“For the reasons so stated, the Defendants’ (MERS) Motion to Dismiss is granted as to Count II of the Complaint, alleging civil conspiracy, and denied as to the remaining counts.”

In a 35-page Memorandum and Order, U.S. District Court Judge James Curtis Joyner (E. Dist. Pa.) dismissed Montgomery County Recorder of Deeds Nancy Becker’s claim for civil conspiracy, but left intact her claims, as part of a putative class action on behalf of all other Recorders in Pennsylvania, that could force MERS and its member-subscribers to record every single missing document to every single MERS mortgage to perfect each property owner’s chain of title and pay the appropriate fees due at the time of recording.

You gotta love this woman’s chutzpah, to move forward and take on a multi-billion-dollar-a-year private electronic database that she alleges in her case, has wreaked havoc on over 130-thousand mortgage filings in her county alone.

In the Memorandum and Order Joyner issued October 19, 2012, Becker would be allowed to pursue a quiet title action against MERS and MERSCORP, Inc. and seek declaratory and injunctive relief to boot.  Becker filed the suit on November 7, 2011, alleging that “MERS was formed for the express purpose of avoiding fees traditionally due to county recorders of deeds when sales or assignments of mortgages were made.  She further pleads that the absence of these recorded assignments as part of the Defendants’ avoidance of recording fees both deprives her office and Montgomery County of revenue needed to support vital public functions and creates deficient property records.”  (Emphasis supplied here by the author herein)  This is what I’ve been alleging ever since I wrote Clouded Titles.  It’s not just about the money; it’s about the destruction of chains of title that every MERS mortgage or deed of trust ever touched.

Also cited in the Memorandum were the cases against MERS and MERSCORP in both Dallas County, Texas and Geauga County, Ohio, both of which are still in play.  MERS attempted through various ploys to get itself dismissed from the complaint in Dallas County by removing it to federal court; subjecting it to the Multi-District Litigation (MDL) backpanel in Arizona, only to find itself back in federal district court in Dallas in the same fashion, dismissed in part and denied in part.  There’s still the issue of a Texas statute at § 192.007 (Texas Government Code) that requires ALL subsequent assignments and transfers be recorded.

This author and his audit team just completed an audit of a county’s land records, to discover multiple issues that could spell fate not just for the Reston, Virginia-based MERS/MERSCORP, but also for multiple attorneys whose signatures appear as wide and varied as Linda Green, the infamous robosignor exposed in CBS’s 60 Minutes piece in April of 2011.  Like other counties, the audited county suffered the same dilemma as Pennsylvania Recorders in a drop of badly-needed revenue due to the lack of recordation of transfers and assignments once the initial MERS mortgage or deed of trust is recorded.

As usual, MERS’ attorneys argued a wide range of assertions, including their claim that Becker did not “invoke the availability of quiet title relief in her pleadings. Nor did she argue that the facts she pleaded state a quiet title claim.”

Alas, quiet title will out.  The Court took several pages of the Memorandum to discuss the construction and interpretation of what the Pennsylvania Legislature intended when it created the original quiet title statutes; repealed and revised same; and came up with enough conclusive discussion to keep MERS and MERSCORP locked into this lawsuit, concluding “that the Plaintiff (Becker) has pleaded sufficient fact to proceed on her unjust enrichment claim …”

I know it seems like there was a consortium of banks and mortgage associations out there that helped mold this electronic database into the monster that it has become in the legal arena and the nightmare that it has become in the land records, obfuscated by a largely unregulated, privately-held database that seems to work in opposition to the system of public recordation that has existed since the 1600’s.  In retrospect, the pleadings for civil conspiracy (as much as we’d like to form a lynch mob on this one) were insufficiently pleaded and for all intents and purposes were a “reach”; but hey, every other claim, including the discussion of 21 Pa. Stat. § 351, which would require recordation of all mortgage assignments, stuck.  On Page 14, the Court wrote:

“Accordingly, we conclude that “all … conveyances … shall be recorded,”

21 Pa. Stat. § 351, means that all conveyances shall be recorded.

How much more plain can you get?  The Court also concluded:

“Pennsylvania law permits any person in any manner interested in a conveyance,

(including the County Recorder of Deeds trying to preserve the land records)

            such as a mortgage assignment, to bring a quiet title action under Pennsylvania Rule

of Civil Procedure 1061(b)(3) to compel the person with the appropriate documents

in his or her possession to record them.”

