A landmark ruling in a recent Kansas Supreme Court case may have given millions of distressed homeowners the legal wedge they need to avoid foreclosure. In Landmark National Bank v. Kesler, 2009 Kan. LEXIS 834, the Kansas Supreme Court held that a nominee company called MERS has no right or standing to bring an action for foreclosure. MERS is an acronym for Mortgage Electronic Registration Systems, a private company that registers mortgages electronically and tracks changes in ownership. The significance of the holding is that if MERS has no standing to foreclose, then nobody has standing to foreclose – on 60 million mortgages

Read more here –

31 Responses

  1. Ellen,

    That is amazing story. I can see a lot of lawsuits coming from this one.

    I am sure someone has figured this out before, but wonder why there’s little talk about it.

    I see the truth in the fact that if a bank sold their mortgage off (which most do) and it was bundled with many more (which most are) and turned into an investment product and then sold off to multiple investors, then determining the true owner of the mortgage is near impossible.



  2. Ellen, Another great service to our readers. Thank you.

    Your article brings the hope that this decision will be a lever for the correction of grave injustices in our money and banking system. Your excellent book, Web of Debt illuminates these monetary wrongs and the urgent need to fix them while we still can, if we still can.

    My main question is will it survive the Federal Courts up through the Supreme Court of the US? There is going to be tremendous pressure brought by Goldman Sachs, JP Morgan-Chase, Morgan Stanley, Bank of America and other “TBTF” money powers to overturn this decision.

    This could be another sound argument for a state-owned public banking system that could issue money (in the form of tax credits or other state-backed IOU’s) that could help fund public works, roads, bridges, libraries, schools, etc in lieu of taxes. Of course the national gov’t could be doing the same thing, rather than borrowing all of our money at usurious rates of interest. This current money scheme only further enriches Wall Street and the international bankers who own the Federal Reserve System, and must be changed via legislation like the American Monetary Act or similar bills.

    Thanks for spotlighting this important Kansas Supreme Court decision.

    • This will survive a Supreme Court review because this is all state law not constitutional law.

      The only constitutional question –of due process –was so weak the Supreme Court would not likely take it.

  3. Another home run! Just how little the Wall Street lords of the universe understood securitization is coming clear. Fortunately, Ms. Brown is on our side.

  4. Great opinion but I wish they would have said more about MERS as beneficiary. The Ark court was better in that regard.

    But there is some real strong language in this opinion and it has a good review of numerous decisions.

    My judge will be getting a copy when I file my response to the Bank’s Second Motion to Dismiss and I will be citing several passages from it.

    If anyone wants a copy of my amended complaint email me at

  5. If you all want to know what kind of trouble the banks are in for, I encourage you to read the complaint filed by David G Mills, posted above. He has generously offered to send you a pdf. It constitutes a brief on the subject. Good read!

  6. I posted your article at Chris Martenson’s website and recieved this question:

    “Frequently MERS appears whenever a notice of default has been filed, but often is not the listed holder of the note. Based on how I read Brown’s article, the above described scenario means the mortgage company has contracted with MERS to file the notice of default and begin foreclosure although MERS has no legal stake in which to do this correct?

    Can you add anything here?


    • Thanks for posting, and yes, that looks correct to me.

    • Yes.

      Mers is listed as a nominee of the lender on the Deed of Trust which is the document that puts a lien on your property and allows the lender to foreclose. What the Kansas court has said is that you can’t be a nominee of a lender who has sold the note. Most lenders have sold the note. This is very basic agency/principal law. A nominee is an agent. When the principal changes, a new agent is required. But the common Deed of Trust used in these securitized transactions, which is used all over, makes MERS the agent of the lender until the loan is paid off, no matter who the lender is. The law simply does not allow MERS to continue to be an agent of a new owner. So MERS has no authority to act as agent. Someone new would have to be the agent but the new owners of the loan never appoint a new agent.

      It gets worse for the banks. MERS is also listed as the beneficiary of the Deed of Trust. A recent ARK Supreme Court has said MERS can’t be the beneficiary of the Deed of Trust even though the Deed of Trust says so. That means there is no trust at all because MERS is the sole beneficiary and you can’t have a trust without a beneficiary. No trust means no valid lien.

