MERS win an Appellate Court Case in CA

Feb 18, 2011.  A Californian Appellate Court Gomes v Countrywide D057005 02182011 upheld that MERS has the authority to transfer the mortgage despite numerous other cases to the contrary.  This has a huge implication to homeowners in CA and consequently all over the country.

When I first read this, I was quite devastated.  Could this be the nail on the coffin for homeowners? Will banks start using this case to defend MERS against illegal transfers?

Well, yes and no.

I think making the claim that MERS does not have the authority to transfer the mortgage/Deed of Trust is significantly weakened due to this case.  However, it still does not answer to the question of Standing and the real party of interest as described by Carpenter v. Longan which basically says, the Deed of Trust follows the Promissory note, not the other way around.  He who controls the Deed of Trust without controlling the note is in reality controlling nothing….and that’s what this MERS decision comes down to.  Who owns the Promissory Note?

So, if you have MERS on your mortgage and you intend to use MERS as your defense, then you ought to restructure your arguments based on the Bifurcation issue.  Basically, the Deed of Trust and the Promissory Note needs to be pointing at the same party at all times.  Once that is separated, we have a defective instrument…and a defective instrument is not enforceable.

If you are in California, your best bet is to file your case in Federal Bankruptcy court in an Adversary Proceeding.  In Federal Bankruptcy court, you have the benefit of Federal Rules of Bankruptcy Rule 3001(d) – Perfected interest in real estate.  Basically, it says that party wishing to claim they are a creditor must present PERFECTED evidence of chain of title linking from the original lender to the current foreclosing party.  Opposing Counsel would like to have everyone believe that Perfection is achieved through the MERS assignment…giving the GOMES v Countrywide Appellate ruling.  At this point, a savvy litigant would need to point out Carpenter v Longan to discredit the MERS argument…because we still don’t know who the real party of interest is.

Further support for the homeowner comes from the recent Massachusetts Supreme Ruling in US Bank v Ibenez which says, Perfection of the chain of title for both the promissory note and the deed of trust must be demonstrated to show standing.

If you are considering filing for Bankruptcy, you might want to learn more about our bankruptcy preparation service. It is designed to save homeowners money.


MERS Advising Its Members not to Foreclose in Its Name

MERS has finally thrown in the towel. It has been named in too many civil actions and there’s just been too many rulings against its right as a real and beneficial party of interest to assign mortgages/Deeds of trusts that it has finally announce to its members not to use its name in foreclosure proceedings.

Here is what the new member rules issued from MERS says:

1. MERS is planning to shortly announce a proposed amendment to Membership Rule 8. The proposed amendment will require Members to not foreclose in MERS’ name. Consistent with the Membership Rules there will be a 90-day comment period on the proposed Rule. During this period we request that Members do not commence foreclosures in MERS’ name. If a Member determines that it will commence a foreclosure in MERS’ name during this 90-day period, two weeks advance notice must be given to MERS to permit verification of the appointment and current status of the Certifying Officer proposed to participate in the foreclosure. No foreclosure may be processed in MERS’ name without first obtaining this verification. We encourage Members to bring foreclosures only in the name of the holder of the note, in the name of the trustee or the servicer of record acting on behalf of the trustee.

2. MERS Members shall have a MERS Certifying Officer (also known as MERS Signing Officer) execute assignments out of MERS’ name before initiating foreclosure proceedings. Assignments out of MERS’ name should be recorded in the county land records, even if the state law does not require such a recording (see MERS Membership Rule 8).

This means these robo-signers can no longer willy nilly write assignments and call it official to foreclose.  Now they ACTUALLY have to certify the facts from MERS.  Wow, how refreshing.

The funny thing is, the statement “We encourage Members to bring foreclosures only in the name of the holder of the note”. What?  Its members were not foreclosing in the name of the holder of the note before?  Wow!  How shocking.  Oh my!  That’s what I’ve been saying all along.

What does this mean to you?

Well, if you have MERS in your Deed of Trust/Mortgage and you are involved in a foreclosure, you should make a point of writing to the Trustee and questioning whether they follow the recent MERS membership rules governing foreclosure by its “officers”.   While there is still a 90 day window before this rule takes effect, it’s certainly worth paying attention to it.

Here’s the copy of the member’s memo from MERS. MERS-Announcement-2011-01

MERS Foreclosures in Florida are Dead!

Take a look at this 2009 MERS Rules of Membership under Rule 8, Section 1) (c) on page 25.

(c) In the State of Florida, the authority to conduct foreclosures in the name of MERS granted to a Member’s Certifying Officers under Paragraph Three of the Member’s MERS Corporate Resolution is revoked. Effective June 1, 2006, the Member shall be sanctioned $10,000.00 per violation for commencing a foreclosure in Florida in the name of MERS.