What a novel idea … use quiet title to compel MERS (by and through its members) to record every single missing assignment to perfect every single land record in the State of Pennsylvania … and pay the recordation fees it should have paid in the first place to boot!  This suit may serve as a template for other counties and states to follow, especially if the outcome looks as promising as the content of this Memorandum.

And so case No. 11-cv-6968 in the Eastern District of Pennsylvania moves forward with all eyes watching, waiting for the checkmate.

 It was a glorious day for homeowners in the State of Washington.  The entire court reviewed the Bain v. MERS and Selkowitz v. MERS cases in the questions put before them, as follows:

The legal consequences of this ruling (download it here in pdf format) have yet to be felt … but I can foresee the possibilities. One would wonder whether the arrogant PR Department inside 1818 Library Street is going to huff and puff and take this ruling to the United States Supreme Court to see whether the U.S. Supremes will even hear this case.  The way the Justice Department is behaving regarding its refusal to prosecute any of the evildoers in the banking and securities industry may not equal the power of the nation’s highest court and what it could do (nationally) to Mortgage Electronic Registration Systems, Inc.

This reporter figures that the Oregon Supreme Court is going to follow Washington’s lead and thump MERS a good one when it issues its ruling.  Remember the old saying about letting a sleeping dog lie?  Ah, the arrogance of MERS!  Perhaps it may wish to rethink which counsel is going to go to DC and tell the U.S. Supremes that borrowers don’t need to know who owns their note too!  Talk about fallacies!  That’s the arrogance I was talking about!

Now let’s talk about condition of title … something MERS and the banks DIDN’T get a legal opinion from Covington & Burling specifically about.  It will take a century to clean up the mess made by MERS in a little over 13 years.

The chain of title assessment (COTA) is going to become a household word because the mainstream media is going to start discussing how 70-million potential homes in America can’t be sold because the average reasonable and prudent buyer wouldn’t spend a plugged nickel on a real-estate-owned (REO) property knowing the possibility its title could be clouded, not to mention the fact there’s probably an indemnification agreement attached in that contract holding the alleged lender harmless from all liability connected with the sale of the REO.

The legal effects of MERS not being able to “assign” anything or “appoint” anything … in of itself … shocks the conscience!  Open up any land record of any home affected by a MERS mortgage or deed of trust and imagine the litigation it will take to clear title to all those affected properties … all because MERS thought we’d be resorting to a national land title system. Geez! More arrogance!

Realtors who ignore this ruling are asking to be named as Defendants in a lawsuit involving tainted titles.  Brokers are complaining to me that they can’t afford a legal challenge to their involvement in a lawsuit of this nature.  They may be held NOT to be liable somehow, but the legal costs of getting out of a suit like that could drive real estate agencies into bankruptcy! Imagine the potential liability pitted against your real estate brokerage’s financial condition if all you sold was REO’s and short sales and “the hens came home to roost” because of this latest ruling?

This isn’t over yet my friends.

This is just getting started.

(AUSTIN) – DK Consultants LLC is sponsoring a series of workshops to teach interested persons on how to effectively conduct and prepare Chain of Title Assessments (COTAs), which are used by attorneys in foreclosure defense in determining case issues for potential use in the development of quiet title actions. This is a non-CLE course, open to all that have any kind of legal or real estate acumen or even to homeowners that have conducted previous substantive research.
(more…)

By Dave Krieger, Investigative Journalist and Author of “Clouded Titles” (03/07/2012)

(AUSTIN) – It may be reflective of the current state of litigation for Mortgage Electronic Registration Systems, Inc. (“MERS”) and its parent “companies”, but don’t let the merger fool tactics you!