      I get emails daily from people wanting my complaint. It explains why the court should stop my lender from demanding any more money from me and why the court should remove the lien on my property. Many lawyers now have read it and agree I am right. (I am a lawyer as well).

      Most think it is funnier than hell that the banks have screwed up this badly.

  7. Ellen I wonder if ultimately it will be the banks who get stuck or if it will be the investors who get stuck.

    Frankly, I think it might end up being the investors. Let’s face it. They were dumb enough to buy these notes without checking to see if the collateral was any good. I can see the banks making a compelling argument that caveat emptor prevails.

    I guess the banks could have some liability for misrepresentation but I think that they will probably be protected from that because Fannie Mae or Freddie Mac are intermediaries and the banks really make no direct representations to the ultimate investor.

    I think the foreign investors just got had. And we will be bailing out the foreigners.

    • Right on all counts right up that very last one, David, and with a bit more specificity, even on that one.

      It’s the taxpayers who will eventually get the “pointy end of the shaft”… in the end. As always.

      How’s that for a colorful turn of phrase?

      It’s always the boards of directors, CEO’s, and managers who rake in the profits faster than they can find places to hide it, and always the taxpayers who wind up footing the final tab. Freddy and Fannie are just the mechanisms, as is the FDIC. Perhaps the biggest of all “mechanisms” for wealth-grabbing is the Fed, or the Federal Reserve System.

      Thanks for all your comments and contributions.

      We live in interesting and exciting times.

      • Yes, Jere, and we have, moreover, already ceased to be a nation of laws. “Too big to fail” and “systemically important” are code for “the law be damned”. The lawyers who know the law and trust in it will suffer a more poignant disillusionment than those of us who acknowledge the golden rule: those with the gold make the rules ( or break them ) with impunity. And they fear just one thing: an aroused populace, which they have always considered “mob rule”. The great irony is that this mob rule ( AKA “democracy”) would more closely resemble the ideal of a rule of law the plutocratic elite has always claimed to represent.

        • Thanks Joseph. Too Big to Fail is simply “too big to exist”. No entity should ever be allowed that much power over society. The possible exception might be government, and even that should be constantly renewed and reconstituted.

          Yes, aristocratic power elites have always feared “mobs” and equated democracy with “mob rule”, and railed against it as if “democracy” was the ultimate evil.

          But it just isn’t so. A constitutional representative democracy (or republic, if you insist – there is no real practical difference between them as qualified above) that is made up of a large majority of educated and properly informed MIDDLE CLASSES is the most ideal form of government currently possible. The key here is a numerous and educated middle class should control the power through their ballot and representatives. Lower classes of the poor and uneducated tend to vote out of resentment and vengeance against those who have more. Upper classes of wealth, land, legal and educational advantage tend to extend and consolidate their networks of power and privilege. There is real safety only in a numerous educated, free, and informed middle class. When that begins to erode, despotism and tyranny begin to take hold.

          Scholars and philosophers dating back to Aristotle and beyond have maintained this, and our nation (USA) was founded on that principle:

          A long line of the finest minds history has known form a chain of ideas that led up to the formation of the US Constitution. They include Solon, Pericles, the early Greeks and Romans, Locke, Rousseau, JS Mill, Paine, Franklin, Jefferson, Madison, Adams, De Toqueville, Lincoln, just to name a few notables.

          Real constitutional representative democracy is not “mob rule” in an orderly society ruled by laws, courts and officers of the laws and courts. It is only where there is no law, or the law is weak or remote, or unenforced does some form of tyranny gain control, whether by strongmen or lawless mobs.

          There is great truth, Joseph, in your last statement. Even in absence of any written law or established order, “majority rule”, or free ballot, is the best way for men at peace to decide things. Only in times of war (including civil war) is a strong executive, general, or “warlord” justified, and then there should always be some way of having civil democratic authorities restored after a crisis.

          “Aye, there’s the rub”. There’s always a “catch 22” to every generalization, and those who know how to exploit it. 😉

          Thanks for your contributions.

  8. Unless my statement about the failure of the rule of law be taken as only an insubstantial sour attitude, one should consider that this crisis was created by the dismantling of the New Deal legislation, in particular the Glass Steagall Act. of 1933. Citibank operated in the 90’s in clear violation of the law established by Glass Steagall as it “pioneered” the daring new world of “new finance”.But its activities were not challenged. Instead, the law was changed in 1999. We have yet to experience the full consequences of plutocratic impunity.

