Amicus Brief - Mcdonnell (as Filed)
Transcript of Amicus Brief - Mcdonnell (as Filed)
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Supreme Judicial CourtFOR THE COMMONWEALTH OF MASSACHUSETTS
NO.SJC-11041
HENRIETTA EATON,PLAINTIFF-APPELLEE,
v.
FEDERAL NATIONAL MORTGAGE ASSOCIATION & ANOTHER,
DEFENDANTS-APPELLANTS.
ON APPEAL FROM THE APPEALS COURT SINGLE JUSTICE
BRIEF OFAMICUS CURIAE MARIE MCDONNELL, CFE
Marie McDonnell, CFE
Mortgage Fraud and Forensic Analyst
Certified Fraud Examiner
Truth In Lending Audit & Recovery Services, LLC
P.O. Box 2760, Orleans, MA 02653
Tel. (508) 255-8829 Fax (508) 255-9626E-Mail: [email protected]
Website: http://truthinlending.net
Dated: September 30, 2011
mailto:[email protected]:[email protected]:[email protected] -
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TABLE OF CONTENTS
TABLE OF AUTHORITIES ............................... ii
STATEMENT OF AMICUSINTEREST ........................ 1
STATEMENT OF THE ISSUES ............................. 7
STATEMENT OF THE CASE AND FACTS ..................... 8
SUMMARY OF THE ARGUMENT ............................ 10
ARGUMENT ........................................... 14
I. THE MORTGAGE CONTRACT CONTROLS. .......... 14
II. THE PIVOTAL ASSIGNMENT OF MORTGAGE THATPURPORTS TO TRANSFER THE EATON MORTGAGETO DEFENDANT GREEN TREE IS INVALID. ...... 19
CONCLUSION ......................................... 22
EXHIBIT A Fannie Mae Announcement 08-12, May23, 2008
EXHIBIT B Note, September 12, 2007
EXHIBIT C Mortgage, September 12, 2007
EXHIBIT D MERS Research Results
EXHIBIT E Assignment of Mortgage, April 22,2009
EXHIBIT F Robo-Signer Monica Medina, SouthernEssex District Registry of Deeds
EXHIBIT G The New Man at MERS, Bill BeckmannInterview
CERTIFICATE OF COMPLIANCE
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TABLE OF AUTHORITIES
CASES:
U.S. Bank National Association v. Ibanez and WellsFargo Bank, N.A. v. LaRace,
458 Mass. 637 (2011)..........................1, 7
STATUTES:
Massachusetts General Laws
Ch. 183.........................................17Ch. 185 67....................................18Ch. 266 35A(b)(4)...............................6
MISCELLANEOUS:
Blacks Law Dictionary, Sixth Edition, 1990..........19
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STATEMENT OFAMICUS INTEREST
I, Marie McDonnell, am a Mortgage Fraud and
Forensic Analyst and a credentialed Certified Fraud
Examiner. I am the founder and managing member of
Truth In Lending Audit & Recovery Services, LLC of
Orleans, Massachusetts and have twenty-four years
experience in transactional analysis, mortgage
auditing, and mortgage fraud investigation. I am also
the President of McDonnell Property Analytics, Inc., a
litigation support and research firm that provides
mortgage-backed securities research services and
foreclosure forensics to attorneys nationwide.
McDonnell Property Analytics also advises and performs
services for county registers of deeds, attorneys
general, courts and other governmental agencies.
I am the same Marie McDonnell who provided amicus
briefs to the Massachusetts Land Court and to the
Massachusetts Supreme Judicial Court in the landmark
cases U.S. Bank National Association v. Ibanez and
Wells Fargo Bank, N.A. v. LaRace, 458 Mass. 637 (2011)
in which the courts vacated two foreclosures
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prosecuted by trustees of securitization trusts.1 My
seminal contribution was to shift the debate beyond
defective assignments of mortgage to an examination of
the fatal breaks in the chain of title that occurred
due to the utter failure of the entities that
securitized these mortgages to document the transfers
between themselves.
More recently, John OBrien, Register of the
Essex Southern District Registry of Deeds in Salem,
Massachusetts, commissioned McDonnell Property
Analytics, Inc. to conduct a forensic examination to
test the integrity of his registry due to his concerns
that: 1) Mortgage Electronic Registration Systems,
Inc. (MERS) boasts that its members can avoid
recording assignments of mortgage if they register
their mortgages into the MERS System; and 2) due to
the robo-signing scandal spotlighting Linda Green as
featured in a 60 Minutes expos on the subject earlier
this spring.
1 McDonnells Amicus Brief is available on the
Massachusetts Supreme Judicial Courts website at:
http://www.ma-appellatecourts.org/search_number.php?
dno=SJC-10694&get=Search.
http://www.ma-appellatecourts.org/search_number.php?%20dno=SJC-10694&get=Searchhttp://www.ma-appellatecourts.org/search_number.php?%20dno=SJC-10694&get=Searchhttp://www.ma-appellatecourts.org/search_number.php?%20dno=SJC-10694&get=Searchhttp://www.ma-appellatecourts.org/search_number.php?%20dno=SJC-10694&get=Search -
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I accepted this assignment on a pro bono basis
because of its high and urgent value to the public
trust, and to educate the 50 Attorneys General who are
brokering a settlement with the subject banks in an
attempt to resolve fraudulent foreclosure practices.
My entire report with exhibits is available at no
charge to the public at: http://salemdeeds.com and at
https://www.truthinlending.net.
I defined the scope of the examination by
selecting all assignments of mortgage that were
recorded during the year 2010 to and from three of the
nations largest banks: JPMorgan Chase Bank, N.A.,
Wells Fargo Bank, N.A., and Bank of America, N.A. The
sample was neither random nor arbitrary; we included
every assignment that appeared in the Grantor /
Grantee index using the registrys online search
engine. The study included 147 assignments involving
JPMorgan Chase; 278 assignments involving Wells Fargo
Bank; and 140 assignments involving Bank of America.
Before examining the documents, I enlisted the
help of Attorney Jamie Ranney of Nantucket,
Massachusetts to establish definitions of terms based
on Massachusetts law that I could rely upon to
determine whether an assignment was either: valid,
http://salemdeeds.com/https://www.truthinlending.net/https://www.truthinlending.net/http://salemdeeds.com/ -
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missing, questionable, invalid, fraudulent, or
criminallyfraudulent. These definitions are attached
as Exhibit A to my report; Exhibit B explains my
methodology, protocols and practical applications for
classifying assignments of mortgage according to the
prescribed definitions; Exhibit C is a list of robo-
signers that we identified which also provides
information on whom the robo-signors executed
documents for, who they were actually employed by (if
we knew), and how many documents they executed.
From there, we researched the underlying mortgage
and assembled all documents cross-indexed thereto such
as prior assignments of mortgage, discharges of
mortgage, orders of notice, and all documents recorded
in connection with a completed foreclosure. This
increased the population of examined documents to
approximately 2,000. In total, 473 unique mortgages
were analyzed, covering $129,577,415 in principal
obligations.
The results of my investigation were shocking and
revealed widespread, systemic, patterns of practice of
fraud and abuse by the mortgage banking and servicing
industries; and especially by their controversial
private utility, Mortgage Electronic Registration
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Systems, Inc. which has eviscerated transparency from
the time-honored public recording system, and so
defiled the integrity of the Southern Essex District
Registry of Deeds that John OBrien has called for a
full forensic audit of his registry.
