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MERS Authority as nominee: Show Me the Nomination!

By Tim A. Bryant (March 2013)

Mortgage Electronic Registration Systems, Inc., as Nominee


The term nominee, as used in the MERS mortgage, is an indefinite reference. It is not defined
in the mortgage. No document is ever recorded in due course to which sets forth such
nomination terms. .. Importantly, the MERS and the lender... purposely chose to use the
specific legal term nominee, and not agent or powerofattorney. MERS also chose not to
define the term nominee., Mortgage Electronic Registration Systems, Inc. (MERS) v.
Johnston, No. 420609 Rdcv, VT Sup Ct Rutland (2009). The relationship between the Lender and
Mortgage Electronic Registration Systems, Inc., must be therefore be derived from the mortgage,
MERS governing documents, and public statements made showing the intent of the parties.

I.

The MERS Mortgage


MERS Residential Marketing Kit (includes sample Mortgage & Deed of Trust)

https://mersinc.org/component/docman/doc_download/197mersresidentialmarketingkit201207se
cured?Itemid=
MERS is 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. MERS is organized and existing under
the laws of Delaware, and has an address and telephone number of P.O. Box 2026, Flint, MI
485012026, tel. (888) 679MERS.
This language states that MERS is nominee, ad infinitum. They are bound to the mortgage as
nominee and mortgagee, even upon transfer or assignment.
The purpose and function of the nomination is stated in the Transfer of Rights in the Property;
This Security Instrument secures to Lender: (i) the repayment of the Loan, and all
renewals, extensions and modifications of the Note; and (ii) the performance of Borrowers
covenants and agreements under this Security Instrument and the Note. For this purpose,
Borrower does hereby mortgage, grant and convey to MERS (solely as nominee for Lender and
Lenders successors and assigns) and to the successors and assigns of MERS, the following
described property....
TOGETHER WITH all the improvements now or hereafter erected on the property,... shall also be
covered by this Security Instrument. All of the foregoing is referred to in this Security Instrument
as the Property. Borrower understands and agrees that MERS holds only legal title to the
interests granted by Borrower in this Security Instrument, but, if necessary to comply with law
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MERS Authority as nominee: Show Me the Nomination!

or custom, MERS (as nominee for Lender and Lenders successors and assigns) has the right:
to exercise any or all of those interests, including, but not limited to, the right to foreclose and
sell the Property; and to take any action required of Lender including, but not limited to,
releasing and canceling this Security Instrument.
The language of the mortgage on its face, indicates that MERS acts as nominee;
To only hold the legal title to, the interests granted by Borrower, in this security
instrument (includes all riders), and the note.
2.

To exercise any and all of those interests;


-As legal title holder of the mortgage;
-And equitable title holder of the mortgage;
-And nominal assignee of the note, as the person entitled to enforce;
-And nominal assignee of the note, as the holder of the equity of redemption;
-Simultaneously, for the Lender and all future interests;
-Only if necessary to comply with law or custom [restrictive endorsement].

3.

For the purpose of simultaneously securing (in the present) the Lender and all future
interests in the mortgage and note;
-Without attachment of the Lenders security interest under UCC Article 9;
-Without perfection of the Lenders security interest under UCC Article 9;
-While requiring the borrower to secure MERS;
-To which it holds the Security Instrument in MERS name;
-And holds the title to the collateral in MERS name.

4.

Without any consideration given by MERS, which would support a legal conveyance, of
interests in real property, to MERS.

MERS is not acting in the capacity of an accommodation party, accommodating party, assignee,
or trustee. They chose the term nominee, which is a position chosen by nomination.

II.

System Governing Documents


The MERS

MERS Residential Marketing Kit (includes Membership Rules, and, Terms and Conditions)
https://mersinc.org/component/docman/doc_download/197mersresidentialmarketingkit201207se
cured?Itemid=
1.

MERS System Membership Rules (June 2009)

We will now review the membership rules to search for their definition of nominee.
Rule 2, Section 5(a) states,
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MERS Authority as nominee: Show Me the Nomination!