On September 22, 2011, the Board of Directors for MERSCORP, Inc. (MERS’s parent corporation … the entity with all the money) formed MERSCORP HOLDINGS, INC. and said corporation was registered with the Delaware Secretary of State as File #5034916. At the time of filing, its Registered Agent was listed as RL&F Service Corporation, with an address for service of process listed at 920 N. King Street, 2^nd Floor, Wilmington, DE 19801.

The process then ended up in a merger with MERSCORP, Inc., which is listed with the Delaware Secretary of State’s office as having been filed on February 27, 2012 and the File #2915165 was listed with a Registered Agent address as The Corporation Trust Company (CTC) at Corporation Trust Center, 1209 Orange Street, Wilmington, DE 19801.

According to a clerk at the Delaware Secretary of State’s office, the MERSCORP, Inc. named disappeared and the new name of MERSCORP HOLDINGS, INC. was retained, showing an incorporation date of June 30, 1998, which should somewhat clarify items gleaned during the depositions of then-former CEO R. K. Arnold and then-Secretary William Hultman.  The current file number of #2915165 and CTC remain as what is shown in the Secretary of State’s records as the correct listing for MERSCORP HOLDINGS, INC. and its registered agent, CTC.

Coincidentally, the merger occurred while the Dallas County v. MERS suit was hung up in “MDL HELL” … being reviewed for incorporation into the multi-district litigation action in Phoenix, Arizona.  Such was not to be the case, as the MDL panel rejected MERSCORP’s (and MERS’s) removal and sent it back to Dallas.

Upon receipt of the case, Harris (Houston) and Brazoria Counties (Texas) filed motions for leave to intervene and became part of the class action.  Bexar County (San Antonio) filed its own action against MERS and MERSCORP, and tagged JPC Financial Resources, Inc. as its in-state defendant to keep its case from being removed to federal court based on diversity, something which MERS and its parents are famous for. That suit seeks unspecified damages, while Harris County seeks $10-Billion … with a “B” from MERS et al.  The case is Dallas County, Texas v. Merscorp, Inc.; 3:11-cv-02733; U.S. District Court (1100L), Northern District of Texas (Dallas).

It’s now anyone’s guess as to how the new entity will affect the litigation. The author surmises it’ll get dragged in by its chameleon’s tail at some point via service of process; which brings to mind the old saying, “You can run but you can’t hide!”

The new entity is listed at the bottom of the MERS website under Copyright 2012, MERSCORP HOLDINGS, INC.  It will be interesting as the investigation ramps up in the copyright office to see who re-registered the MERS name and proprietary gobbledygook on its website.

By Dave Krieger

“MERS 101”

The event was sponsored by the V. G. Young Institute School for County and District Clerks in conjunction with the AgriLife Extension division of the Texas A & M System and the V G. Young Institute of County Government. Two separate lectures were given by the author at 3:00 and 4:10 p.m. to county and district clerks from across the State of Texas.

My mental database of knowledge on this subject matter had to be condensed into an information-packed hour, which included video deposition testimony of a robosignor and a piece done by MSNBC that featured Essex County, Massachusetts Register of Deeds John O’Brien, (salemdeeds.com), who refers to his land records as a “crime scene”, discussing the issues involving the bank’s taking shortcuts through third-party service providers and committing fraud on the land records with documents that have been deliberately manufactured without the knowledge of the facts attested to by the person signing and the allegations that the notaries that witness the signatures of those executing the documents are often not present at the signings.

Out of 254 Texas counties, nearly two-thirds of the clerks representing the land recordation systems in the State of Texas showed up for the lectures and at certain points in the lecture, jaws literally dropped at the information presented (especially that of the robosignor who admitted he had no idea what an “Assignment of Mortgage” was, after admitting he signed hundreds of them an hour).

I was surprised (especially in the second session) at the number of clerks (elected officials) who had no idea who MERS was. The first session however, was just the opposite. Very few district court clerks attended the sessions; however, those who did came to the understanding that they may have to bone up on Order of Publication with the upcoming wave of quiet title actions expected to be filed in the next decade, along with slews of §51.903 motions.

