So are the fees owed or not?
The collateral instrument, which one must acknowledge is signed by only the homeowner, states
that MERS is the beneficiary as nominee of the lender.
All right - let's say, then, that MERS is a nominal beneficiary. A nominal beneficiary is one
which, long and short, has no economic interest in the matter. Or say MERS IS an agent.
Doesn't matter here. In order for the loans to have been transferred to the trusts, there has
to be a writing somewhere which identifies the loans, because they surely are not transferred
by osmosis. Let's say that writing is the PSA - or any writing which meets the UCC Article 9
provisions for transfer -such as a Sale and Assignment Agreement - and it identifies the loans
with sufficient particularity to pass muster.
There could also be endorsements on the notes, which were called for by the PSA's, right?
There could also have been assignments of the collateral instruments, which were called for
by the PSA's, right? But we now know there were no individual assignments actually done for
the reliance on MERS as mutual nominal beneficiary. Some suspect, with good reason, such as
the mountain of lost note affidavits initially submitted by claimants, that not only were the
notes not timely endorsed and delivered to the trusts or their custodians, but also suspect
the endorsements and deliveries in the chain were also not done with rushed reliance on the
entries in the MERS' database, somewhat akin to a post-it note about what to handle when
As to transfers to the trusts and perhaps others along the way, even if MERS remains the
nominal beneficiary, if the loans were factually transferred to the trusts by bulk Purchase
and Assignment Agreements pursuant to Article 9, the loans were transferred and the only
things missing are 1) Notice, 2) recordation of the assigning Agreements, and 3) fees due to county recorders. If the transfers took place by Article 9 S & A Agreements, which is suggested in
material published by those involved, the S & A Agreements could have been recorded to
provide Notice and the fees owing could have been paid. But that didn't happen.
It appears under the UCC that any failure to sell and assign by way of a Sale and Assignment Agreement as well as to deliver the notes, fully endorsed, to one who has paid for the sale and assignment, results in mere security interests to the party who has paid, makes the seller an obligor on the notes to that party, leaving the matter of that party's right to enforce the notes subject to the provisions of the UCC regarding security interests and more specifically, subject to the provisions of the UCC for enforcement of security interests in notes secured by real property. As to the trusts, even this must assume the earlier transfers on the way to securitization were effected and didn't themselves create only security interests.
There are two choices here: 1) the loans were factually transferred in oneor more bulk Sale and Assignment Agreements pursuant to Article 9 even though for lack of individual assignments, if not Article 3 endorsements, they didn't meet the provisions of
the psa's or 2) in the absence of a qualifying Sale and Assignment Agreement, the loans, for
lack of endorsement, assignment, and delivery, resulted only in security interests to the
trusts. If one takes No. 1 as a fact, then regardless of MERS maintaining its nominal status
in public record (disregarding the salient question of MERS' nominal status for non-member
investors), the transfer fees are due to the county recorders for every interest identified
in those bulk transfers (as well as the transfers prior to any to the trusts) since MERS'
nominal status, or even agency, didn't serve to undermine the transfers. In which case, all
those fees are owing and overdue.
The only way this could not be true is if MERS as beneficiary meant MERS had and retained
the economic interest of a true beneficiary, which would stand in stark contrast to MERS'
sworn testimony, most notably in MERS v Nebraska Dept of Banking and Finance, and calls into
question MERS' need to be appropriately licensed in each state. And of course, if MERS were
the true beneficiary, i.e., the party with the economic interest and not merely a nominee or
agent, the question of intended bifurcation and its ramifications necessarily arises.
If No. 2 is factual, that for lack of endorsement and written assignments, only security
interests were established for the trusts, it's possible no fees are due to the county
recorders since no sales and assignments actually occurred. But No. 2 is a concession MERS
and its members would hardly want to make; that is, that no sales actually transpired, that
what optimally occurred was the creation of security interests to the trusts and all the
ensuing entanglements. Since every MERS' assignment of the collateral instrument also contains a recitation of transfer of the note, one reasonably wonders if this document isn't to serve as a a belated Article 9 transfer of the note itself, although if MERS has any authority regarding the note, it hasn't come to light. Further telling, perhaps, is the fact that an assignment of the collateral instrument wouldn't actually require any consideration - it's the transfer of the note which must be supported by consideration - yet consideration is expressed in every MERS' assignment. The fact that the assignment is actually executed by an employee of the assignee as a MERS' officer further complicates the matter and possibly if not likely presents a conflict of interest as well as a legal snafu.
Unless MERS and its members want to stare down the creation of mere security interests to
the trusts, they might want to pony up and pay the County Recorders for those multiple
transfers. Of course, since there were no assignments of the collateral instruments done
because of reliance on MERS, if there were also no Article 9 bulk sales and assignments
at all, includng along the way to the trusts, that's another story.
The Kentucky County Recorders' Amended Complaint alleging fraud, conspiracy, and unjust enrichment may be found here: