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Points: y Commercial Transaction y Holder in due course y Party in Interest UCC1-201(44) A security interest constitutes a right to sieze control of a pledged thing if the one giving the security interest fails to perform as agreed. The one receiving a security interest becomes a secured Party, especially if the instrument establishing the security interest is registered. He has rights, which are remedies and defenses that he can use to enforce an agreement if the other party fails to perform as agreed. y Rights includes remedies A remedy is a commercial right for those who acquire that right through an instrument. y Contract Basic contract law => a plaintiff suing on a written contract must produce a signed contract proving he is entitled to relief. y MERS => a. Does not hold financial interest b. Not prepared of equipped for consumer discovery requests c. Does not deliver anyone with any standing to foreclose d. Kansas Supreme Court => is more akin to that of a Straw man than to party possessing all the rights given a buyer e. By statute, assignment of the mortgage carries with it the assignment of the debt . Indeed, in the event that a mortgage loan somehow separates interests of the note and the deed of trust, with the deed of trust lying with some independent entity, the mortgage may become unenforceable. The practical effect of splitting the Deed of Trust from the promissory note is to make it impossible for the holder of the note to foreclose, unless the holder of the deed of trust is the agent of the holder of the note. Without the agency relationship, the [person holding only the note lacks the power to foreclose in the event of default. The person holding the deed of trust will never experiencing default because only the holder of the note is entitled to payment of the underlying obligation. The mortgage loan becomes ineffectual when the mote holder did not also old the deed of trust: f. MERS as straw man lacks standing to foreclose, but SO DOES THE ORIGINAL LENDER, although it was signatory to the deal. The lender lacks standing because title had to pass to the secured parties for the arrangement to legally qualify as a security. The lender has been paid in full and has no further legal interest in the claim. Only the securities holders have skin in the game. But they have no standing to foreclose, because they were not signatories to the original agreement. They cannot satisfy the basic requirement of contract law that a plaintiff suing on a written contract must produce a signed contract proving he is entitled to relief.

U.S. Bank National Association v Ibanez & Wells Fargo v Larace Massachusetts Land Court Department. Judge J. Long a. Neither bank had been assigned the mortgages at the time notice was published and sale took place. b. the holder of the mortgage needs to be identified in the notice c. did the party conducting the foreclosure have authority to do so and , if challenged, can it prove that is had such authority? d. Bottomly v Kabachnick, unequivocally holds that a notice that fails to identify the holder of the mortgage is defective, thereby rendering the foreclosure sale void as a matter of law. e. One can become the holder of the mortgage ( an interest in land) only by a writing satisfying the statute of frauds, G.L. c.259, § 1, in recordable form. Thus, the plaintiffs contention at oral argument that G.L. c. 244, § 14 s requirement of holder status was satisfied by the assignment of the promissory note secured by the mortgage to the securitized pools, (apparently done by the contract documents referencing them generally, along with hundreds or thousands of other Holder such notes) fails. In any event, no such documents were included in the record, so ant argument of based upon them are unsupported and waived. Moreover, there is nothing in the record to mortgag indicate when the promissory notes were assigned and the record is unambiguously clear that e the mortgage were assigned on the dates referenced herein. Blank mortgage assignments failed to name an assignee, they were ineffective to transfer any interest in the mortgage. Flavin v. Morrissey, 327 Mass. 217, 219 (1951); Macurda v. Fuller, 225 Mass. 341, 344-345 (1916); A. Eno & W. Hovey, 28 Mass. Practice: Real Estate Law, §4.50 at 109 (4th ed 2004)(hereafter, Eno & Hovey ) and cases cited therein. f. The plaintiffs were not the present holders of the mortgage at the time of the mortgage and sale. They were not properly authorized by the mortgage holder at those times. the notice and conduct of the foreclosure sale in the plaintiffs names under the incorrect representation that the plaintiffs were the mortgage holders makes the sale invalid. And retroactive assignments do not cure statutory defects. g. actually holding something and having the right to be its holder are two very different things. To obtain a mortgage assignment you do not actually possess presumes, at the least, that you have a demonstrable right to get it, that you will be able to determine the entity that validly holds the mortgage you need assigned, (not always easy when all previous assignments have not been recorded at the Registry), that the entity will still be operational, that it will be able to find the relevant paperwork, that it will have someone with authority to execute the relevant paperwork, and that it will be able to do so in a timely fashion. h. While mortgagee has been defined to include assignees of a mortgage, in other words the current mortgagee, there is nothing to suggest that the one who expects to receive the mortgage by assignment may undertake any foreclosure activity. In re Sima Schwartz, U.S. Bankr Ct., D. Mass., Chap. 7 Case No. 06-42476-JBR, Memorandum of Decision on Motion for Relief at 7 (Apr. 19, 2007) y y A mortgage is a contract. It is a fundamental and basic that a party seeking to exercise a contractual right (here, the power of sale) has the contractual right to do so at the time of its exercise. As the statute recognizes, these are the mortgagee or his valid assignee, a person specifically authorized by the power of sale or an attorney, legal guardian or conservator of those persons acting in the name of those persons. See