Each Member, at its own expense, shall cause Mortgage Electronic Registration
Systems, Inc., to appear in the appropriate public records as the mortgagee of record with
respect to each mortgage loan that the Member registers on the MERS System. Mortgage
Electronic Registration Systems, Inc. is a wholly owned subsidiary of MERS created for the
purpose of serving as the mortgagee of record in the appropriate public records. The Member
shall monitor the public records to verify that it has complied with the preceding sentence and
shall maintain an adequate quality assurance program to ensure that its verification procedures
are effective. The Member hereby warrants to MERS that either (i) an appropriate mortgage, or
deed of trust, or other such instrument as may be required under applicable state law, naming
Mortgage Electronic Registration Systems, Inc. as mortgagee, or (ii) an appropriate assignment
of mortgage, or assignment of deed of trust, or other such instrument as may be required under
applicable state law, naming Mortgage Electronic Registration Systems, Inc. as mortgagee, has
been or as soon as practicable shall be, properly prepared and delivered to the appropriate
recording office and the Member shall promptly register on the MERS System the date on which
such instrument was delivered. As soon as practicable, the Member shall register on the MERS
System the specific recordation information provided by the custodian of public records which
evidences that Mortgage Electronic Registration Systems, Inc. is mortgagee of record with
respect to such mortgage loan. Upon the Members becoming aware of any discrepancy between
the information shown on the MERS System and the information in the public records, the
Member shall promptly correct the information on the MERS System.
In this rule, there is no nominee status given or defined. MERS is the principal, and the member
is MERS agent. MERS is demanding the member to act in the capacity of Mortgage Electronic
Registration Systems, Inc., as mortgagee. No lender has ever filed a d/b/a Mortgage Electronic
Registration Systems, Inc. with their Corporate Certificate, nor has any lender ever provided a
Power of Attorney from MERS to contract on their behalf.
Rule 2, Section 4(b) states,
As long as there are no contrary instructions, when the beneficial ownership of a
mortgage loan registered on the MERS System is vested in a nonMember, MERS and Mortgage
Electronic Registration Systems, Inc. shall at all times comply with the instructions of the
Member shown on the MERS System as the servicer of such mortgage loan with respect to
transactions relating to such mortgage loan. Such Member shall indemnify and hold harmless
MERS, and any employee, director, officer or affiliate of MERS, for any and all liability incurred
as a result of compliance by MERS with instructions given by such Member on behalf of the
nonMember beneficial owner.
In this rule, MERS acts solely as an agent of the servicer, when MERS no longer has any
agency with the Lender. Its nominee status has terminated, yet MERS fraudulently converts
and conceals its status under the mortgage. The legal title to the collateral is embezzled by
MERS for its own use, and the use of its members, who are not parties to the mortgage or
the note. The mortgage recorded in the country recorders office is obsolete, but MERS and its
members, through undeniable, conspired, criminal acts, retain it as a false document of title. This
rule also evidences that MERS had no intention of abiding by the applicable law stated in the
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MERS Authority as nominee: Show Me the Nomination!

mortgage.
Rule 3, Section 3(a) states,
Upon request from the Member, Mortgage Electronic Registration Systems, Inc. shall
promptly furnish to the Member, in accordance with the Procedures, a corporate resolution
designating one or more officers of such Member, selected by such Member, as certifying
officers of Mortgage Electronic Registration Systems, Inc. to permit such Member
(i) to release the lien of any mortgage loan registered on the MERS System to such Member,
(ii) assign the lien of any mortgage naming MERS as the mortgagee when the Member is also the
current promissory noteholder, or if the mortgage is registered on the MERS System, is shown to
be registered to the Member, (iii) to foreclose upon the property securing any mortgage loan
registered on the MERS System to such Member, (iv) to take any and all actions necessary to
protect the interest of the Member or the beneficial owner of a mortgage loan in any bankruptcy
proceeding regarding a loan registered on the MERS System that is shown to be registered to
the Member, (v) to take such actions as may be necessary to fulfill such Members servicing
obligations to the beneficial owner of such mortgage loans (including mortgage loans that are
removed from the MERS System as a result of the transfer thereof to a nonMember), (vi) to take
action and execute all documents necessary to refinance, amend or modify any mortgage loan
registered on the MERS System to such Member, (vii) endorse checks made payable to
MERS to the Member that are received by the Member in payment on any mortgage loan
registered on the MERS System that is shown to be registered to the Member. In instances
where Mortgage Electronic Registration Systems, Inc. designates an officer of a Member as a
certifying officer of MERS for the limited purposes described above, such Member shall
indemnify MERS and any of its employees, directors, officers, agents or affiliates against all loss,
liability and expenses which they may sustain as a result of any and all actions taken by such
certifying officer.
In this rule, MERS can act as an assignee of the note, as a party with a right to receive payment
under it. It can also act to protect the interests of a member, instead of the beneficial owner. This
is the extent of MERS authority under the Membership Rules. It is glaringly apparent that
Nominee in not included in the language.
2.