With respect to transparency i.e., how often
could we track the true, current owner of a given
mortgage, we found:
Using our forensic tools and methods(typically unavailable to the generalpublic and registry staff), we wereable to trace ownership to only 287 of473 mortgages (60%).
46% of mortgages were MERS registered;and 47% were owned by the GovernmentSponsored Enterprises (i.e., FannieMae, Freddie Mac, Ginnie Mae),respectively. Typically ownership ofthese mortgages is highly obscure.
37% of mortgages were securitized intopublic trusts (as opposed to privatetrusts), which are typically morediscoverable through use of forensictools and high cost, subscription-baseddatabases.
With respect to the integrity of the chain of
title i.e., how valid (legal) are the assignments of
mortgage that we examined, we found:
Only 16% of all assignments examinedare valid.
75% of all assignments examined areinvalid and an additional 8.7% arequestionable (require more data.)
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27% of the invalid assignments arefraudulent; 35% are robo-signed; and10% violate the Massachusetts MortgageFraud Statute (M.G.L. Ch. 26635A(b)(4).
683 assignments are missing,translating to approximately $180,000in lost recording fees per 1,000mortgages whose current ownership canbe traced.
My audit of the Southern Essex District Registry
of Deeds is relevant here because Henrietta Eatons
situation is a case in point of what typically happens
when Fannie Mae, its Servicer, and Mortgage Electronic
Registration Systems, Inc. conspire to suppress the
identity of the true owner and holder of a borrowers
note and mortgage so that they can illegally foreclose
upon the collateral property without raising
suspicion.
My interest in offering this amicus briefis
simply to shed the light of the truth on the
documentary evidence available in the public record so
that this venerable Court will not be fooled by the
charade that is playing out before it now.
I offer my services herepro bono as a public
service. I have not requested, accepted nor received
any compensation for my efforts; nor do I have a stake
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in the outcome of the litigation except to see that
justice prevails.
STATEMENT OF THE ISSUES
1. The issue presented is the validity of aforeclosure conducted by a [successor] mortgagee who
[took the mortgage by assignment and purported to]
hold the mortgage but not the underlying promissory
note at the time of foreclosure.
2. A condition precedent to resolving issue # 1is to establish that the successor mortgagee seeking
to foreclose can prove that it received a valid
assignment of the mortgage from a party that itself
held the mortgage. If more than one transfer was
involved, the successor mortgagee must be able to
provide a complete unbroken chain of assignments
linking it to the record holder of the mortgage.2
3. If issue #2 fails, then issue #1 becomesacademic in nature with respect to the instant case;
however, the Supreme Judicial Courts ruling will be
of inestimable value to other matters that involve the
separation of the note from the mortgage due to
2SeeU.S. Bank v. Ibanez, 458 Mass. 637 (2011).
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securitization, the use of Mortgage Electronic
Registration Systems, Inc., or inadvertence.
STATEMENT OF THE CASE AND FACTS
Amicus Curiae McDonnell hereby adopts the
statement of the case and facts presented by the
Plaintiff-Appellee, Henrietta Eaton, in her Brief of
Appellee docketed with the Massachusetts Supreme
Judicial Court on September 23, 2011 in the instant
appeal.
However, also relevant to this case indeed,
essential are critical facts that arise upon an
examination of the assignment of mortgage recorded in
the Suffolk County Registry of Deeds on May 20, 2009
at Book 44958 Page 249 by which Mortgage Electronic
Registration Systems, Inc. as nominee for BankUnited,
FSB purports to assign and transfer to Green Tree
Servicing LLC all its right, title and interest in and
to the Eaton mortgage.
Simply put, if the operative assignment is shown
to be invalid, the issue of whether or not a mortgagee
who neither owns nor holds the note can foreclose on
the collateral property becomes academic in nature.
Moreover, if the assignment is invalid, the
foreclosure of the Eaton property would fail as a
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matter of law without having to consider the
splitting factor i.e., that the note and mortgage
are held by different entities.
Finally, if the assignment is invalid neither of
the Defendants, Green Tree Servicing LLC nor its
assignee Federal National Mortgage Association, have
the requisite standing to invoke the jurisdiction of
the Massachusetts courts.
Plaintiff-Appellee Eaton has pleaded her case
well both in the Housing Court, the Suffolk County
Superior Court, and before this Supreme Judicial
Court. She has properly cited Massachusetts common
law, the relevant statutes, and the terms of the
mortgage contract itself, all of which require
unification of the note and mortgage prior to the
institution of a foreclosure action.
The law of this case, which will ultimately
resolve issue #1, is well settled and does not require
the Supreme Judicial Court to pay deference to the
business models, innovations, rules and customs that
the mortgage banking industry has adopted which have
wreaked havoc of cataclysmic proportions throughout
all sectors of our economy and have had far-reaching
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effects on other sovereign nations and emerging
markets around the globe.
What is baffling here is that the Defendant-
Appellees who stand to profit from the instant
foreclosure are purposely suppressing the identity of
the real party in interest. This Honorable Court
should want to know, why is that? Whats there to
hide? Whats there to gain? And how does this tie into
the ever-increasing lack of transparency I quantified
after auditing the Southern Essex Registry of Deeds?
SUMMARY OF THE ARGUMENT
Amicus Curiae McDonnell hereby adopts and
ratifies the arguments, citations to relevant common
law, Massachusetts General Laws, and the operative
terms of the mortgage contract presented by the
Plaintiff-Appellee, Henrietta Eaton, in her Brief of
Appellee docketed with the Massachusetts Supreme
Judicial Court on September 23, 2011 in the instant
appeal.
Further, I argue below that not only does the
Eaton mortgage require that the Note and the attendant
Security Interest (Mortgage) be transferred together
when sold; but the policies and procedures of
Defendant-Appellant Federal National Mortgage
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Association (Fannie Mae) require that its Loan
Servicer hold both the note and the mortgage prior to
instituting a foreclosure action. Additionally, if
required by Applicable Laws, the Loan Servicer must
also gain physical possession of the note by
submitting a Request for Release of Documents from
Fannie Maes Document Custodian. . (See Exhibit A.
Fannie Mae Announcement 08-12, 5/23/2008)
Having an understanding of Fannie Maes policies
and procedures helps to explain why Mortgage
Electronic Registration Systems, Inc. (MERS)
functions as it does, especially when a MERS Member is
prosecuting a foreclosure action. However, as will
become apparent, Fannie Maes protocols and MERS
Rules are in direct conflict with the Massachusetts
General Laws governing foreclosure.
The pivotal Assignment of Mortgage (Assignment)
that purports to transfer the Eaton Mortgage from
Mortgage Electronic Registration Systems, Inc.
(MERS) as nominee for BankUnited, FSB to Green Tree
Servicing LLC (Green Tree) is invalid for a variety
of reasons explained in detail below.
Moreover, the purpose of this Assignment is not
to memorialize a true sale of the Note and Mortgage to
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the Assignee; but rather, it is a litigation tool
designed to close the gap in the chain of title so
that it appears in the public record that the
Assignee, Green Tree in this case, had the legal right
to foreclose the property. This sham Assignment is a
necessary precursor to the ultimate recordation of the
Foreclosure Deed; otherwise, Registers of Deeds would
not allow title to pass to the foreclosing entity.