McGreevey, 294 Mass. At 484 ( it is familiar law that one who sells under a power must follow strictly its terms. If he fails to do so there is no valid execution of the power and the sale is wholly void ); see also G.L. c. 183, § 21 ( statutory power of sale in mortgage, recognizing that person seeking to exercise the power must first comply with the terms of the mortgage and with the statutes relating to the foreclosure of mortgages by the exercise of a power of sale ) y WELLS FARGO, N.A. v FARMER 2008 NY Slip Op 51133(U) [19 Misc 3d 1141 (A)] SUPREME COURT, KINGS COUNTY Judge Arthur M. Schack a. Valid assignment of mortgage and note b. Failure to demonstrate ownership of mortgage loan c. Court of Appeals ( Saratoga County Chamber of Commerce, Inc. v Pataki 100 NY2d, 901, 812 [2003], Cert denied 540 US 1017 [2003] held that standing to sue is critical to the proper functioning of the judicial system. It is a threshold issue. If standing is denied, the pathway to the courthouse is blocked. The plaintiff who has standing, however, may cross the threshold and seek judicial redress. In Carper v Nussbuam, 36 AD3d 176, 181 (2d Dept 2006), the Court held that standing to sue requires an interest in the claim at issue in the lawsuit that the law will recognize as a sufficient predicate for determining the issue at the litigant s request. If the plaintiff lacks standing to sue, the plaintiff may not proceed in the action. (Stark v Goldberg, 297 AD203 [1d Dept 2002]). d. Failure to name a beneficiary for the Trustee renders the assignment without merit. It is axiomatic that there are four essential elements of a trust: (1) a designated beneficiary; (2) a designated trustee; (3) a fund or other property sufficiently designated or identified to enable title thereto to pass to the trustee; and (4) actual delivery or legal assignment of the property to the trustee, with the intention of passing legal title to such property to the trustee (Brown v Spohr 180 NY 201 209). e. The Court in Campaign v Barba , 23 AD3d 327 [2d Dept 2005], held that to establish a prima facia case in an action to foreclose a mortgage, the plaintiff must establish the existence of the mortgage and the mortgage note, ownership of the mortgage, and the defendant s default in the payment. (See Household Finance Realty Corp v New York v Wynn, 19 AD3d 545 [2d Dept 2005; Sears Mortgage Corp. v Yahhobi, 19 AD3d 402 [2d Dept 2005]; Ocwen Federal bank FSB v Miller, 18 AD3d 527 [ 2d Dept 2005]; U.S. Bank Trust Nat. Ass n v Butti. 16 AD 3d 408 [2d Dept 2005]; First Union Mortgage Corp. v Fern, 298 AD2d 490 [2d Dept 2002]; Village Bank v Wild Oaks Holding, Inc., 196 AD2d 812 [2d Dept 1993].