    Can the law save us from the tyranny of money?

    No, not when plutocrats make the laws.

    • Yes Joseph, I’m in agreement with you on all counts. I was only adding some emphasis and filling in a few details for the edification of our readers.

      However, as important as was the dismantling of New Deal legislation, Glass-Steagall in particular, in creating this economic crisis, that was only a proximate cause. It was not the entire cause, but one in a string of causes dating back to banking activities prior to the founding of the USA.

      The real cause of this crisis is the establishment of private banking control over our monetary system, and the “Voodoo System of fractional reserve banking” that, in tandem, creates all of our money except for coins. It is a power without controls, transparency or check and balances. It is not elected.

      This fight for sovereign control over out money system began with Hamilton’s advocacy of the British banking system of central banking. It continued with the establishment of the 1st and 2nd Banks of the US in a constant ongoing battle with Jefferson, Jackson, and other advocates for sovereign money up though Lincoln and Garfield (both assassinated) until the bankers finally triumphed in 1913 with the passage of the Federal Reserve Act. We’ve been living with the consequences of that through two world wars, a great depression, numerous recessions, and serial localized wars that have broken our budgets, including Korea, Vietnam, Afghanistan, and Gulf I and II.

      So I am in full agreement with you when you say the plutocrats are making the laws. Even more, the laws they make are making them stronger year by year. The corporatocracy continues to grow unabated and nearly uncontrolled. Only in times of dire crisis, like now, is there an outcry to “do something”. And that only makes things worse, because so few people really understand what needs to be done.

      Therefore, every cry to “do something” to “fix things” only turns into another opportunity for the Money-Masters to further tighten the noose, line their pockets while increasing out debt.

      The “law” (or any constitution) can only save us if and when it is written in the hearts and minds of the people, especially those people whose megabucks can insulate them from the consequences of breaking the law, or let them off with a slap on the wrist.

      Whatever “reforms” that are now taking place in DC are just “dog and pony shows” for the masses. The only real beneficiaries from it all will again be the billionaire Bilderberger and their networks that siphon real wealth from the people.

      Maybe, just maybe, courageous decisions like the above Kansas MERS decision will begin to give the people some leverage to change things. One can and should be hopeful.

      However, my greater gut feeling is that it will only cause the great Money-Powers to turn up the heat to the war and chaos machines. Those prevent patriots from acting as patriots should, even congresspersons and presidents.

      As always, your comments are appreciated.

      • Great comments. Most people just don’t get it and I don’t blame them. It is not their fault, they have been lied to so much and so long about so many things that it would be easy for the MSM could convince them that the earth is flat.

        In addition to being “too big to fail” we now have and have had “too big to prosecute” for a long time. That is what really did this nation in. What a shame.

        Hardcore Harv, 4/39th, 9th Inf. Div….1968/69

  9. While this is a bit new to me, I see the potential and it is amazing. So how to individuals find out who holds the deed on their property? And how do we find out if ours is one of the 90% of mortgages that may be fatally flawed?

  10. Viewing the recent video, “Oh Canada”, impressed me with how thoroughly the government of Canada has been infiltrated by those in the pay of the moneyed elite. Their apparent willingness to “forget” the law requiring The Bank of Canada to be the source of all currency in Canada is appalling. What does this say about our ability to expect that any legal instrument will be recognized when the party with the most power has massive wealth? This MERS case will be very interesting to watch. Listening to NPR’s Market Place Money yesterday convinced me that this is the place to begin to demand some accountability. They claim to have the interests of the common person at heart, but are not or have not in my hearing made accurate comments about the source of our currency.

    The Bank of North Dakota is very interesting as are the Alberta Treasury Branches because they appear to be institutions and governments acting as the law requires. Why have these examples not been taken out by the normal methods? Has anyone suggested to the Governor of NY, David Patterson, that he should change the situation in NY to one like ND?

    In MA we are beginning to discuss the establishment of a State Bank. A set of issues, questions and answers to be presented to candidates for MA Governor are being developed and are available at: Any comments would be welcome.

  11. And Colorado law has made this all moot. Reading the mess in the Colorado Revised Statutes near made me cry: CRS 33-38-10.

