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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Bill
When a state doesn't have any case law on MERS assignments of the mortgage (the failure to record each assignment with the sale of the note) and the state requires the recording of a mortgage/assignment is there a way to bring up the issue and then preserve it for appeal so the court of appeals can make a ruling on this?   I don't think this has happened, because the result could make MERS/parties to the sale liable for the fees to the states that were never paid.  I know I read something about a suit in CA for MERS to pay the fees.  Why isn't this happening all over the country?  I find it hard to beleive that NO attorney in any state is raising the question "what gives this private company the authority to not record assignments AND pay the FEE"   While things like paperwork error could be an excuse for not recording the assignment and paying the fee once this error was discovered why have no courts required that the plaintiff/MERS go back and record all the transfers like required and pay the fees?  Talk about slowing the foreclosure machine.   To me it is a legal equity question in a court of equity (forclosure).   I kind of felt it's more of an Al Capone tax evasion case.  MERS/the note owner is required by state law to record assignments AND pay the recorders fee.  It's not a question of the legal transfer/illegal transfer of the mortgage/note, failure to record the mortgage assignment that is required by law, it's not a question about breaking the laws, but more of a question as to where is our money that you are required to pay for the recording.  


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William A. Roper, Jr.
Bill:

I think that you misunderstand how the recording acts work in most states.  In most places, there is NOT a requirement that documents be recorded.  To the contrary, most deeds and mortgages, as well as assignments of mortgage, can be valid under the statute of frauds for that jurisdiction without recording.

Recording is usually necessary only to perfect one's interest in the transaction and to protect one's deed, mortgage and/or assignment against another competing conveyance for value and without notice of the prior grant.

So if you sell me "Blackacre", giving me a deed containing all of the requisites to satisfy the statute of frauds, and I put it in my safety deposit box without recording it, I have a valid, but unperfected deed.  And you cannot DENY the validity of your deed on the basis of my failure to record.

But if you then subsequently convey "Blackacre" by deed to someone else (despite your prior sale to me), that is, if you fraudulently deed the property to SMITH and SMITH, as an innocent purchaser pays you value and, without notice of my prior deed and in reliance upon the records, takes your subsequent deed and records it, SMITH will probably find under the recording acts that he has superior title.

The recording acts in general displace the common law rule of "first in time, first in right".

I HAD a valid deed, but lose my interest to an innocent purchaser for value due to my failure to record in conformity with the recording acts.

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I have previously posted information in other Forum threads about the recording acts.  Search for these other posts for more information.

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While I believe that the MERS model has many flaws and foremost amongst these is MERS' complicity in a criminal conspiracy which includes fabrication of assignments for use as false evidence in court cases, I do not believe that the failure to pay fees to the authorities for the missing intervening assignments is likely to be a fruitful cause of action.
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Bill
This is like the 5th time you are going to make me read the recording act William.  I am sure it says that it is required.   Maybe I just don't understand. 

IC 32-29-2
    
Chapter 2. Recording of Assignment

IC 32-29-2-1
Written transfer or assignment; acknowledgment and recording
    
Sec. 1. A person who transfers or assigns a mortgage within Indiana shall do so in writing by:
        (1) noting the assignment or transfer on the record recording the mortgage; or
        (2) separate written instrument.
A person who transfers or assigns a mortgage as described in this section shall cause the notation or written instrument to be acknowledged before an officer authorized to take acknowledgments of the execution of mortgages.
As added by P.L.2-2002, SEC.14.
IC 32-29-2-2
Written transfer or assignment; location and business address of transferee or assignee required
    
Sec. 2. In order to be recorded, a written instrument that transfers or assigns a mortgage under this chapter must state the location and business address of the person to whom the mortgage is transferred or assigned.
As added by P.L.2-2002, SEC.14.


What are your thoughts on this?

Thanks

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Bill

IC 32-29-1-8
Assignment of mortgage
    
Sec. 8. (a) Any mortgage of record or any part of the mortgage may be assigned by the mortgagee or any assignee of the mortgage, either by an assignment entered on the margin of the record, signed by the person making the assignment and attested by the recorder, or by a separate instrument executed and acknowledged before any person authorized to take acknowledgments, and recorded in the

mortgage records of the county. The county recorder shall note the assignment in the margin by reference to the location where the assignment is recorded.
    (b) The signature of a person on an assignment under subsection (a) may be a facsimile. The facsimile on the assignment is equivalent to and constitutes the written signature of the person for all requirements regarding mortgage assignments.
    (c) Notwithstanding subsection (a), marginal assignments may be accepted at the discretion of the recorder. Except in a county that accepts marginal assignments of mortgage, an assignment of mortgage must be recorded on a separate written instrument from the mortgage. If a recorder accepts marginal assignments of mortgage, an instrument presented for recording in that county may not contain more than one (1) assignment. If a recorder allows an instrument to contain more than one (1) assignment, the fee for recording that instrument is provided in IC 36-2-7-10(b)(3).
    (d) After entry is made of record, the mortgagor and all other persons are bound by the record, and the entry is a public record. Any assignee may enter satisfaction or release of the mortgage, or the part of the mortgage held by the assignee of record.
As added by P.L.2-2002, SEC.14.

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William A. Roper, Jr.
Bill:

The language of the statute you quote, which I understand may be from Indiana statutes, is unlike any I have seen elsewhere.

It is UNCLEAR to me whether this language actually imposes an affirmative duty to actually make the assignment as shown within the statutory language and whether the existence of this statute might operate to negate the otherwise common law rule that the mortgage automatically follows the negotiable instrument (promissory note).

I would think that you would need to research and read the Indiana cases interpretting this language to have a better idea of the precise boundaries imposed.

I would AGREE, though, that this language would seem far more likely to impose an affirmative duty to assign rather than merely making the recording a matter of perfecting the assignment!

You will recall that I have rather repeatedly encouraged Forum participants to read the law of their jurisdiction.  Real estate law DOES vary considerably from place to place.  Ohio imposes an affirmative duty on a plaintiff to record its interest in the mortgage by way of assignment before commencing a foreclosure action.  Perhaps this Indiana language similarly imposes some special duties on the holder of a note to follow this express language in making an assignment.  If I was in Indiana, I would certainly research this issue and very possibly argue that it imposes just such a duty! 
 
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More common is language within the recording acts that might never mention a mortgage assignment at all, but which implicitly includes assignments by reference to interests in real estate.
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Moose
As Mr. Roper so appropriately points out - things vary from state to state and even recognizable experts will differ on points of law that have not yet been challenged, ruled on and appealed.

Real property law is a STATE issue.  Mortgage lending involves both state and Federal statutes.

The other thing to be aware of is that the appearance of what I call a "raw statute" one finds on the 'net neglects context. The civil process takes time to produce interpretive conclusions about what a statute actually means or what the intent of the legislature was.

It's like reading a menu that simply shows the basic ingredients; it lacks nuances of how much and when they're introduced in the cooking process.

Moose.



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