VALID ASSIGN MENT

JP Morgan Chase Bank, N.A. v George 2010 NY Slip Op 50786(U) May 04, 2010 Judge Schack Foreclosure Judgement and Sale Vacated with Prejudice. 1. said mortgage to be duly assigned by an Assigment to be recorded is not an assignment that s valid at the time of notice. Lack of 2. Plaintiff s lack of standing and to vacate the instant judgment of foreclosure and sale for lack of Standing jurisdiction to render judgement because plaintiff Chase lacks Standing, is a motion that can be Vacate entered at any time. foreclosue 3. A claim for lack of jurisdiction is a condition precedent to the maintenance of the claim, & sale 4. Standing to sue is critical to the proper functioning of the judicial system. It is a threshold issue. If standing is denied, the pathway to the courthouse is blocked. The plaintiff who has standing, y

however, may cross the threshold and seek judicial redress. (Saratoga County Chamber Of Commerce, Inc. v Pataki, 100 NY2d 801 812 [2003], cert, denied 540 US 1017 [2003]) 5. Standing to sue requires an interest in the claim at issue in the lawsuit that the law will recognize as a sufficient predicate for determining the issue at the litigant s request. (Caprer v Nussbaum, 36 AD3d 176,181 [2d Dept 2006]) 6. Thus, a retroactive assignment cannot be used to confer standing upon the assignee in a foreclosure action commenced prior to the execution of an assignment. Wells Fargo bank, N.A. v Marchione, 69 AD3d 204, 210 {2d Dept 2009]) 7. CPLR R. 5015(a)(4) Motion was brought based on this rule by defendant CPLR R. 5015 Relief from judgment or order (a) On motion (1) excusable default... (2) newly-discovered evidence... (3) fraud, misrepresentation, or other misconduct of an adverse party (4) lack of jurisdiction to render the judgment or order (5) reversal, modification or vacatur of a prior judgment or order upon which it is based Whittiker & Stepanek v Deutsch Bank National Trust Company Judge David D. Dowd, Jr. U.S.District Court for the Northern District of Ohio Eastern Division Case No. 1:08CV300 First Amended Class Action Complaint Action for 1. Violation of FDCPA, 15 USC § 1692e(2),(5) & (10) A. Federal law prohibits the use of any false, deceptive or misleading representation or Fair means in connection with the collection of any debt including the false Debt representation of the character, amount, or legal status of any debt and the threat Collect to take any action that cannot legally be taken 15 USC 1692e Practic 2. (Ohio RICO) § 2923.32 e Act a. Ohio RICO states that no person, through a pattern of corrupt activity shall acquire or maintain, directly or indirectly, any interest in, or control of any real property. RC § 2923.32 (A)(2) b. Section 2921.03 of revised code stated that no person, knowingly and by filing, recording, or otherwise using a materially false or fraudulent writing in a wonton or reckless manner, shall attempt to influence a public servant in the discharge of the person s duty. 3. Appointment of Receiver under RC § 2735.01 y

y Supreme Court of Arkansas chief justice Jm Hannah. MERS is at most a mere agent of the lender a. it hold no property interest MERS b. it s not a necessary party (to an action / proceding) No c. no authority to act as an agent Interest d. Cannot act on its own independent of the direction of the specific lender who holds the repayment interest in the security instrument at the time MERS purports to act. y Kansas Supreme Court Landmark VS Kessler - Aug 28,2009