It is incumbent upon consumers, their attorneys,
registry staff, clerks of court, and judges to learn
how to recognize these sham assignments because they
are corrupting the chain of title in our land records;
and because, once recorded, courts afford them
deference rather than seeing them for what they are:
counterfeits, forgeries and utterings.
The MERS System is no replacement for the time-
honored public land recording system that is the
foundation of our freedom, our prosperity, and our
American way of life. By privatizing property transfer
records MERS has been allowed to set up a control
fraud of epic proportions that has facilitated the
largest transfer of wealth in human history, and it
should be abolished.
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I have copious evidence that the MERS System
simply does not do what it claims to do. It is
incomplete, inaccurate, misleading, unreliable, self-
contradictory, and asynchronous with the timing of
events as they actually happened. Moreover, I have
witnessed that certain entries reflected in MERS
Milestone Reports appear to have been made during the
course of litigation in an attempt to square MERSs
internal records with the timeline of external events.
Indeed, the New Man at MERS, Bill Beckman was just
interviewed by Mortgage Technology Magazine and he
frankly admits: We did not have a robust process to
make sure that all the data on our system was
accurate, timely and reliable. Our view was that is
the servicers data and theyre relying on it for
their own transactions, theyre using their own
systems, so we dont have to double checkWell, the
regulators took the perspective of, No. Youve got
your name on it. Its your system. It is being used,
but you dont know exactly the way its being used, so
theres no reason those two things shouldnt line
up. (See Exhibit G. The New Man at Mortgage
Electronic Registration Systems, Inc., Bill Beckman
Interview)
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ARGUMENT
I. THE MORTGAGE CONTRACT CONTROLS.
On September 12, 2007, Henrietta L. Eaton
(Eaton or Appellee) executed a Note in favor of
BankUnited, FSB to obtain funds in the amount of
$145,000.00. The terms of the subject Note indicate
that the principal amount would be financed at a fixed
interest rate of 6.875% per annum; and that the
monthly installments of $952.55 beginning on November
1, 2007 would be sufficient to fully amortize the
obligation over the thirty (30) year term to maturity
by October 1, 2037. (See Exhibit B. Note,
9/12/2007)
To guarantee the debt, Eaton executed a Mortgage
encumbering residential property located at 141
Deforest Street, Roslindale, Massachusetts 02131
(Property). The Mortgage names BankUnited, FSB
(BankUnited) as the Lender and defined MERS as
Mortgage Electronic Registration Systems, Inc. MERS is
a separate corporation that is acting solely as a
nominee for Lender and Lenders successors and
assigns. MERS is the mortgagee under this Security
Instrument. (See Exhibit C. Mortgage, 9/12/2007)
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The Mortgage in question is what is known as a
MERS Original Mortgage (MOM) and is being tracked in
the Mortgage Electronic Registration Systems, Inc.
database as MIN #100526500053612901. MERS reports that
as of June 24, 2011, the status of the Eaton Mortgage
is Inactive meaning that the servicing rights and
the beneficial ownership rights in the Mortgage are no
longer being tracked in the MERS System. It also
indicates that Green Tree Servicing LLC was the last
Servicer of record and that Fannie Mae was the
Investor, i.e. owner and holder of the Mortgage Loan
at the time the Mortgage was deactivated. (See
Exhibit D. MERS Research Results)
A close reading of the Note and Mortgage clearly
indicates that the contract is between Eaton as
Borrowerand BankUnited as Lender. MERS has no
position in the Note and is not authorized to take any
action on behalf of the Lender under the terms
thereof. The Mortgage, on the other hand, provides
that MERS may take certain actions on behalf of the
Lenderif so directed by the Lenderor the Lenders
successors and assigns. The granting clause reads as
follows:
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This Security Instrument secures to Lender:(i) the repayment of the Loan, and allrenewals, extensions and modifications ofthe Note; and (ii) the performance ofBorrowers covenants and agreements under
this Security Instrument and the Note. Forthis purpose, Borrower does hereby mortgage,grant and convey to MERS (solely as nomineefor Lender and Lenders successors andassigns) and to the successors and assignsof MERS, with power of sale, the followingdescribed property located in the County ofSuffolk which currently has the address of141 Deforest Street, Roslindale,Massachusetts 02131.
There is no contractual language in the Mortgage
that gives MERS the independent right to enforce the
Note and Mortgage; or even to assign its position in
the Mortgage without the express direction and
authorization of the Lender or the Lenders successors
and assigns.
The Mortgage contains notice to the Borrower that
the instruments memorializing the mortgage obligation
may be sold; however, the clear representation made to
Eaton was that her Note and Mortgage, if sold, would
move together and remain inextricably linked. The
relevant section of the uniform covenants contained in
the Mortgage reads as follows:
20. Sale of Note; Change of LoanServicer; Notice of Grievance. The Note or apartial interest in the Note (together withthis Security Instrument) can be sold one ormore times without prior notice to Borrower.
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A sale might result in a change in theentity (known as the Loan Servicer) thatcollects Periodic Payments due under theNote and this Security Instrument andperforms other mortgage loan servicing
obligations under the Note, this SecurityInstrument, and Applicable Law. [Emphasissupplied]
Thus, irrespective of whether or not MERS is
involved in a nominal capacity, the Mortgage must
follow the Note pursuant to the strict language of the
contract between the parties. Notwithstanding MERS
overall scheme to avoid the recording of Assignments
in the public records, the Lender or the Lenders
successor and assigns are bound to do so under the
terms of the mortgage contract and all Applicable Laws
as explained further below.
Massachusetts General Laws Chapter 183 governing
the recording of documents in the county Registry of
Deeds does not specify when an assignment of mortgage
must be recorded. The presumption here is that all
assignees would want to record their position in order
to protect themselves from the risk of loss. While
auditing the Southern Essex District Registry of
Deeds, we came across numerous assignments that were
recorded as much as ten (10) years after the mortgage
had been discharged. Those were an obvious attempts to
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close the gap in the chain of title which stands for
the proposition that, eventually all valid assignments
must be recorded to maintain the integrity of title to
real property.
In contrast, M.G.L. Ch. 185 67 is explicit on
this subject and requires that all assignments
affecting registered land shall be registered. The
statute in its entirety states emphatically:
The owner of registered land may mortgage itby executing a mortgage deed. Such deed maybe assigned, extended, discharged, releasedin whole or in part, or otherwise dealt withby the mortgagee by any form of deed orinstrument sufficient in law for thepurpose.But such mortgage deed, and allinstruments which assign, extend, discharge
and otherwise deal with the mortgage, shall
be registered, and shall take effect upon
the title only from the time of
registration. [Emphasis supplied]
The clear statutory requirement codified in
M.G.L. Ch. 185, 67 establishes that all instruments
that assign the mortgage shall be registered. If
nothing else, common sense dictates that this
requirement carries over to recorded land as well;
otherwise, in a situation where a property consists of
an assemblage of both recorded land and registered
land, the result would be absurd i.e., the chain of
title to Parcel I would be different from Parcel II
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even though both lots were equally impacted by the
same transactions. This is not a hypothetical
situation as I have just completed an analysis of a
case involving this scenario.
II. THE PIVOTAL ASSIGNMENT OF MORTGAGE THAT PURPORTS
TO TRANSFER THE EATON MORTGAGE TO DEFENDANT GREEN
TREE IS INVALID.
