MERS IS FOR THE BENEFIT OF A WAREHOUSE BANK.


Borrower must understand that MERS holds alleged legal title to the interest granted by Borrower in the Security Instrument. However, 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 or all of those interests, including, but not limited to, the right to foreclose and sell the Property; and to take any action required of the Lender including, but not limited to, releasing and canceling this Security Instrument Deed of Trust (attached as Ex. A to Def.’s Req. for Judicial Notice). Plaintiffs did execute a promissory note and deed of trust in favor of [Lender] and have yet to discover the link for which MERS is either a party or responsible for anything of value.

Having yet to hear the matter as to MERS and its name appearing on the Deed and not the note, we examine Knighton v. Merscorp, Inc. Here the Fifth Circuit United States Court of Appeals was presented with theopportunity to decide whether a claim under Section 8(b) could be brought when only one culpableparty received an unearned fee.    However, the court sidestepped the issue.    The case was broughtbefore the court on an appeal from the district court’s dismissal of a multi‐district litigation case forfailing to state a claim on which relief could be granted.The plaintiffs brought claims against Merscorp, Inc. and Mortgage Electronic Registrations Systems, Inc. (collectively, MERS), entities that served as the mortgagee of record in the public land records and had charged a one‐time and nominalfee for each registered mortgage.  

The bulk of the plaintiffs’ Section 8(b) claim was that MERS violated RESPA because the services performed by MERS did not benefit the borrower. MERS advanced several arguments in favor of dismissal, one being that for an actionable claim under Section 8(b), a plaintiff must allege that an unearned fee be split between two parties.

Note , while acknowledging the decision by the Second Circuit in Cohen I, the Knighton court refused to decide whether a split in the fee is required, instead holding that there was no allegation that the fee was not earned.The court found that there was no requirement that the service performed have a benefit that inured to the borrower, and that in exchange for the fee, “MERS performed the service of being the permanent record mortgagee in the public land records, regardless of how many times the beneficial and servicing rights to the mortgage loans were bought and sold.”  Therefore, the court affirmed the dismissal because there was no allegation of an unearned fee.

We disagree! A nominee is used to shelter identity of investors and guard against undue exposure to risk and for transferring purposes by its high profile and high net worth investors. Its a Nominee named in place of the principal name in the original note subject to having to identify the real party in interest. MERS serves all the above and fails in its earliest disclosure under RESPA section 8. Where the nominee is paid 432 for its registration services it is boons that MERS is a successors and assigns to the original note. One CANNOT act the benficiary one and beneficial interest can exist at that time and whereupon the agreement for MERS as nominee for the beneficiary on the note does not figure into logical or ethic mind set for the participating parties thought the life of the loans.

Not even one disclosure revealing MERS is found in the files we review , subject to RESPA Sec 8 compliance requirements for settlements of loans. CitiFinancial Group is a leading participant in the subprime crash who avoided adding MERS till recently for this reason. MERS added to the Deed with the Beneficial interest shown alongside of upon the mortgage or deed of trust is no less a “CBA” under HUD enforcement of definition’s for a Controlled Business Affiliation, which it is a violation or Rex X under RESPA . This is the opine with no reference to overcharging. Until the decision by the Third Circuit United States Court of Appeals in Alston v. Countrywide FinancialCorp.,district courts had occasion to address the analysis of the Sixth Circuit in Carter. In Alston, the Third Circuit agreed with Carter, holding that “it is clear to us that the plain, unambiguous language of section 8(d)(2) indicates that damages are based on the settlement service amount with no requirement that there has been an overcharge.”   

In reaching this conclusion, Alston was certainlyreferring to the “any charge paid” language contained within Section 8(d)(2) that was referred to inCarter.   Summing up its opinion, the Alston court concluded that, regardless of whether there was anovercharge, a consumer is entitled to damages for a violation of Section 8 for the individual settlementservice that was involved in the violation.  Therefore, in other words, the court staed:[A] single real estate closing may involve several different services, but the charge for each distinct service will not necessarily violate section 8 . . . . [A] homebuyer is entitled to three times any charge paid, but only for the service connected to the kickback or fee‐split.It appears that until another circuit court addresses the issue, the decisions in Carter and Alston will indicate another step by the courts to broaden the scope of Section 8. Holding that a plaintiff does not have to have a cognizable economic injury in order to bring suit, the decisions in Carter and Alston drastically increase the number of potential plaintiffs with MERS over Section 8 lawsuits and will the litigation over settlement service fees.20See Carter v. Welles‐Bowen Realty, Inc., 493 F. Supp. 2d 921, 927 (N.D. Ohio 2007) (Carter I); Contawe v. Cresent Heightsof America, Inc., No. Civ.A. 04‐2304, 2004 WL 2244538, at *3‐4 (E.D. Pa. Oct. 1, 2004); Mullinax v. Radian Guaranty, Inc., 311F. Supp. 2d 474, 486 (M.D.N.C. 2004); Moore v. Radian Group, Inc., 233 F. Supp. 2d 819, 825‐26 (E.D. Tex. 2002; Morales v.Attorneys’ Title Ins. Fund, 983 F. Supp. 1418, 1427 (S.D. Fla. 1997); Durr v. Intercounty Title Co. of Ill., 826 F. Supp. 259, 260‐62 (N.D. Ill. 1993)

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