I read the amicus and had the following thoughts/observations (for what they're worth) - pass it on if you think it is helpful:
1. MERS is a parasitic virus: "MERS is a system that is “grafted” onto the traditional recording system and could not exist without it, but it usurps the function of county recorders and eviscerates the system recorders are charged with maintaining."(3, 17-18) " MERS purports to simplify the process of trading mortgage-backed securities, because it has taken the liberty of eliminating requirements for documenting changes to the beneficial" (18)ownership interests in real property. MERS, in effect, creates a lacuna in the record, and makes meaningless the record onto which it is grafted." (18)
2. Mac & Mae GSE Crime Families: "From its planning stages, MERS was conceived as a way of reducing costs for sellers of mortgage-backed securities (MBS). In 1970, the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac), and the Government National Mortgage Association (Ginnie Mae), radically changed mortgage lending relationships by originating the creation and sale of mortgage backed securities (MBS)—pools of mortgages, or bonds secured by such pools, for which they sold fractional interests." (7) See, Christopher L. Peterson, Foreclosure, Subprime Mortgage Lending, and the Mortgage Electronic Registration System - See more at: http://caselaw.findlaw.com/us-9th-circuit/1669550.html#sthash.8voQvEPZ.dpuf 78 U. Cin. L.Rev. 1359, 1374, 1407 (2010) (outlining MERS's “[q]uestionable” legal foundations and arguing that “[t]he shift away from recording loans in the name of actual mortgagees and assignees represents an important policy change that erodes not only the tax base of local governments, but also the usefulness of the public land title information infrastructure”; Professor Peterson argues that MERS is a "tax-evasion broker"); Christopher L. Peterson, Two Faces: Demystifying the Mortgage Electronic Registration System's Land Title Theory, 53 Wm. & Mary L.Rev. 111, 120, 125–27 (2011) (criticizing the “incoherence of MERS's legal position” regarding MERS's status with respect to mortgages registered in the MERS System, which is “exacerbated by a corporate structure that is so unorthodox as to be considered arguably fraudulent,” and criticizing the unreliability of the MERS database); David P. Weber, The Magic of the Mortgage Electronic Registration System: It Is and It Isn't, 85 Am. Bankr.L.J. 239, 239–40, 264 (2011) (describing MERS's “imperfect implementation and lack of transparency”); see also Michael Powell & Gretchen Morgenson, MERS? It May Have Swallowed Your Loan, N.Y. Times, March 6, 2011, http:// www.nytimes.com/2011/03/06/business/ 06mers.html (describing the “mounting” legal challenges facing MERS).
3. MBSs are empty: "MERS, who is named “solely as nominee,” remains the mortgagee even after subsequent transfers of the mortgage note. Id. These subsequent transfers are not recorded in the public registry. Rather, MERS operates a private database and mortgage servicers may voluntarily report changes in “beneficial interests” and servicing rights for individual mortgages. See MERS Procedures Manual (v. 27) at 88-91. Consequently, MERS removes the incentives for its members to retain and aggregate the legal documentation pertaining to such transfers for any given piece of property, astronomically increasing both the likelihood of broken chains of title and the difficulty of detecting fraudulent claims in the absence of documentation showing the legitimacy of prior transfers." (9) "MERS privatized and made the documentation of transfers of mortgage notes optional, discouraging the mortgage industry from maintaining complete records of actual holders of interests in real property." (10) "Janis Smith, a spokeswoman for Fannie Mae, admitted Fannie Mae kept its own records and that “We would never rely on it [MERS] to find ownership.” Powell and Morgenson, supra p. 32. (25)" With MERS, investors purportedly received a security interest in the debt obligation (promissory note). However, neither MERS nor its principals or assignees ever take possession of the note and, therefore, could not be the beneficiary of the DOT (security instrument) or PETE under Washington law. RCW 61.24.005(2); RCW 62A.3-301.
4. "We don't need no stinking... transparency" (public records). Given MERS created a system whereby the banks and its minions could ignore state recordation statutes, the putative secured parties should have perfected their security interests in the "personalty" by filing a financing statement with the state. (22 fn 6). UCC Article 9 applies to secured transactions in a wide assortment of collateral other than real property (e.g. promissory notes, accounts receivables, payment intangibles, etc.). Just as an interest in real property is "perfected" by recording a security instrument (mortgage or DOT) with the county where the land is located, an interest in a promissory note purportedly held by an investor would be perfected under the UCC Art. 9 by either possession or filing a financing statement with the state (e.g. DOL in Washington). However, as stated above, neither MERS nor the investors take possession of the note and (apparently) ignore state laws governing filing of financial statements to perfect their interest in the "personalty".
Shawn Newman
Adjunct Professor
Business at Saint Martin's University
Paralegal Studies at South Puget Sound Community College www.newmanlaw.us
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