Compliments of several dedicated consumer attorneys, including Kelly Harpster, consumer attorney par excellence, and Sybil Hebb,lead attorney for the Oregon Law Center, a non-profit law firm for low income Oregonians, I am posting a Frequently Asked Questions publication discussing the recent Niday court ruling [which I have discussed here and here] as well as general issues regarding the infamous MERS company and important Oregon foreclosure information.  Although it is not “legal advice,” this post contains information “You can take to the bank.”  And after you take it to the bank, you can tell them what to do with it…. PCQ

1)  What is MERS?

MERS stands for Mortgage Electronic Registry Systems, Inc. It is a private company that operates an electronic registry designed to track servicing rights and ownership of mortgage loans in the United States. MERS is owned by holding company MERSCORP, Inc. When MERS is named as a beneficiary in a trust deed, a related entity named MERSCORP records transfers

of the loan in a private database. Continue reading “FAQ on Niday Ruling & MERS/Non-Judicial Foreclosures in Oregon”

[Door Slamming]

Her:  “Honey, is that you?  It’s awfully early for you to come home.  Are you ill?”

Him: “Yeh, I know it’s early.  I’m OK. I just didn’t feel like working anymore.”

Her: “What’s wrong?  Don’t you enjoy your work kicking people out of their homes anymore?   I thought you loved having Big Bank clients who specialized in that sort of thing.”

Him: “That was then, this is now. After a couple of years of writs of executions and evictions, the thrill is gone.  I’m tired of watching U-Haul trailers getting packed up and children on the sidewalks crying.  I never thought I’d say it, but maybe I’m starting to grow a conscience – hard as that sounds.  Whatever it is, I’m beginning to wonder if I’m playing for the wrong team.  I’m noticing how people kinda shy away from me at the cocktail parties now.  Like I’m some kind of monster.  I remember early on when we had our soirees, I was the life of the party, regaling everyone with stories of my latest foreclosure, and how I kept postponing the auction sales letting the beleaguered borrower think they were actually going to get a loan mod, and then at the last minute, when they were on the 99-yard line, I’d drop the hammer and foreclose ‘em.  I had people rolling on the floor laughing.  Now no one wants to hear about this anymore.  I feel like the lonely Maytag Repairman.” Continue reading “A Curious Day At The Foreclosure Mill….”

This is the second post of two, analyzing the recent Oregon Court of Appeals ruling on MERS.  The first post can be found here.  The Court’s written decision can be found here.

Issue Two

Can MERS act as a “Nominal Beneficiary” in the trust deed for purposes of avoiding the requirement under  ORS 86.735(1) that to conduct a non-judicial foreclosure in Oregon, any successive assignments of the trust deed must be recorded?

Besides the epic battle between Good and Evil, Right and Wrong, Light and Darkness, reduced to its simplest form, the disagreement between Big Banks and Bantam Borrowers is this:

  • Borrowers maintain that ORS 86.735(1) means what it says, i.e. that before a non-judicial foreclosure may be lawfully commenced, any time the trust deed has been assigned, the event must be recorded in the county records.  
  • Banks argue that since MERS is the “beneficiary” under the trust deed, the only assignment that is necessary to record is the one from MERS to the foreclosing bank.  They say that all of the intermediary assignment that may or may not[1] have been electronically “registered” should not have to be recorded, since MERS is the nominal beneficiary for everyone, now and in the future. [This results in what I have referred to as the “Hail Mary Pass” in prior posts on the subject, here and here: When a borrower goes into default, MERS, as the “nominal beneficiary” for the original lender [and all successive transferees of the lender’s promissory note], makes a “single assignment” pass over the heads of the intermediate transferees, and the trust deed lands neatly in the waiting arms of another Big Bank to commence the foreclosure in its own name.] Continue reading “MERS Smackdown! Niday Analyzed – Part Two”

In the first Oregon appellate court ruling on the issue, the Court of Appeals, addressed, head on, whether MERS may be appointed as the “beneficiary” in an Oregon trust deed, for purposes of avoiding the law. The full opinion may be accessed here.

The decision, written by Justice Lynn R. Nakamoto’s was a “textbook” opinion; clear, concise and methodical, demonstrating a good grasp of the legal issues at play.