Blacks Law Dictionary defines the term validas
having legal strength or force, executed with proper
formalities, incapable of being rightfully overthrown
or set aside Founded on truth of fact; capable of
being justified; supported, or defended; not weak or
defectiveOf binding force; legally sufficient or
efficacious; authorized by lawas distinguished from
that which exists or took place in fact or appearance,
but has not the requisites to enable it to be
recognized and enforced by law. (See Blacks Law
Dictionary, Sixth Edition, 1990, page 1550)
My examination of the Assignment of Mortgage
recorded in the Suffolk County Registry of Deeds on
May 20, 2009 at Book 44958 Page 249 by which Mortgage
Electronic Registration Systems, Inc. as nominee for
BankUnited, FSB purports to assign and transfer to
Green Tree Servicing LLC all its right, title and
interest in and to the Eaton mortgage revealed the
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following facts: (See Exhibit E. Assignment of
Mortgage)
1. The Appellants state in their Brief that,After the loan was funded, the Note wasendorsed in blank and transferred to FannieMae, which retained Green Tree to servicethe loan. [Appellants Brief, p. 4]
2. On information and belief, this transferfrom BankUnited to Fannie Mae occurred at ornear the origination date of September 12,2007.
3. Accordingly, BankUnited had no interest inthe Eaton Mortgage to transfer on April 22,2009.
4. Moreover, BankUnited had conveyed all righttitle and interest to Fannie Mae and couldnot sell the Mortgage for a second time toGreen Tree.
5. The Appellants admit that Green Tree was theLoan Servicer.
6. The Assignment of Mortgage in question wasexecuted by Monica Medina, AssistantSecretary of Mortgage ElectronicRegistration Systems, Inc. acting on behalf
of BankUnited, FSB.
7. Monica Medina is not an employee of MERS;and she was not employed by BankUnited on
April 22, 2009 when she executed thisAssignment.
8. In truth, Monica Medina is employed by GreenTree Servicing LLC at its headquarters inTempe, Arizona.
9. Thus, what we have here is a fictitious,self-dealing Assignment of Mortgage thatcontains false statements,misrepresentations, and omissions ofmaterial fact in order to deceive ordefraud. It was prepared and executed byGreen Tree without BankUniteds knowledge,authority or consent.
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10. This Assignment was not prepared for thepurpose of legally transferring the EatonMortgage to Green Tree. Rather, it is alitigation tool that was prepared underfalse pretenses to close the gap in the
chain of title to so that Green Tree couldprosecute the instant foreclosure, which itcompleted on November 4, 2009.
In preparation for writing this amicus brief, I
called upon Register John OBrien to search the
Southern Essex District Registry of Deeds filings for
other assignments that were executed by Monica Medina
(Medina). As of this writing, eleven (11)
assignments were provided to me for review. The
results are astonishing and clearly establish a
pattern and practice of assignment fraud. Medina
executed the assignments on behalf of ten (10)
different assignors in her dual role as a MERS
Certifying Officer or as Authorized Agent for Green
Tree. (See Exhibit F. - Robo-Signer Monica Medina)
In my capacity as a Certified Fraud Examiner, I
hereby certify to the Massachusetts Supreme Judicial
Court that the above-described Assignment of Mortgage
is fraudulent and therefore, it is void as a matter of
law. Thus, everything that flows from this breeder
document is tainted with fraud and must be revoked.
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CONCLUSION
In closing, I want the Justices to know that my
audit of the Southern Essex District Registry of Deeds
enabled me to examine 565 Assignments of Mortgage, the
majority of which were prepared in order to foreclose
on John OBriens electorate. Every single assignment
of mortgage that I examined that was prepared to
prosecute a foreclosure, without exception, is tainted
with the same fraud that I have detailed here.
The consequences to homeowners, the public land
recording system and the state and federal court
systems are devastating. In particular, the
Massachusetts Land Court is being used as the entry
point for these false documents as foreclosure law
firms introduce them with Complaints to Foreclose in
Servicemembers Civil Relief Act cases. The crisis is
so severe; it requires the immediate attention of the
Executive, Legislative and Judicial branches of the
Commonwealth of Massachusetts in order to protect its
citizens, its real property, and the rule of law.
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Respectfully submitted,
_____________________________
Marie McDonnell, AffiantMortgage Fraud and Forensic AnalystCertified Fraud Examiner, ACFEMcDonnell Property Analytics, Inc.P.O. Box 2067Orleans, Massachusetts 02653(v) 508-694-6866(f) 508-694-6874
Dated: September 30, 2011
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AMICUS BRIEF OF MARIE MCDONNELL
Henrietta Eaton v. Federal National Mortgage Association & Another
EXHIBIT A
Fannie Mae Announcement 08-12May 23, 2008
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AMICUS BRIEF OF MARIE MCDONNELL
Henrietta Eaton v. Federal National Mortgage Association & Another
EXHIBIT B
NoteSeptember 12, 2007
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AMICUS BRIEF OF MARIE MCDONNELL
Henrietta Eaton v. Federal National Mortgage Association & Another
EXHIBIT C
MortgageSeptember 12, 2007
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AMICUS BRIEF OF MARIE MCDONNELL
Henrietta Eaton v. Federal National Mortgage Association & Another
EXHIBIT D
MERS Research Results
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1 record matched your search:
MIN: 1005265-0005361290-1 Note Date: 09/12/2007 MIN Status: Inactive
Servicer: Green Tree Servicing LLC Phone: (800) 643-0202
Tempe, AZ
Investor: Fannie Mae Phone: (202) 752-7000
Washington, DC
Return to Search
For more information about MERS please go to www.mersinc.org
Copyright 2006 by MERSCORP, Inc.
S Servicer Identification System - Results https://www.mers-servicerid.org/
6/24/2011
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AMICUS BRIEF OF MARIE MCDONNELL
Henrietta Eaton v. Federal National Mortgage Association & Another
EXHIBIT E
Assignment of MortgageApril 22, 2009
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AMICUS BRIEF OF MARIE MCDONNELL
Henrietta Eaton v. Federal National Mortgage Association & Another
EXHIBIT F
Robo-Signer Monica MedinaSouthern Essex District Registry of Deeds
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ROBO-SIGNERMONICAMEDINA
ASS
IGNMENTSOFMORTGAGEEXECUTEDBYMONICAMEDIN
AANDRECORDEDINTHE
ESSEXSOUTH
ERNDISTRICTREGISTRYOF
DEEDS
Execution
Date
Effective
Date
Assignor
Assignee
MedinasPosition
MERS
McDonnellPropertyAnalytics,
Inc.
Page1
05/31/2011
11/01/200
9
MERSasnomineeforFirst
NationalBankofArizona
GreenTreeServicingLLC
AssistantSecretaryofM
ERS
YES
06/01/2011
04/01/200
9
MERSasnomineefor
Bankunited,FSB
GreenTreeServicingLLC
VicePresidentofMER
S
YES
05/27/2011
12/02/200
9
MERSasnomineeforMortga
ge
Partners,Inc.
