This is Part 3 of a 3-part series on MERS and its attempts to “bat clean-up” (another word for damage control). For more information, and to read the preamble to my response to MERS’s PR campaign, see Parts 1 and 2 of 3 on http://www.cloudedtitles.com.
As long as we’re going to “set the record straight” … one has to understand what is posted on the Williamson County Clerk’s website at http://www.wilco.org:
Texas Property Code Sec. 11.001. PLACE OF RECORDING. (a) To be effectively recorded, an instrument relating to real property must be eligible for recording and must be recorded in the county in which a part of the property is located. However, if such an instrument grants a security interest by a utility as defined in Section 261.001, Business & Commerce Code, the instrument may be recorded as required by Sections 261.004 and 261.006 of that code, and if such instrument is so recorded, the lien and the secured interest created by such instrument shall be deemed perfected for all purposes.
Texas Local Government Code 192.001 General items. The county clerk shall record each deed, mortgage or other instrument that is required or permitted by law to be recorded.
192.007 To release, transfer, assign or take another action relating to an instrument that is filed, registered or recorded in the office of the county clerk, a person must file, register, or record another instrument relating to the action in the same manner as the original instrument was required to be filed, registered or recorded.
I emphasized the last sentence in bold-faced type. It clearly says a person MUST FILE, no exceptions, including MERS-originated mortgages and deeds of trust any document that affects the original recorded instrument (that includes all of these assignments the banks using the MERS business model and electronic database largely ignore … to save money!
Again, as I pointed out in Part 2 of 3 of this rebuttal series, pricey assertions can come back to bite you in the butt:
- As to the paragraph that talks about the borrower naming MERS as the beneficiary of the deed of trust? I would have to question exactly how many Borrowers really KNEW who MERS was when they went to the closing table because most of the homeowners I’ve talked to said they had no idea who MERS was and the title companies handling the closing sure didn’t explain it to them. It amazes me that if people knew about MERS when they went to the closing table, why is the Williamson County real property records office now packed with concerned homeowners searching through their documents since the audit was released, searching for MERS-related documents?
- In the rebuttal letter, Beckmann tells the Williamson County Commissioners that they heard this testimony on January 22, 2013, when in fact, the Commissioners’ Court heard this testimony on January 29, 2013. What does that say for Beckmann not getting HIS facts straight?
- Again, in the paragraph above the bullet points in the ad MERS ran, it says, by using the MERS system, “the need for certain assignments is eliminated, thereby reducing paperwork and errors and lowering the overall cost of home financing. This role is disclosed and explained to the borrower on the first pages of the deed of trust, which they have signed.” Sure, the borrowers signed the document, but in assuming that the need for all of the assignments that SHOULD HAVE BEEN recorded in the land records is eliminated clearly violates Section 192.007 of the Texas Local Government Code. I also have to reflect back as to “who” explained this to the borrowers at closing. Again, most I’ve talked to have no idea who MERS was or what they represented.
- The so-called “explanations” MERS claims are provided in deeds of trust are seemingly vague and ambiguous, for the purposes of arguing whatever their attorneys want to argue to “stay in the game”. Further, I’d like to know who the “successors and assigns of MERS” are as shown under TRANSFER OF RIGHTS IN THE PROPERTY, because this definition sure as hell isn’t defined under Definition “C” or “E” in the long-form deeds of trust. In fact, those “definitions” don’t even mention who the successors and assigns of MERS are or how they’re involved contractually. That tells me a lot about the deficiencies in MERS’s business model.
- To respond point-for-point on the “bullet points” in this ad:
- (1) Disclosing liens to property in any given county does NOT disclose who theintervening assignees are that are transacting business outside of the county land records.
- (2) Most of the Texas Clerks had no idea that the definition giving MERS any authority in the land records as a “national book entry system” was enacted; it got past them.
- (3) MERS used to foreclose until they were challenged to the point of issuing a Policy Bulletin (2011-5) telling its members that as of July 22, 2011, they were no longer to foreclose in the name of MERS; thus, this statement is in my book, a “half-truth”.
- (4) Whether anyone has ever wrongfully lost a home due to MERS is not really the issue here. What is at issue is the robosigning and suspect notary fraud and multiple signature variations the audit uncovered of those suspected of manufacturing documents to effectuate foreclosure.
- (5) Cloud on title by using MERS? Instead of owning up to the mistakes being made by its “certifying officers” (who are nothing more than employees of some servicer or third- party document manufacturer like DOCX, whose President is going to prison) and taking responsibility for it, Beckman eludes to the fact that title companies support MERS. I don’t see anywhere in this argument where Schedule B: Exclusions is mentioned in title policies, wherein the title company won’t insure a chain of title if the “defects” aren’t recorded. How convenient is that for MERS? Is Beckmann then drawing a legal conclusion here by saying having MERS as a beneficiary or mortgagee the problem? What about MERS as a nominee? The combination of the two seem to give the MERS “officers”, like the attorneys working at the foreclose mills the impetus to sign whatever they want in the name of MERS and attempt to convey notes into trust pools that MERS doesn’t have the apparent authority to do. And what about those intervening assignees whose interests aren’t recorded in the land records in violation of Section 192.007? I have an idea … why don’t we let the courts (or juries) decide what constitutes a “cloud on title” instead of Beckmann unilaterally drawing his own conclusions?
- (6) MERS provides transparency? Really? Even Jeff Thigpen challenged this as mere folly in the PRIA convention in San Antonio where he and Beckmann were panelists. Thigpen got more applause than Beckmann did. Remember, MERS disclaims accuracy on its website because its website is data-inputted by its member-subscribers with no regulatory oversight. This means what’s on the MERS database that shows up in Servicer ID searches is what the members WANT YOU TO SEE, whether it’s accurate or not. The intervening assignees still aren’t there … so I question this “transparency” argument. Horse puckey.
- Beckman then admits that MERS reduces fees paid to county recorders. No wonder the county services are being curtailed. The county recorders rely on the assignments of intervening owners for the revenue they need to keep their services going as their constituents expect. So it would seem that MERS isn’t doing the Texas County Clerks, or any other recorders for that matter, any real favors. But the MERS subscribers (the banks and their servicers) save billions annually.
- By admitting that the possibility exists that MERS could create title issues by NOT insisting that its members MUST RECORD their assignments goes right to the very heart of the argument against MERS for its members violations of Section 192.007 of the Texas Local Government Code.
- Beckmann says the allegations in the audit are unfounded … well … give it time Bill, one of these days, it will be proven just what MERS members did to the land records using the MERS business model, which I still say is flawed and screws the counties out of billions of dollars a year in recording fees. Maybe the foreclosure mill attorneys who supposedly signed all of the documents reviewed in the audit will have to answer to grand juries. They should be nervous, Bill.
- “The key fact is, MERS WORKS.” I’m about to vomit. MERS works for its members. MERS works for Wall Street. MERS didn’t save me any money. MERS will end up costing homeowners money in the long run. MERS didn’t save me any money. I haven’t heard MERS tell any of these so-called Borrowers at closing that if you don’t understand what MERS is, don’t sign this mortgage or deed of trust until you consult an attorney.
Again, a glorified PR stunt with little or no probative value; but lots of seemingly viable admissions to violating Texas Local Government Code. MERS even faxed this article directly to Commissioner Lisa Birkman of Precinct One in Williamson County, which contained Texas case law handy to support MERS arguments. Those cases weren’t included in the advertisement here.
This is why MERS ran this article. The audit hit a nerve. If it didn’t, why respond like this unless you’re trying to do damage control? I hear the attorneys who signed a lot of these Williamson County recorded documents are “nervous”. Again, they should be.
Dave Krieger is the author of the book Clouded Titles and Managing Member of DK Consultants LLC, San Antonio, Texas, whose firm was retained to conduct the Williamson County real property records audit.
This is Part 2 of a 3-part series on MERS and its attempts to “bat clean-up” (another word for damage control). For more information, and to read the preamble to my response to MERS’s PR campaign, see Part 1 of 3 on http://www.cloudedtitles.com.
