The Big Lie:

MERS Mortgages in Massachusetts

by Jamie Ranney, Esq.
Jamie Ranney, PC
4 Thirty Acres Lane
Nantucket, MA 02554
iamie@nantucketlaw.pro
508-228-9224
1
1. SUMMARY
"If you tell a lie that's big enough, and you tell it often enough, people will
believe you are telling the truth, even when what you are saying is total
crap.,,1
The validly of the Mortgage Electronic Registration System, Inc., ("MERS") system and
its ability to have survived (most) legal challenges (thusfar) to its existence, its legal
standing and its core purpose(s), seems based on a variation of the "big lie" theory stated
above.
2
MERS is a privately-run electronic recording system for the tracking of legal and
beneficial interests in mortgage loans in the United States. The MERS "system" has, for
all intents and purposes, leapfrogged what in most states are centuries-old systems for
publicly recording various real estate transactions (primarily mortgages and assignments
of mortgages although more recently, foreclosure documents) MERS has done nothing
less than usurp the role of many state government recording agencies in administering,
for itself and its members, what will or what will not be disclosed on the public land
records with respect to ownership interest(s) ofloans in some 60% of the real property of
this country.
Virtually everyone who would be in a position to effectively and credibly challenge
MERS' very existence - including judges, state legislators and many legal commentators
- seems to assume (in most cases) that MERS has a right to exist and do what they do
simply because MERS itself says they do. Couple this with the fact that MERS was
formed, financially-backed and is owned by the nation's biggest banks and their business
affiliates, (title insurance companies, foreclosure mill law firms, etc.; and the fact that
some 66 million MERS mortgages have been registered in this country) and it is clear to
see that MERS designed itself with staying power in mind. Undoubtedly MERS has
developed a market "momentum" and ubiquitous presence that makes it difficult to
ignore - or challenge. Again, if the lie is big enough, people begin to accept it as the
truth.
Despite its insertion into the very foundation (no pun intended) of our nation's housing
market however - and the broad economic implications for the country was a whole were
the MERS-system ultimately found to be invalid or unlawful - simply being "too big to
fail" does not make what the MERS-system does, right or legal. It is this author's opinion
that MERS is not right or legal in Massachusetts.
By effectively eliminating the transparency required on the public land records for the
disclosure of encumbrances on real property in Massachusetts, MERS-mortgages have
sown massive confusion, serious incidences of fraud and perhaps billions of dollars of
liabilities into a land recording system that - although perhaps ancient and out-dated in
1 UFOs, .JFK, and Elvis: Conspiracies YOll Don't Have To Be Crazy To Believe, Belzer, Richard; (Ballentine Books,
1999)
2 The original "big lie" theory is actually attributed to Adolf Hitler. See http://en.wikipedia.org/wiki/Big_Lie
2
many respects - has consistently served the fundamental purpose(s) for which it was
formed: to promote transparency as to ownership interests in land and to provide "actual
notice" to parties reviewing the public land records of the current ownership and
existence of encumbrances on real property.
This memo will focus on MERS-designated mortgages in Massachusetts.
In this author's opinion two (2) things are evident after a survey of Massachusetts law.
First, MERS cannot be a valid "mortgagee" under Massachusetts law and thus MERS
designated mortgages are invalid in the Commonwealth of Massachusetts.
This is because MERS-designated mortgages by definition "split" the security instrument
(the mortgage) from the debt (the promissory note) when they are signed. This "split"
invalidates the mortgage under Massachusetts law. Where the security interest is invalid
upon the signing of the mortgage, MERS cannot occupy the legal position of a
"mortgagee" under Massachusetts law no matter what language MERS inserts into their
mortgages that purports to give them the legal position of "mortgagee". Since MERS
designated mortgages are invalid at their inception, it follows logically therefore that
MERS mortgages are not legally capable of being recorded in the Commonwealth of
Massachusetts by its Registers of Deeds.
Second, even if a MERS-designated mortgage were found to be a valid security
instrument in Massachusetts, each and every assignment of the mortgage and note
"behind" a MERS-designated mortgage must be recorded on the public land records of
the Commonwealth in order to comply with the Massachusetts recording statute at
M.G.L. c. 183, s. 4 which requires that "conveyances of an estate" be recorded to be
valid. A mortgage is a "conveyance of an estate" under Massachusetts law. Since
MERS-designated mortgages exist for the primary purpose of holding "legal" title on the
public land records while the "beneficial" interest is transferred and sold multiple times
(and a mortgage cannot exist without a note under Massachusetts law), MERS-mortgages
unlawfully avoid recording fees due the Commonwealth for the transfer(s) of interests
under MERS-designated mortgages.
II. BACKGROUND ON THE AUTHOR
I am a 41 year-old sole practitioner on the island of Nantucket. Born in Los Angeles, CA
and thus not a "real" islander, my family moved to Nantucket in 1977 and I went to
school here and have been practicing law on Nantucket for almost eleven (11) years.
I went to Vermont Law School (VLS) where I graduated in 1999. I enjoyed Vermont
summers more than the winters, never skied once in three (3) years, was admitted to the
VLS General Practice Program (where you learn how to actually BE a lawyer), played
rugby (broke my nose twice), wrote a movie review column for the school newspaper
called "The Mothership", was elected a student Trustee in my third year and thereafter
generally made myself the bane of the VLS administration's existence. My law school
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grades were not impressive. I am co-owner of a local propane company on Nantucket
(www.nantucketenergy.com) and the co-founder and race director for the Nantucket
Triathlon (www.acktri.com).
Although currently inundated with foreclosure defense cases, I normally run a general
practice office on Nantucket that deals with usual small town lawyering issues - DDI's
and minor criminal defense, landlord-tenant work, some civil litigation, collections,
contractor disputes, local permitting work and some real estate conveyancing.
I "happened" into foreclosure defense by accident when about 18 months ago an elderly
couple came to see me. In their 70's, they told me that they were being evicted from their
home. They had no money and didn't know what to do. At first I thought I would just
buy them some time so that they could find another place to move to. But after reviewing
the paperwork, it became clear that this was much more than an eviction case. The
couple, well-known residents of Nantucket for more than 50 years, were being evicted
from their home after a foreclosure sale.
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When I reviewed their loan documents, I was
stunned to see that their stated income at the time they obtained their mortgage was
$4,000.00 per month - primarily social security income. The loan payment that they had
signed up for? More than $17,000.00 a month. Thus began my entry into foreclosure
defense, predatory lending and mortgage fraud (on the lender's side).
