The findings in this examination are factual although they are here provided for informational purposes only and are not to be construed as legal advice. The borrower or the reader, as the case may be, was or is advised to consult a competent legal professional in connection with the contents of this report and its proper use.
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TRANSFER TRANSACTIONS
Endorsements
1. First Endorsement
On an unknown date, the Fixed Rate Note was endorsed by Countrywide Bank, FSB, the
originating lender in favor of Countrywide Home Loans, Inc.
This endorsement is purportedly signed by Laurie Meder, purporting to be Senior Vice-President.
Countrywide Home Loans, Inc. was acquired by Bank of America, NA in July 2008. Countrywide
Home Loans, Inc. was the seller of CHL Mortgage Pass-Through Trust 2007-18, the trust into
which the subject loan is purportedly securitized.
2. Second Endorsement
On an unknown date, the Fixed Rate Note was endorsed in blank by Countrywide Home Loans,
Inc.
This endorsement is purportedly signed by Michele Sjolander, purporting to be Executive Vice-
President.
1. First Assignment
1.1. Main Features
On August 5, 2009, an Assignment of Mortgage was executed by MERS. This document
names the assignee as The Bank of New York Mellon, formerly known as The Bank of New
York as Trustee for CHL Mortgage Pass-Through Trust 2007-18.
This assignment is purportedly signed by Serena Harman and Mary Kist, purporting to be
Assistant Vice-President and Vice-President, respectively and is purportedly notarized by
Chastity Terrell, a notary public of the state of Texas. It was recorded in (Name of County
Withheld) on August 17, 2009.
1.2. About the Assignor
MERS executed the first assignment without stating its designation or source of authority to
assign. The Mortgage actually names MERS as nominee for the lender and mortgagee.
“Under the MERS System®, MERS will hold legal title to mortgages, deeds of trust or
security deeds on behalf of its members both as nominee and mortgagee or beneficiary.
Thus, any member that holds a note secured by real property that assigns that note to
another member by way of an entry into the MERS database need not assign the security
instrument because legal title to it remains in the name of MERS as agent for the
member which holds the corresponding note." Mandelman, M., New Bankruptcy Court Decision Sounds the Alarm –
The USS MERS is Going Down, abridged.
1.3. Verbiage of the Assignment
1.3.1. This assignment states that:
“. . . Assignor (MERS) does hereby grant, bargain, sell, assign, transfer unto the
Assignee the Mortgage, together with the note described in said Mortgage.”
This means that this assignment was made to include the promissory note that is
secured by the Mortgage being assigned. The language used indicates the intention
of the parties to bind themselves in such accord and to make it known to the public
at large (an assignment, being a recordable, and therefore, a public instrument) that
the note is covered in the assignment.
1.3.2. An excerpt from a ruling by the Supreme Court of New York in Nassau County states
that:
“In support of its standing to maintain the action when the action was
commenced is an “Assignment of Mortgage” executed by MERS as nominee of
Home Funds Direct which includes a provision indicating the assignment is
TOGETHER with the bond or note. . .” Not only has plaintiff failed to establish
MERS’ right as a nominee for purposes of recording to assign the mortgage, more
importantly, no effort has been made to establish the authority of MERS, a non-
party to the note, to transfer its ownership. Without establishing ownership of the
note at the time the action was instituted, the plaintiff lacked a right to maintain
the action.”
1.4. Non-Compliance with TILA, 15 U.S.C. § 1641(g)
This assignment, executed on August 5, 2009, states that it pertains to a Mortgage that was
executed on August 29, 2007.
On May 19, 2009, the Truth in Lending Act was amended in order to include a provision
which states:
"[N]ot later than 30 days after the date on which a mortgage loan is sold or otherwise
transferred or assigned to a third party, the creditor that is the new owner or assignee of
the debt shall notify the borrower in writing of such transfer[.]" 15 U.S.C. § 1641(g)(1).
Notably, if the new creditor does not comply, the borrower may bring suit to recover actual
damages, a statutory penalty of up to $4,000 for individual claims ($1 million for a class
action), plus costs and attorney's fees. A 2009 Amendment to the Truth in Lending Act, 15 U.S.C. § 1641(g), Property Law
Legal Research Blog, National Legal Research Group, Inc.
2. Second Assignment
2.1. Main Features
On July 22, 2011, an Assignment of Mortgage was executed by MERS as holder of the
Mortgage. This document names the assignee as The Bank of New York Mellon, formerly
known as The Bank of New York as Trustee for CHL Mortgage Pass-Through Trust 2007-18.
This assignment is purportedly signed by Cynthia Santos and Dominique Johnson, purporting
to be Assistant Secretaries, witnessed by Yomari Quintanilla and Chester Levings and is
purportedly notarized by Jovida Alvarez-Diaz, a notary public of the state of California. It
was recorded in (Name of County Withheld) on July 28, 2011.
