DID MERS SHOOT ITSELF IN THE FOOT?

PART 3 OF 3 March 7th, 2013

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 MERSs PR campaign, see Parts 1 and 2 of 3 on http://www.cloudedtitles.com. As long as were going to set the record straight one has to understand what is posted on the Williamson County Clerks website athttp://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 Ive talked to said they had no idea who MERS was and the title companies handling the closing sure didnt 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

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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 Ive 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, Id 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 isnt defined under Definition C or E in the long-form deeds of trust. In fact, those definitions dont even mention who the successors and assigns of MERS are or how theyre involved contractually. That tells me a lot about the deficiencies in MERSs 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 dont see anywhere in this argument where Schedule B: Exclusions is mentioned in title policies, wherein the title company wont insure a chain of title if the defects arent 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 doesnt have the apparent authority to do. And what about those intervening assignees whose interests arent recorded in the land records in violation of Section 192.007? I have an idea why

dont we let the courts (or juries) decide what constitutes a cloud on title instead of Beckmann unilaterally drawing his own conclusions? 6. (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 whats on the MERS database that shows up in Servicer ID searches is what the members WANT YOU TO SEE, whether its accurate or not. The intervening assignees still arent 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 isnt 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. Im about to vomit. MERS works for its members. MERS works for Wall Street. MERS didnt save me any money. MERS will end up costing homeowners money in the long run. MERS didnt save me any money. I havent heard MERS tell any of these so-called Borrowers at closing that if you dont understand what MERS is, dont 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 werent included in the advertisement here. This is why MERS ran this article. The audit hit a nerve. If it didnt, why respond like this unless youre 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.

DID MERS SHOOT ITSELF IN THE FOOT? PART 2 OF 3

March 7th, 2013

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 MERSs 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 didnt 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. Porters 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 youve 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. Thats not what Im 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, its 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 hasnt read something (as in the Williamson County land record audit), that the PR arm wouldnt simply come out and say, We have no comment because we havent read the audit yet rather than the usual adage, We havent done anything wrong. Theres the PR defense mechanism rearing its ugly head again. Thats 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, Im going to have at it and

rebut some of MERS assertions in this article, which ran in the Austin AmericanStatesman 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 Clerks 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 OBrien 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 didnt 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 werent 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 MERSs 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 Washingtons 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? Dont you think for one minute that the court systems across America arent 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 MERSs 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 Im doing is legal. So whats 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 Ive talked to said they had no idea who MERS was and the title companies handling the closing sure didnt 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? Ill present the rest of my rebuttal in Part 3 of 3 of this 3-part series.

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DID MERS SHOOT ITSELF IN THE FOOT? PART 1 OF 3

As to MERSs responses to media inquiries, I was surprised to hear the traditional denial statement: We havent done anything wrong when the audit itself wasnt 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, theyre 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, Moodys and Covington & Burling. As Virginia delegate Bob Marshall told me one afternoon in a phone call that he couldnt figure out where MERS gets off acting like it has some sort of governmental authority to operate when its 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 theyve done is unimpressive. In my book, what MERS is doing works much the same way as Hitlers 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 youve got a recipe for injustice. When you look up most of these judges financial statements, youll 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. Its 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 wont survive because in many instances, the pleadings are drafted to federal standards of pleadings that wont survive the likes of Ashcroft v. Iqbal and Bell Atlantic v. Twombly. I also see where a lot of federal judges just cant 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 Ill explain further in the next segment, how MERS needs to learn to pick its battles.