  12. OK,
    So I am sitting on one of these fatally flawed mortgages what do I do? All payments are current but I do not want to continue this fraud. What is the best way to handle this? Any suggestions?

  13. I’ve got a mortgage where a phone call to the loan servicing company was not able to answer “Who holds the note?”. They told me to make a written request.

    The servicer holds another mortgage of mine, and I was able to get a loan modification on it. However, they keep sending me refinance advertisements for both of my loans. When I call the number, they regret to inform me that I don’t qualify to refinance (perhaps because the property value is too low compared to the debt?) and then pass me onto their loan modification department. But, the loan modification department can’t modify the one loan because the servicer does not hold it. And that’s when I asked the question – which they could not answer. I’m tempted to ask the court to void the loan and mortgage since the servicer does not know the owner! It would help pay for renovating that property when the current tenant moves out.

  14. Any comments or thoughts on current REO properties for sale, in which lets say Bank of America aka CountryWide is a seller.

    If there Is no valid lien is it possible that banks may not have authority to grant deed to the new buyer and close escrow, if title made same assumptions?

    • I suspect the sheriff’s sale, which gave the title to Bank of America (Countrywide) would be considered adequate proof of ownership by the courts. You’d first have to void the bankruptcy that caused the sheriff’s sale – I don’t know too many homeowners who could afford an attorney willing to do that. If they could, they’d probably still be paying the mortgage and not even thinking about foreclosure…

  15. Memo from MERS on this case

    To: All MERS Members October 1, 2009
    Re: Kansas Supreme Court Decision

    On August 28, 2009, the Kansas Supreme Court issued a decision that some
    in the press have tried to interpret to have a broader impact than the
    actual Court’s finding. The Court’s ruling in Landmark National Bank v.
    Boyd A. Kesler, Kansas Supreme Court, No. 98,489 is quite limited
    because it involves the vacating of a final judgment. The Kansas Supreme
    Court did not want to disturb the final judgment. MERS continues to be
    entitled to notice and service of foreclosure actions when MERS is the
    mortgagee because the Court did not say otherwise. In fact, the Court
    went out of its way to emphasize the narrow scope of its holding by
    stating: “Even if MERS was technically entitled to notice and service in
    the initial foreclosure action-an issue that we do not decide at this

    Moreover, foreclosure actions can continue to be prosecuted in the name
    of MERS because the Court made no mention of this issue. Essentially,
    the Court held that in this particular case, because a default judgment
    had already been entered, and the property sold to a third party, the
    trial court did not abuse its discretion in denying a motion to vacate.

    In this case, the originating lender, a MERS member, was named as a
    defendant, but no longer held any interest in the mortgage loan and was
    no longer the servicer. The plaintiff mistakenly did not name MERS as a
    defendant even though, pursuant to the Kansas statutes, the mortgage was
    recorded naming MERS as the mortgagee. The current note holder, also a
    MERS member, became aware of the action and sought to intervene on its
    own after entry of the default judgment. But because the member was not
    the recorded mortgagee, the member was meeting resistance from the trial
    court on its right to do so. At that point, the member alerted MERS to
    the issue, but it was too late.

    To prevent the circumstances that led to the decision from happening
    again, we remind and urge all MERS members to take the following steps:

    1) If a member is named as a defendant in a lawsuit involving a MOM
    mortgage loan that the member originated, and MERS is not named as a
    defendant, please alert the MERS Law Department right away at mers@mers This should be done even when the MERS member no longer holds
    any interest in the mortgage loan. Do not simply ignore the lawsuit.

    2) Any MERS member that is foreclosing a mortgage loan in the member’s
    name, or having MERS foreclose the lien as the mortgagee, and MERS holds
    another mortgage lien for another mortgage loan on the property, the
    member should instruct its counsel that MERS must be named as a
    defendant as the mortgagee for the other mortgage loan and served with
    the lawsuit.

    3) Make sure that when MOM mortgages are recorded, the County Recorders
    and Clerks are indexing the mortgages correctly to reflect MERS as the
    mortgagee, grantee, etc.

