----- Message from "Jason R.S. Cassady" <jcassady@doughertylawfirm.com>
on Thu, 5 Oct 2006 13:21:39 -0600 -----
To:
<realestate@iabar.org>
Subject:
Re: MERS Mortgage Releases
I have always understood that MERS was to prevent the
need of the assignment to be filed by each note holder. Accordingly,
we have never required an assignment of the nominee status. To require
the same would make the purpose of MERS null and void. I have seen
numerous foreclosures in abstracts with MERS (which were then usually assigned
by MERS at one point or another to the lender at that time).
My understanding of MERS was that MERS is the mortgagee on the mortgage,
and nothing else. Thus, instead of the lender being mortgagor, MERS
takes that role, but leaves all other roles with the lender. MERS
holds the mortgage as mortgagor for the lender at the time the mortgage
is granted or the assignment is made. But instead of holding it as
nominee for just that lender, it is for the lender (or note holder) - and
"its successors and assigns" - whomever that might be. Thus,
the combination of the language in either the mortgage or assignment, of
successors and assigns, coupled with a release (even if it lacks the nominee
language) I believe raises a level of presumption that MERS has the authority
to release.
If MERS lacks the authority to release without the nominee language, what
is to stop the next logical step of requiring that each nominee assign
their interest as nominee from one to the other, and thus nullifying the
entire existence of MERS?
To me, it is clear that the intent of all parties involved is to allow
MERS to remain nominee for whomever the lender assigns the note to - whether
or not it shows on the release. Given the enormous reliance upon
MERS over the past few years, it would be shocking to require the nominees
match on releases and mortgages (or the last assignment).
My opinion is that given the "successors and assigns" language,
Title Standard 1.1, and the customary use of MERS over the past few years,
there should be no reason to require the nominee appear on a release (or
assignment from MERS for that matter).
Jason
Jason R.S. Cassady, Attorney at Law
Dougherty Law Firm
801 North Avenue
Norwalk, IA 50211
Phone: 515-981-5401
Fax: 515-981-5517
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I object to MERS mortgage releases when MERS has taken the mortgage as
Nominee and releases without showing its nominee status.
The MERS mortgage document (from the mortgage at issue) states:
"DEFINITIONS
(C) “MERS” is Mortgage Electronic Registration Systems, Inc.. MERS is
a separate corporation that is acting solely as a nominee for Lender and
Lender’s successors and assigns. MERS is the mortgagee under this Security
Instrument …
(D) “Lender” is Mortgageit, Inc.
...
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 Borrower’s covenants and agreements under this Security
Instrument and the Note. For this purpose, Borrower irrevocably mortgages,
grants and conveys to MERS (solely as nominee for Lender and Lender’s
successors and assigns) and to the successors and assigns of MERS, with
power of sale, the following described property located in … 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 interest granted by Borrower in this Security Instrument, but, if
necessary to comply with law or custom, MERS (as nominee for Lender and
Lender’s successors and assigns) has the right to …"
Blacks Law Dictionary, 8th Edition defines Nominee as…(2) A person designated
to act in place of another, usu. in a very limited way (3) a party who
holds bare legal title for the benefit of others or who receives and distributes
funds for the benefit of others.
My argument is that when the mortgagee is MERS as Nominee for Mortgageit,
Inc. it is not the same as MERS being mortgagee in its own name.
It’s no different than if I deed to First National Bank as Trustee for
the Craig Hastings Trust.
We would not accept a Deed from First National Bank __________, without
showing it is acting in its role as Trustee of the Craig Hastings Trust.
A similar analogy, in my opinion, is where a Bank takes a mortgage as Trustee
for a Pooling Arrangement.
I have been engaged in an email/phone debate with one of MERS’ attorneys,
Richard Anderson, on this issue. Mr. Anderson argues as follows:
“MERS' agency relationship to the note owner is not identical to a trustee
relationship b/c MERS is not a trustee and does not hold its liens in trust.
MERS' contractual relationship to the note owner, as outlined in
the MERS Member Agreement, follows the role of an agency relationship.
A trustee relationship has different standards and requirements.
I also don't agree with your analogy drawn to trustee entities used in
a pooling agreement or securitized entity and my reasons why are more easily
discussed by phone.”
He also stated:
“Craig and I discussed the lien release issue below and have not come
any closer to an agreement on the meaning of the terms in the recorded
mortgage. As such, I'm now deferring to Icela at Countrywide/ReconTrustCo
to decide what it wants to do regarding the requested lien release (whether
or not to add the "as nominee" language for MERS to sign). We
maintain that the "as nominee" language is unnecessary and a
MERS executed lien release is valid when its executed in the name of MERS.
Title companies routinely write title insurance over MERS releases and
we are unaware of any title company that has declined to do so. That's
because title companies recognize that once the note is marked "paid
in full", the obligation is extinguished. The mortgage lien
follows the note, so if there is no note, there cannot be a mortgage lien
outstanding. All parties involved with the mortgage loan agree that
the obligation is extinguished and no outstanding lien exists.”