The Parties.  The persons and entities discussed in the case included two banks. One was GreenPoint Mortgage Funding, Inc. (“GreenPoint”) the lender that originated, i.e. funded, the loan at the time of closing.  The other bank was GMAC Mortgage, LLC (“GMAC”), the company that was servicing the loan.  GMAC, the servicer, was named as a defendant.   In a bit of cosmic comeuppance, in May 2012, GMAC filed for Chapter 11 bankruptcy protection.  [Apparently, defaulting is OK if you’re a Big Bank, but not if you’re a Bantam Borrower. – PCQ]   The plaintiff in the case was the borrower, Rebecca Niday.  Mortgage Electronic Registration Systems, Inc. (“MERS”) was also named as a defendant, along with Executive Trustee Services.

The Attorneys. The lawyers on the side of the angels were W. Jeffrey Barnes, who argued the case for Rebecca Niday.  With him on the briefs were Elizabeth Lemoine and the Luby Law FirmDavid L. Koen and Legal Aid Services of Oregon filed the brief amicus curiae [“friend of the court”] for the Oregon Trial Lawyers Association.  Congratulations all!

Factual Background.  In August 2006, Ms. Niday obtained a home loan from GreenPoint.  She signed a promissory note that obligated her to repay the $236,000 debt.  She also signed a trust deed, which, as security for the note to GreenPoint, was recorded in Clackamas County, where her home was located. Continue reading “MERS Smackdown! Niday Analyzed – Part One”

Foreclosure today is not what it used to be.  In the past, banks and borrowers tried to avoid foreclosure, since it was a lose-lose proposition for both sides. Today, that is not the case.  With the advent of securitization, Big Banks discovered several things: (1) That they could make loans for which they were promptly repaid in the GSE secondary market or the private label secondary market; (2) That underwriting guidelines were unimportant if  Big Banks no longer kept these loans on their own books; (3) That they could make even more money servicing the loans they had already sold into the secondary market; (4) That servicing sketchy and poorly underwritten non-performing loans was far more profitable than servicing performing loans, since they could charge higher fees, pile on Draconian charges, split fees on force-placed casualty insurance, upcharge investors for the vendor costs they had advanced; (5) That through affiliated subsidiaries, they could actually create foreclosure companies to act as “successor trustees” in non-judicial foreclosure states; (6) And most significantly, Big Banks discovered that any damages resulting from their bad loans and exorbitant servicing charges, would ultimately be borne by others – either the investors who bought the private label junk they sold, or the American Taxpayer who picked up Fannie’s, Freddie’s, and FHA’s losses.  So today, there is a need to level the playing field.  Mandatory mediation may not be a “Silver Bullet” but it will hopefully serve as a tool to help level the playing field as homeowners try to extricate themselves from the mess the Big Banks created. Oregon’s Senate Bill 1552 is one such effort.  For a more detailed discussion of SB 1552’s terminology and forms, go to my earlier blog post here.  – PCQ Continue reading “Oregon’s Mandatory Mediation Law – The Timelines”

“In Roman mythology, the god Janus, for whom each year’s first month is named, was the deity of beginnings and endings. According to legend, the titan Saturn gave the two-faced god the power to see both the future and the past. Romans carved both of Janus’ two faces on gates and doorways to solemnize momentous transitions. Most notably, in the Roman Forum, the Senate erected the ritual gates called the Janus Geminus, which the Romans opened in times of conflict.  At war’s outset, priests made sacrifices here to curry favor from the gods and forecast the prospects of success. No deity better symbolizes what financiers hoped to create when they founded the Mortgage Electronic Registration System (MERS). MERS sits as a dichotomous, enigmatic gatekeeper on the vestibule of our nation’s complex and turbulent mortgage finance industry. Financiers invoked MERS’s name at the beginning of millions of subprime and exotic mortgage loan transactions and again invoke its name as they attempt to terminate so many of these loans through foreclosure. Like Janus, MERS is two-faced: impenetrably claiming to both own mortgages and act as an agent for others who also claim ownership.”  Professor Christopher Peterson, “Two Faces: Demystifying The Mortgage Electronic Registration System’s Land Title Theory”