The MERS System Terms and Conditions

While MERS and MERSCORP have offered the MERSSystem Membership Rules as evidence
of their nominee status (which is there is none), they neglect to include the Terms & Conditions
associated with those rules. The MERS System Terms and Conditions, as well as the MERS
Membership Rules are contained in the MERS Residential Marketing Kit. The Terms &
Conditions, and Membership Rules were required to be incorporated into the mortgage;
1. MERSCORP Holdings, Inc. (MERSCORP Holdings) and Mortgage Electronic
Registration Systems, Inc. (MERS) (collectively, the Companies) , and the Member shall
abide by these Terms and Conditions (T&C), the MERS System Rules of Membership (the
Rules), and applicable Procedures (collectively, the Governing Documents), copies of
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MERS Authority as nominee: Show Me the Nomination!

which will be supplied upon request. The Governing Documents shall be a part of the terms
and conditions of every transaction that the Member may make or have with the Companies or
the MERS System either directly or through a third party. The Member shall be bound by any
amendment to any of the Governing Documents.
Clause 2 is the first reference we find to MERS as nominee;
2. The Member, at its own expense, shall promptly, or as soon as practicable, cause
MERS to appear in the appropriate public records as the mortgagee of record with respect to
each mortgage loan that the Member registers on the MERS System (each, a MERS Loan) .
MERS shall serve as mortgagee of record with respect to all MERS Loans solely as a nominee, in
an administrative capacity, for the beneficial owner or owners thereof from time to time. MERS
shall have no rights whatsoever to any payments made on account of MERS Loans, to any
servicing rights related to MERS Loans, or to any mortgaged properties securing MERS Loans.
MERS agrees not to assert any rights (other than rights specified in the Governing Documents)
with respect to MERS Loans or mortgaged properties. References herein to mortgage(s) and
mortgagee of record shall include deed(s) of trust and beneficiary under a deed of trust and
any other form of security instrument under applicable state law.
We now discover that MERS nomination is only in an administrative capacity, from time to
time. More importantly, MERS has no right to the legal title of the mortgaged property, and
has no authority to assert any rights (including the mortgage). This means that MERS did not
have capacity to contract with the borrower, and obtained the title due to Larceny by Fraudulent
Inducement.

III.

MERS ELECTRONIC TRACKING AGREEMENTS

Whole Loan ETA template


https://mersinc.org/component/docman/doc_download/195etawhol
eloantemplatev6secured?Itemid=
Warehouse ETA template
https://mersinc.org/component/docman/doc_download/194etaware
housetemplatev6secured?Itemid=
Gestation ETA template
https://mersinc.org/component/docman/doc_download/193etagesta
tiontemplatev6msecured?Itemid=

One only needs to review the MERS Electronic Tracking Agreement (ETA) to discover that
Mortgage Electronic Registration Systems, Inc. was never granted any nominal rights by its
alleged principles (yes, plural). The ETAs are the true contracts to which are entered into between
multiple entities as principles, MERSCORP Holdings, Inc. (MERSCORP), as Electronic
Agent, and Mortgage Electronic Registration Systems, Inc. in the status of MERS. It is
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MERS Authority as nominee: Show Me the Nomination!

paramount to recognize that they are not designated as Nominee.