I have worked closely with Glenn F. Russell, Jr., from Fall River, MA
(russ45esq@gmail.com) - one of the pioneering Massachusetts attorneys in the area of
foreclosure defense. I have also worked together with Thomas B. Vawter, Esq., from
Needham, MA (tbvawter@comcast.net) to develop innovative foreclosure defense
strategies including challenging a foreclosing bank's standing in Servicemembers cases
in the Massachusetts Land Court and in raising standing challenges to post-foreclosure
evictions.
As of this writing I have approximately 75 foreclosure defenses cases. About 90% are on
Nantucket and are in various stages from pre-foreclosure default, to active default, to
commencement of Servicemembers hearings in the MA Land Court, to sale dates
scheduled, to active MA Superior Court and federal (District Court and Bankruptcy
Court) cases.
Approximately 65-70% of my cases involve MERS as the purported mortgagee.
III. MORTGAGE LOANS GENERALLY
In my experience, the average person is confused by what a "mortgage loan" actually is.
Wikipedia states in pertinent part:
"A mortgage loan is a loan secured by real property through the use of a
mortgage note which evidences the existence of the loan and the
] http://www.ack.net/Gilbert-Foreclosure-101410.htm!
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encumbrance of that realty through the granting of a mortgage which
secures the loan. However, the word mortgage alone, in everyday usage,
is most often used to mean mortgage loan.
According to Anglo-American property law, a mortgage occurs when an
owner (usually of a fee simple interest in realty) pledges his interest (right
to the property) as security or collateral for a loan. Therefore, a mortgage
is an encumbrance (limitation) on the right to the property just as an
easement would be, but because most mortgages occur as a condition for
new loan money, the word mortgage has become the generic term for a
loan secured by such real property.,,4
So what does a "mortgage loan" consist of?
A mortgage loan consists primarily of 1.) the promissory note (the "note") and 2.) the
mortgage.
The note:
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The note is your "promise to pay". It is the formal acknowledgement of the debt owed.
It is usually 3-5 pages long, and contains all of the essential terms of the loan (how much
you are borrowing, who you are borrowing from, interest rate, monthly payment amount,
term of loan, etc.).
A note is a "negotiable instrument" under Massachusetts law. See M.G.L. c. 106, s. 3
104. As a "negotiable instrument", a note can be sold or transferred subject only to
certain legal requirements that consist primarily of the formality of the transfer and
consideration (payment) for the note. A person or entity that owns your note is called a
"holder". One who holds a note must be a "holder in due course" for them to have to
right to collect the debt. See M.G.L. c. 106, s. 3-302. Physical possession of the note is
required for a party to be a holder in due course. See M.G.L. c. 106, s. 1-201(20)
The mortgage:
The mortgage is the instrument that attaches the debt (evidenced by the note) to your
property. It contains further conditions of your loan and typically contains a "power of
sale" that allows the mortgage holder to sell your property if you don't pay the money
you owe under the terms of the note.
6
4 http://en. wikipedia.org/wiki/Mortgage_loan
5 According to MERS's rules, they never own notes or the right to any payments under a note (or mortgage).
6 For authority to foreclose under the power of sale in a mortgage see M.G.L. c. 183, s. 21. Massachusetts is a "non
judicial" foreclosure state. This means that a lender need only properly notice a default and advertise the property for
sale for three (3) weeks in order to foreclose on the mortgage and sell the secured property at auction. M.G.L. c. 244,
s. 14.
5
IV. WHAT IS MERS?
MERS is a privately-owned and operated electronic database that was designed for the
primary purpose of allowing the electronic tracking of promissory notes and
corresponding mortgages in the United States.
7
MERS was set up in the mid-1990's by several of the country's biggest banks, secondary
market mortgage buyers (Freddie Mac, Fannie Mae) along with other industry
stakeholders (Mortgage Bankers Assoc.; American Land Title Assoc.) and over the last
decade or so, some 66 million MERS mortgages have been registered on the MERS
system in the United States.
MERS has described itself as follows
8
:
What is MERS?
MERS serves two purposes. First, it is a national electronic registry for tracking
servicing rights and beneficial ownership interests in mortgage loans. Second,
MERS acts as nominee (a form of agent) for the servicer and beneficial owner of a
mortgage loan in the public land records. MERS is designed to operate within the
existing legal framework in all U.S. jurisdictions and did not require any changes
to existing laws. How is this made possible? Its members appoint MERS as the
mortgagee of record on all loans that they register on the MERS System. This
appointment eliminates the need for any future assignments when servicing rights are
sold from one MERS Member to another. Instead of preparing a paper assignment to
track the change in the county land records, all subsequent transfers are tracked
electronically on the MERS System.
MERS does not create or transfer beneficial interests in mortgage loans or create
electronic assignments of the mortgage. What MERS does do is eliminate the need
for subsequent recorded assignments altogether. The transfer process of the
beneficial ownership of mortgage loans does not change with the arrival of MERS.
Promissory notes still require an endorsement and delivery from the current owner
to the next owner in order to change the beneficial ownership of a mortgage loan.
MERS is a Delaware corporation with a broad base of ownership from the mortgage
industry. American Land Title Association is among our owners and has a seat on the
MERS Board of Directors. Other owners with substantial investments in MERS include
the Mortgage Bankers Association of America (MBA), Fannie Mae, and Freddie Mac.
7 One court succinctly described MERS as follows: "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. a/Banking, 270 Neb. 529, 530, 704 N.W.2d 784 (2005).
8 This explanation - present on the MERS website for some time - has recently been removed. (www.mersinc.org)
6
These parties, along with Ginnie Mae, decided several years ago that MERS would be a
major benefit to the mortgage industry and worked together to create the MERS of today.
How does MERS become the Mortgagee of Record?