“Setting the record straight” … this is what MERS CEO Bill Beckmann attempted to orchestrate when he caused this almost-full-page response to the land record audit with an “open letter” to the Williamson County Commissioners. Beckmann obviously didn’t understand that before this audit was ever conducted, conversations amongst the hierarchy in Williamson County about the condition of the land records had already taken place, as early as the days when former MERS CEO R. K. Arnold bandied his PR campaign about the countryside much to the chagrin of county recorders and Texas Clerks alike. What became noticeable to the hierarchy was the proliferation of alleged robosigning with the repeated filings of foreclosure mill attorney Stephen C. Porter’s signature, or multiple variations of it, along with another known foreclosure attorney, Selim Taherzadeh, along with multiple signature variations of his signature. Did we say MERS was directly responsible? I think not. They just provided the business model for this behavior.
This intervention (what I call the published article of February 7, 2013 in the Austin American- Statesman) appears similar to the results of an intervention that took place in the case of In Re Agard in a New York bankruptcy court, where Judge Robert Grossman literally eviscerated MERS to the same level as gutting a chicken once you’ve cut its head off and watch it run around in circles before it bleeds out. MERS then had to take its case to another federal district judge to “bat clean-up” again (the Grossman attack on MERS in Agard was ruled improper).
Most PR experts I have spoken with tell me that if you make a mistake, the best PR approach is to come right out and admit it. That’s not what I’m seeing in this newspaper article. It looks to me as if MERS is trying to justify itself and further justify its existence before another lawsuit gets filed against it while yet another lawsuit is in mediation (Dallas County v. MERS).
Hey, it’s a free-speech country here, at least for the moment. So Beckmann gets to take a shot at my work in “setting the facts straight”. Most of the time, when someone hasn’t read something (as in the Williamson County land record audit), that the PR arm wouldn’t simply come out and say, “We have no comment because we haven’t read the audit yet” rather than the usual adage, “We haven’t done anything wrong.” There’s the PR defense mechanism rearing its ugly head again. That’s like the kid getting caught with his hand in the cookie jar all the while looking at you with a facial expression of, “What did I do wrong?”
One would have to wonder why Beckmann would seemingly attempt to rebut something and not check his work for errors. Thus, I’m going to “have at it” and rebut some of MERS assertions in this article, which ran in the Austin American-Statesman on February 7, 2013.
I should precede my comments with the fact that an attorney who is known to represent Bank of America came into the Williamson County Clerk’s office threatening suit. A lawsuit for what? Bring it then! We want discovery! This is called “intimidation factor” as part of “damage control”. This is what Southern Essex County Register of Deeds John O’Brien told an attorney (that came into his office after the audit of his land records was issued) that threatened him with similar action. This too, is part of damage control.
MERS has a P.R. department designed specifically for that purpose. After all, if MERS didn’t do anything wrong:
- Why did they agree to a Consent Order on April 13, 2011?
- Why all of a sudden are they in mediation with Dallas County over allegations of the Texas Local Government Code Section 192.007 violations, which largely was used as a basis for the Williamson County real property records audit?
- Why did Multnomah County, Oregon sue them?
- Why did the Kentucky Attorney General sue them?
- Why did the (substitute name of county or state here) sue them? Why is Williamson County considering suing them?
- Why are they named in virtually every lawsuit filed against a lending institution by a disgruntled homeowner who “just now found out MERS is in his deed of trust or mortgage”?
- ￼Why did the Washington State Supreme Court rule that they weren’t a valid beneficiary under the Washington Deed of Trust Act in the Bain v. Metropolitan Mortgage case?
- Why are the Oregon Supremes taking up similar issues that Washington ruled on as to MERS’s “beneficial” status under the Oregon Deed of Trust Act?
- Why have several law professors, who I deem highly worthy of commendation here, along with several states attorneys general (like Washington’s Jim Sugarman, who now works at the Consumer Financial Protection Bureau along with law professor Christopher Peterson, whose white papers you all know and love), come out against MERS in several think pieces and amicus briefs?