This is most interesting for any homeowner living in Florida facing foreclosure who has MERS in their loans.  The “lender” (also known as pretender lender or servicer) is stuck in a pickle.

They used to rely on MERS to perpetrate their foreclosure to bring questionable documents to court.  However, after the fiasco with Robo-signers and numerous court challenges that have been ruled against MERS lacking the standing to be a true beneficiary, and therefore having no authority to assign any mortgages in Florida, MERS have quietly informed its members that it is no longer doing loan assignments.


These servicers/pretender lenders will go to any lengths to steal your house, preying on your ignorance.  Hoping you don’t know their scam.

So what does this have to do with me?  I am facing foreclosure and I live in Florida

It is imperative you download and read, and understand the MERS Membership Rules.  You should already download and read the Foreclosure Defense Handbook, if you haven’t already.  Read it and understand the scam that banks are trying to pull over your eyes.

Now, instead of relying on MERS to do their assignments as they have done in the past, these servicers are now doing their own document “reverse engineering” to create an illusion of chain of title.

By getting a Mortgage Scene Investigation (securitization audit), you should very likely find evidence of title reverse engineering that you can present to court as evidence that the servicer does not have proper standing nor proper chain of title to “steal” your house.

If you live in Florida, chances are you will be served with a Summons to go to court to defend your title against foreclosure.  Most homeowners are ignorant and never even show up.  If you put up a fight by answering the Summons and challenging the Plaintiff (the servicer)’s standing to foreclose, especially on the basis of their lack of “perfection of chain of title” for both the promissory note as well as the Mortgage (as it is required to be recorded at the County) to be “perfected”, then the servicer will have a difficult time moving forth with their lie.

On your mortgage, you will have language that gives the “Lender” the right to assign the mortgage.  If the party doing the foreclosing is the servicer, then the servicer will need to prove standing.  The Servicer is not “the lender”.  These are two different parties.

On some mortgages, it might give MERS the right to assign the mortgage.  You could bring this 2009 MERS Membership Rule into evidence to say, the Mortgage gave MERS the right as Beneficiary…not the Servicer.  The Servicer is not the Lender nor the Beneficiary, therefore, does not have ANY RIGHT to foreclose, unless they can prove otherwise.

Remember, the Plaintiff bears the burden of Proof.

MAKE THEM PROVE STANDING before they can foreclose.

Good luck and God Bless.


Another Win for Homeowners

This post is thanks to Neil Garfield of In a recent New Jersey Appeals Court case, Wells Fargo’s summary judgment was overturned for lack of Standing.

This is a case involving a homeowner accusing Wells that they did not have the Standing to foreclose in her property.  New Jersey is a Judicial State so Wells had to sue the homeowner.  Despite her objections, the (corrupt) Judge granted Wells Fargo the motion for summary judgment.  Wells only submitted a photocopy of the note with an affidavit from some person of dubious origin stating that they know with first hand knowledge that the note was assigned to Wells Fargo.

The homeowner (in pro se) filed an appeal.

In the Appellate court, the Judges ruled that Wells did not properly established their standing as “holder in due course” for the note under UCC 3-301.  Furthermore, (and this is really important), Wells Fargo can not go back and fix the assignment retrospectively. The summary judgment to Wells was overturned and the case is remanded back to Superior Court.

As I mentioned in the book, “a defective instrument is like bad food. Once it has gone bad, you can not fix it to make it better.” You can read more about the case here:

Look, don’t take my word for it.  Download the case and read it for yourself.  If you are facing foreclosure, you need to be comfortable reading these cases so you can understand the points and arguments.  You may need to use these same arguments for your own case one day.

Money Creation: This is how money is created

Here’s an post by one of our users on the principles of money creation.


(65) “Promissory note” means an instrument that evidences a promise to pay a monetary obligation, does not evidence an order to pay, and does not contain an acknowledgment by a bank that the bank has received for deposit a sum of money or funds.

What this means is that the bank does not have to tell you that they (the bank) received your asset(the note) as a sum of money for deposit.

Below is from the Various Federal Reserve Publications  FRB

Modern Money Mechanics  page 5  FRB CH

If business is active, the banks with excess reserves probably will have opportunities to loan the $9,000. Of course, they do not really pay out loans from the money they receive as deposits. If they did this, no additional money would be created. What they do when they make loans is to accept promissory notes in exchange for credits to the borrowers’ transaction accountsLoans (assets) and deposits (liabilities) both rise by $9,000. Reserves are unchanged by the loan transactions. But the deposit credits constitute new additions to the total deposits of the banking system. See illustration 3.