THIS ELECTRONIC TRACKING AGREEMENT dated as of ... (this Agreement)
among... (Lender), MERSCORP Holdings, Inc. (Electronic Agent), Mortgage Electronic
Registration Systems, Inc. (MERS) and....(Borrower). - (Warehouse Lending ETA)
THIS ELECTRONIC TRACKING AGREEMENT dated as of...(this Agreement)
among.... (Purchaser), MERSCORP Holdings, Inc. (Electronic Agent), Mortgage
Electronic Registration Systems, Inc. (MERS) and...(Seller). - (Whole Loan ETA &
Gestation ETA)
Continuing on in the ETA, it states;
WHEREAS, the Lender and the Borrower desire to have certain Mortgage Loans
registered on the MERS System (defined below) such that the mortgagee of record under
each Mortgage (defined below) shall be identified as MERS
The black-letter language of this clause nominates MERS to be the mortgagee of record under
each mortgage, for certain Mortgage Loans, registered on the MERS System. It does not
nominate them as nominee or mortgagee, in the actual mortgage registered in the county
recorders office. The ETAs, unlike the Membership Rules, do not define mortgagee of record
which would clarify the language. The definition of mortgage loan under the ETA states;
Mortgage Loan shall mean each mortgage loan included in a Mortgage Pool, in
each case secured by a Mortgage on a one to fourfamily residence and (if so required by the
relevant Agency Program) eligible to be either guaranteed by VA and/or insured by FHA, or
insured by a private mortgage insurer, as applicable. - (Gestation ETA)
Mortgage Loan shall mean each mortgage loan included in a Mortgage Pool, in
each case secured by a Mortgage. - (Whole Loan ETA)
Mortgage Loan shall mean each mortgage loan that is pledged by Borrower to
Lender. - (Warehouse ETA)
The ETA language would then make sense. The parties want the mortgages registered on the
MERS(TM) System in the name of MERS, but do not want the notes registered in MERS
name.
Section 3 of the ETA (Designation of MERS as Mortgagee of Record) is the only place where
you will find MERS designated as nominee. The problem with this clause is that MERS is not the
nominee for the Lender, but the Servicer;
The Borrower represents and warrants that (a) it has designated or shall designate
MERS as, and has taken or will take such action as is necessary to cause MERS to be, the
mortgagee of record, as nominee for the Borrower, with respect to the pledged Mortgage Loans
in accordance with the MERS Procedures Manual and (b) it has designated or will promptly
designate itself as the servicer or subservicer in the MERS System for each such pledged
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MERS Authority as nominee: Show Me the Nomination!

Mortgage Loan (each pledged Mortgage Loan, so designated is a MERS Designated Mortgage
Loan), and has designated or will promptly designate the Lender as the interim funder on the
MERS System with respect to each MERS Designated Mortgage Loan. - (Warehouse ETA)
As you can see, MERS is not the nominee for the true Lender who funded the loan. The Whole
Loan ETA does not even mention nominee status. Once again, the servicer is the party involved;
The Seller has designated or shall designate MERS as, and has taken or will take such
action as is necessary to cause MERS to be, the mortgagee of record with respect to each
Mortgage Loan in a Mortgage Pool, and in accordance with the MERS Procedures Manual, the
Seller has designated or shall designate the Seller as the servicer or subservicer in the MERS
System for each such Mortgage Loan (each such Mortgage Loan, upon such designation by
MERS, a MERS Designated Mortgage Loan). - (Whole Loan ETA)
The last sentence states that the designation of MERS as mortgage of record, and the Seller as
servicer or subservicer, is the process by which the mortgage loan becomes a MERS
Designated Mortgage Loan. Apparently, this is a process for perfection within the MERS
System. The Gestation ETA is slightly different;
The Seller has designated or shall designate MERS as, and has taken or will take such
action as is necessary to cause MERS to be, the mortgagee of record with respect to each
Mortgage Loan in a Mortgage Pool, and in accordance with the MERS Procedures Manual, the
Seller has designated or shall designate the Seller as the [investor/servicer] or subservicer in the
MERS System for each such Mortgage Loan (each such Mortgage Loan, upon such
designation by MERS, a MERS Designated Mortgage Loan). - (Gestation ETA)
The only variance between this ETA, and the Whole Loan ETA, is that the Seller may be
designated as investor, servicer, or subservicer. Again, there is no mention of public recording.
Just recording on the MERS System. This granting of mortgagee of record, only in the
MERS System, must be the sole nominee authority. There is no other conclusion to be made
when the following ETA provisions are read;
7. Covenants of MERS.
MERS shall;....(q) not acquire the obligations or securities of its affiliates or owners, including
partners, members or shareholders, as appropriate, (r) not make loans to any other person or
entity or buy or hold evidence of indebtedness issued by any other person or entity (except for
cash and investmentgrade securities),.... (u) not pledge its assets for the benefit of any other
person or entity,....
MERS agrees that in no event shall MERS status as mortgagee of record with respect to
any MERS Designated Mortgage Loan confer upon MERS any rights or obligations as an owner
of any MERS Designated Mortgage Loan or the servicing rights related thereto, and MERS will
not exercise such rights unless directed to do so by the Purchaser.
9. No Adverse Interest of the Electronic Agent or MERS.
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MERS Authority as nominee: Show Me the Nomination!