MERS is put in this position in one of two ways: the first is by an assignment from
a lender or servicer to MERS. This method is usually associated with bulk
transfers of servicing. The second way is with the lender naming MERS as the
mortgagee of record as nominee for itself (and its successors and assigns) in the
original security instrument at the time the loan is closed. We call this second
option "MOM", which stands for MERS as Original Mortgagee. "MOM" was a
significant milestone for MERS and the mortgage industry. Fannie Mae, Freddie Mac,
and Ginnie Mae have each approved the use of MERS as original mortgagee as nominee
for a lender on the security instrument for loans sold to them and registered on the MERS
System. In order to make MOM work, changes were made by Fannie Mae and Freddie
Mac to their uniform security instruments allowing MERS to be named as the mortgagee
in a nominee capacity for the lender. First, to reflect the interrelationship of the
promissory note and mortgage and to ensure these two instruments are tied together
properly, the recital paragraph names MERS, solely as nominee for Lender, as
beneficiary. Second, it is made clear that the originating lender rather than MERS is
defined as the "Lender". This change was made so that everyone understands that MERS
is not involved in the loan administration process. Third, as mortgagee of record, MERS
needs to have the authority to release the lien of security instrument, or if necessary,
foreclose on the collateral on behalf of the lender. Such authority is provided by adding a
paragraph to the security instrument informing the borrower that MERS holds only legal
title to the interests granted by the borrower. It also informs the borrower that, if
necessary to comply with law or custom, MERS may exercise the right to foreclose and
sell the property and may take any action required of the Lender to release or cancel the
security instrument. Once MERS is named in the original security instrument or by way
of an assignment, the document is then recorded in the appropriate public land records.
From this point on, no subsequent assignments of the mortgage to a MERS member
needs to be recorded. MERS remains in the land records, as mortgagee, throughout the
life of the loan" so long as servicing is not sold to a non-MERS member. All subsequent
transfers of ownership in mortgage loans and servicing rights for that loan are tracked
electronically between MERS members through the MERS System. This process
eliminates the opportunity for a break in the chain of title. Moreover, unless a MERS
member transfers servicing rights to a loan registered on the MERS System to a non
MERS member, the loan stays on the system until it is paid off. The process to transfer
servicing rights between MERS members requires an electronic confirmation from the
buyer. It begins with the seller entering loan transfer information into the system,
including the Mortgage Identification Number (explained below), the new servicer
organizational identification number, the sale date, and the transfer effective date. The
buyer then must submit a confirmation acknowledgment to the system. The old servicer
and the new servicer are still required to notify the homeowner in writing when loan
servicing is traded as required under the Real Estate Settlement Procedures Act
(RESPA), 12 U.S.C. 2601 et seq. A loan is de-registered from the system only if
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its servicing rights to a loan are transferred to a non-MERS member. With every new
loan that is registered on the MERS System, it becomes more likely that you will come in
contact with a mortgage loan having MERS as the mortgage holder in the chain oftitle.,,9
v. MORTGAGES AND NOTES IN MASSACHUSETTS
By definition under Massachusetts law, "A mortgage is security for a note or other
obligation." Private Lending & Purchasing, Inc. v. First American Title Insurance Co.,
54 Mass. App. Ct. 532, 537, 766 N.E.2d 532, 537 (2002).
As further explained by William V. Hovey, Michael Pill & Darren Baird recently:
"The mortgage was but an incident to the debt." Perry v. Oliver, 317 Mass. 538,541,59
N.E.2d 192, 193 (1945). That means the mortgage cannot be separated from the debt.
"The mortgage was only an incident to the debt which it secured. The debt was
evidenced by the note. A mortgage on real estate transfers a title to the realty [United
States Trust Co. v. Commonwealth, 245 Mass. 75, 139 N.E. 794; Geffen v. Paletz, 312
Mass. 48, 43 N.E.2d 133], but the title is defeasible upon the payment of money or the
performance of some other condition for which the mortgage was given, **13 3 Depon v.
Shawye, 163 Mass. 206, 161 N.E. 243; General Ice Cream Corporation v. Stern, 291
Mass. 86, 195 N.E. 890, and the title held by the mortgagee cannot be separated from the
note and applied independently of the note by a creditor of the mortgagee in payment of a
debt of the latter, leaving the note outstanding as a valid obligation of the mortgagor to
the holder of the note who might possibly be a person other than the mortgagee."
Coperstein v. Bogas, 317 Mass. 341,343-344,58 N.E.2d 131,132-133 (1944). See 28
Massachusetts Practice Series: Real Estate Law with Forms (4th ed. 2004 & Supp. 2009
2010); William V. Hovey, Michael Pill & Darren Baird; October 22,2010 at p. 5.
What does this mean?
It means that under Massachusetts law, a note and mortgage cannot be "split" without the
mortgage losing its legal effect. Put another way, a mortgage without a note doesn't
secure anything. A note without a mortgage is nothing more than an unsecured debt like
a credit card account.
In order for a mortgage to have legal effect in Massachusetts, the stated mortgage holder
must hold and own the note. Not only must the mortgage holder "own" the note, they
must have physical possession of it in order to have a valid enforceable mortgage
interest.
1O
See M.G.L. c. 106, s. 1-201(20) ('''Holder' with respect to a negotiable
instrument, means the person in possession of the instrument is payable to bearer or, in
the case of an instrument payable to an identified person, if the identified person is in
possession."). Emphasis supplied.
9 See www.merscorpinc.org. For a recent survey ofa slew ofMERS-related cases erupting across the country see
www.johnhoogelawoffice.comlwp/wpcontent/uploadsIMERS Williams Hooge.pdf
10 This is particularly important when a mortgagee wants to foreclose on a mortgage.
8
Splitting the note and mortgage therefore - which is undisputedly what happens in a
MERS-designated mortgage - renders the mortgage unenforceable under Massachusetts
law.
More importantly, since a MERS mortgage is unenforceable at the outset, a MERS
mortgage cannot be legally recorded as a "conveyance of an estate" since the mortgage
unenforceable as it is - conveys nothing. See M.G.L. c. 183, s. 4 and discussion below in
Paragraph VI. 1I
Massachusetts follows the majority rule regarding the "splitting" of notes and mortgages.
Carpenter v. Longan, 83 U.S. 271, 274 (1872) ("The note and mortgage are inseparable;
the former as essential, the latter as an incident. An assignment of the note carries the
mortgage with it, while an assignment of the latter alone is a nullity.") Merritt v.
Bartholick, 36 N.Y. 44, 45 (1867) ("[A] transfer of the mortgage without the debt is a
nullity, and no interest is acquired by it."). 12
Again, Hovey, Pill & Baird:
"A leading Massachusetts treatise, Howard J. Alperin, 14C Massachusetts
Practice: Summary of Basic Law, 15.126 (4th ed. & Supp. 2009-2010),
summarizes rule [sic] as follows:
Both the obligation (the note) and the security interest (the mOligage) must
be transferred to the same person, [FN8] because "a transfer of the
mortgage without the debt is a nullity, and no interest is acquired by it.