- Why is Ohio Congresswoman Marcy Kaptur sponsoring legislation to rid MERS involvement with government-sponsored entities (Fannie Mae, Freddie Mac, Ginnie Mae)?
- Why are many States (like Rhode Island) now reconsidering banning “nominees” from acting in the stead of the lender in foreclosure actions?
Need I go on?
Don’t you think for one minute that the court systems across America aren’t going to get tired of dealing with MERS business model? They will at some point, as the dockets start loading up en masse as more and more homeowners come out of the woodwork “with pitchforks” and sue MERS into oblivion. Do you really think there are enough attorneys to defend millions of lawsuits? I would think at some point the legal costs would do more than “tarnish” MERS’s profit margin. Mind you, I could pay $10,000 and get an opinion letter drafted by a major law firm that ironically represents my interests to clarify that what I’m doing is legal. So what’s all the fuss about putting an article in the American-Statesman?
Beckmann can attempt to “set the record straight”, but some of his assertions come at a price:
- I would have to question exactly how many Borrowers really KNEW who MERS was when they went to the closing table because most of the homeowners I’ve talked to said they had no idea who MERS was and the title companies handling the closing sure didn’t explain it to them. It amazes me that if people knew about MERS, why did the Williamson County real property records office received hundreds of phone calls from concerned homeowners over a 10-day period following the release of the audit?
- In the rebuttal letter, Beckmann tells the Williamson County Commissioners that they heard this testimony on January 22, 2013, when in fact, the Commissioners’ Court heard this testimony on January 29, 2013. What does that say for Beckmann not getting HIS facts straight?
I’ll present the rest of my rebuttal in Part 3 of 3 of this 3-part series.
(SAN ANTONIO) – I did some checking around the country to find out whether the hierarchy with Mortgage Electronic Registration Systems, Inc. (“MERS”) ever filed such a rebuttal piece to a county land record audit. I could find none. So I consulted with several people familiar with the audit to ask them why MERS CEO Bill Beckmann would cause such a piece to be published in a major metropolitan newspaper and they all pointed to the fact that the audit was conducted by my firm.
Granted, the 179-page final audit is probably the most comprehensive audit of MERS-related assignments and peripheral documents thus far in U. S. history. I am sure that as time progresses, that other firms will conduct more substantial audits involving more internal review processes.
Not surprisingly, it’s no secret that MERS communications folk are monitoring websites all over the country to see what the “other side” is saying about them and my website is no different. But taking out two-thirds of a page in the American-Statesman? Was that really a wise move?
Most of the media contacted me to ask me about the rebuttal and especially about MERS’s typical knee-jerk response when confronted with issues: “We didn’t do anything wrong.”
My response was: “Well, if MERS hasn’t done anything wrong, why is everybody suing them?”
Shortly after this piece ran, I got a call from the law firm that assisted me with the legal opinion on this audit. The paralegal and his attorney were beside themselves because of the “tone” of this rebuttal piece. This is where the “shoot yourself in the foot” scenario seems to play itself out. The ad to the Commissioner’s Court looked more like a public relations campaign to me.
As to MERS’s responses to media inquiries, I was surprised to hear the traditional denial statement: “We haven’t done anything wrong” when the audit itself wasn’t published until much later in the day and the media was responding to the press release issued by Williamson County and not so much to the video presentation posted on http://www.cloudedtitles.com. I made sure my video crew got that presentation launched within 24 hours and this is what appears to be at issue with the folks in Reston, Virginia.
One would first have to understand what MERS is in order to be able to understand why MERS is contractually in their mortgage or deed of trust. Heck, most attorneys attempt to argue around this fact and MERS always wins. After MERS wins, they rub their win in the noses of all of the homeowners and opposing counsel with blurbs from their PR department. I guess if an attorney argues or pleads a case improperly, they’re going to get shanked.
Remember that MERS’ PR machine is designed to keep the hype about the positive aspects of MERS “out there”; however, it does not appear that until the massive spate of lawsuits manifested themselves and the April 13, 2011 Consent Order was released did most in the legal community really realize what was happening.
