsely asserting that it is the owner of the promissory note. Whether MERS is or was ever the holder is a FACT QUESTION which can be determined only by ascertainly the chain of custody of the promissory note. When the promissory note is lost, missing or stolen, MERS is NOT the holder.