By execution of this Agreement, the Electronic Agent and MERS each represents and warrants
that it currently holds, and during the existence of this Agreement shall hold, no adverse interest,
by way of security or otherwise, in any MERS Designated Mortgage Loan. The MERS
Designated Mortgage Loans shall not be subject to any security interest, lien or right to setoff by
the Electronic Agent, MERS, or any third party claiming through the Electronic Agent or
MERS, and neither the Electronic Agent nor MERS shall pledge, encumber, hypothecate,
transfer, dispose of, or otherwise grant any third party interest in, the MERS Designated
Mortgage Loans.
25. Status of Electronic Agent.
Nothing herein contained shall be deemed or construed to create a partnership, joint venture
between the parties hereto and the services of the Electronic Agent and MERS shall be rendered
as independent contractors for the Purchaser and the Seller. Other than the obligations of the
Electronic Agent and MERS expressly set forth herein, the Electronic Agent and MERS shall
have no power or authority to act as agent for the Purchaser or the Seller pursuant to any grant
of authority made under or pursuant to this Agreement.
Mortgage Electronic Registration Systems, Inc. has no nominal authority to contract on behalf of
any party, with a borrower. They had no capacity to issue a mortgage as an agent of the Lender,
nor hold any right, title, or interest in the mortgaged property. By contract, they also agreed never
to assert any such rights. As such, the mortgage, and the conveyance of title, to MERS, was void
ab initio.

IV.

ARTICLES OF INCORPORATION
http://www.scribd.com/doc/111072092/1999MERSDelArticlesofIncorporationWithCertif
ications

We turn our attention to the corporate charter of Mortgage Electronic Registration Systems, Inc.
The functions of every corporation are stated in their Articles of Incorporation, filed with every
state secretarys office in which they do business. Article Third (a restricted article) of the MERS
AOI states,
The purpose for which the organization is organized is limited solely to (A) acting as
mortgagee of record on behalf of originators, owners, trustees, investors, servicers,
subservicers, and other interested parties in connection with the origination, purchase, sale,
pledge, rehypothecation, financing and/or securitization of, or similar transactions involving
mortgage loans and similar interests in real estate, and (B) transacting any and all lawful
business for which a corporation may be organized under the laws of the State of Delaware that
is incident, necessary and appropriate to accomplish the foregoing.
Here we see that MERS is only to acting as mortgage of record, as stated in the mortgage. The
word nominee is absent, with on behalf of being the effective language. The charter,
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MERS Authority as nominee: Show Me the Nomination!