The security cannot be separated from the debt and exist independently of
it."[FN9] That is, as leading commentators have stated, " ...the security is
worthless in the hands of anyone except a person who has the right to
enforce the obligation; it cannot be foreclosed or otherwise
enforced. "[FN10]
[FN8] Restatement, 3d, Property (Mortgages), 5.4 and
Comment a; 1 Nelson and Whitman, Real Estate Finance
Law, 5th Ed. (Thomson/West, 2007), 5.27, p. 530.
[FN9] Merritt v. Bartholick, 36 N.Y. 44, 51, 34 How. Pr.
129, 1867 WL 6406 (1867). See also 5-Star Management,
Inc. v. Rogers, 940 F. Supp. 512, 520 (E.D. N.Y. 1996)
11 While it may be true that a true mortgagee can "contract" with a note holder so that the two instruments can be
separately owned, this does not mean that the intervening assignments can avoid being recorded as they do under a
MERS-designated mortgage. Moreover, the splitting of the ownership of note and mortgage has, as mentioned herein,
the legal effect of un-securing the mortgage as a matter of Massachusetts law and voiding the mortgage interest,
voiding the power of sale in a mortgage and rendering the debt unsecured.
12 For a case that does not agree that MERS "splits" the note and mortgage under Massachusetts law or that such split
as the legal effect of unsecuring the mortgage, see in re Huggins. 357 B.R. 180 (Bankr. D. Mass. 2006). This author
however agrees with authors Hovey, Pill & Baird and believes that Huggins was wrongly decided and is contrary to
Massachusetts law. For a detailed examination of the Huggins holding and its defects, see Mortgage lee. Registration
Sys., Inc. (MERS) v. Johnston, No. 420-6-09 Rdcv (Slip. Op. Vt., Cohen, .I., Oct. 28, 2009; unpublished).
9
(applying New Mexico law) (" ... an assignment of a
mortgage without the underlying debt is a nullity,
and therefore unenforceable .... ").
[FNI0] 1 Nelson and Whitman, Real Estate Finance Law,
5th Ed. (Thomson/West, 2007), 5.27. Hovey, Pill &
Baird at p. 533.
Massachusetts law regarding the "splitting" of notes and mortgages is also consistent
with recent case law in other jurisdictions regarding what "standing" MERS relative to
the mortgage where the note and mortgage are deemed to have been "split" by the MERS
system paradigm.
In Landmark National Bank v. Kesler, 289 Kan. 528, 539-541 (2009), the Court
examined MERS' standing to insert itself as a "party in interest" into a foreclosure case
and stated:
"The relationship that MERS has [to Sovereign] is more akin to that of a
straw man than to a party possessing all the rights given a buyer. A
mortgagee and a lender have intertwined rights that defy a clear separation
of interests, especially when such a purported separation relies on
ambiguous contractual language. The law generally understands that a
mortgagee is not distinct from a lender: a mortgagee is "[0]ne to whom
property is mortgaged: the mortgage creditor, or lender." Black's Law
Dictionary 1034 (8th ed.2004).13
Accordingly, under the holding of Kesler, MERS cannot be a mortgagee since it
is not a "lender" and doesn't own the note.
The Kesler Court, citing a Massachusetts bankruptcy case (In re Schwartz, 366 B.R.
265,266 (Bankr.D.Mass.2007)) also commented on the problems with MERS' "off
record" assignment paradigm.
"It is not uncommon for notes and mortgages to be assigned, often more
than once. When the role of a servicing agent acting on behalf of a
mortgagee is thrown into the mix, it is no wonder that it is often difficult
for unsophisticated borrowers to be certain of the identity of their lenders
and mortgagees. Kesler at 539. (quoting In re Schwartz, 366 B.R. 265,
266 (Bankr. D. Mass. 2007)).
13 See also Bellistri v. Ocwen Loan Servicing, LLC, 284 S. W.3d 619, 623 (Mo.App.2009). "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.l 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. "
10
Ironically for a lender operating in Massachusetts, a MERS-designated mortgage, instead
of securing a lender's interest in the borrower's property, actually unsecures it the
moment the promissory note is indorsed (usually in blank) by the originating lender and
is sold down the line to various other parties in a typical MERS-designated transaction. It
is this "split" that voids the security interest in a MERS mortgage under Massachusetts
law. Unless the mortgage itself is properly assigned down the "chain" (along with the
note) to each and every party, there is no legal security for the debt, no valid and
enforceable mortgage (including no power of sale), and no cognizable property interest
secured by the mortgage. 14 Since MERS does not own or ever have possession of a note,
irrespective of their claimed "nominee" status for the lender, MERS-designated
mortgages are invalid under Massachusetts law. IS
VI. MASSACHUSETTS RECORDING LAW
Massachusetts is a "title theory" state.
In layman's terms - when a borrower grants a mortgage to a lender, the borrower - as of
the time they execute the mortgage - has effectively transferred all oftheir interest in the
property to the lender (up to the amount of the loan) subject to the borrower's right to
own the property - free of the mortgage - when the mortgage is paid off.
See US Bank National Association v. Ibanez, (08-MISC-384283; Memorandum on
Motion to Vacate; Long, J. Oct. 14,2009) citing Faneuil Investors Group, L.P. v. Bd. of
Selectmen ofDennis, 75 Mass. App. Ct. 260,264-265 (2009)16
14 This begs the question as to whether a MERS can legally put the note and mortgage back together into the same
ownership in order to create a valid mortgage under Massachusetts law upon the occurrence of some triggering event
(typically default of the borrower). To substantiate the right to foreclose MERS typically purports to assign the
mortgage to the note holder so that the note holder can legally foreclose (MERS has had difficulty foreclosing in their
own name). This author would suggest that since a MERS-designated mortgage violates Massachusetts law from its
inception, such an effort to "put Humpty Dumpty back together again" is legally ineffective. A defective and unlawful
document cannot be "rehabilitated" or be alternatingly ineffective and then effective if it was not legal to begin with.
Moreover, the MERS method: of "re-connecting" the note and mortgage for the purpose of foreclosure merely
underscores MERS' tacit recognition that the note and mortgage cannot be legally "split" and still be effective.