    4) Provide counsel representing MERS with proper documentation,
    information and an explanation of MERS and its interest in the mortgage.
    If you are unsure about what to provide, contact the MERS Law Department
    at mers@mers

  16. Foreclosure sales in limbo over title issue
    Expected ruling may complicate transactions

    By Jenifer B. McKim, Globe Staff | October 9, 2009

    A court decision expected as soon as today could negate the validity of sales of thousands of foreclosed homes in Massachusetts, causing havoc for buyers and sellers and further stalling the housing market’s recovery in hard-hit areas.

    At issue is proof of ownership at the time of a foreclosure sale. During the housing boom, millions of mortgages were bundled into bonds and sold to investors, a process that resulted in lengthy and twisted paper trails that can obscure ownership. Many lenders believed they could complete foreclosure transactions and later produce formal proof they held the mortgage.

    That changed in March when Justice Keith C. Long of Massachusetts Land Court found that two foreclosures in Springfield were invalid because ownership of the mortgages was not clear at the time of the foreclosures.

    Long’s ruling, which came as a shock to many who deal with distressed properties, called into question the ownership of hundreds if not thousands of foreclosed homes in Massachusetts, prompting some lenders to delay sales out of fear they could later be voided, title companies to balk at insuring them, and nonprofits to steer away from certain foreclosed homes altogether.

    “There are thousands and thousands of titles that have gone through foreclosures with these late filed’’ ownership records, said Lawrence Scofield, an attorney with Ablitt Law Offices in Woburn, who represented plaintiffs in three consolidated Springfield cases ruled on by Long. “Judge Long is saying you don’t really own it. That is the real, overwhelming, economic effect.’’

    Two of the plaintiffs asked Long to reconsider the ruling, and a decision is imminent.

    Among those watching the case are Boston city officials, who say they hope Long will clarify title issues for homes that have already gone into foreclosure. In the meantime, the judge’s actions have stymied the city’s effort to buy as many as 20 bank-owned properties, hurting much-needed redevelopment efforts in neighborhoods plagued by foreclosure, officials said.

    “It has put some properties in the state of limbo,’’ said Evelyn Friedman, director of Boston’s Department of Neighborhood Development.

    While title issues can affect any home sale, Long’s ruling addressed procedures required under foreclosure law and therefore only affects properties foreclosed on by a lender. His decision builds on a growing national movement among housing advocates, courts, and some lawmakers to push lenders dealing with foreclosed properties to produce accurate documentation before deals are consummated.

    Kathleen Engel, professor of law at Suffolk University, said the federal government should step in to help states deal with “toxic titles’’ that are clogging up the system from California to Florida. She said until recently few people were scrutinizing paperwork of foreclosing lenders, whose actions are causing problems for borrowers, investors, and municipalities. No matter how Long rules, she said, the problem isn’t going away.

    “The fundamental problem is the paperwork was really shoddy,’’ said Engel. “The mess was created by Wall Street.’’

    Locally, the Massachusetts decision has pitted advocates trying to revive neighborhoods against others trying to help homeowners stave off foreclosures.

    Gary Klein, a consumer law attorney who filed a friend of the court brief in the case, said the real estate system placed “expedience and convenience’’ before the law. Providing home buyers with a “full set of procedural protections,’’ he said, is more important than comforting lenders who ignored the law. He said the lending community created the mess and it needs to fix it.

    Klein said there is a benefit to the ruling for homeowners in trouble: It is slowing the foreclosure process, allowing them more time to try to save their homes. Indeed, since March, the number of foreclosure deeds has slowed, according to Warren Group, a Boston company that provides real estate data.

    “There are probably at least a thousand families who are getting at least some period of temporary delay while lenders go back and get a proper paper trail,’’ said Klein, an attorney with the Boston-based law firm Roddy, Klein and Ryan. “Slowing foreclosures down allows people to get loan modifications and other relief.’’

    The Springfield lawsuit was filed not by homeowners seeking to regain their houses, but by the foreclosing lenders who were trying to remove a “cloud from the title’’ of properties created because of where the lenders chose to publish foreclosure auction notices. A secondary issue was whether the notices – which did not officially name the mortgage holders – complied with the law, and that is what Long is concerned about.

    The Real Estate Bar Association for Massachusetts, a statewide group with 3,000 members, joined the plaintiff’s attorney to ask the court to reconsider its ruling. Attorney Christopher Pitt, chair of the group’s Title Standards Committee, said many banks already have changed their procedures as a result of the March decision and are now coming to foreclosure-sale closings with completed paperwork.