however, states that they are limited to only that function. It does not state that they are an
intermediary for MERSCORP, the MERS System, or members. What it does show, is that
MERS is definitely not acting solely as nominee for Lender, which it proclaims in the
mortgage. There are a few other functions that are noticeably absent from the stated purposes; 1)
It does not state that MERS can own, transfer, foreclose, liquidate, or otherwise dispose of the
real estate. 2) It also does not state that it can act as attorney-in-fact for these parties, with
capacity to contract with borrowers. 3) It does not states that it can act as a certifying authority
for its members to act as MERS agents.
Article Eighth (a restricted article) provides more restrictions on MERS;
The Corporation shall;
(a) Maintain books and records separate from any other person or entity,
( c ) Not commingle its assets with those of any other person or entity and hold all of its assets
in its own name,
(f) Observe all corporate formalities,
(l) Not acquire the obligations or securities of its affiliates or owners, including partners,
members or shareholders, as appropriate,
(m) Not make loans to any other person or entity or buy or hold evidence of indebtedness
issued by any other person or entity (except for cash and investment-grade securities),
(p) Not pledge its assets for the benefit of any other person or entity,
Taking Article Eighth into consideration of MERS nominee status, we see that; 1) it must keep
its own records, and not those of MERSCORP, the MERS System, or its members., 2) Cannot
hold legal title, while the Lender holds equitable title, in the same instrument., 3) It cannot
acquire any interest in the notes or the mortgages of its members., 4) It cannot make a loan to a
borrower., 5) It cannot hold the mortgage bonds of its members., and 6) It cannot pledge the
legal title it claims to hold for the benefit of another party.
Reviewing Article Eighth, a MERS mortgage is ultra vires. It had no authority or capacity to
enter into it, especially under those terms. Under Article Seventh, clause (c), Eighth cannot be
amended, as being a restricted Article, unless authorized by the MERS Board of Directors. Such
amendment would have to be filed with the Delaware Secretary of State, and any other state
which they do business. I have yet to discover any such amendment.
V.
SECURITY AGREEMENT, DATED JUNE 30, 1998, BETWEEN MORTGAGE
ELECTRONIC REGISTRATION SYSTEMS, INC, AND NATIONSBANK, N.A.
http://assignments.uspto.gov/assignments/assignmenttm17730949.pdf
This agreement was for a secured line-of-credit for MERS. Here is what was given by MERS to
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MERS Authority as nominee: Show Me the Nomination!

induce the Bank to enter into the Credit Agreement and to secure its obligations thereunder and
hereunder;
Section 2.1

Grant of Security Interests

To secure the due and punctual payment of all Obligations, howsoever created, arising or
evidenced, whether direct or indirect, absolute or contingent, now or hereafter existing or due or
to become due, in accordance with the terms thereof and to secure the due and punctual
performance of all the obligations of the Borrower contained in the Credit
Agreement.....Borrower hereby grants to the bank a security interest in all of the Borrowers
right, title, and interest in, to and under the following, whether now existing or hereafter
acquired (all of which are herein collectively called the Collateral):
(i)

all Receivables;

(ii)

all Other Intangibles;

(iii)

all Equipment;

(iv)

all Inventory;

(v)

to the extent not included in the foregoing, all other personal property, whether
tangible or intangible, and wherever located, including, but not limited to, the
balance of every deposit account now or hereafter existing of the Borrower with
any bank and all monies of the Borrower and all rights to payment of money of
the Borrower;

(vi)

to the extent not included in the foregoing, all books, ledgers and records and all
computer programs, tapes, discs, punch cards, data processing software,
transaction files, master files and related property and rights (including computer
and peripheral equipment) necessary or helpful in enforcing, identifying or
establishing any item of collateral; and

(vii)

to the extent not otherwise included, all Proceeds and products of any or all of the
foregoing, whether existing on the date hereof or arising hereafter.

The definitions of Receivables, Other Intangibles, and Inventory are defined, in the agreement,
as;
Receivables means all accounts now or hereafter owing to the Borrower, and all
accounts receivable, contract rights, documents, instruments or chattel paper representing
amounts payable and monies due or to become due to the Borrower, arising from the sale of
Inventory or the rendition of services in the ordinary course of business or otherwise (whether or
not earned by performance), together with all Inventory returned by or reclaimed from
customers wherever such Inventory is located, and all guaranties, securities and liens held for
the payment of any such account, account receivable, contract right, document, instrument or
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MERS Authority as nominee: Show Me the Nomination!