In a stunning rejection of the earlier Beyer and James cases [severely criticized by yours truly here, here, here, here, here and [satirically] here – PCQ] holding that MERS and Big Banks may ignore the plain language of the mandatory recording law found at ORS 86.735(1), recently appointed U.S. Federal District Judge Michael H. Simon, issued a 41-page Opinion and Order [here] that should be required reading for all lawyers and laypersons interested in the current MERS issues bouncing around in Oregon’s state and federal courts.  Quoting Lake Oswego attorney Kelly Harpster’s statement to the Oregonian, Judge Simon’s ruling is “the most thorough and thoughtful analysis of the MERS issue that has yet been published ….” Continue reading “Another MERS Slapdown! The Recent James Case Analyzed (Part One)”

It has recently been reported that Big Banks must have ‘living wills’ in place by July, 2012.  In estate planning circles, a “living will” is a document one creates in the event they should later become incapacitated or incompetent, and are unable to make important decisions for their long term care.  More to the point of the article – apparently the FDIC had unanimously voted to require banks with $50 billion or more in assets to prepare and submit these so-called “living wills” to “…ensure comprehensive and coordinated resolution planning for both the insured depository and its holding company and affiliates in the event that an orderly liquidation is required….” This,  according to FDIC chairman Martin Gruenberg.

In the case of the Big Banks, the idea here is to avoid a repeat of the Bear Stearns and Lehman Bros. debacles that occurred in 2008, setting off a chain reaction and causing credit to seize up to the point of nearly collapsing our country’s entire financial system.  Several weak banks were either absorbed by more stable ones, filed bankruptcy, or taken over by the FDIC.  Today, some of the country’s largest banks are still struggling.

I guess the thinking is that some Big Banks are still viewed as “systemically important” – using the currently accepted term – rather than those nasty pejoratives “Too Big To Fail” or “TBTF” [an acronym that could refer to any number of expletives about Big Banks. – PCQ]

I find the use of the term “living will” an interesting choice of words, as it tends to humanize Big Banks – a task of Herculean proportions – even Dr. Frankenstein failed on that count.   On the other hand – put yourself in the bankers’ shoes; this whole idea must raise some uncomfortable feelings at the highest executive levels.  I mean, how would you feel, if every time you turned around, someone wanted to perform a “stress test” on you – digitally poking around in one orifice or another?   And then after performing the tests, the examiner promptly suggests that you might want to make arrangements for the time when you can no longer care for yourself.   It’s like facing the Grim Reaper mano a mano.  Does the Fed know something the Big Banks can see but refuse to admit? After reading his patients’ charts, does Dr. Bernanke fear the end is near?  Does he foresee these symbols of wealth and power now becoming “Zombie Banks”? Mere shells of their former selves, soulless, disembodied creatures, aimlessly lurching across the financial landscape, frightening everyone, as they hemorrhage the last vestiges of their life-sustaining cash reserves – this sounds like a scene out of Thriller.   Well, if that’s what’s in store, “Yes!” – By all means, Living Wills are definitely in order!

In an effort to discover what plans some of the Big Banks have made toward drafting their Living Wills, I recruited a trusted associate to see if he might quietly find me a copy of one such document.  I am happy to report that the mission was hugely successful and I am now in possession of one of the few known Living Wills that has been drafted for submission to the FDIC this July.  What appears below is a redacted copy of the original: Continue reading “‘Living Wills’ For Big Banks?”

As we move into the New Year, our friends in the banking, servicing, and title industries have hastily convened a conference call to deal with the latest MERS setback in court.  It seems that when Fannie Mae sought permission to evict some folks from the home it had recently foreclosed, the local Jackson County Circuit Court Judge said “Fannie May Not.”  As usual, Belial Bank’s devilish President and CEO, B.L. Zebub, moderates.  He is joined by his trusted cronies to consider what to make of this decision coming out of sleepy Southern Oregon.  In attendance with  B.L. is his honest but naïve legal intern, Les Guile, who, of late, has developed a tendency to speak more freely.  Could it be that a conscience stirs within this young novitiate, and that he is tiring of the Machiavellian personalities on these calls?  Also in attendance is title industry hand-wringer Liz Pendens and her nemesis, Dee Faulting, of the default servicing industry.  Damian Faust, Belial’s lead counsel and hatchet man is present, as is the Bank’s chief schemer and PR man, Kenneth Y. Slick III (aka “KY”).  B.L.’s loyal secretary, Lucy Furr, has dutifully transcribed this conversation, although she apparently forgot to “scrub” it, as instructed by B.L.   As before,  I am unable to disclose the source of this purloined post. – PCQ