In reality, what MERS boasts is true. They are a “tool” (they call themselves a “utility”) … I call them a “tool”. The word “tool” to me describes more of a slang vernacular to describe the behaviors of those who have been vested with some sort of MERS authority; albeit this is a private corporation that gets its “PR authority” from other private corporations, like the American Land Title Association, Moody’s and Covington & Burling. As Virginia delegate Bob Marshall told me one afternoon in a phone call that he couldn’t figure out where MERS gets off acting like it has some sort of governmental authority to operate when it’s just a private corporation.
So the PR campaign has now proliferated itself into the mainstream media, where MERS has taken to the print media in Austin, Texas to cater to the need to put spit polish on its business model, albeit my take of what they’ve done is unimpressive. In my book, what MERS is doing works much the same way as Hitler’s PR arm during his Nazi regime … “keep feeding the masses with repeated information and soon they come to believe it as the truth …”
Couple that with judges who are pro-bank and do half of the fact-finding for the financial institutions during open court and you’ve got a recipe for injustice. When you look up most of these judges’ financial statements, you’ll discover that many of them have investments that are backed by these securitized mortgage pools. One Austin federal judge has 15 Ginnie Mae portfolios listed in his most recently-publish financial statement. It’s no wonder MERS thinks it has a “leg up” in the game. All its attorneys have to do is simply remove the case to federal court and they know the pleadings won’t survive because in many instances, the pleadings are drafted to federal standards of pleadings that won’t survive the likes of Ashcroft v. Iqbal and Bell Atlantic v. Twombly. I also see where a lot of federal judges just can’t seem to understand the basic principles of quiet title actions, which in essence, really are the jurisdiction of state judges. This again all comes down to how to pick your battles and this time, as I’ll explain further in the next segment, how MERS needs to learn to pick its battles.
Reason #18 as to WHY you should have a chain of title assessment done BEFORE you buy a foreclosed home!
Posted: Feb 08, 2013 5:11 PM CST Updated: Feb 08, 2013 6:17 PM CST
By Dave Elias, NBC2 Investigator
LEHIGH ACRES, FL – A Pennsylvania couple recently purchased their retirement dream home in Lehigh Acres by using an online auction company. Ralph and Linda Donley paid $65,000 cash for the home only to discover an eviction notice on their front door months later.
“They say we own the house free and clear. I said we can’t. We’re getting evicted. How can it be ours?” said Linda Donley.
It turns out a second mortgage on the property surfaced and the home went into foreclosure.
“The title company didn’t do their job at all.” said Ralph.
The Donley’s did have title insurance. While they’re expected to get their money back they will not get money for upgrades they made to their home.
“I put new hurricane shutters on the home. That cost me $2,000.” said Ralph Donley.
Allen Olofson-Ring, a Realtor at Coldwell Banker, said he has never seen anything like this happen.
Donley, 81, has until Monday to vacate the property. The best advice to avoid this type of situation is to make sure you have title insurance when you purchase a home.
Title insurance MAY NOT save you if the mortgage isn’t recorded (see Schedule B for details) in the real property records. As to the last sentence of this story … I love it when TV news people hand out legal advice when they’re not attorneys. Online auction companies are NOT to be trusted due to the fact most of them disclaim accuracy for the information they post on their websites and further, most of them insist you indemnify them from all liability when purchasing property on their website! What kind of a “deal” does one expect to get when a prospective purchaser can’t even be bothered to check the real property records BEFORE making a purchasing decision? This is one reason why chain of title assessments are necessary. Smart investors know this! This is one reason why title companies are going to end up getting sued in the future. Can you imagine the negligence claims pouring into the E&O carriers?
(GEORGETOWN, TEXAS; January 29, 2013) — Williamson County Clerk Nancy Rister held a press conference following the presentation of the results of the audit of the official property records she commissioned last October. Joining her was Austin attorney David Rogers, an attorney who specializes in foreclosure-related matters and Dave Krieger, paralegal and author of the book Clouded Titles, whose firm, DK Consultants LLC conducted the audit of the Williamson County land records.