2.2. About the Assignor
MERS executed the second assignment as “holder of the Mortgage” (see Transfer
Transactions; Assignments; 1. First Assignment; 1.2. About the Assignor).
2.3. Duplicate Assignment
This assignment is a duplication of the first assignment. It does not state that it was
executed in order to correct any errors in the first assignment.
2.4. Verbiage of the Assignment
This assignment states that:
“. . . Assignor (MERS) does hereby grant, bargain, sell, assign, transfer unto the Assignee
the Mortgage, together with the note described in said Mortgage” (see Transfer
Transactions; Assignments; 1. First Assignment; 1.3. Verbiage of the Assignment).
Examiner’s Comments
1. Endorsements
1.1. A blank endorsement cannot identify the owner of the endorsed note even if possession
thereof is claimed by a singular, specific entity, except when it is undisputable that this
entity itself owns the note, or this entity is acting as agent or trustee for only one principal
and does not itself own the note.
As of November 18, 2017, the date of this examination, The Bank of New York, the trustee
of the trust into which the subject loan is purportedly securitized, was also acting as
trustee for several other securitization trusts (see Securitization; Other Trusts in Which The
Bank of New York is Trustee, page 30).
1.2. While the absence of dates on the purported endorsements leave the endorsements open
to the assumption that they were executed on or prior to December 28, 2007, or within
three months of September 28, 2007, the closing date of the trust into which the loan is
purportedly securitized, it also does not close the endorsements on the speculation that
they were executed only about the time of the execution of the assignments or of the filing
of the Complaint.
An undated endorsement, even if it is valid, cannot stand as evidence of the date that the
note was conveyed from the endorser to the endorsee. A definite date for the
endorsement was necessary under the circumstances of securitization because the loan
needed to be proven to have been transferred into the trust as of a certain date and that
the timing of the transfer qualified the loan for inclusion into a REMIC. The choice to
qualify its assets for inclusion into a REMIC was a voluntary act of the trust.
1.3. No robo-signing examination was conducted on the signatories of the two endorsements.
2. Assignments
2.1. First Assignment
The Bank of New York Mellon as Trustee for CHL Mortgage Pass-Through Trust 2007-18 could
be held liable for a statutory penalty of up to $4,000 and actual damages for its failure to
inform the borrower of the change of creditor under TILA, 15 U.S.C. § 1641(g).
For the purpose of determining compliance of TILA, 15 U.S.C. § 1641(g), the date that the
loan was conveyed to the assignee can only be based on the date of the assignment and
not on any date that can be inferred from the blank endorsement.
2.2. Second Assignment
This assignment is a mere duplication of the first. It does not state that it was executed in
order to correct any error in the first assignment. The fact that this was still executed by
MERS as holder of the Mortgage on July 22, 2011 after having executed the first assignment
on August 5, 2009 shows that the assigned Mortgage was not delivered to the assignee as a
consequence of the first assignment.
This assignment is a mere duplication of the first. It does not state that it was executed in
order to correct any error in the first assignment. The fact that this was still executed by
MERS as holder of the Mortgage on July 22, 2011 after having executed the first assignment
on August 5, 2009 shows that the assigned Mortgage was not delivered to the assignee as a
consequence of the first assignment.
3. General Comments
3.1. MERS has no authority:
3.1.1. To execute the assignments except as nominee for the assignor. MERS could only
have held the Mortgage as nominee for the lender and could only have executed the
assignments in such capacity.
3.1.2. To include the note in the assignments. By including the note in the assignments,
MERS had usurped the authority of the originating lender to endorse the note. As has
been ruled by a court in New York in a similar case, MERS was a non-party to the
note, with no authority to transfer ownership thereof.
3.2. A statement that the assignment covers the note secured by the security instrument being
assigned is not correct and not true regardless of whether or not the note has actually been
endorsed.
In fact, while the assignments were executed by MERS to The Bank of New York Mellon as
Trustee, in the first endorsement, Countrywide Bank, FSB, the originating lender, endorsed
the note to Countrywide Home Loans, Inc. in the first endorsement.
Countrywide Home Loans, Inc. was the seller of the trust into which the subject loan is
purportedly securitized. A note that has been endorsed in blank may be endorsed further
by mere delivery, thus, it can be assumed that the seller endorsed the note to the
depositor and the depositor to the trustee.
MERS’ appointment as nominee for the lender extends to the lender’s successors and
assigns which include the trust’s seller and depositor. In accordance with the
endorsements, the Mortgage would be assigned in the MERS System® from the lender to
the seller, from the seller to the depositor and from the depositor to the trustee, so that
MERS, supposedly, only needed to execute a formal assignment to the trustee.
3.3. The assignments pertain to the security instrument alone and not the note. None of the two
assignments can stand as evidence or be made basis as to the date of any of the
endorsements or as to the date the loan was transferred to the trust.
3.4. No robo-signing examination was conducted on the signatories of the two assignments.
End of article.
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