15 See also In re IValker (CA B.R. 10-21656-RJS; May 20, 2010).
16 The Faneui! court stated: "Mortgage theory. General Laws c. 260, 35, inserted by St.1957, c. 370, defines a
mortgage as a "conveyance made for the purpose of securing performance of a debt." Under our title theory of
mortgages, "[a] mortgage of real estate is a conveyance of the title or of some interest therein defeasible upon the
payment of money or the performance of some other condition." Murphy v. Charlestown Sav. Bank, 380 Mass. 738,
747,405 N.E.2d 954 (1980), quoting from Perr.v v. Miller, 330 Mass. 261,263, 112 N.E.2d 805 (1953). See Atlantic
Sav. Bank v. Metropolitan Bank & Trust Co., 9 Mass.App.Ct. 286, 288, 400 N.E.2d 1290 (1980). See also Eno &
Hovey, Real Estate Law 9.2 (4th ed. 2004); Mendler, Massachusetts Conveyancers' Handbook 20.1 (4th ed. 2008).
"Literally, in Massachusetts, the granting of a mortgage vests title in the mortgagee to the land placed as security for
the underlying debt."; "a mortgage is a conveyance of title" Maglione v. BancBoston Mort[] Corp., 29 Mass.App.Ct.
88,90-91,557 N.E.2d 756 (1990). "The payment of the mortgage note ... terminates the interests of the mortgagee ..
.and revests the legal title in the mortgagor." Pineo v. White. 320 Mass. 487,489, 70 N.E.2d 294 (1946). The Fanueil
court also stated: [W]hile our cases may implicate a distinction in how whole the transfer or how absolute the
conveyance, they also have made it clear that a mortgage is a conveyance. See Geffen v. Paletz, 312 Mass. 48.53.43
N.E.2d 133 (1942) (mortgage is "conveyance of real estate or of some interest therein"); Krikorian v. Grafton Co-op.
Bank, 312 Mass. 272, 274, 44 N.E.2d 665 (1942) (mortgage is "conveyance in fee"); Pineo, supra. (mortgage is
"conveyance in fee"); Perry, supra (mortgage "is a conveyance of the title or of some interest therein"); Atlantic Sav.
11
Because the lender/mortgagee gets "title" to the land under a mortgage in Massachusetts,
the Massachusetts "recording" statute(s) are triggered. This memo will focus solely on
the recording statute for unregistered land.
M.G.L. c. 183, s. 4 (unregistered land) states in pertinent part:
"A conveyance of an estate in fee simple, fee tailor for life, or a lease for more than
seven years from the making thereof or an assignment of rents or profits from an estate or
lease, shall not be valid as against any person, except the grantor or lessor, his heirs and
devises and persons having actual notice of it, unless it, or an office copy as provided in
section thirteen of chapter thirty-six, or, with respect to such a lease or an assignment of
rents or profits, a notice of lease or a notice of assignment of rents or profits, as
hereinafter defined, is recorded in the registry of deeds for the county or district in which
the land to which it relates lies." Emphasis supplied. See M.G.L. c. 183, s. 4.
It is clear therefore that under Massachusetts law, the "conveyance of an estate" of
unregistered land "shall not be valid" (with certain enumerated exceptions), unless it is
recorded in the Registry of Deeds.
A MERS-designated mortgage represents a classic "have-your-cake-and-eat it-too"
scenario which runs directly counter to the fundamental purpose of Massachusetts'
centuries-old property law: transparency and the public disclosure of ownership and
other interests in real property on the public land records.
In a nutshell, in a MERS transaction, the originating lender wants the unfettered ability to
sell and assign your loan, but they don't want to transfer the mortgage along with the debt
because of, among other things, the attendant complication (and expense) of having to
record multiple assignments and incur a $75.00 recoding fee each time. So under the
MERS system, the mortgage stays on the land records in the name of MERS as the
"mortgagee" while the note is sold multiple times behind the scenes. Multiplied by 33
million active MERS mortgages (some 66 million have been registered since MERS'
inception) and one can easily see that there is substantial financial incentive to avoid
recording (and paying for such recording) assignments when ownership of the mortgage
loan is transferred. I? Whether each assignment needs to be recorded in a MERS-
Balik, supra (mortgage constitutes "deed of conveyance"). See generally Alperin, Summary of Basic Law 15.116
(2008-2009 ed.) r'a mortgage takes the form of a deed of conveyance of real property, transferring a fee interest to the
mortgagee").
17 The nature and effect of the MERS system on the land recording systems of the United States was notably discussed
in a recent Congressional report of the issues surrounding the country's foreclosure crisis:
"During the housing boom, mu Itiple rapid transfers of mortgages to facilitate securitization made recordation of
mortgages a more time-consuming, and expensive process than in the past. To alleviate the burden of recording every
mortgage assignment, the mortgage securitization industry created the Mortgage Electronic Registration Systems, Inc.
(MERS), a company that serves as the mortgagee of record in the county land records and runs a database that tracks
ownership and servicing rights of mortgage loans. MERS created a proxy or online registry that would serve as the
mortgagee of record, eliminating the need to prepare and record subsequent transfers of servicing interests when they
were transferred from one MERS member to another. In essence, it attempted to create a paperless mortgage recording
process overlying the traditional, paper-intense mortgage tracking system, in which MERS would have standing to
initiate foreclosures. MERS experienced rapid growth during the housing boom. Since its inception in 1995,66 million
mortgages have been registered in the MERS system and 33 million MERS-registered loans remain outstanding.
12
designated mortgage has never been formally determined by a court as far as I can tell.
MERS just decided to do it that way and no one - apparently - has ever challenged it.
Leaving aside the fact that MERS-designated mortgages - in and of themselves - are
invalid under Massachusetts law because they "split" the note and mortgage at the time of
the document's execution, it is apparent that any unrecorded transactions such as the ones
contemplated from the outset under a MERS-designated mortgage also run counter to
Massachusetts law.
Where the intent of the instrument is to securitize a loan into a "pool" of mortgages (one
of the primary reason for MERS' existence), the note will be "owned" (if only for an
electronic nanosecond) by at least 1 to as many as 4 or 5 other entities before reaching the
Trust in which it finally comes to rest in its final "ownership". Since the mortgage must
go with the note and has no independent significance without it (see cases cited above),
everyone of these assignments must be recorded at the Registry of Deeds to comply with
Massachusetts law. In a MERS-designated loan, none of these assignments are recorded
with exception of a "final" assignment (see footnote 12 above) and thus MERS
designated mortgages unlawfully "avoid" required recording fees under Massachusetts
law.