chattel paper.
Other Intangibles means all accounts, accounts receivable, contract rights,
documents, instruments, chattel paper, money and general intangibles now owned or hereafter
acquired by the Borrower including, without limitation, all customer lists, permits, federal and
state tax refunds, reversionary interests in pension plan assets, Trademarks, Patents, Licenses,
copyright and other rights in intellectual property, other than Receivables.
Inventory means all inventory now owned or hereafter acquired by the Borrower,
including (I) all goods and other personal property which are held for sale or lease or are
furnished or are to be furnished under a contract for service or which constitute raw materials ,
work in process or materials used and consumed or to be used and consumed in the Borrowers
business, (ii) all inventory, wherever located, evidenced by negotiable and non-negotiable
documents of title, warehouse receipts and bills of lading, (iii) all of the Borrowers rights in, to
and under, all purchase orders now owned or hereafter received or acquired by it for goods or
services and (iv) all rights of the Borrower as an unpaid seller, including recission, replevin,
reclamation and stopping in transit.
MERS grants a security interest in the legal title to your property, to secure NationsBank (now
Bank of America) for MERS own line of credit. This is never disclosed as part of the mortgage
loan. This is an illegal transaction, and a violation of RESPA and TILA. MERS is not securing
the Lender. They are securing their creditor, with your collateral, to which you did not expressly
agree to in writing. They are also converting your collateral, for their personal gain and unjust
enrichment. This is Fraudulent Conversion (embezzlement) and Larceny by Fraudulent
Inducement. By this contract, every borrower has an equitable interest in the monies given to
MERS. The security interest in the mortgage would attach to NationsBank, and not the Lender or
MERS.
Under Section 2.2 of the agreement, MERS cannot waive its liability to NationsBank, by any
other agreement or contract. It has continuing liability, and shall do nothing to impair the
security interests herein granted. What makes this more egregious is that NationsBank makes
itself a party in interest to the note and mortgage, under Section 2.3;
(b) The Borrower is authorized to collect amounts owing to it with respect to the
Collateral. However, the Bank may at any time, upon the occurrence of a Default, notify
Account Debtors obligated to make payments under any or all Receivables or Other
Intangibles that the Bank has a security interest in such Collateral and that payments shall be
made directly to the Bank. Upon the request of the Bank at any time upon the occurrence of a
Default, the Borrower will so notify such account debtors. The Borrower will use all reasonable
efforts to cause each account debtor to comply with the foregoing instruction. In furtherance of
the foregoing, the Borrower authorizes the Bank (i) to ask for, demand, collect, receive and give
acquittances and receipts for any and all amounts due and to become due under any Collateral
and, in the name of the Borrower or its own name or otherwise, (ii) to take possession of,
endorse and collect any checks, drafts, notes, acceptances or other instruments for the payment
of moneys due under any Collateral and (iii) to file any claim or take any other action in any
court of law or equity or otherwise which it may deem appropriate for the purpose of collecting
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MERS Authority as nominee: Show Me the Nomination!

any amounts due under any Collateral. The Bank shall have no obligation to obtain or record
any information relating to the source of such funds or the obligation in respect of which
payments have been made.
Defined Term = Account Debtor means, with respect to any Receivable or Other Intangible,
any Person obligated to make payment thereunder, including without limitation any account
debtor thereon.
MERS, without your knowledge, has bound you to be liable under their Security Agreement,
with which they illegally used your property deed as collateral. It also has granted rights to
NationsBank to declare default (of MERS, not the mortgagor), and direct the mortgagors to make
payments to the bank. This means that MERS has granted an equitable interest IN THE NOTE
and mortgage to NationsBank. MERS never endorsed the note or was granted any right, title, or
interest in it. MERS also authorized NationsBank to make demands upon mortgagors, in the
name of MERS. NationsBank is also authorized to take possession of the mortgage and deed, and
to sue or foreclose upon mortgagors, for MERS default under their security agreement, even if
the mortgagor was not in default!
Section 3.1 Validity of Security Agreement; Consents states that creation of the security
interests is (i) within MERS corporate power, (ii) duly authorized by the Board of Directors and
shareholders, (iii) are not against MERS Articles of Incorporation, (iv) do not violate any law,
(v) do not conflict with any other agreements (including mortgages & deeds of trust) which
MERs is a party or bound, (vi) do not create a lien upon any MERS property other than in the
name of NationsBank, and (vii) does not require the consent of any other person. Each
agreement, other than (possibly) (ii), are illusory promises.
Section 3.2 Title to Collateral, states;
Except for the security interests granted to the Bank pursuant to this Security Agreement,
the Borrower is the sole owner of each item of the Collateral, having good and marketable title
thereto, free and clear of any and all Liens, except Permitted Liens.
The rest of the agreement is just as nefarious as the aforementioned Sections. It is frankly, too
appalling to continue stating each section ad nauseum. Needless to say, MERS has sold its
rights stated in the underlying mortgages, to NationsBank, for credit, to which the mortgagors are
unaware they are liable for MERS default.
The caveat, is that this MERS merged with and into, and became MERSCORP, Inc., on January
1, 1999. While this, at first, would appear less damning upon the current MERS, there are a few
items that tend to reflect that this contract is bound to them, as well.
Section 4.3 of the NationsBank Security Agreement requires it to be amended to preserve its
security interests upon any MERS corporate change in name, identity, or structure. This includes
business under any trade, assumed, or fictitious name. (Remember, MERS is a registered
trademark owned by MERSCORP, Inc.) Since MERS granted security interests in any mortgage
past, present, or future, it appears to bind the current MERS, as well as MERSCORP, Inc.
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MERS Authority as nominee: Show Me the Nomination!

