County Clerks Sue MERS in a Lost Cause

County Clerks Suing MERS/MERSCORP in a Lost Cause

9 November 2011 by Bob Hurt

The following news stories explain the Florida Duval County Clerk lawsuit against MERS and MERSCORP.

• http://www.mortgageservicingnews.com/dailybriefing/2010_471/fla-clerk-del-ag-sue-mers-1027375-1.html#.Trm_SSxjslk.twitter
• http://www.nationalmortgagenews.com/dailybriefing/2010_471/fla-clerk-del-ag-sue-mers-1027375-1.html

The lawsuit complains: 

“MERS has usurped the rights and privileges of the Florida Clerks of Court by establishing, maintaining and inducing lenders to use its private recording system, which unlawfully interferes and competes with the public recording system.”

The clerk alleged that both the note and mortgage must go on the county record.  MERS attorney rebutted the complaint, claiming inaccuracy, and said MERS owns the mortgage and no law require the recording of a note.

I agree with MERS, but I also think the squabble could result in a beneficial change in the laws.

I consider this the core problem:  Smart people will always seek ways to keep their wealth while taking the wealth of others, particularly the stupid.  This case merely punctuates the problem.

Furthermore, Government operatives incessantly try to invade privacy rights of the people, and requiring the recordation of notes would reveal wealth in a way that would definitely invade privacy.

Most importantly, Florida law does not give the Clerk the authority to require recordation of notes. Florida statute 28.222 lists all the instruments the Clerk (County Clerk or Clerk of Courts) must record.  Notes do not appear in the list.  28.2222 (3) (h) names “Any other instruments required or authorized by law to be recorded.” 

Additionally, one’s possession of the note, or one’s name on the note or an allonge as beneficiary or assignee, proves one’s beneficial interest in the note, such as a stream of repayments.  Any law requiring recordation of notes would impose an undue burden on commerce and unduly enrich the Clerk.

Imagine the insanity of filing every issuance of every Federal Reserve Note with a Clerk, and paying associated fees to the clerk.  The Clerk has neither a right nor a privilege to record notes, nor a right to receive fees related to registration of the notes with MERS.

Society’s big problem with recordation of notes lies in the mess caused by promissory notes  (“Notes), mortgage security instruments (“Mortgages”), securitization, and  mortgage foreclosures. 

The mortgage loan borrower signs a Mortgage when buying a house.  The Mortgage contains language that protects the lender and abuses the borrower through rights-stripping.  Borrowers almost never read it.  If they did, and they thought about it, they might wonder why they need to convey the realty to the lender as part of the mortgage.

That conveyance makes the lender the legal owner of the realty.  It also implies that the “loan” consists of the realty, not the alleged money which the borrower allegedly borrowed and typically never sees.  Instead, the closer hands the purchase check directly to the seller.  In effect, the lender bought the realty and lent it to the borrower.

This makes the typical closing into a scam that leaves the borrower owning nothing but a debt, equitable interest in the realty, and the obligation to maintain and insure it. 

Neither the Note nor the Mortgage contain language requiring the lender or assignee to keep the note and mortgage united as one package of documents, nor to return the Note and Mortgage security instrument to the borrower upon satisfaction of the terms of the Note.  The borrower typically relieves the lender of the obligation both to inform the borrower of every assignment of the note, and to comply with the UCC’s notice and demand cycle.  Worst of all, no language in the Note actually conveys the Note to the lender, and yet lenders sell and securitize the note as though it constitutes their own chattel, depriving the borrower of all the fruits of such conversion.

Various rumors and facts surround the mystery of what happens to the physical Note after the borrower signs it at closing.  These have caused confusion so great that the mishandling of notes confounds judges in the real estate trial courts across America.  For decades, lenders or assignees held the notes securely in vaults and never brought them to court or the trustee in foreclosure matters.  They merely provided proof of loan payments and a copy of the note to prove its existence.