My lecture, which also included interactive Q&A, produced many legitimate questions about the sources of the recordations; to quiet title; to the liability of title companies; to the fraud on the documents found in land records all across America. I encouraged all of the clerks to direct their legal questions to their county and district attorneys, as I cannot (as a paralegal) render legal advice. (Much of the information shared with the clerks was taken directly from the new, updated version of Clouded Titles, soon to be released.)

Afterwards, some county clerks came up to me and thanked me profusely for the information; one clerk showed me a letter he dug out of his files that was directed to a legislator from the clerk concerning the legitimacy of the MERS recordation system. Another clerk came up to me asking me for the styling of a quiet title action filed in her county so she could look it up. I told her that she may want to check on the records as to conformation to the Texas Property Code (as some of the documents in that particular case were suspect for robosigning issues). I got to see many new faces in addition to some familiar ones (who I’ve previously been working with).
My take on MERS’s continued existence in the State of Texas is that there is a huge groundswell of support to repeal legislation that gives MERS any authority to record its deeds of trust in this State. The legislation that gave MERS the right as a “nominee” to record in this “permissive recording” state was enacted in 2003 and took effect January 1, 2004 and was authored by outgoing State Representative Burt Solomons. Many clerks were quite surprised that this legislation (merely by adding a definition) made it “under their radar” and many were visibly upset.

The lawsuit filed by Dallas County District Attorney Craig Watkins against MERS and MERSCORP was removed to federal court (there are no federal questions in the complaint according to lead attorney Steve Malouf) and we can expect to see it tied up in multi-district litigation, a typical ploy of MERS to further stall the cases filed against it. All of the county clerks were made aware that this class-action-style suit involves all 254 counties and they were told to bring the matter to their county attorneys for follow-up (filing a motion for leave to intervene, according to the way Steve Malouf put it, to make the county part of the representative class). Several counties in Texas have already vowed suit against the private electronic database.

All in all, I was quite pleased at the turnout. It leaves open the door for more interaction with the clerks, both in legislative sessions and in private consultations about their specific land records. One thing is for sure, those clerks who are aware of MERS don’t like it and don’t want it around anymore.

By Dave Krieger

As of this post, two states Attorneys’ General have now decided to investigate Mortgage Electronic Registration Systems, Inc. (hereinafter “MERS” … which decided over a decade ago with the help of Fannie Mae, Freddie Mac, the American Land Title Association, the Mortgage Bankers Association and a host of major banking institutions), which injected itself into the electronic data recording business for securitized mortgages and insodoing, toyed with the chains of titles to over 70,000,000 pieces of American real estate.

As expected, MERS spin folk put out a press release welcoming Beau Biden (DE) and Martha Coakley (MA) investigations, saying they look for quick resolve, while wiping the sweat off their brows that the other 48 attorneys general are just willing to roll over as long as the State they’re in gets some damage money from the banks to put into their respective general funds. That extra budget money doesn’t solve the general crisis however, it just gives the AG’s that won’t investigate thoroughly the mess MERS and its member-subscribers made a campaign platform touting toughness the likes of the tobacco settlements, when in fact, the settlements against the banks just rub salt in an already-gaping wound that are indeed miniscule to the money big tobacco paid.

On July 21, 2011 MERS issued a policy change (2011-5) claiming that members were no longer allowed to foreclose in the name of MERS … like that’s going to change the equation?

If MERS is involved in your title, so are unknown intervening assignees … assignees who didn’t record their interest in the notes they bought and sold on Wall Street and electronically recorded in MERS database. The end result hasn’t changed. MERS new policy dictates that their 20,000+ robo-officers signoff on assignments, transferring the mortgages and deeds of trust into the names of the real owners, many of which are New York trusts that have in almost all of the cases, violated the terms of their own Pooling and Servicing Agreements in claiming ownership of some 30-million claimed current MERS mortgage database holdings and 40-million past.