    But that doesn’t help people who already bought a foreclosed property from a bank.

    “If a property has one of those arguably defective foreclosures in its back title, right now you may not be able to refinance or sell it,’’ said Pitt, who works for the law firm Robinson & Cole, which has an office in Boston.

    In Springfield, the ruling scuttled purchases of two foreclosed properties in depressed areas, said Rudy Perkins, a staff lawyer with HAPHousing, a nonprofit that promotes affordable housing. As a result, Perkins said, the agency now steers clear of properties with similar title questions.

    “There is a danger that if this can’t be resolved, those properties will stay boarded up,’’ said Perkins. “It killed the deals and, unfortunately, it is going to kill deals on other properties.’’

    In North Andover, real estate agent Linda Kody said some banks have moved to redo a foreclosure rather than wait for Long’s decision. Others are not moving forward with foreclosures. Twelve pending sales in her office have collapsed recently, Kody said, and another 25 bank-owned property listings are on hold as lenders wait for a ruling.

    “It is very upsetting,’’ said Kody, president of the real estate firm Kody & Co. Inc.

    Biju Kachappilly, a father of two, is one of the many hopeful buyers awaiting the decision. Kachappilly said his pending purchase of a four-bedroom, $400,000 Colonial in Tyngsborough in April fell through over questions about the title. He still hopes to buy the home, but in the meantime is paying higher rent on a month-to-month apartment in Billerica after notifying the landlord of his plans to move.

    “We are trying to buy a house and move our family there; it is good for the neighborhood and it is good for the town,’’ said Kachappilly. “Many families and houses are in limbo because of this decision.’’

    Jenifer McKim can be reached at

  17. Here is Legal Aid Atty April Charney’s initial outline on this case

    Charney Outline of the Kesler-Kansas MERS Case

    This is my outline of the Kesler case. It is not yet done, but this is as far as I have gotten so far. I hope to find time to finish this today, but that is a lot of hope.

    Some of the high points:

    1. The court upheld the ruling that as a nonlender, MERS is not a necessary party to a judicial f/c action.

    2. MERS, as a nonlender, has no due process rights to intervene in a mortgage foreclosure action.

    3. The fact that MERS is named as “nominee” on 2nd mtg will not void a default or a judgment of f/c or subsequent sale to bona fide purchaser at court ordered f/c sale when MERS is not named as a party defendant (with an interest in the property) and is not served with process where lender identified on the mtg is served and named as a party to the f/c.

    4. MERS is not a “contingently necessary party” to a f/c under K.S.A.
    60-219(a) on the basis that MERS is not a real party in interest to the f/c.

    5. MERS is determined to only be an agent or representative for the lender, Millennia.

    6. It is interesting that the court found that it was “appropriate–and probably necessary” for the trial court to consider evidence beyond the bare pleadings to determine whether it should set aside a default judgment.

    7. The court also found that the trial court was within bounds “to consider whether MERS would have had a meritorious defense if it had been named as a defendant and whether there was some reasonable possibility MERS would have enjoyed a different outcome from the trial if its participation had precluded default judgment.”

    8. Under Kansas law, “A person is contingently necessary if (1) complete relief cannot be accorded in his absence among those already parties, or (2) he claims an interest relating to the property or transaction which is the subject of the action and he is so situated that the disposition of the action in his absence may (i) as a practical matter substantially impair or impede his ability to protect that interest or (ii) leave any of the persons already parties subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations by reason of his claimed interest.”

    9. The court proceeds to review “the nature of the interest in the mortgage that MERS has demonstrated.”

    10. The court references the opinion of another court that tried to define and give context to MERS:

    “MERS is a private corporation that administers the MERS System, a national electronic registry that tracks the transfer of ownership interests and servicing rights in mortgage loans. Through the MERS System, MERS becomes the mortgagee of record for participating members through assignment of the members’ interests to MERS. MERS is listed as the grantee in the official records maintained at county register of deeds offices. The lenders retain the promissory notes, as well as the servicing rights to the mortgages. The lenders can then sell these interests to investors without having to record the transaction in the public record. MERS is compensated for its services through fees charged to participating MERS members.” Mortgage Elec. Reg. Sys., Inc. v.
    Nebraska Depart. of Banking, 270 Neb. 529, 530, 704 N.W.2d 784 (2005).