Out of all the documents reviewed, 1,576 files were pulled and examined, along with all of the files of the personal residences of every elected county official that had MERS in their chain of title. Every file reviewed had some issue involved with suspect robosigning, suspect surrogate signing, suspect notary fraud, suspect forgery, instances where lenders assigned the notes to themselves wearing the “MERS hat” and instances where servicers and third-party document manufacturing mills and processing centers self-appointed trustees or acted outside of the specific authority granted to them by power of attorney.
By Dave Krieger
(GEORGETOWN, TEXAS) — The Williamson County Commissioners Court was presented with the final results of the real property records audit conducted in early October by DK Consultants LLC out of San Antonio. The Commissioners were shocked at the findings, which you can access by clicking here for the full report.
County Judge Sam Gattis instructed County Clerk Nancy E. Rister, who commissioned the study, to contact the newly-elected county attorney and investigate the matter further for future action by the County. The Board also heard from local Austin attorney David Rogers, who explained that “MERS’ business model is illegal in Texas”.
DK Consultants Managing Member and author of the book “Clouded Titles”, Dave Krieger called for the county district attorney to empanel a grand jury to investigate the foreclosure mill behaviors that MERS’s business model allows to run amuck without any regulatory oversight, specifically naming names of attorneys whose gross signature variations were called into question during the audit.
County Clerk Rister also announced that the county’s property fraud alert system was operational and that any time a document was recorded in the land records, the homeowner would be alerted by email to the document’s newly-recorded presence in the county land records.
courtesy of JESSICA HOLLOWAY / KVUE NEWS kvue.com
AUSTIN — Homeowners in Travis County and Williamson County are discovering unsettling information about their mortgages.
County clerks are warning families that the ownership of tens of thousands of Central Texas home loans could be in question because of a company called Mortgage Electronic Registration System, Inc. or MERS.
It’s a private registry that officials say has failed to file proper documents with county clerk’s officers all over Texas and the United States.
According to the MERS website, the company was created in the 1990s by 3,000 of the nation’s largest lenders to “streamline the mortgage sale process by using e-commerce to replace paperwork.”
The site goes on to say it “is not a legal system of record nor a replacement for the public land records. No interests are transferred on the system. They’re only tracked.”
The Travis County Clerk estimates nearly 400,000 properties in the county are tracked by MERS and that the county has not collected at least $4 million in fees from documents that were never recorded.
Williamson County Clerk Nancy Rister estimates more than 70,000 properties in the county are in the MERS system. Rister said she learned that her own home mortgage had been sold to a new lender last year, yet her office had no record of the transfer.
How to check your mortgage:
For Travis County go to: http://deed.co.travis.tx.us
For Williamson County go to:http://www.wilco.org/CountyDepartments/CountyClerk/tabid/230/language/en-US/Default.aspx
By Dave Krieger, Managing Member, DK Consultants LLC, San Antonio, Texas
GEORGETOWN, TEXAS – Williamson County Clerk Nancy Rister just issued a news release pertaining to an audit she commissioned last October of the real property records of her county. You can obtain a copy of her press release by CLICKING HERE.
The release comes on the heels of an announcement made by Jack Conway, Attorney General for the Commonwealth of Kentucky, who has filed suit against MERSCORP Holdings, Inc. and its subsidiary, Mortgage Electronic Registration Systems, Inc. for alleged violations of his State’s recordation statutes.
Austin area attorney David Rogers and I will be appearing before the Williamson County Commissioners’ Court on Tuesday, January 29, 2013, beginning at 9:30 a.m. to explain the results of the audit, which will be released the evening prior to our appearance before the Court. The media is welcomed to attend and it is our understanding that numerous residents of Williamson County also plan to fill the Court chambers.
Those who are not included on the list of email recipients for this audit report (over 140 pages including the legal opinion) are welcomed to access the .pdf version on this site on January 29, 2013. It will be provided in a separate announcement.
Any questions regarding the results of the audit or media inquiries may be directed to Dave Krieger through the email link on this website.