When challenged for the original, they claimed they had lost or accidentally destroyed the note, and maybe they did.  In recent years when the foreclosures began to mount and defendants demanded to see the original note, plaintiffs magically found them.  Companies like DOCX specialized in re-creating “original” loan documents, a crime for which no court has yet punished anyone.

Now, amidst all this confusion, county clerks have started suing MERS in an effort to stop MERS from registering note assignments, and to force the assignees to file the assignment along with any changes in the mortgage with the county clerk, and to pay corresponding recordation fees.  This would of course bring a windfall of much-needed money into the court coffers.

But, as I have explained, that would constitute malfeasance, invasion of privacy, and a ball and chain on the ankle of commerce.

The assignment-in-blank and bearer instruments like bonds and currency constitute an additional major fly in the ointment of the clerks’ nefarious scheme to record notes.  If they get their way, people will, out of logical consistency, have to record every I.O.U., promissory note, bond purchase, and currency transaction, even when it does not relate to a mortgage.

For further consistency, people might also have to record purchases and transfers of chattel, and pay a corresponding fee.  This would amount to a tax on all commerce, on top of existing luxury tax, sales tax, and other excise taxes.  The clerks would have a monumental, new outrage from the public to deal with, a brand new justification for a Boston Tea Party uprising.

In addition, the clerks don’t seem to grasp the significance of MERS and MERSCORP.  The MERS concept started because lenders wanted it and funded it so they could keep track of notes and simplify foreclosures while reducing the cost of assigning notes.  All major lenders own shares in MERSCORP for that reason.  Thus, MERSCORP operates as their special-purpose alter-egos with perfect legitimacy.

For the foregoing reasons, I predict that the clerks will lose and lose badly in their effort to force note assignees to record the assignment and pay a fee for it.  They will fail in their effort to shut down the legitimate operation of MERS.

However, MERS does cause a certain problem.  When the holder of the note and the mortgagee sue under separate names to foreclose, they have no standing to force a foreclosure sale of the mortgaged realty.  These points explain why. 

1.       The holder named on the note or allonges has the right to foreclose the note, but because the mortgage bears the servicer’s name (MERS) as mortgagee, and not the holders, the holder has no authority to force a sale UNLESS the holder has made the mortgagee the holder’s agent for that purpose.  That almost never happens.

2.       The mortgagee (MERS) has no standing to sue to force the foreclosure sale because the borrower’s failure to make timely mortgage payments injured only the holder, not the mortgagee.  Only injured parties have the right to sue.

If these sticky issues become salient in the clerk’s lawsuit against MERS, maybe the legislature will take the hint and clarify the issue in statutes that prevent splitting the note from the mortgage.  This would force the assignees of the note to file and pay a recording fee.   I doubt that will happen, however.  The lenders could combine the note and mortgage in a single document, but for a variety of sound reasons chose not to.

Bob Hurt    bh   Blog 1  2  3 • Email    f      t

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More Pesky Questions about Florida Adverse Possession

10 November 2011 By Bob Hurt

Roxann from Broward County Florida called and informed me of Fitzroy Ellis sentencing related to Adverse Possession, and to ask about AP of a house of a deceased, intestate, heirless owner.   Lola from Duval County Florida called and informed me of Statewide Prosecutor Nick Cox persecution of Demetrius Lewis and Chris McDonald for AP-related crimes, and to ask about AP of an abandoned, moldy, overgrown place bought by the lender for $100 at auction.

I estimate that only a high appeals court like the state Supreme Court can adequately and with reasonable finality answer the questions.  They involve an understanding of the English Law of Florida with roots 600 years deep.  And neither the courts nor the Florida Legislature have ever published that law fully for the people to know and use.

I pointed the callers to Florida Statutes Chapter 86 and my article on AP strategy.  Questions arose that might provide topics for declaratory judgment naming Sheriff, State Attorney, Statewide Prosecutor, Attorney General, Police Chief.