M.G.L. c. 183, s. 4 also provides that a conveyance ofland shall not be valid against any
person without "actual notice" unless the transfer is recorded in the Registry of Deeds.
This would include mortgages and assignments of a mortgage since they are considered
"conveyances" of a property interest. See Faneuil Investors Group, L.P. v. Ed. of
Selectmen ofDennis, 75 Mass. App. Ct. 260,264-265 (2009). The term "actual notice"
under the statute has been strictly construed by Massachusetts courts. See Emmons v.
White, 788 N.E.2d 557,566 (Mass. Ct. App. 2003); Tramontozzi v. D'Amicis, 183 N.E.
2d 295,297 (Mass. 1962); McCarthy v. Lane, 16 N.E.2d 683,685 (Mass. 1938).18
"Actual notice" means that you go to the public land records and look and you can see
who owns the property and all the encumbrances are listed. A MERS mortgage
unquestionably "shields" off-record assignments of the note (and the corresponding
interest in the mortgage) from being listed on the public land records. Indeed, MERS
brags about not needing to record assignments in their promotional materials. See
Section IV above. Accordingly, with a MERS-designated mortgage, it is impossible to
have "actual notice" of the ownership of the loan.
During the summer of2010, one expert estimated that MERS was involved in 60 percent of mortgage loans originated
in the United States." See Congressional Oversight Panel, November Oversight Report: Examining the Consequences
of Mortgage Irregularities for Financial Stability and Foreclosure Mitigation (November 16,2010), Submitted under
Section 125(b)(I) of Title I of the Emergency Economic Stabilization Act of2008, Pub. L. No. 110-343
18 " ... the term [actual notice] is construed with "considerable strictness" and mere "[k]nowledge of facts which
would ordinarily put a party upon inquiry is not enough." Emmons v. White, 788 N.E.2d at 566 (quoting Tramontozzi v.
D'Amicus, 183 N.E.2d 295 (Mass. 1962)). See GMAC Mortgage Corporation v. Bay/co, 05-1 I746-GAO (D.Mass. 9
21-2007).
13
The Massachusetts Supreme Court in Board a/Selectmen v. Lindsay, 444 Mass. 502, 507
(2005), (in a case involving the failure to record certain conservation restrictions on a
deed), opined on the fundamental purposes behind the Massachusetts requirement that
interests in real estate be recorded:
"Recording acts have two separate, but interconnected, purposes.
"First and foremost, they are designed to protect purchasers who
acquire interests in real property for a valuable consideration
and without notice of prior interests from the enforcement of
those claims." 14 R. Powell, Real Property 82.0 I [3], at 82-13
(M. Wolfed. 2000). "The second purpose of recording acts is
fundamental to the achievement of the first. To make the system
self-operative and to notify purchasers of existing claims, the
recording acts create a public record from which prospective
purchasers of interests in real property may ascertain the
existence of prior claims that might affect their interests."
Id. at 82-14. "[T]he effective operation of the entire process
of conveyancing, and title assurance depends upon a recording
system that excludes from recordation as few instruments as
possible." Id. at 82.02[3], at 82-86 to 86-87.
The Lindsay Court went on to say:
In this Commonwealth, "[b]ecause of the long-recognized
inevitability and ubiquity of controversies over land, the
Massachusetts Bay Colony enacted a recording act as early as 1640
for the declared purpose that' [e]very man may know what estate
or interest other men may have in houses, lands or other
hereditaments they are to deal.'" Long v. Wickett, 50 Mass. App. Ct.
380, 397 n. 13 (2000), citing A.L. Eno & W.V. Hovey, Real Estate
Law 2.1, at 13 n. 1 (3d ed. 1995). See also Coons v. Carstensen,
15 Mass. App. Ct. 431, 433 (1983). "One is entitled to rely upon the
record to ascertain the existence of an encumbrance that must be
recorded in order to prevail over a bonafide purchaser. He may
deal with the title to the land as he finds it upon the record"
(emphasis in original). Lamson & Co. v. Abrams, 305 Mass. 238,
244 (1940). Cf. Houghton v. Rizzo, 361 Mass. 635, 643 (1972) ("the
proliferation of implied rights in or servitudes upon real estate,
which cannot be readily ascertained by an examination of the records
of the appropriate registry of deeds or of the Land Court, will serve
only further to erode the integrity and reliability of such records and
will be a subversion of the fundamental purpose for which such
records are required to be made and maintained"); McCusker v.
Goode, 185 Mass. 607, 611 (1904) ("It is the policy of our law in
regard to the recording of deeds, that persons desiring to buy may
14
safely trust the record as to the ownership of land, and as to
encumbrances upon it which are created by deed"); Popponesset
Beach Ass'n v. Marchillo, 39 Mass. App. Ct. 586,587-588 (1996)
(defendants' lots not burdened by restrictions where nothing in
chains of title placed defendants on notice of such encumbrances on
land). Id., p. 508.
Accordingly, and despite MERS' apparent audacity in assuming its own legal validity
and the failure, thusfar, for the courts of the Commonwealth to fully examine MERS'
legal authority to act as a mortgagee under Massachusetts law and to have the
jurisprudential courage to follow the law in finding that it does not (irrespective of the
consequences of such a finding), Massachusetts presumably continues to adhere to the
fundamental principle that only official state land records can provide constructive notice
of competing interests in real property.
VII. MERSCORP, Inc., v. Romaine 861 N.E.2d 81 (NY Ct. of App., 2006)
The case most closely on point with the question now being asked (do MERS-designated
mortgages violate the Massachusetts recording statute?) is a similar question posed to the
Court of Appeals of New York in MERSCORP, Inc., v. Romaine 861 N.E.2d 81 (2006).
In Romaine, the Clerk of the County of Suffolk (Edward P. Romaine) had refused to
register MERS-designated mortgages on the public land records at all.
19
Emphasis
supplied. His position - as bolstered by an "informal" opinion from the New York
Attorney Genera1- was that MERS-designated mortgages failed to comply with New
York property law since MERS - by its own definition acting only as a "nominee" of the
lender - had no property interest in the mortgage and thus could not be a proper
"mortgagee" under New York law.
Ultimately the Romaine Court held that - based on New York law - the Clerk was
required to accept MERS mortgages for recording.
There was also a concurring opinion and a dissenting (in part) opinion which are worth
noting for their application to the larger issues that have been created by MERS.
In his concurring opinion, Judge Ciparick stated with unusual prescience:
"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.