    11. Next the court examines the actual language in the mtg that refers to MERS (the below language is boilerplate across the land):

    “THIS MORTGAGE is made this 15th day of March 2005, between the Mortgagor, BOYD A. KESLER, (herein ‘Borrower’), and the Mortgagee, Mortgage Electronic Registration Systems, Inc. (‘MERS’), (solely as nominee for Lender, as hereinafter defined, and Lender’s successors and assigns). MERS is organized and existing under the laws of Delaware, and has an address and telephone number of P.O. Box 2026, Flint, MI 48501-2026, tel. (888) 679-MERS.

    Borrower does hereby mortgage, grant and convey to MERS (solely as nominee for Lender and Lender’s successors and assigns) and to the successors and assigns of MERS the following described property…

    “Borrower understands and agrees that MERS holds only legal title to the interests granted by Borrower in this Mortgage; but, if necessary to comply with law or custom, MERS, (as nominee for Lender and Lender’s successors and assigns), has the right: to exercise any and 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 or cancelling this Mortgage.”

    12. But the court also notes that the mtg sets up the lender and not MERS as the real party in interest thereby setting up the lender and not MERS as the ” contingently necessary” party under Kansas law:

    “If Borrower fails to perform the covenants and agreements contained in this Mortgage, or if any action or proceeding is commenced which materially affects Lender’s interest in the Property, then Lender, at Lender’s option, upon notice to Borrower, may make such appearances, disburse such sums, including reasonable attorneys’ fees, and take such action as is necessary to protect Lender’s interest.”

    13. The court also reviewed the standard notice provisions in the mtg:

    “Notice. Except for any notice required under applicable law to be given in another manner,… (b) any notice to Lender shall be given by certified mail to Lender’s address stated herein or to such other address as Lender may designate by notice to Borrower as provided herein. Any notice provided for in this Mortgage shall be deemed to have been given to Borrower or Lender when given in the manner designated herein.”

    “Borrower and Lender request the holder of any mortgage, deed of trust or other encumbrance with a lien which has priority over this Mortgage to give Notice to Lender, at Lender’s address set forth on page one of this Mortgage, of any default under the superior encumbrance and of any sale or other foreclosure action.” (Emphasis added.)

    14. The court finds that “nominee” is defined nowhere in the mortgage and also finds a lack of definition of “the functional relationship between MERS and the lender” leaving the interpretation to the court “in the absence of a contractual definition”.

    15. So the court decides that ” The parties appear to have 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.

    16. The court recites what the parties want the word to mean, but then quotes Black’s Law Dictionary which defines a nominee as “[a] person designated to act in place of another, usu. in a very limited way” and as “[a] party who holds bare legal title for the benefit of others or who receives and distributes funds for the benefit of others.”

    17. The court finds that the Black’s Law definition “suggests that a nominee possesses few or no legally enforceable rights beyond those of a principal whom the nominee serves.”

    18. The court carefully summarizes some of the other cases that have tried to give a context to the use of “nominee” in the MERS setting:

    a. In re Sheridan, ___ B.R. ___, 2009 WL 631355, at *4 (Bankr.
    D. Idaho March 12, 2009) (MERS “acts not on its own account. Its capacity is representative.”)

    b. Mortgage Elec. Registration System, Inc. v. Southwest, ___ Ark. ___, ___, ___ S.W.3d ___, 2009 WL 723182 (March 19, 2009) (“MERS, by the terms of the deed of trust, and its own stated purposes, was the lender’s agent”)

    c. LaSalle Bank Nat. Ass’n v. Lamy, 2006 WL 2251721, at *2 (N.Y. Sup. 2006) (unpublished opinion) (“A nominee of the owner of a note and mortgage may not effectively assign the note and mortgage to another for want of an ownership interest in said note and mortgage by the nominee.”)

    19. Now, on this point: “By statute, assignment of the mortgage carries with it the assignment of the debt. K.S.A. 58-2323” , Kansas is different than most states.

    20. The court relies on the fact that the mortgage “consistently refers only to rights of the lender, including rights to receive notice of litigation, to collect payments, and to enforce the debt obligation.”
    And, the court finds that the mtg “consistently limits MERS to acting “solely” as the nominee of the lender.”