·         Why does lender get property for only $100 at auction (auction sham works like a scam)?

·         Why does clerk turn down opposing bids?

·         How does court determine fair market value of foreclosure auction property?

·         If APer makes repairs and improvements can APer put lien on property for costs?

·         Can APer prevail in a law suit against owner for payment of such lien?

·         Can owner prevail in a lawsuit against the APer for rent or unauthorized changes like adding on a room, re-landscaping the property, planting a garden where grass existed, uprooting a tree, etc.?

·         Does chapter 82/83 apply  - must owner sue for ejectment/writ of possession to eject adverse possessor who possessed realty more than 30 days, or may owner remove APer with mere trespass warning filed with sheriff?

·         How much time does APer have to vacate property on receipt of writ or possession or trespass warning?

·         Does time of filing Notice of AP affect the above, given that law requires AP Notice only within the first year of AP?

·         For abandoned realty with house open to the air, should County health dept check air quality and other inhabitability issues like mold/rats/pigeons/insects/vermin in A/C ducts, attic, main house?

·         Can APer hold owner liable for health problems resulting from mold/rats/pigeons/insects/vermin?

·         Does the English Law of Florida provide that AP statutes/common law constitute only a remedy for adverse possession or also a right adversely to possess untended realty?

·          Does Florida statute violate the English Law of Florida, by removing a common law right without providing a suitable statutory substitute, such as by requiring notice to the property appraiser and owner and Sheriff/police, such that police harass the APer without complaint by owner?

·         Does sheriff/police violate APer rights by harassing, and warning APer of arrest for entry on AP property?

·         Must notice to owner of record include notice to both equitable owner (mortgagor) and legal owner (mortgagee/lender/assignee)?

·         Does such notice require uniting or mortgage and note under one common beneficiary?

·         Does such notice become unduly burdensome when beneficiary has assigned note in blank?

·         Does APer have right to rent the AP realty to someone else?

·         What law or principle of law prohibits an APer from taking AP of numerous realties, fixing them up, and renting them out, so long as APer does not misrepresent the APer’s status as an APer, or the fact that the owner of record might act to repossess the realty within the statutory period?

·         Does the APer have the right to demolish a structure unfit for its intended use (such as human habitation) on the AP realty and replace it with a new one or not replace it at all?

·         Approximately how much would it cost to prosecute a declaratory judgment lawsuit on these and related questions, seeking injunctions against law enforcers and prosecutors from harassing APers or acting against APers criminally, and forcing harassers to compensate victims of such harassment?

·         If an APer takes AP of a house that belonged to a free-and-clear owner who died without will or heirs, what right does the APer have to defend possession against the State of Florida and any probate court?

·         What if the owner did have heirs but no will?  Does APer have any priority of right over the heirs, and if so, what?

·         What if the owner had a will that ignored the  house, and no heirs?

·         At a foreclosure auction where lender takes realty for the “value” at a cost of $100, why does the auction detail not list the purported value instead of $100 as the purchase price?

·         Why do courts not (in equity) force lenders to cram down loan balances to present actual value minus paid in equity – why does lender as sophisticated investor who caused the collapse of values not have to shoulder the brunt of equity loss?

A white paper answering the above questions could become a good promotional item for a title attorney.

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A law buddy responded to the above comments as follows:

Answers are pretty simple.   First of all you need to define an APer.   One does not have the right to make any claim for adverse possession until one has resided and paid taxes for at least seven years.  Once that requirement is met, one can then file an action in court seeking a judicial decree as to whether he or she has adverse possession rights.   Whether one does depends on all the facts and circumstances of that particular case.

So anyone taking possession of property without the permission of the owner is a trespasser for the first seven years and has absolutely no adverse possession rights.  Hence, anyone taking possession of property without the property owner’s permission can be prosecuted as a trespasser.   The law does not require the police or the state attorney’s office to have permission of victims to enforce the law. 

