RICHMOND (CBS 5) — Banks seem to have most of the power when it comes to foreclosures, but some homeowners are fighting back with a new battle cry: “Show Me the Note!”

Chuck and Eric are trying to hang on to their Richmond home.

“We are not going to let the bank take the house,” said Chuck, sitting in his study surrounded by foreclosure documents.

The trouble started two years ago when their adjustable rate mortgage jumped from $2,600 to $4,400 a month. They soon fell behind and the bank foreclosed. But there was a problem with the paperwork.

“They don’t have the note! It’s as simple as that,” said Eric, referring to the promissory note that homeowners give the bank, promising to pay back the loan.

So where is the note? Normally it stays with the bank that issued the mortgage. But the note can also be traded or sold to other institutions. When that happens, the sale is supposed to be recorded with the county, showing who has legal claim on the house.

That’s basically how things have worked in America since the 1600s.

Then about 10 years ago, Wall Street got together with banks to sell huge blocks of mortgages like stock. And to keep track of it all, they created a separate , private system called MERS – the “Mortgage Electronic Registration System.” Electronic is the key – because the transactions are all computerized. So, MERS never gets the original promissory note.

“The deeper you look, the more illegal the actions are of these banks,” said Reno attorney Robert Hager, who’s suing MERS and hundreds of banks, alleging they’ve been foreclosing on homes without showing a true legal link to the note.

“It’s an industry-wide fraudulent scheme,” said Hager, “in which the parties that are foreclosing have no authority to foreclose and take the property away from these borrowers and homeowners.”

Hager’s lawsuit charges bank officials with using “false, fraudulent, misleading and untruthful documents.” For example, he displays four different foreclosure documents signed by MERS vice-president “Linda Green.” But each document has a different signature.

As another example, Hager shows several foreclosure papers where the true owner of the promissory note is apparently missing or unknown – so bank officials used placeholder names like “Bad Bene” and “Bogus Assignee.”

“And these were homes that were actually foreclosed on, and taken from people, by ‘Bad Bene’ and ‘Bogus Assignee,” said Hager.

Chuck and Eric say that fighting the banks can be pretty scary. “The banks know the average person is going to be intimidated,” said Eric. “They’re going to be frightened. They’re going to be confused. And they’re not going to know what to do.”

To save their home, Chuck and Eric have joined a growing movement called “Produce The Note!” or “Show Me The Note!” One Tactic: instead of paying the mortgage, they are paying a lawyer to fight the foreclosure in court until they can negotiate a new loan. So far it is working. They say in the last year the bank has tried to foreclose 10 times – but still has not shown them the note.

“So each day you sit and wonder: Will this go on?” said Chuck. “Will the banks agree to what we’re trying to fulfill? Or will they continue trying to steal our home?”

MERS said there is nothing fraudulent about its system, and the company expects the courts to eventually settle these foreclosure battles in its favor. The following is a press release and statement by the company.

Statement by R.K. Arnold, President and CEO of MERSCORP, Inc.
October 9, 2010
Contact: Karmela Lejarde
703-772-7156RESTON, Virginia (October 8, 2010) – MERSCORP, Inc. (MERS) President and Chief Executive Officer R.K. Arnold today issued the following statement regarding the organization and clarifying certain aspects of its operations:

“MERS is one important component of the complex infrastructure of America’s housing finance system. Billions of dollars of mortgage money flow through the financial system every year. It takes many, often-unseen mechanical processes to properly get those funds into the hands of qualified homebuyers.

Technology designed to reduce paperwork has a very positive effect on families and communities. They may not see it, but these things save money and time, creating reliability and stability in the system. That’s important to keep the mortgage funds flowing to the consumers who need it.

With millions of Americans facing foreclosure, every element of the housing finance system is under tremendous strain. What we’re seeing now is that the foreclosure process itself was not designed to withstand the extraordinary volume of foreclosures that the mortgage industry and local governments must now handle.

MERS helps the mortgage finance process work better. The MERS process of tracking mortgages and holding title provides clarity, transparency and efficiency to the housing finance system. We are committed to continually ensuring that everyone who has responsibilities in the mortgage and foreclosure process follows local and state laws, as well as our own training and rules.”

Facts about MERS

(from MERS Communications Manager Karmela Lejarde)

FACT: Courts have ruled in favor of MERS in many lawsuits, upholding MERS legal interest as the mortgagee and the right to foreclose. This legal right springs from two important facts:

  1. MERS holds legal title to a mortgage as an agent for the owner of the loan
  2. MERS can become the holder of the promissory note when the owner of the loan chooses to make MERS the holder of the note with the right to enforce if the mortgage loan goes into default.

MERS does not authorize anyone to represent it in a foreclosure unless both the mortgage and the note are in MERS possession. In some cases where courts have found against MERS, those cases have hinged on other procedural defects or improper presentation of MERS’s legal interests and rights. Citations can be found at the end of this document.*

FACT: MERS does not create a defect in the mortgage or deed of trust.

Claims that MERS disrupts or creates a defect in the mortgage or deed of trust are not supported by fact or legal precedents. This is often used as a tactic by lawyers to delay or prevent the foreclosure. The mortgage lien is granted to MERS by the borrower and the seller and that is what makes MERS the mortgagee. The role of mortgagee is legal and binding and confers to MERS certain legal rights and responsibilities.

FACT: The trail of ownership does not change because of MERS.