Money, Banking and Monetary Policy    FRB Dallas  page 11

How Banks Create Money

Banks actually create money when they lend it. Here’s how it works: Most of a bank’s loans are made to its own customers and are deposited in their checking accounts. Because the loan becomes a new deposit, just like a paycheck does, the bank once again holds a small percentage of that new amount in reserve and again lends the remainder to someone else, repeating the money-creation process many times.

Points of interest  FRB  Chicago Page 7           Banks and Deposit Creation

Banks , offer transaction accounts and make loans by lending deposits . This deposit creation activity, essentially creating money.

Banks create deposits by making loans .

This creation of checking accounts through loans is just as much a deposit as one we might make by pushing a ten dollar bill through the teller’s window .


These points to the fact that money was actually created through our signatures.

The Massachusetts Supreme Court Case – What this has to do with you

Just last week, the Massachusetts Supreme Court ruled on two very important cases regarding foreclosures that affects many people in foreclosure.  This has caused quite a bit of stir among those in the foreclosure defense community.  I would like to share with you some of the conclusions and  implications that is a result of these rulings.  Here are some of the pertinent points from the ruling:

Case points from U.S. Bank v. Ibanez, 10694, Supreme Judicial Court of

"We have long held that a conveyance of real property, such as a
mortgage, that does not name the assignee conveys nothing and is
void,”the Supreme Judicial Court said

“the court ruled that an otherwise valid confirmatory assignment was not
sufficient to prove right to foreclose.”

The banks argued, as does the securitization industry, that the right to
a mortgage follows the sale of the promissory note it secures, and since
they held the notes, they should be deemed to have the right to the

The court disagreed.

“where a note has been assigned but there is no written assignment of
the mortgage underlying the note, the assignment of the note does not
carry with it the assignment of the mortgage,”

** This not only applies to Massachusetts.

“This decision affirms our belief that the onus should be on the banks
and other holders of notes to follow proper procedures before initiating
foreclosure on any Massachusetts homeowner,” state Attorney General
Martha Coakley

"there must be proof that the assignment was made by a party that itself
held the mortgage,” the court said

The court rejected the banks’ request to apply the decision only to
future foreclosures.

“All that has changed is the plaintiffs’ apparent failure to abide by
those principles and requirements” in the law “in the rush to sell
mortgage-backed securities,” .... They broke the law and in so doing
committed FRAUD.

Justice Robert J. Cordy said he was struck by “the utter carelessness
with which the plaintiff banks documented the titles to their assets.”

1) A Defective Instrument is forever defective.

A defective promissory note or deed of trust is like bad food; once it’s gone bad, you can not fix it.  In other words, if it can be proven that a note has been bifurcated (ie. the note is sold to one party and the deed of trust was not assigned AT THE TIME IT WAS SOLD, then it is defective).  You can not go back and fix it.

All documentations has to be proper at the time of the Notice of Default or the process is deemed improper thus violating State Civil Code governing foreclosures because a foreclosure must be done by the real party of interest.

2) Perfection of Chain of Title

Related to 1) is the fact that the chain of title for both the Deed of Trust as well as the Promissory Note must be “perfected”.  This means all assignments must be properly done to both.

On the Promissory Note, the proper endorsements on the back must be signed from a party that is authorized to assign the note to another party.

On the Deed of Trust/Mortgage, once an assignment is done for the promissory note, then the appropriate assignment must be done at the County recorder’s lane record for the property.  This is ALMOST NEVER DONE.

3) A Blank Assignment is not perfection

It is STANDARD BANK PRACTICE to do blank assignments.

Let me say this again.

It is STANDARD PRACTICE when a note has been securitized, they ALWAYS do a blank assignment held in a vault somewhere in the event a foreclosure happens.  When they need to foreclose, they then take that note and either “reverse engineer” the appropriate assignments to suite their needs or just give the note in blank to the appropriate party to foreclose.

For example, if the note went from A to B, to ….Z.  And Bank Z is now foreclosing…all they do is take the note with a blank assignment and give it to Z to foreclose.

The Supreme Court ruled that this does not follow proper UCC procedure governing a negotiable instrument.

Possession of the note is not enough.


So What does this have to do with me? I’m in foreclosure right now.

If you are in foreclosure, then you should get a copy of the court case and read it.  Understand it.  Internalize it.  Own it.  (this case is available to our foreclosure defense members under the Reference file)

If you are in a Judicial State (ie. your lender has to sue you), then you should bring this case to court and “Motion the Court to take mandatory Judicial Notice”, and include the case as a Memorandum of Law in the caption.  (this is included in the documents for foreclosure defense members).

You should then file an objection to require that your lender provide proof of standing quoting this Supreme Court ruling.  Specifically, the requirement to provide proof of perfection of chain of title for both the Mortgage and the Promissory note that proves that they had standing at the time of the Notice of Default.