B.L. Zebub: “I just read the decision in Federal National Mortgage Association vs. Goodrich. Well, the timing couldn’t be more prophetic; December 7, 2011 and we find out we just got bombed in court.  Folks, I want to know what happened here!   This was a little garden variety eviction.  It can’t get much simpler than that.  All the bank has to prove is their superior right of possession.  We have our high-powered bank attorney flown all the way down to……..where is it “Jackson County” Orygon?  Where the hell is that?  Quick, someone, see if you can locate it on an AAA Trip Tik!  I doubt it.  Do they even have an airport there?  Did we have to pay to have our attorneys chauffeured to court again?!  That’s the problem – all those backwater bleeding heart liberal judges feeling sorry for the little guy!  I had a bad feeling about this case the minute I found out it wasn’t going to be tried in Portland.  It seems the farther away from the city you get, the more risk there is that some wild-eyed lib is gonna take issue with MERS.  Remember what happened in the Flynn case?  Where was that, Columbia County – wherever that is?  Damien, enlighten us. What went wrong?  I assume our lawyers take off their Rolex watches and Tiffany jewelry before they go to court.  We don’t want these hayseeds thinking that we actually make a pretty good living foreclosing Oregonians out of their homes.” Continue reading “Belial Bank Conference Call Discussing The Goodrich Decision & MERS”

Hypocrisy: [c.1200, ipocrisie, from O.Fr. ypocrisie, from L.L. hypocrisis, from Gk. hypokrisis “acting on the stage, pretense,” from hypokrinesthai “play a part, pretend….” Online Etymology Dictionary]

Example: When banks lend money today, they demand absolute transparency of their borrowers. Every “T” must be crossed and “I” dotted.  Signatures, income, credit, employment, all must be verified and re-verified to the nth degree. But when banks foreclose their borrowers today, they throw transparency to the wind. Everything becomes opaque. The banks move into the shadows, transferring obligations behind the scenes, employing lackeys to sign their most important foreclosure documents, and using servicers to do their dirty work, all the while whispering “We Care” to beleaguered homeowners, when that is the farthest thing from their mind. – PCQ

Background. On July 23, 2004, Mr. and Mrs. Sharpe borrowed $194,750.00 from their lender, Washington Mutual Bank (“WaMu”).  They signed a Promissory Note and Trust Deed.  Here’s what these documents said:

  • The Note informed them that their lender could transfer it to a third party, which would entitle the new entity to receive the Sharpes’ payments;
  • The Trust Deed stated that the Note could be sold without prior notice to them;
  • The Trust Deed stated that the “Loan Servicer” [i.e. the entity to whom they were to make all Note payments – PCQ] could change;
  • The Servicing Disclosure Statement [a separate lender-created document – PCQ] informed them that WaMu was to initially act as servicer of their loan – but that could change in the future;

On September 16, 2004, WaMu sold the loan to Fannie Mae, although it [WaMu] retained all servicing rights.  This means that while Fannie Mae owned the Trust Deed and was the holder of the Note, WaMu acted as the collection agent and was thus earning servicing fees on the Sharpes’ loan even after they had sold it to Fannie Mae. Continue reading “Sharpe vs. Wells Fargo Home Mortgage – A Critical Analysis”

The following Frequently Unanswered Questions have been provided in an effort to better understand Big Banks and their systemic inability to explain, answer, or even address, basic questions that pervade the Oregon foreclosure landscape.  Since the they have not offered the slightest explanation to frequently ask questions,  I am compelled to do so.  If  I am wrong, perhaps a Big Bank attorney will let me know. – PCQ

Question: When the Big Banks halted their foreclosures in light of the robo-signing scandal last year, and resumed again this year, what precisely did they do to correct the earlier problems?

Answer: Nothing. In fact, when they rescinded their Notices of Default, the merely recorded the same ones oftentimes with little or nothing changed.  Since several months had elapsed, one would think they would at least have updated the information, but normally they did not. Continue reading “Oregon Bank Foreclosures: Frequently Unanswered Questions”