GreenTreeServicingLLC
AssistantSecretaryofM
ERS
YES
05/27/2011
01/01/201
1
MERSasnomineeforFamily
ChoiceMortgageCorporatio
n
GreenTreeServicingLLC
AssistantSecretaryofM
ERS
YES
06/23/2011
06/20/201
1
GreenTreeServicingLL
U.S.Bank,NationalAssociation,
astrusteeonbehalfofLehm
an
Capital,Inc.aDivisionofLeh
man
BrothersHoldings,IncasDe
btor
andDebtorinPossessionin
its
Chapter11caseintheUnited
StatesBankruptcyCourtfor
the
SouthernDistrictofNewYork,
CaseNo.08-13555
AuthorizedAgentofGreen
Tree
ServicingLLC
NO
07/10/2009
REOPropertiesCorporationby
itsattorneyinfactGreenTree
ServicingLLC
DBStructuredProductsInc
AuthorizedAgentofRE
O
PropertiesCorporationb
yits
attorneyinfactGreenT
ree
ServicingLLC
NO
10/21/2009
DBStructuredProducts,Inc.
by
itsattorneyinfactGreenTree
ServicingLLC
U.S.Bank,NationalAssociation,
asTrusteeintrustforthebe
nefit
oftheholderofSerVertisFu
ndI
AuthorizedAgentofD
B
StructuredProducts,Inc.byits
NO
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ROBO-SIGNERMONICAMEDINA
ASS
IGNMENTSOFMORTGAGEEXECUTEDBYMONICAMEDIN
AANDRECORDEDINTHE
ESSEXSOUTH
ERNDISTRICTREGISTRYOF
DEEDS
Execution
Date
Effective
Date
Assignor
Assignee
MedinasPosition
MERS
McDonnellPropertyAnalytics,
Inc.
Page2
Trust2009-2Certificates,Se
ries
2009-2
attorneyinfactGreenT
ree
ServicingLLC
04/08/2011
MERSasnomineeforGMAC
MortgageCorporation
TheBankofNewYorkMel
lon
TrustCompany,N.A.asTrustee
forGMACMH
omeEquityLoan
Trust2006-HE3
AssistantSecretaryofM
ERS
YES
04/15/2011
MERSasnomineeforMortga
ge
LendersNetworkUSAInc
TheBankofNewYorkMellon,
TrusteeforCSMA2011-3,c/o
GreenTreeServicingLLC
AssistantSecretaryofM
ERS
YES
05/25/2011
10/01/200
9
MERSasnomineeforGMAC
MortgageCorporation
TheBankofNewYorkMel
lon
TrustCompany,Nationa
l
Association,asTrusteefo
r
GMACMH
omeEquityLoanTrust
2006-HE3
AssistantSecretaryofM
ERS
YES
05/27/2009
MERSasnomineefor
BankUnited,FSB
GreenTreeServicingLLC
AssistantSecretaryofMor
tgage
ElectronicRegistrationSys
tems,
Inc.asnomineeforBankUnited,
FSB
YES
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AMICUS BRIEF OF MARIE MCDONNELL
Henrietta Eaton v. Federal National Mortgage Association & Another
EXHIBIT G
The New Man at MERSBill Beckmann Interview
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Vol.1
8,
No.
4September2011
Tech Savvy Lenders | .NET Framework | MMC Exams
mortgagetechnology.com
TOUGHQUESTIONSFOR
Bill Beckmann seeksto tackle challenges
MERS
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PhotographyByRandallScott
12
MortgageTechnology
September2011
BILLBECKMANNBEGINSEACHWEEKWITHAFLIGHT
from
his
homeinSt.
LouistoWas
hington,D.C.ewee
k-
lyightshave
becom
earoutineofsortssince
hetookona
jobthatof
late,hasbecomeamongthemostdauntinginthe
mortgageindustry,presi
dentan
dCEOofMerscorpInc.
ecompany,locatedinthecapitalsubur
bofReston,Va.,
runsMERS,theMortgageElectronicRegistrationSystems.
ItsMERSSystemisadatabasethattrac
ksmortgageservicers
andcorrespon
dingpromissorynoteowners
for60%ofthe
nation
sresi
dentialmortgages.
Merscorpwascreatedan
disowne
dbythe
biggestplayers
inthemortgageindustry,includingthegovernment-spon-
sore
denterprisesan
dthenations
largestmortgage
len
ders
andservicers
likeC
iti,w
hereBec
kmannspent25yearsof
hiscareer,inc
ludingtimeservingasthepresidentofitsCiti-
Mortgageunitfrom2
005to2008.
ButMERSsro
leinthe
foreclosureprocess
hascomeun
der
re
from
borrowerad
vocatesan
dregu
lators,u
ltimately
lead-
ingtoaconsentorderissued
byfedera
lregulatorstwowee
ks
beforeBec
kmannshiringwasannounce
d.
InanexclusiveinterviewwithMortgageTec
hnology
his
rstwithanymediasincetakingthenewro
leBec
kmann
explains
how
hesleadingtheeorttoovercomeMerscorps
chal
lengesan
dw
hyh
ebelievesinthe
futureofMERS.
TheNe
wM
anat
ME
RS
ByAustinKilgore
MortgageindustryveteranBillBeckmann
sayshecanlea
dembattledMerscorp
throughitstoughtimes.
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What compelled you to take this job?
I loved MERS for three
reasons. One is that its an interesting
company at a difficult time. I felt like I
could dive in and make a difference. And
I still feel that way; its proven to be true.
The second part is I really liked the
board. I liked that we have Fannie and
Freddie and the top lenders supportingthe company. Even though its a tough
time, you couldnt have a better board.
I figure that if I can help get through
the tough times, the ability to move the
company forward later with the backing
of a group like this would be incredible.
The third part, personally, I spent
25 years at Citigroup, a company with
250,000 people. By the end, I probably had
more bosses there than I have staff here.
The ability to be part of a small company
where I can walk down the floor and talk
to people instead of having to email orconference call, and work for a board of
directors which I had never done before,
was really just an interesting calling.
Having come from a MERS member, do
you feel you can relate to the members?
I understand it from the
other side. I supported MERS when I
was at Citi and I helped make invest-
ments in it. I understood its value propo-
sition. Coming into this, I had a basic un-
derstanding of how the members think
about it. That helps me day-to-day.
Equally important, having run a large
mortgage company, I understand the
broader perspective and I know many of
the personalities Im working with. They
can call me up if theyve got an idea or
problem, and I have the ability to reach
out and gain access to senior leaders dur-
ing the middle of a tough time is pretty
good and I think that helps us.
Q At Citigroup, we were a heavily regu-lated institution, especially during 07-08when the market started to turn. So I havea lot of familiarity and comfort working
with regulators, the OCC and OTS, and I
knew it was something new for this or-
ganization. So my ability to come in here
and feel like that with the right effort, this
is a solvable problem, was huge.
What stands out about what you know
now inside MERS that you didnt know before?
That MERS really is a
small company. Were up to 65 people
now, from 50 at the beginning of theyear. For something so important, with
60% market share in the U.S. of a back
office utility function for all the key play-
ers, it really is a small company.
There is some very focused expertise,
but its just not that deep. Our core func-
tions are done with outsourced vendors.
The key knowledge base is very concen-
trated and that was certainly a big dif-
ference. Im not sure I really understood
that when I was a member. I think this
is new, but I also didnt have as much
of an appreciation of how much effortmembers are spending on MERS.
