Mortgage Servicing Fraud
occurs post loan origination when mortgage servicers use false statements and book-keeping entries, fabricated assignments, forged signatures and utter counterfeit intangible Notes to take a homeowner's property and equity.
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William A. Roper, Jr.
In thinking about and assessing the fallout from the Weisblum decision in New York State, it is essential to bear in mind that a long line of New York cases has persistently held that an assignment of the mortgage without an assignment of the note, bond or debt is a NULLITY.

Take a look at these decisions:
US Bank Natl. Assn. v Madero, 2010-02046, 80 A.D.3d 751, 915 N.Y.S.2d 612, 2011 NY Slip Op 505, 2011 N.Y. App. Div. LEXIS 532 (NY App. 2nd Dept., 2011)

U.S. Bank, N.A. v Collymore, 68 AD3d 752, 890 N.Y.S.2d 578, 2009 NY Slip Op 9019 (NY App. 2nd Dept., 2009)

Kluge v Fugazy, 145 A.D.2d 537 (NY App. 2nd Dept., 1988)
Weisblum shows that MERS cannot assign a note which it neither owns nor holds.  But a long line of cases shows that the mortgage cannot be assigned without an assignment of the note.


There was an interesting post and thread on this topic by "Knows About Notes" about two years ago which includes some language from a U.S. District Court decision showing cases in other jurisdictions reaching the SAME holding:


"Separation of Note and Mortgage

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William A. Roper, Jr.
Here are some other holdings relating to the assignment of the mortgage without the debt being a nullity in New York State:

"It has long been the law that a bond, or other obligation, secured by a mortgage lien on realty, is a chose in action and constitutes personal property.  The mortgage is a mere incident of the bond or collateral security for the debt. The assignment by a mortgagee of the mortgage lien in the land, without an assignment of the debt, is considered in law as a nullity.  (Jackson ex dem. Curtis v. Bronson, 19 Johns. 325; see, also, Belfanc v. Belfanc, 252 App. Div. 453, affd. 278 N.Y. 563; 2 Corbin on Contracts, § 403, p. 394, and Thomas on Mortgages [3d ed.], p. 263.)  The bond or other evidence of indebtedness is the principal obligation and the mortgage is merely security for the personal indebtedness.  (Seamen's Bank for Sav. v. Smadbeck, 293 N.Y. 91, 95; Matter of Wilbur v. Warren, 104 N.Y. 192, 197.)"  Flyer v Sullivan, 284 App Div 697, 698 (NY App. 1st Dept., 1954).

"In addressing the issue of standing, it is well settled that an action to foreclose on a mortgage may not be brought by one who has no title to it and absent transfer of the debt, the assignment of the mortgage is a nullity (Kluge v Fugazy, 145 AD2d 537, 538 [1988], citing Merritt v Bartholick, 36 NY 44, 45 [1867]; Flyer v Sullivan, 284 AppDiv 697, 698 [1954]; Beak v Walts, 266 AppDiv 900 1943 [1943]; Manne v Carlson, 49 AppDiv 276, 278 [1975])."  GRO-WIT Capital, LTD. v. 1080 Utica, LLC, 2010 NY Slip Op 50962 (NY Sup. Ct. Kings Co. 2010).

"Foreclosure of a mortgage may not be brought by one who has no title to it and absent an effective transfer of the debt, the assignment of the mortgage is a nullity (Kluge v Fugazy, 145 AD2d 537 [2d Dept 1988])."  US Bank National Association v. Merino, 16 Misc. 3d 209, 836 N.Y.S.2d 853 (NY Sup. Ct. Suffolk Co. 2007).

"To foreclose on a mortgage, a party must have title to the mortgage. The instant assignment was a nullity.  The Appellate Division, Second Department (Kluge v Fugazy, 145 AD2d 537, 538 [2d Dept 1988]), held that a "foreclosure of a mortgage may not be brought by one who has no title to it and absent transfer of the debt, the assignment of the mortgage is a nullity."  Citing Kluge v Fugazy, the Court in Katz v East-Ville Realty Co. (249 AD2d 243 [1d Dept 1998]), held that "[p]laintiff's attempt to foreclose upon a mortgage in which he had no legal or equitable interest was without foundation in law or fact."  Plaintiff HSBC, with the invalid assignment of the instant mortgage and note from MERS, lacked standing to foreclose on the instant mortgage."  HSBC BANK USA, NA v. Yeasmin, Index 2007/3414, 2010 NY Slip Op 50927 (NY Sup. Ct. Kings Co. 2007)

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William A. Roper, Jr.
It should be noted that one of the decisions cited by the cases shown above is Merritt v Bartholick, 36 NY 44, 45 [1867].  This decision was expressly cited by Justice CIPARICK in his concurring opinion in the Romaine case:
"I concur with the majority that the Clerk's role is merely ministerial in nature and that since the documents sought to be recorded appear, for the most part, to comply with the recording statutes, MERS is entitled to an order directing the Clerk to accept and record the subject documents. I wish to note, however, that to the extent that the County and various amici argue that MERS has violated the clear prohibition against separating a lien from its debt and that MERS does not have standing to bring foreclosure actions, those issues remain for another day (see e.g. Merritt v Bartholick, 36 NY 44, 45 [1867] ["a transfer of the mortgage without the debt is a nullity, and no interest is acquired by it"]). [emphasis added]" Merscorp, Inc. v. Romaine, 8 N.Y.3d 90, 99-100, 861 N.E.2d 81, 828 N.Y.S.2d 266 (N.Y. 2006).

The arrogance of MERS and the major mortgage lenders in proceeding with their scheme in rather stark violation of New York law is almost unbelievable.

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I think the major problem defendants come up against in court is that the plaintiff pleads in its complaint that it is the owner and holder of the mortgage and note. The plaintiff just uses a photo copy of the note and purports that its a true and correct copy of the original, but nobody knows if this is really true because when you try to get discovery(production&inspection) they stone wall you and file a motion for summary judgment. 

If the defendant brings up the assignment issue they then rely on Flyer v. Sullivan and Curtis v. Morre, here is 2 pages from a foreclosure mill summary judgment motion contending that they have standing be delivery only and no assignment is necessary. 
Click image for larger version - Name: sj_motion_(3).JPG, Views: 97, Size: 765.30 KB Click image for larger version - Name: sj_motion_(2).JPG, Views: 72, Size: 870.19 KB Click image for larger version - Name: sj_motion.JPG, Views: 84, Size: 883.02 KB
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Here is my question. If Mers, through an assignment, transfers title to bank A using a VP MS. W. signing off on it for example, then, on a consecutive assignment on the same day, Bank A transfers title to Bank B using that same VP Ms. W. as VP for Bank A signing off on that doc as well. Same person, VP for 2 different institutions.
Does that work? I say no, but what do I know. Sounds like self dealing to me.
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Check out this recent lawsuit that says that MERS cannot be beneficiary.
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Check out this recent lawsuit that says that MERS cannot be beneficiary.

While the holding Niday v. GMAC is terrific news for citizens of Oregon and the reasoning in this case is interesting and instructive, distressed borrowers should use great caution in assuming or hoping that this holding is likely to be followed in their own jurisdictions. 

There are a few places, like New York State, where courts have been somewhat hostile to MERS.  More common are rulings in state courts elsewhere which have enabled the mischief.

Be sure to use out of state cases to broaden your understanding of the arguments and issues, while relying on authoritative cases binding in your own states to determine the law that applies in your situation.  There is no harm in citing out of state law.  But do NOT expect the courts of your state to necessarily follow this decision. 
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