The other evidence supporting this conclusion, are the statements made by MERS Secretary,
William C. Hultman, in a deposition on April 7, 2010. While being deposed, in Bank of New
York, as Trustee for the Certificate Holders CWABS, Inc. Asset-Backed Certificates, Series
2005-AB3 v. Victor and Enoabasi Ukpe, Sup. Ct. NJ Atlantic County, DOCKET NO. F1020908,
Hultman made the following statements;
Q.

What is the relationship between the earlier company that had a meeting of the
board on April 9, 1998 and the company that was incorporated in Delaware on
December 30, 1998, with an effective date of incorporation of January 1, 1999?

A.

The corporation that was incorporated at 1999 is a wholly owned subsidiary of


Merscorp, Inc. Prior to 1999, the name of that corporation was Mortgage
Electronic Registration Systems, Inc. and prior to that, there was a predecessor
corporation which was a membership corporation which also had the name
Mortgage Electronic Registration Systems, Inc.

Q.

And can you tell us if anything the predecessor board did on April 9, 1998, was
binding on the new corporation incorporated on incorporated effective January
1, 1999?
MR. BROCHIN: Object to the form of the question.
THE WITNESS: Basically, the subsidiary assumed all of the authority relating to
holding title to the mortgage that the original corporation had.

Continuing;
Q.

Other than assuming something to do with the mortgage the original corporation
had, did anything the prior corporation did bind the new corporation when it
came into existence effective January 1, 1999?

A.

Most of the again, the authority that related to holding title to the mortgage was
adopted by the new corporation.

Q.

And I'm sorry, maybe you can explain that a little bit. I'm not sure what's meant by
the authority relating to the holding of a mortgage.
The subsidiary is a single purpose corporation that was incorporated for the sole
purpose of holding title to the mortgage. The other operations of the old
corporation remained with the parent corporation, the operation of the registry
and the other operational issues associated with the MERS process.

A.

Hultman then states that he current MERS assumed obligations of the old MERS;
Q.

Is the new company was the new company in any way bound by any acts of the
prior company?

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MERS Authority as nominee: Show Me the Nomination!

A.

To the extent that we

Q.

The court reporter couldn't hear your answer.

A.

The subsidiary corporation assumed some of the obligations of the parent

Q.

Which obligations were assumed by the new subsidiary corporation?

A.

The ones that related to holding title to mortgages or acts as mortgagee or

benefici

Continuing;
Q.

Specifically, was the new corporation in any way bound by resolutions passed by
the old corporation?
MR. BROCHIN: Object to the form of the question.
THE WITNESS: Only to the extent that they assumed those resolutions.

Q.

BY MR. MALONE:
Can you tell us which resolutions the new company, the company that came into

A.

There's a whole series of them. I don't have them in front of me and I didn't look

As the Kansas Supreme Court noted, MERS, as it relates to nominee, defined the word in
much the same way that the blind men of Indian legend described an elephant their description
depended on which part they were touching at any given time. Landmark Nat. Bank v. Kesler,
216 P.3d 158, 164 (Kan. 2009). What is clear is that MERS never had any of the right, title, or
interest they claimed under the mortgage, nor did they have the authority to enter into the
contract with the borrower.

14
MERS Authority as nominee: Show Me the Nomination!

at them

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