Is that small size and concentrated ex-
pertise a strength or weakness?Its a little bit of both. One
of the reasons it was an appeal to me
coming here is that were small and nim-
ble. I dont have to go through a matrix
organization or a series of committees to
get stuff done. We have officers meetings
a couple of times a week and if we need
to make a decision, we can make it.
Even when I need to go to the board,
theyre very supportive. Theyre here to
make sure were staying on the straight
and narrow on the compliance order.
They meet monthly and I get stuff done
real fast. So in that sense, its good.
But its a challenge to go through pe-
riods of time, for example, like with the
consent order, where you have a large
amount of work come in all at once.
For example, weve now become a
vendor to our members and the vendor
management groups of eight to 10 of the
large banks want to come in and do a
vendor management reviews. Thats a
challenge when you have a small group.
But those are things you just have to
deal. There are peaks and valleys in any
business. Id submit that all the servicers
and banks are dealing with that capacity
issue and trying to get things lined up.
Thats one of the reasons I came here.
What are the other strengths of MERS?
I remain convinced morethan ever of the value proposition of the
business. While its been a under fire in
the press, the truth is bringing e-com-
merce to the process and eliminating un-
necessary recordings really is a positive
thing thats of value. Thats why despite
the controversy and compliance issues,
the members have stood behind us.
The board is phenomenal. If you added
up the market share of the board, its the
vast majority of the industry. Having that
group behind you and the expertise and
the resources behind them if you needhelp is tremendous.
The other thing that doesnt get talked
about is the connectivity. Were connect-
ed to Fannie, Freddie and all the mem-
bers. Were connected to LPS. We are the
de facto standard in terms of connectiv-
ity among all the different players. I think
thats something that as we go forward
and think about new opportunities
weve got to fix the challenges we have
in front of usbut as I think about the
future, the connectivity, the data and that
member support, taking it as a whole, it
really puts us in a unique position.
What are Merscorps biggest weaknesses?One is the fact that were
small. Were transitioning from almost
like an association to really a vendor of
Fortune 500 companies. Thats different
for us. We didnt have the support, infra-
structure, systems and process to do that.
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What do you mean by the difference be-
tween an association and a vendor relationship?
We view our role as sup-
porting the members activities. Thats
what we were formed to do and were
going to continue to do it well. One of
our challenges has been, in doing that, is
our name is on all those transactions.
Take one of the consent order re-
quirements. We did not have a robust
process to make sure that all the data
on our system was accurate, timely
and reliable. Our view was that is the
servicers data and theyre relying on
it for their own transactions, theyreusing their own systems, so we dont
have to double check. Theyre per-
forming those transactions, so theyre
performing it that way.
Well, the regulators took the per-
spective of, No. Youve got your name
on it. Its your system. It is being used,
but you dont know exactly the way its
being used, so theres no reason those
two things shouldnt line up.
So weve put in place a process now
that were going to make sure that
since we run a database, thats what
we do, its going to be perfect.
Its going to take a little while to
get there, but thats the process were
going through. Were going to have
a quality assurance function to make
sure it stays that way and all the otherprocesses supporting that are done
well. That wasnt something we did
robustly before and thats one of the
things weve been asked to do.
One of the other weaknesses we have
is that were a niche and complex busi-
ness. People dont understand us very
well. Were hard to understand and
that makes it difficult to get our mes-
sage out in a crisp and clean way and I
think that has hurt us a little bit.
As the foreclosures brought our
name into the forefront, people didnt
understand us. Weve become sort of
an easy villain because were a small
company, we dont have a lot of em-
ployees in all the states and were
owned by the banks.
Our name was on some of the fore-closures and because our name is
used by the servicers, we got pulled
into some of those other bad practices.
So thats been a weakness for us.
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Youre describing changes that focus a lot
on Merscorps public message, which critics could
dismiss as merely PR spin. What are the actual
substantive changes that need to happen?
Its a balance depending
on the audience. Were not dealing with
a consumer ad campaign here where it
can be all spin and catchy. Were dealing
with a sophisticated audienceattorneys,
judges, legislators and candidly, some
cynical reporters. It has to be balanced.
It doesnt mean that were not going to
put a positive edge or spin on things. But
if its not balanced, if it doesnt explain fac-tually who we are and what we do and
the context of why our position makes
sense and perhaps another doesnt, then
were not going to have credibility.
But when do you actually start doing
what youre talking about? You can say youre
improving, that quality assurance is getting better
and youre addressing items in the consent order,
but that takes time. When does the message actu-
ally start conveying real accomplishments rather
than how you position your message?
In some ways, the consentorder was good for MERS and the mem-
bers. The reason is it really added focus,
attention and resources to a part of the
business thats getting a lot of attention.
What I like about the consent order is
that it isnt just that MERS was told to fix
its process; the members were told to fix
theirs. Its a hand-in-glove approach.
Whats great about this is the members
now have made a commitment that said,
If were going to use MERS, were going
to treat them as a vendor with the same
high standards we treat other vendors of
a Fortune 500 bank. Were going to treat
them with the same data security reviews.
Were going to reconcile our data.
So its not MERS thats reconciling the
data to make sure their system of record
is right with the MERS System. Theyre
doing it every month and we just now
have to check periodically that we agree
with the results theyre coming up with.
They have to have a MERS QA plan.
Our QA plan isnt a unique plan. Our QA
plan is testing the QA plans of the mem-
bers. Theyre really meant to fit together.
What we have in terms of the consent
order, were really going to end up much
stronger as an organization and the rela-
tionship with us and members in feeling
confident that the processes and the pro-
cedures and the data is all good.
Do you think its fair for people to ask
why that wasnt in place to begin with?
Yeah, sure. I think its fair. Ithink the answer is the organization grew
up over a period of 15 years and it was
never questioned, much in the same way
I think that some of the robustness of
servicing processes at servicers got ques-
tioned when they got put under stress.
The process worked for a long time
and when it was put under stress, people
said, Look, thats just not good enough
for the world we live in now. It has to
stand up to a different level of scrutiny.
MERS had never had a regulatory visit
before last year. When they came in, theydidnt say, What you did was terrible.
If anything, the regulators got con-
vinced that we do has value. But they
said, If its going to have value and
youre going to use it, it has to meet these
criteria because youre a critically impor-
tant back office function to banks. Weve
never been held to that standard before.
So its a legitimate question, although
what I would say is that servicers were
not necessarily operating off of the
MERS database. They were operating off
their own databases. I dont think this
was causing bad outcomes to consum-
ers or anybody else. I just think it was
a looseness in the process that subjected
us to criticism, which can be fixed.
Going back to the consent order, where
do we stand on that? Weve really made
enormous progress. The boards have
been reconstituted. The management
team has largely been reconstituted.
At the senior management level, weve
brought on a head of communications,
a new CEO, a chief risk officer and head
of HR in the past four months. Beneath
that, we brought in a new person to run
our quality assurance function and a
new person to run IT.
Thats a second bucket of what the
regulators were looking for so well have
more strength and oversight at the senior
level. Beyond the board and manage-
ment, weve really enhanced the whole
QA and data integrity processes.
Our defense has never been in anyof these court cases or even in the cases
of public appeal that its OK that we
did something wrong and were going
to do it better tomorrow. Weve always
felt and still feel today that the ground-
ing of the MERS business model is cor-
rect and lawful. What were doing right
now is more supporting the infrastruc-
ture that stands behind that.