    21. This next part is really the kick in the MERS ass:

    “Indeed, in the event that a mortgage loan somehow separates interests of the note and the deed of trust, with the deed of trust lying with some independent entity, the mortgage may become unenforceable.

    “The practical effect of splitting the deed of trust from the promissory note is to make it impossible for the holder of the note to foreclose, unless the holder of the deed of trust is the agent of the holder of the note. [Citation omitted.] Without the agency relationship, the person holding only the note lacks the power to foreclose in the event of default. The person holding only the deed of trust will never experience default because only the holder of the note is entitled to payment of the underlying obligation. [Citation omitted.] The mortgage loan becomes ineffectual when the note holder did not also hold the deed of trust.”
    Bellistri v. Ocwen Loan Servicing, LLC, 284 S.W.3d 619, 623 (Mo. App.

    The Missouri court found that, because MERS was not the original holder of the promissory note and because the record contained no evidence that the original holder of the note authorized MERS to transfer the note, the language of the assignment purporting to transfer the promissory note was ineffective. “MERS never held the promissory note, thus its assignment of the deed of trust to Ocwen separate from the note had no force.” 284 S.W.3d at 624; see also In re Wilhelm, 407 B.R. 392 (Bankr.
    D. Idaho 2009) (standard mortgage note language does not expressly or implicitly authorize MERS to transfer the note); In re Vargas, 396 B.R.
    511, 517 (Bankr. C.D. Cal. 2008) (“[I]f FHM has transferred the note, MERS is no longer an authorized agent of the holder unless it has a separate agency contract with the new undisclosed principal. MERS presents no evidence as to who owns the note, or of any authorization to act on behalf of the present owner.”); Saxon Mortgage Services, Inc. v.
    Hillery, 2008 WL 5170180 (N.D. Cal. 2008) (unpublished opinion) (“[F]or there to be a valid assignment, there must be more than just assignment of the deed alone; the note must also be assigned. . . . MERS purportedly assigned both the deed of trust and the promissory note. . .
    . However, there is no evidence of record that establishes that MERS either held the promissory note or was given the authority . . . to assign the note.”).

  18. I filed my Response to the Bank’s Motion to Dismiss yesterday.

    If anyone wants a copy of my response in pdf email me at

    Warning. It is 38 pages. Not for the faint of heart.

    Hearing on the motion is Wednesday, October 28.


    If it walks like a piggy, talks like a piggy, by golly it’s a PIGGY!

    BofA and it’s CEO Brian Moynihan reminds me of that song by John Lennon and George Harrison titled “Piggies” I invite you to listen to this song on youtube and see if it appropriately fits.

    Have you seen the little piggies
    Crawling in the dirt
    And for all the little piggies
    Life is getting worse
    Always having dirt to play around in.

    Have you seen the bigger piggies
    In their starched white shirts
    You will find the bigger piggies
    Stirring up the dirt
    Always have clean shirts to play around in.

    In their ties with all their backing
    They don’t care what goes on around
    In their eyes there’s something lacking
    What they need’s a damn good whacking.

    Everywhere there’s lots of piggies
    Living piggy lives
    You can see them out for dinner
    With their piggy wives
    Clutching forks and knives to eat their bacon.

    John Wright vs. Bank of America Lawsuit at:

    When I filed my lawsuit against Bank of America, myself and United Law Group thought of the many others out there in the same situation. It was then that we decided to educate the public on what these piggy banks are doing, as well as unite us all together as one voice. Please help me turn this David vs. Goliath modification process, into a Goliath vs. Goliath.

    Please stand with me and United Law Group and send an email to Bank of America that states that we will no longer tolerate their potentially illegal, fraudulent, irregular and abusive business methods.

    Divided we might have fell America, but united we must stand!

    Please send your email directly to Bank of America and include the following:

    1. Your name
    2. Your complaint concerning your experience with Bank of America.
    3. Please end your email “I support John Wright vs. BofA Lawsuit!”
    4. Please send a copy of your email to
    5. Please send your email to both BofA link below and the CEO email

    BofA Linked Email:

    CEO Brian Moynihan:

    Matthew Task, Executive Relations
    Office of the CEO

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