19 Industry parties associated with MERS came out in force to challenge the lower court's finding that MERS was not a
valid mortgagee under New York law. Briefs in support of MERS were submitted by the MOl1gage Bankers
Association, American Land Title Association, and Federal National Mortgage Association (Fannie Mae).
15
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 N.Y. 44, 45 [1867] ["a transfer of the mortgage
without the debt is a nullity, and no interest is acquired by it"]).
In addition to these substantive issues, a plethora of policy arguments have
surfaced during the pendency of this proceeding. For instance, {lMERS
succeeds in its goal ofmonopolizing the mortgage nominee market, it will
have effectively usurped the role ofthe county clerk that inevitably would
result in a county's recordingfee revenue being substantially diverted to a
private entity. Additionally, MERS's success will arguably detract from
the amount ofpublic data available concerning mortgage ownership that
otherwise oIlers a wealth ofstatistics that are used to analyze trends in
lending practices. Another concern raised is that, once an assignment of
the mortgage is made, it can be ifnot impossible, for a
homeowner to find out the true identity olthe loan holder. Amici who
submitted briefs in favor of the County argue that this can effectively
insulate a noteholder from liability and further that it encourages predatory
lending practices." Id. at 85, 86. Emphasis supplied.
In a dissenting (in part) opinion, Judge Kaye likewise showed considerable
understanding of the corning problems with MERS as he expounded on the
problems associated with MERS-designated mortgages:
"Although creating efficiencies for its members, there is little evidence
that the MERS system provides equivalent benefits to horne buyers and
borrowers - and, in fact, some evidence that it may create substantial
disadvantages. While MERS necessarily opted for a system that tracks
both the beneficial owner of the loan and the servicer of the loan, its 800
number and Web site allow a borrower to access information regarding
only his or her loan servicer, not the underlying lender. The lack of
disclosure may create substantial difficulty when a homeowner wishes to
negotiate the terms ofhis or her mortgage or enforce a legal right against
the mortgagee and is unable to learn the mortgagee's identity. Public
records will no longer contain this information as, if it achieves the
success it envisions, the MERS system will render the public record
useless by masking beneficial ownership ofmortgages and eliminating
records ofassignments altogether. Not only will this information deficit
detract from the amount of public data accessible for research and
monitoring of industry trends, but it may also fimction, perhaps
unintentionally, to insulate a noteholderfrom liability, mask lender error
and hide predatory lending practices. The county clerks, ofcourse, are
concerned about the depletion oftheir revenues - allegedly over one
16
million dollars a year in Suffolk County alone." Id. p . 88, 89. Emphasis
supplied.
It is important to note that the holding in Romaine however is inapplicable in
Massachusetts because the holding was based solely on the Romaine Court's
interpretation of New York law.
MERS-designated mortgages are invalid under Massachusetts law because no
matter what MERS purports to be in their mortgages, the note and mortgage are
"split" at the signing of a MERS-designated mortgage and this has the legal effect
of voiding the security interest. Without a cognizable security interest under a
valid mortgage, there is no "conveyance of an estate" which is what is required to
be a mortgagee under Massachusetts law. MERS cannot therefore be a
mortgagee, and MERS-designated mortgages are not entitled to be recorded.
VIII. MERS, MORTGAGE SECURITIZATION AND AVOIDING RECORDING
FEES
In securitized mortgage transactions - the lifeblood of the MERS system and indeed the
primary reason for its existence - there are typically multiple assignments of the
mortgage loan required to accomplish the complete transaction. These transactions are
all done "off record" in order - according to MERS - to avoid recording fees and to
allow MERS, and MERS alone to track them. The ostensible purpose of securitization
(aside from allowing investment bankers to reduce a 30 year obligation to an instantly
payable commodity and make lots and lots of money) is to make the transactions
"bankruptcy remote" by removing the ownership of the loan as far from the loan
originator as possible in a series of transactions sufficiently "remote" to defeat the loan
being "sucked into" a bankruptcy filing if the loan originator fails (think Washington
Mutual, Countrywide, IndyMac and dozens and dozens of smaller banks
2o
).
A basic understanding of securitization and the parties involved in such transactions is
important to an understanding of why MERS violates the Massachusetts recording statute
atG.L. c. 183,s. 4.
Mortgage securitization:
Typically the proper "chain" of required transactions is conducted under the fairly
standard language contained in a "Pooling and Service Agreement" ("PSA"). This
language governs the terms, conditions and procedures involving the securitization of
mortgage loans and the resulting transfer of those loans into an investment "pool". Since
MERS-related securitized mortgage transactions involve multiple transfers of the note
(while the mortgage stays in the name ofMERS), each and everyone of these transfers
requires a recorded assignment to comply with Massachusetts law.
20 See the "failed bank" list since the year 2000 at http://www.fdic.gov/bank/historical/banklindex.html
17
Since, under Massachusetts law, conveyances of interests in real estate such as mortgages
are required to be recorded in order to be valid and MERS intentionally avoids this,
MERS has unlawfully "avoided" recording fees due on each and every transfer of an
interest in the underlying debt in all MERS-designated mortgages.
IX. M.G.L. c. 183, s. 54B - RECENT AMENDMENTS
On August 9, 2010, Massachusetts Gov. Deval Patrick signed amendments to G.L. c.
183, s. 54B into law - with retroactive effect. The law became effective on November 7,
2010.
M.G.L. c. 183, s. 54B ostensibly deals with the signing requirements for recording
discharges of mortgages and other documents. However, and importantly for MERS (and
unfortunately for the borrowers of the Commonwealth), it also deals with assignments of
mortgage and foreclosure documents.
The legislation was purportedly advanced by the Real Estate Bar Association (REBA)
and the New England Land Title Assoc. ("NEALTA") and was "unanimously" approved
by the Massachusetts House and Senate.
21
One can only assume that the elected
members of the Massachusetts legislature did not understand or were not advised as to
the implications of what had been presented for their consideration nor were the
consequences of the bill properly explained in the context of the nation's foreclosure
CrISIS.
Text ofsection effective until November 7,2010. For text effective November 7,2010,
see below.]