One of the key things, if theres one
thing that makes me really feel good
about all the challenges that weve had
and fixing the regulatory issues andthese legal cases, is if you look at the
business and the business model as it
stands today, MERS has the same mar-
ket share that it did a year ago. Were
still operating in 50 states. We havent
lost any of our members. We havent
lost a nickel to an adverse judgment or
award. So the business model that we
have put in place here has really con-
tinued unfettered through the regula-
tory and legal challenges.
But that doesnt mean we havent
had to change some of the processes.
In Michigan, we lost the appeal on fore-
closure by advisement. For now, at least,
thats a way we cant do things. Well we
werent planning on doing things that
way anyway. We were already moving
out of foreclosures in our name. We
have had to adapt, but in terms of the
core business model and our value to
customers, thats continued strong.
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Is the MERS System still a viable
component of the mortgage industry?
Whats the alternative? Is
the alternative to go back 20 years and
start recording these things on paper
again? There is no good alternative.
MERS was formed for a valid purpose.
There were challenges with the accu-
racy, timeliness and cost of paper-based
recording. None of that has changed, so
that value proposition is as true today as
it ever was. I would even argue its more
true today. While the securitization mar-
ket has slowed down a little bit, lendersneed more flexibility rather than less in
where loans can be disposed of.
Take Citi. There was a time when we
would originate a loan and say this is a
Citi loan, its going to go into Citis ser-
vicing and stay on Citis books or stay in
a Fannie/Freddie securitization forever.
Then all of a sudden, times got tight and
we had to start deciding whether we
wanted to sell off loans or sell off servic-
ing. I think having that flexibility you get
using MERS is perceived as more of a
value, not less, than ever before.Yes, there have been some challenges
to the governance related issues at MERS,
but were fixing those and the underlying
business model hasnt changed at all. If
anything, its more important than ever.
Recording officials who are critical of
MERS, like Massachusetts John OBrien Jr.,
believe the problems of 15 years ago have been
addressed with e-recording and other technology
that enables them to handle a large volume of ac-
tivity without MERS. Meanwhile, the industry
is experiencing a decline in new originations and
securitizations, so fewer loans are being recorded.
Why not phase out MERS?
The OBriens of the world
are talking about the way theyd like the
world to be, not the way it is. The idea
of going to 50 different state processes
for recording every assignment is a huge
step back. It doesnt make sense. Theres
no analogy for it in modern commerce.
When you think of the mortgage in-
dustry, its one of the more robust finan-
cial transactions and financial-intensive
industries in the country. And yet every
other industry has adopted e-commerce
and standardization as a way of doing
business. This hasnt yet.
The property recordings were never
meant to be a robust source of consumer
information. Theyre not today and they
werent before MERS existed. If MERS
wasnt here, they still wouldnt be. Its re-
cording a lien between two commercial
counter parties. This concept that if youhad recorded all the assignments, con-
sumers would know who their true own-
er and servicer are isnt the case. The note
isnt recorded, so it wouldnt have solved
the issues people are bringing up.
Theres also the cost piece of it. Record-
ing all of these interim assignments that
arent required by law, would add cost
to the mortgagee that isnt there today
which is passed down to the person in
the form of lower mortgage costs.
So first, youd have a rise in mortgage
cost. And second, people like OBrientalk about all the revenue that was lost.
Well, recordings were not supposed to
be a profit center for the state. Typically
a $35-$40 recording fee went to covering
the states costs. This is not a huge profit
center to the state that weve taken away,
nor is it clear that in the vast majority of
states, they could handle the volume.
But if recorders set lower fees based on the
expectation of handling multiple assignments
and then they dont generate that revenue because
of MERS, dont they have a valid argument that
the lost revenue impacts their ability to cover
costs? Do they have to raise their fees to generate
the same revenue from fewer recordings and as-
signments in order to cover expenses?
Why should they add
revenue for something thats adding no
value? Its essentially just a tax on the
mortgage that adds no substantive value
to the consumer or the industry.
The only reason to do that, if theyre
not increasing their costs, is as a tax
for the benefit of the state. So call it
what it is. Im not sure how that adds
value to the process or the transaction
or make the home buying process
more affordable. Its really not.
And as far as the information being
out there, anybody can come to our
website and get that information for
free in a lot easier way than having to
go down to the county courthouse.
How does the disparate level of tech-nological capabilities among recording offices
impact the viability of MERS?
There are thousands of
counties and each one of them has
their own processes. Some of them
are electronic. In that particular case,
it probably doesnt cost them that
much more for assignments and that
assignment might generate additional
revenue for that state. One could ar-
gue whether that should be a revenue
generation tool or a lower cost of as-
signment, but thats a policy question.But I will tell you its not universal
and the vast majority of the counties
have not invested in people or systems
to get that process done. Whether its
in a refinance boom or other cases,
you might experience backlogs.
But to ask the question in reverse,
why would we ever want to reinvent
the process thousands of times on a
local basis when youve got a national
answer that works and results in lower
costs for consumers?
You have something that works ef-fectively for 60% of the market thats
backed by the customers of that sys-
tem. The customers of the system are
not the individual homeowners and
theyre certainly not the county re-
corders. The customers are the per-
son whos got the lien and the person
whos got the note, and theyre both
pretty darn happy right now.
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If the critics who want these assignments
recorded arent considering the difficulty of man-
aging thousands of county requirements, is a bet-
ter solution to nationalize MERS and establish a
countrywide standard for land recording?
No. The answer could be
that. But I go back to why? Why are we
fixing something thats not broken? You
have two willing parties, the note holder
and the person who has the security in-
terest who are happy with this system.
They are all members with us. You
have a price that works for them, that
makes their business model work and itmakes it less expensive for them to offer
mortgages. Its offered nationally at scale.
So if you could nationalize it, do you
think the government could actually do
whats being done by a 60-person com-
pany for $13 for the life of the loan as re-
liably? Ive never seen an instance where
the government could take it over and
run it more effectively, more reliably and
with a higher customer satisfaction that
can be done privately.
What is the relationship of MERSwith land recorders?
We have a challenge ad-
dressing them because of the reasons
you said. Most local municipalities
and local regions are really pressed for
dollars right now and this is a place
where they would love to see more
dollars. So I get that.
But to the point of should this be done
nationally, I keep reading some of the
critics saying, Well who gave them the
authority to go do this?
We dont need the authority. Were
following the law. The law gave us the
authority. Thats why were following the
process. We have two willing counter-
parties who are happy to have it done
this way and it is part of the consumers
transaction that were going to do it this
way. Its not done in stealth, though Id
agree that its a few words in a fairly vo-
luminous and complex document.
I think we have a challenge with coun-
ty recorders because theyve latched onto
this concept of revenue and I think a mis-
guided sense of accuracy for information.
But if you go back to it, if MERS wasnt
here, note information would not be re-
corded. Fannie and Freddie assignments
would not be recorded and theyre the
vast majority of the mortgage industry.
Its not as if, as you read in the press,
that MERS has somehow shielded or
shadowed or made useless the hundreds
of years worth of county recording re-
cords. The world is different now than itwas 200 years ago.
I still think that part of our challenge is
both a little bit the press, but also, some
of the county recorders are still working
off the notion that somebody makes a
loan and they record it and it kind of
stays that way, where you should be able
to hang on to it through the trail at each
step. Thats a little bit different than the
way the industry works. The industry
moves at a fast pace. The note is moving
one way and the servicing rights may be
moving a different way and the actualservicing may be subserviced in a differ-
ent place. Its very complex.