MERS holds no interest a. splitting if the note and mortgage creates an immediate and fatal flow in the title b. Saxon Mort. Services, Inc. v. Hillery, 2008 WL 5170180 (MD. CA / 2008) (unpublished opinion) ( For there to be a valid assignment, there must be more than just assignment of the deed alone; the note must also be assigned MERS purportedly assigned both the deed of trust and the promising note However, there is no evidence of record that establishes that MERS either held the promissory note on was given the authority to assign the note. ) c. If MERS is only the mortgagee, without ownership of the mortgage instrument, it does not have enforceable right. ( while the note is essential the mortgage is only an accident to the note [quoting Carpenter v Logan, 16 wall, 271, 83 U.S. 271, 275, 21 L. Ed 313 (1872)]) y Bellistri v Ocwen Loans Serving, LLC 284 S.W. 3d619 (mo. App. 2009) Issue of standing a. party seeker relief have a legally cognizable interest in the subject matter and that he has a threatened or actual injury b. If party seeking relief lacks standing, the trial court does not have jurisdiction to grant the requested relief c. A mortgage loan consist of (i) a promissory note and (2) security instrument, usually a mortgage or deed of trust, which secures payment on the note by giving the lender the ability to foreclose on the property. Typically, the same person holds both the note and the deed of trust. In the event that the note and Deed of Trust are split, the note, as a practical matter becomes unsecured.. Restatement (third) of property (mortgages) 5.4 comment. The practical effect of spitting the deed of trust front the promissory note is to make it impossible for the holder of the note too foreclose, unless the holder of the Deed of Trust is the agent of the note without the agency relationship, the person holding only the note lacks the powers to foreclose in the event of default. The person holding only the Deed Of Trust will never experience default because only the holder of the note is entitled to payment of the underlying obligation, the mortgage loan became ineffectual when the not holder did not also hold the deed of trust. d. An assignment of Deed of Trust separate from the note has no Force. Effectively, the note and deed of trust are inseparable, and when the promissory note is transferred, it vests in the transferee all the interest, rights, powers, and security conferred by the DOT upon the beneficiary there in and the payee in the notes. St. Louise MUT Life Eng Co. v. Walter, 329 Mo. 715, 46 S.W. zd 166, 170 (1931) e. There is no evidence in the record or the pleading that MERS held the promissory note or that BNC gave MERS the authority to transfer the promissory note y AURORA LOAN SERVICES,LLC V JUDITH MENDES DA COSTA Case no.: 09-142-CA Circuit Court Collier County, Florida Judge Rob Crown April 28, 2010 a. Lack of Standing i. Standing is a threshold issue a) Hence, a defect in standing cannot be waived; it must be raised, either by the parties or by the Court, whenever it becomes apparent ); Bellistri v Ocwen Loan Servicing, LLC. 284 S.W.3d 619 (Missouri Court of Appeals, 2009)

b) ( Lack of standing cannot be waived and may be considered by the court sua sponte. ) b. Possession of the Original Note i. When exhibits are attached to a complaint, the contents of the exhibit control over the allegations of the complaint ii. None of the documents identify Plaintiff as holder iii. Moreover language controls over contrary allegations contained in the complaint. iv. possession of the original note, in and of itself, does not vest plaintiff with standing. Rather , plaintiff must necessarily rely upon a valid assignment, which does not exist. c. Assignment i. Assignment is from MERS to Plaintiff and is completely ineffective. a) As nominee for lender, MERS serves in a very limited capacity. b) MERS has no substantive rights itself and, therefore, cannot assign what is does not have. c) a nominee of the owner of the note and mortgage may not effectively assign the note and mortgage to another for want of ownership interest in said note and mortgage by the nominee. La Salle Bank Nat. Ass n v. Lamy, 824 N.Y.S.2d 769, 2006 WL 2251721 (Sip.2006) d) MERS own definition of its very limited role as a nominee Subsequently, counsel for MERS explained that MERS does not take applications, underwrite loans, make decisions on whether to extend credit, collect mortgage payments, hold escrows for taxes and insurance, or provide any loan servicing functions whatsoever. MERS merely tracks the ownership of the lien and is paid for its services through membership fees charged to its members. Mortgage Electronic Registration Systems, Inc. v Nebraska Department of Banking and Finance, 704 N.W.2d 784 (Neb.2005). e) not only are there substantive deficiencies with an assignment from MERS, f) there is no indication on the assignment that the note and mortgage were physically transferred prior to that date. [T]he plaintiff s lack of standing at the inception of the case is not a defect that may be cured by the acquisition of standing after the case is filed. Progessive Exp. Ins. Co. v McGrath Community Chiropractic, 913 So.2d 1281 (Fla. 2nd DCA 2005). If on the date the Provider filed the original statement of claim Mr. Joseph had not assigned benefits to the provider, only Mr. Joseph had standing to bring the action. It follows that the Provider would gave lacked standing under these circumstances, and the case should have been dismissed. Id.