If you are in a Non-Judicial State, then you will need to file a civil action against your lender to require them to provide proof of claim; specifically that they have proper standing to foreclose.  This means that they must demonstrate that they have perfection of chain of title for both the Deed of Trust and the Promissory note at the time of the issuance of the Notice of Default.

You should also notify the Trustee of this and put them on notice that they are complicit in committing fraud against you.  This makes them directly liable should it be proven later that fraud has indeed been committed.  Without this notice, they are immune because they were simply doing their job.

Of course, before you can sue anyone, you will need proof.  The Plaintiff has the burden of proof.  If you have evidence of movement (ie. the loan moved from Bank A to Bank B, to Bank C), AND there was no matching assignment at the county recorder’s office, then this is evidence.  If you have evidence that the loan has been securitized, then you can submit this as proof.  Remember, without proof, your case will be dismissed for “failure to state a claim”.

Obviously, the process of litigating against one’s lender is a harrowing one and should not be taken lightly.  You should consult an attorney if possible.  If you can’t afford an attorney and would like to do it yourself, then you should gather as much evidence of fraud as possible.  This means going down to the County Records department and get a title search for your property to find all assignments.

You should study up on your State’s Civil Procedures to know the rules of your state in regards to civil litigation.

You should then learn the rules of court by getting Jurisdictionary by Dr. Frederic Gray.  This is the absolute MUST READ and MUST HAVE resource if you are even considering litigation.  I give it my highest recommendation.

If you need help with the process, then we invite you to join our foreclosure defense membership program.

Obviously, if you are facing a trustee sale in the next 30 days or so, you don’t have time.  If this is the case, then we recommend you read our guide on how to stop a Foreclosure Trustee Sale.

The Shattered American Dream

This is a great video about the Great American Dream.  It reveals the truth behind the banking industry in simple and elegant terms.

I highly recommend that you set aside 30 mins to watch this great video.  It is AWESOME!  Very well done.

Do You Have a Robo-Signer?

To find out if you have a Robo-signer on your Notice of Default, Notice of Trustee Sale or Notice of Assignment/Transfer/Substitution of Trustee, take a look at the person signing on your documents.  If they are a “Vice President” of MERS, then there is a good chance they are a Robo-signer.

Why is this important?

If we can prove and establish that they are a Robo-Signer, then we might be able to establish that they are a part of a scam designed to defraud the homeowner of their due process of the law, specifically, anyone signing an affidavit must have first hand knowledge of the facts.  These people are representing that:

a) They know for a fact that the “bank” owns the instrument

b) They have the authority to execute the assignment.

Neither of which is true.

Anyone can be a Vice President of MERS.  For a small fee, you can join MERS and have one of your employees be a VP of MERS.  These people are given the title of VP but non of the real responsibilities of a VP just for the administrative purpose of loan assignments.  This is pure insanity.

Anyway, to check if you have a robo-signer, come check out this complete list of Robo-Signer.


IMPORTANT: Rescission of Notice of Default

In August 2010, Recontrust sent me a Notice of Default for my property.

Since I was in the middle of disputing with Bank of America over who the real and beneficial party of interest may be, I sent them (the Trustee) a certified letter (included in the coaching program) disputing the debt.

At the time, I had a civil action in Circuit Court against Bank of America which I had won by default, but was set aside for lack of proper service.  When I was in the Court Records department, there was a lady in front of me in line who was extremely upset…like spitting mad.  She went to the teller and asked for a case number….MY CASE NUMBER.

Dying of curiosity, I asked her what was the problem…and she informed me that there was an issue with the title with a case she was trying to foreclose on.  She then took copies of my case, and promptly called her lawyer.  She must have talked with him for over 30 mins because by the time I was done with my paperwork, she was still on the phone.

Anyway, I had expected that Bank of America/ReconTrust would have filed some sort of motion to have the case dismissed, etc.

Nada.   Zip.  Nothing happened.

I never received a Notice of Substitution of Trustee (but one was filed at the County).

I did receive a Notice of Trustee Sale for late December.

But on the Date of the sale…the property never came up.

Anyway, today I went down to the County Recorder’s office to inspect my records for my property.


Boy was I shocked.



This document is AMAZING.


It prove that they are in fact caught in the act stealing and was forced to return the goods when I disputed the debt.


This is a Rescission of the Notice of Default.  This means that the Notice of Default was taken back as if it was never issued.  No Trustee sale can proceed until such time as a real party of interest can come forth to claim the property.


With this, I will be promptly filing for a Quiet Title Action next year to have the clouded title removed from my property.




Would love to hear your comments.