The cover of the May issue of Mort-
gage Technology was MERS 2.0 vs. Life After
MERS. The story explored the debate over the fu-
ture of MERS. What do you think is the future?
Clearly, its MERS 2.0. Were
not done yet, but in terms of that vision
and model, I think were already there.
The reality is our board, Fannie, Fred-
die and the top servicers, in order to even
get to the point of us having a consent
order, the regulators looked them in the
eye and said, If you want to use this
company, you have to sign up for the
changes you need to do and they have
to sign up for the changes they need to
do to really make this work right going
forward. Are you willing to do that?
And they all said yes, we said yes and
the regulators bought in.
Weve been marching down that path
now for several months and our mem-
bers have started their reconciliations. We
started the process in July of doing some
independent reviews. Weve hired firms
to help us and weve hired staff here.
We understand what its going to take
to succeed in a world with a higher level
of scrutiny and discipline. And we know
how to do that. Thats one of the reasons I
came here. That parts not rocket science.
I still think we have to work our way
through the legal challenges and even
if we get through the legal challenges,there will be some legislative challenges.
There are some people who are going
to say even if it is legal, I dont like it; it
shouldnt be that way. Thats one of the
larger communication and education op-
portunities and to some degree, threats if
we dont do it really well, that exists.
I feel pretty good about the regulatory
piece. I feel good about the way the orga-
nization is moving and the support of the
boards and members. I feel pretty good,
not exceptional, but there are good days
and bad on the legal front. Even there,were getting a lot more wins than losses
and were OK. Were moving forward.
But I keep coming back to what is the
alternative? What is the life after MERS?
If this model doesnt work, there are only
two outcomes I could see.
One would be a nationalized approach.
Personally, I think thats nuts. Why would
you go that route when youre already
60% of the way there with something the
regulators and the constituents say is OK?
I know there are critics who dont say that,
Im very mindful of that. I see it every day
in the press and in other places.
The other alternative is going back-
wards again. Going backwards may
not be going back 15 years or 20 years,
maybe its only going back a few years
because some counties have come up to
speed and the ones who have come up
the fastest have the biggest constituen-
cies. But its very uneven.
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Why would you ever want to go back
to a situation where you have 50 people
inventing and investing in the same sys-
tems and different processes? That adds
cost and complexity to the process thats
going to get passed on the consumer in
the end. Its going to be harder to comply
to, rather than easier. So I really believe
this concept, not only do I believe in it, its
what were executing and doing today.
What is the state of the MERS eRegistry?
Were excited about the
eRegistry. Its kind of a natural evolutionfor a company like us. When I talked
about our strengths, the concept of bring-
ing e-commerce and having the large
backers and connectivity to the systems,
I think that all plays into the next gen-
eration, which is how do you take paper
out of the process, how do you help to
standardize things, and the eRegistry falls
naturally into that space for us.
That said, what Ive seen on customer
calls with six different organizations, ev-
ery one of them was asking about and
had an interest in the concept of e-notesand the eRegistry and how that might
help them from a couple of perspectives.
One is really getting paper out of the pro-
cess. The second is adding a bit of unifor-
mity to the process. Theyve all focused
on control and compliance given that
theyve been banged over the head so
hard with it. This actually adds, not takes
away control from the process. Then of
course, cost. They understand that theyre
going to be living in a world right now
with higher compliance costs and lower
mortgage volume for a while. So they
understand theyre going to be compet-
ing for a smaller piece of the universe.
So are servicers and originators seeing
the heightened regulatory environment as an
opportunity to make the shift to e-mortgages?
Theyre see it more as forc-
ing them to evaluate things that will give
them more control and lower costs.
Heres the flip side of that coin; despite
the fact that its a new product and had
been growing pretty quickly, weve also
seen the growth slow this year.
For the existing customers, its slowed
because the market has slowed. But there
also havent been a lot of new customers
joining. I think its for the understandable
reason that all the big guys and most of
the small guys have taken 100% of their
system and project resources and focused
them on the core business.
The eRegistry is one of our sweet spots
for future growth. Weve seen it growat a normal pace, but unfortunately for
us, not at the exponential growth wed
hoped for. In a way, thats good. It may
sound self-serving, but we needed the
time, too. I like to relate it to making sure
the foundation is good before we start
building additions on the house.
One of the lesser-publicized require-
ments in the consent order is a review of the
eRegistry. What has that review found?
We havent completed it
yet. But the regulators didnt find any-thing that gave them concern over the
eRegistry. Why they asked us to do the
review for is because they found issues
in the core business. This really isnt our
core business and they didnt really take
a look at it. They want us to take a look
at it and make sure its OK, too.
What do you think the review will find?
Will there be opportunities to improve quality
control measures like with the MERS System?
We dont believe so. Any-
time you pay somebody a lot of money
to do a review, Im sure theyll come up
with some recommendations, but that
process was done fairly recently.
The eRegistry is a bit different than the
MERS database. eRegistry is a system of
record and because its a system of record
and because Fannie and Freddie and oth-
er investors are on it, its gone through
some pretty rigorous reviews.
We started it with a legal opinion
and its been through some fairly rigor-
ous reviews or else Fannie and Freddie
wouldnt be accepting us having the sys-
tem of record. So Im not expecting that
were going to run into any issues.
If the eRegistry was designed with more
controls, is there crossover in policies and proce-
dures that can be used in the MERS System?
I still think theyre a little
bit different. The standards and the focus
on something thats a system of record
for transactions is going to have a higherlevel of scrutiny, review and focus be-
cause theres commerce dependent on it.
If something fails, you potentially put the
principal at risk. Thats going to have a
different level of scrutiny than a registry
thats basically a copy of a database.
But the same lessons that were apply-
ing to the core businessthe staff, the
documentation, the being able to prove
it, making sure that if were working
through our policies and we have the
right resources to make sure to follow
up when theres an errorall those samekinds of lessons learned that were now
applying to the core business are going
to apply to our entire business model. Six
to 12 months from now, we as an organi-
zation walk out stronger overall.
Even if eRegistry were perfect, the fact
that people have some discomfort over
MERS right now and were under this
consent order, that may give people some
cause to say, Should I build my future
infrastructure on this foundation until
Im comfortable with this company?
While I dont have any specific con-
cerns over eRegistry, the fact that were
shoring up the whole organization and
saying, This is MERS 2.0. Its solid. Its
something thats been reviewed by the
regulators and all the servicers. You can
feel comfortable putting your Origina-
tions 2.0 on our MERS 2.0 and youre go-
ing to feel good about it. I think its going
to help the whole business.
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CERTIFICATE OF COMPLIANCE
This brief complies with the rules of court thatpertain to the filing of briefs, including, but notlimited to: Mass. R. A. P. 16(a)(6) (pertinentfindings or memorandum of decision); Mass. R. A. P.16(e) (references to the record); Mass. R. A. P. 16(f)(reproduction of statutes, rules, regulations); Mass.R. A. P. 16(h) (length of briefs); Mass. R. A. P. 18(appendix to the briefs); and Mass. R. A. P. 20 (formof briefs, appendices, and other papers).
_____________________________
Marie McDonnell, Affiant
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