"Section 54B. A deed of release or written acknowledgment of payment or satisfaction
of the debt thereby secured, or a release, partial release or assignment of mortgage, or an
instrument of subordination, non-disturbance, recognition, or attornment by the holder of
a mortgage, or a power of attorney for the purpose of foreclosing a mortgage held by any
such holder and executing any instrument necessary for that purpose, executed before a
notary public, justice of the peace or other officer entitled by law to acknowledge
instruments, whether executed within or without the commonwealth, by a person
purporting to hold the position of president, vice president, treasurer, clerk, secretary,
cashier, loan representative, principal, investment, mortgage or other officer, agent, asset
manager, or other similar office or position, including assistant to any such office or
position, of the entity holding record title thereto on behalf of such entity acting in its
own capacity or as a general partner or co-venturer of the entity holding record title, shall
be binding upon such entity and shall be entitled to be recorded or filed, and no vote of
the entity affirming such authority shall be required to permit recording of filing.
21 According to their website, the NELTA (http://www.nelta.org/) is an '"aftiliate" of the American Land Title
Association ('"ALTA"; http://www.aIta.org/). A representative of ALTA sits on the Board of Directors of MERS and is
one ofMERS' '"owners".
18
Chapter 183: Section 54B. Mortgage discharge, release, assignment, foreclosure,
etc.; execution before officer entitled to acknowledge instruments; effect
[Text ofsection as amended by 2010, 282, Sec. 2 effective November 7, 2010 applicable
as provided by 2010,282, Sec. 7. For text effective until November 7, 2010, see above.]
Section 54B. Notwithstanding any law to the contrary, (1) a discharge of mortgage; (2) a
release, partial release or assignment of mortgage; (3) an instrument of subordination,
non-disturbance, recognition, or attornment by the holder of a mortgage; (4) any
instrument for the purpose of foreclosing a mortgage and conveying the title resulting
therefrom, including but not limited to notices, deeds, affidavits, certificates, votes,
assignments of bids, confirmatory instruments and agreements of sale; or (5) a power of
attorney given for that purpose or for the purpose of servicing a mortgage, and in either
case, any instrument executed by the attorney-in-fact pursuant to such power, if executed
before a notary public, justice of the peace or other officer entitled by law to
acknowledge instruments, whether executed within or without the commonwealth, by a
person purporting to hold the position of president, vice president, treasurer, clerk,
secretary, cashier, loan representative, principal, investment, mortgage or other officer,
agent, asset manager, or other similar office or position, including assistant to any such
office or position, of the entity holding such mortgage, or otherwise purporting to be an
authorized signatory for such entity, or acting under such power of attorney on behalf of
such entity, acting in its own capacity or as a general partner or co-venturer of the entity
holding such mortgage, shall be binding upon such entity and shall be entitled to be
recorded, and no vote of the entity affirming such authority shall be required to permit
recording." Emphasis supplied as to "new" terms in the statute.
It is clear from the language of the previous iteration of the statute, which deals primarily
with the ability of various individuals to sign documents related to mortgages in
Massachusetts, that the protections granted the borrowers of the Commonwealth were
already weak.
Note that only the "purported" authority of the signer was previously required in order to
record "A deed of release or written acknowledgment of payment or satisfaction of the
debt thereby secured, or a release, partial release or assignment of mortgage, or an
instrument of subordination, non-disturbance, recognition, or attornment ..." as well as
foreclosure documents. Note also that any such documents, if executed by a laundry list
of parties stated within the statute, including such lofty titles as "cashier" or an
"assistant" to any of the identified "officers" "... shall be entitled to be recorded or filed,
and no vote of the entity affirming such authority shall be required to permit recording of
filing."
In August 2010, just before the "robo-signer" crisis exploded into the national media
22
,
the Massachusetts legislature and the Governor, instead of strengthening the protections
22 http://www.palmbeachpost.com!money/real-estate/state-probes-whether-three-law- fi rms-falsi fi ed-forecl osure
851395.html
http://www.heraldtribune.com!article/20100813/ARTICLE/l 00819878/24 I6/NEWS?p=all&tc=pgall
19
for borrowers in the Commonwealth as against banks and their foreclosure mill attorneys
who are signing hundreds of thousands of documents related to foreclosures, thousands
of whom have already lost their homes to illegal foreclosures based on flawed paperwork,
were evidently duped by various interest groups into further weakening G.L. c. 183, s.
54B and making its provisions retroactive.
It is baffling to understand how the interests of the citizenry of the Commonwealth is
being served by loosening the requirements for signing documents related to mortgages
(and assignments thereof) in the Commonwealth - and allowing them to be recorded - in
the midst of clear evidence of the fraud that has been perpetrated on the borrowers in this
state on a scale so massive that it is hard to even comprehend it. Indeed, I cannot think of
a single, rational reason why documents required to assign mortgages and foreclose on
them should not be signed under the pains and penalties of perjury by individual officers
of various entities that not only attest to their personal knowledge of the contents of the
documents, but provide competent evidence of their ability to act on behalf of the entity
for whom they are signing. Is it burdensome to ask the banks and their affiliates to attest
and swear to the very facts and documents which they are already required to have the
legal authority to execute? To ask less merely open the door to the type of fraud that is
being uncovered on a daily basis while the banks and their affiliates attempt to shrug it
off as "technical" defects in the paperwork.
The only plausible explanation for the recent amendments to G.L. c. 183, s. 54B is that
our elected officials were duped by special interests into approving this legislation in
order that much of the issues associated with the flawed paperwork utilized by lenders in
their foreclosure processes can be removed even one step further from challenge by
borrowers in the Commonwealth who already bear a heavy burden in having to
essentially fend for themselves because the entire system of foreclosure in Massachusetts
puts the onus on the borrower to raise (and fund) any challenge to the foreclosure
process.
It is imperative that our elected officials understand and counter what is nothing more
than a transparent effort to cover the tracks of those lenders and their affiliates and
partners in the mortgage and banking industries who are finding themselves plagued with
the consequences of unlawful and poorly executed paperwork and who are sparing no
expense to try and mitigate the damage by and through the legislature in this case - all at
the expense of the borrowers of the Commonwealth who are literally crying out for
protection.
Instead of allowing "purp011ed" officers to sign such documents, the documents listed in
G.L. c. 183, s. 54B should be required to be executed "under the pains and penalties of
perjury" by parties with "actual knowledge" of the contents of such documents.
Competent evidence of the signers authority to sign should also be required. The author
hopes that any legislators or interest groups that read this memo proceed to seek

20
emergency amendments to G.L. c. 183, s. 54B that are more appropriately balance the
interests of the borrowers of the Commonwealth with the financial interests of the lenders
and their agents who clearly cannot be trusted to rely on policing themselves.
DATED: Nantucket, MA
November 27,2010
By:
21