The law does evolve and change.   You raise some good issues as to why it should change in this area.   One is looking at spending at least $100,000 to handle a test case to take up to the Florida Supreme Court. 

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I responded to him as follows:

I understand your comments, but I have an alternate view.  I believe an adverse possessor engages in adverse possession upon taking possession adversely, not upon filing notice or lasting on the realty through the statutory limitation period and associated quiet title action.  Such an action perfects possessory rights against the owner and terminates the adverse possession period.  Thus, AP lasts from initial possession, through continuous possession, for the statutory period.

I therefore believe that ONLY THE RIGHTFUL OWNER OF RECORD has any right to complain against the APer with any legal effect.  And I believe you can prove this IF YOU HAVE FULL, UNFETTERED ACCESS to the English Law of Florida (which you probably do not have).  Our state government has the legal duty to provide all Floridians with the English Law of Florida, as amended and updated, annually, in printed and on-line form so that Floridians may avail themselves of its rights and operate according to its limits and obligations.  Only a successful prosecution of this point through the Florida Supreme Court will force the government to obey its responsibility to provide us with the law in writing. 

As a case in point, the Supreme Court in Kluger v White (1973) opined that the legislature cannot remove a common law right without providing a suitable statutory substitute, and later that year that the Court could, as the source of common law, CHANGE the common law to suit the evolved needs of society.  Thus, any interpretation of criminal law that would impede adverse possessors, other than trespass warning by the rightful owner, operates as a removal of the common law right of adverse possession. 

Thus, AP does NOT constitute trespass UNLESS the owner demands that the APer leave the realty AND the APer refuses to leave .  THEN and ONLY THEN does AP constitute trespass.  400 years of English law prior to the founding of the USA seem to support this.

Essentially, nobody can actually steal realty, other than the objects on it.  Only an idiot would leave his wallet lying on the front seat of an unlocked car.  Even though the law punishes theft of the wallet, catching the thief presents a problem, so most such thieves succeed without penalty.  

However, with realty, we have a different situation.  Because no one can steal it, one cannot commit grand theft of it if abandoned.  One cannot deprive an owner of use of the realty if the owner does not use it, and shows no sign of caring for or cultivating it. 

Owners owe themselves and the community a duty of care for their realty.  Without such care the realty becomes a danger to the community and to the owner and any future occupant through mold infection, pest infestation, and invitation to vandals and thieves.


Thus, the owner owes the care to the community, not merely to himself, and adverse possession therefore purges the community of the harm related to abandonment.  AP has for that reason, not just for taxes and cultivation, ALWAYS operated as a benefit to the community, the owner, any mortgagees, and the government.  And for that reason, GOVERNMENT has the DUTY to protect the APer against all possession adversaries other than the owner of record.  

Let us not forget in this discussion that all governments ultimately took the land by conquest, wresting it from the control of predecessors.  They accomplished this because predecessors failed adequately to care for the land and inclusively to defend their possession.  Today, our government keeps such land only by consent of the governed, and so both government and governed owe mutual duties of care, utilization - putting the land to its highest, best use-,  and defending possession, ultimately ousting from the land those who ignore those duties.  In this sense, "might" indeed makes "right."

The question also arises regarding right to possess any item discarded or thrown away, such as realty abandoned in foreclosure.  NO rhyme or reason supports the faulty notion that an owner of record cannot discard realty, nor that an adverse possessor cannot claim it as his “found” property.  The same remains true when a person dies intestate, and the government has slept on its own obligation to put the realty and other assets of the deceased into probate proceeding.  Government has no less obligation than the rightful owner to prevent the property from becoming a danger to the community or, conversely, to put the property to its highest, best use.

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Bob Hurt    bh  Blogs 1 2 3 • Email • Law • Donate    f      t 
2460 Persian Drive #70, Clearwater, Florida 33763 •727 669 5511

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