Many think MERS started out well-intentioned and grew into a monster of catastrophic proportions. My take is that MERS only goal was to show its members how to save billions of dollars by paying it a cheap data entry fee and circumvent the land records, changing the character and status of the promissory notes which they split from the deeds and mortgages, instead of properly sticking to the tried and true (and sometimes slow) process of following state property recordation laws. Judges who look the other way at this mess (in my opinion) haven’t been economically affected enough to wake up yet. When the states and counties can’t afford to keep paying their law clerks (take Florida for example) and judges have to do their own research, the system is going to bottleneck even worse than it already is. Foreclosures in Florida are estimated to take over 600 days from start to finish according to one estimate I’ve read.

Despite all of the claims that MERS is trying to straighten out their preconceived “mess”, the conditions of title have not changed for every single piece of American real estate it has “touched”. The marketability of any MERS-related/mortgaged property hangs in the balance.
Two important elements remain a constant here: (1) the damage to the chain of title is on-going and any recordation past the MERS recordations further convolutes the title to the point of uninsurability; and (2) just because MERS claims they’ve changed their strategies doesn’t put the “toothpaste back in the tube”. Titles to property are still slandered and clouded and MERS and its parent MERSCORP, Inc. are culpable and negligent to that end.

MERS demands to be informed every time one if its members get sued? Why does MERS make itself so hard to serve process on? If you’re an attorney trying to litigate against MERS and MERSCORP in a quiet title action, service of process against these entities is as obfuscated as the loans they preserve on their databases. Any service of this kind that claims it’s got nothing to hide shouldn’t be behaving badly (the latest address of service against both entities is in New Castle, Delaware through CTC). At least with Bank of America, you know it’s in Charlotte, North Carolina. Depending on the MERS mortgages, deeds of trust and assignments, its agents can be anywhere. Finding and deposing these agents drives up the costs of litigation, discouraging homeowners from pursuing methodologies to restore their titles to marketable condition. Having judges out there that think it’s okay for MERS to do what it’s doing further complicates the final resolution to the bigger problem that even Gretchen Morgensen from the New York Times understands. It’s sad that the paper won’t let her out of her cage to really unleash this issue. Everyone would be suing the banks and MERS trying to quiet title to their properties, jamming up the court with millions of lawsuits … and by golly, we can’t have that now, can we? Whether any newspaper reporter, judge or banker smirks at that proposition, there are many who see the groundswell of disgruntled homeowners, foreclosed on or otherwise, chant my new mantra: “If I can’t convey … neither can they!”

I brushed the dust off my old deed of trust (hey, that rhymes too!) recently to find the same thing stated that I’ve seen on dozens of others I’ve audited, the phrase that says, “Borrower Covenants that Borrower is lawfully seised of the estate and has the right to convey” … hmmm? If you as a homeowner are left scratching your head on that one, trying scratching someplace else when you realize that you weren’t the one who caused your title to become clouded (well, actually, you did when you signed a MERS mortgage or deed of trust). You didn’t know at the time you signed the paperwork and moved into your new home that your problems with conveying clear title had just begun. This is why rumors abound that one-third of Kansas City’s properties with mortgages issued between 2003 and 2008 are uninsurable. That means the value of your home is worth ZERO because you can’t sell it … because you can’t convey clear title.

Title companies are going to start feeling the brunt of these legal actions unless they start refusing to insure based on phony or improper assignments and substitutions of trustee. How can a short sale really work if the MERS system has convoluted and obfuscated true ownership of the borrower’s loan? We can only hope that the issue of MERS legitimacy will be squashed like a cockroach before the Supreme Court of the United States at some point in the near future and will be turned into roadside fauna along with the 30-year mortgage loan. MERS policy changes? They look good on paper but it’s just another smokescreen on the part of those who would continue to make the other side think MERS is complying with the April 13, 2011 Consent Order. In my book, there is no indemnification for MERS or MERSCORP, Inc.

Dave Krieger is Managing Member of DK Consultants LLC, a title consulting firm based in San Antonio, Texas.