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U.S. Bankruptcy Judge Samuel L. Bufford in Los Angeles issued a notice last month warning plaintiffs in foreclosure cases to bring the mortgage notes to court and not submit copies. this requirement will apply because developments in the secondary market for mortgages and other security interests cause the court to lack confidence that presenting a copy of a promissory note is sufficient to show that movant has a right to enforce the note or that it qualifies as a real party in interest, the notice said. Do not accept a lost-note affidavit. Request the original note A. MERS rules don t allow members to submit lost-note affidavits in place of mortgage notes State of California v MERS, BoA, Coutrywide, J.P.Morgan, etc. filed May 10, 2010 in Lassen County Courts Statement of the Case: Plaintiffs seek recovery pursuant to California Government Code § 12650 et seq., the False Claims Act because the Defendants made false representation in order to avoid payment in full of all recording fees reflecting the establishment and/or transfer of secured interests in real property in the State. After having recorded false, fraudulent, misleading and untruthful documents with the land records of the counties of this State, Defendants failed to cure/correct said false, misleading and untruthful documents and, thereby, avoided, decreased and/or diminished their obligation to pay fees or monies to the counties, the above-named real parties in interest. In discovery either in or out of litigation, you want to see the transmittal documents by which the foreclosure judicial or non-judicial were initiated. These referral documents contain information that will probably show that the would-be forecloser, the pretender lender, is attempting to sue in its own name, take the house, the proceeds and achieve a windfall, since the investors don t seem to be getting any of the benefit. If the pretenders have a case, they will need to prove it through evidence rather than assumptions and reputations. If they finally give real documentation, you will see for yourself and so will the court, that the real parties in interest are not only not present in court but don t even have actual notice of the proceedings, much less service of process. Predatory lending, appraisal fraud, securities fraud, rescission under all available theories of law, damages, treble damages, punitive damages, exemplary damages, and consequential economic damages.

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Fraud in the Factum is a type of fraud where misrepresentation causes one to enter a transaction without accurately realizing the risks, duties, or obligations incurred. [1] This can be when the maker or drawer of a negotiable instrument, such as a promissory note or check, is induced to sign the instrument without a reasonable opportunity to learn of its fraudulent character or essential terms. Determination of whether an act constitutes fraud in the factum depends upon consideration of ³all relevant factors.´ Fraud in the factum usually voids the instrument under state law and is a real defense against even an holder in due course. Contrast this with the situation where a trusted employee signs a check without permission. The employer must still honor the check despite the fact that the check was a fraudulent negotiable instrument. Here, the employer had a reasonable opportunity to avoid the obligation by restricting access to the checks.

Fraud in the factum is often contrasted with fraud in the inducement.
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Fraud in the factum is a legal defense, and occurs where A makes/signs an agreement, but either does not realize that it is supposed to be a contract, or does not understand the nature/content of the agreement, because of some false information that B gave to A. For example, suppose John tells his mother that he is taking a college course on handwriting analysis, and for his homework he needs her to read and sign a pretend deed. If Mom signs the deed believing what he told her, and John tries to enforce the deed, Mom can plead "fraud in the factum." Fraud in the inducement is an equitable defense, and occurs when A enters into an agreement, knowing that it is supposed to be a contract and (at least having a rough idea) what the agreement is about, but the reason A signed/made the agreement was because of some false information that B gave to A. For example, suppose John tells his mother to sign a deed giving him her property, Mom refuses at first, but then John falsely tells her that the bank will foreclose on the property unless she signs it over to him. If Mom signs the deed because of this statement from John, and John tries to enforce the deed, Mom can plead "fraud in the inducement."
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