MERS does not remove, omit, or otherwise fail to report land ownership information from public records. Parties are put on notice that MERS is the mortgagee and notifications by third parties can be sent to MERS. Mortgages and deeds of trust still get recorded in the land records.

The MERS® System tracks the changes in servicing rights and beneficial ownership. No legal interests are transferred on the MERS System, including servicing and ownership. In fact, MERS is the only publicly available comprehensive source for note ownership.

While this information is tracked through the MERS® System, the paperwork still exists to prove actual legal transfers still occurred. No mortgage ownership documents have disappeared because loans were registered on the MERS® System. These documents exist now as they have before MERS was created. The only pieces of paper that have been eliminated are assignments between servicing companies because such assignments become unnecessary when MERS holds the mortgage lien for the owner of the note.

FACT: MERS did not cause mortgage securitization.

MERS was created as a means to keep better track of the mortgage servicing and beneficial rights as loans were getting bought and sold at a high rate during the late 1990s.

At the height of the housing market, low interest rates prompted some homeowners to refinance once, twice, even three times in the space of months. Banks were originating loans at more than double their usual rate. Assignments—the document that names the holder of the legal title to the lien—primarily between servicing companies, were piling up in county land record offices, awaiting recording. Many times the loans were getting refinanced before the assignments could get recorded on the old loan. The delay prevented lien releases from getting recorded in a timely manner, leaving clouds on title.

MERS was created to provide clarity, transparency and efficiency by tracking the changes in servicing rights and beneficial ownership interests. It was not created to enable faster securitization. MERS is the only publicly available source of comprehensive information for the servicing and ownership of the more than 64 million loans registered on the system. The Mortgage Identification Number (MIN), created by MERS, is similar in function to a motor vehicle VIN, which keeps track of these loans. Without MERS the current mortgage crisis would be even worse.

FACT: Lenders cannot “hide” behind MERS.

MERS is the only comprehensive, publicly available source of the servicing and ownership of more than 64 million loans in the United States. If a homeowner needs to identify the servicer or investor of their loan, and it is registered in MERS, they can be helped through MERS® ServicerID or via toll-free number at 888-679-6377.

FACT: MERS fully complies with recording statutes.

The purpose of recording laws is to show that a lien exists, which protects the mortgagee and any bona fide purchasers. When MERS is the mortgagee, the mortgage or deed of trust is recorded, and all recording fees are paid.


a. IN RE Mortgage Electronic Registration Systems (MERS) Litigation, a multi-district litigation case in federal court in Arizona who issued a favorable opinion, stating that “The MERS System is not fraudulent, and MERS has not committed any fraud.”

b. IN RE Tucker (9/20/2010) where a Missouri bankruptcy judge found that the language of the deed of trust clearly authorizes MERS to act on behalf of the lender in serving as the legal title holder.

c. Mortgage Electronic Registration Systems, Inc. v. Bellistri, 2010 WL 2720802 (E.D. Mo. 2010), where the court held that Bellistri’s failure to provide notice to MERS violated MERS’ constitutional due process rights.

(© CBS Broadcasting Inc. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.)

Comments (23)
  1. Larry McCoy says:

    What MERS fails to mention, is that more courts have found MERS to hold NO legal standing, (ie right to foreclose), than they have found that they do.

    1. Larry McCoy says:

      If you doubt it, do a search for “MERS LEGAL STANDING”.
      You’ll get pages of web hits, where MERS failed in their bid to help the banks properly foreclose. And that state supreme courts held that MERS has no legal standing to foreclose.

  2. rex says:

    These BANKSTERS must be puniished. Why aren’t they in jail with Madoff? Did Madoff rip off the wrong people? Was it okay to massively rip off this nation?

    They should have NEVER received any bonuses!

    Also, EVERY politician (including the Prez) who signed the BANKSTER BAILOUTS twice (without reading the bills-loaded with earmarks) should be jail as well.

    While we’re at it, the FEDERAL RESERVE must be abolished and GLASS-STEAGALL must be reinstated.

    I don’t understand why the people are so silent on these issues.

  3. Saundra Allman says:

    I had a conversation with my broker about this taqctic for homeowners who demand “Show me the Note”. His reply was “What does the homeowner do when they can easily and readily produce the Note”?

    This article clearly explains the position of “MERS” and how it came about. It also provides their contact telephone number for homeowners use. For some homeowners, they may be able to delay their foreclosre process, for others, MERS position may hold up in court as some of the above examples show.

    I have seen articles about those that use the “Show Me the Note” strategy and how it has been a benefit for some. Important to remember, this strategy may not be one for all homeowners.

    This is a valuable current article with important information for us all to understand how the impact of the “Show Me the Note” may or may not apply to certain homeowners.

    It will be a great benefit for some if they have a workable strategy that meets all the requirements and not hinged on the lenders being able to produce the note. At least may buy time to pay up default to prevent foreclosure, or not? Some homeowners are living in their homes without paying mortgage or rent for extended periods of time and their property values so much lower than their owed mortgage debt. Talk with your Certified Public Account, Attorney specialist, and the lender of your mortgage for solutions that will benefit you best in this foreclosure crisis situation. You may be trying to hold on to your home. You may be considering do you try to sell Short Sale. You may be considering Foreclosure process. I encourage all in this situation to seek advice from their tax and attorney specialist for discernment in your decision. As a licensed California Realtor, I am ready to help and service to make a difference for the families in need and desire to do what will benefit their real estate needs best. Like me, there are professional qualified licensed Realtors that will help serivice your real estate needs if their is enough time prior to foreclosure and trustee sale after you have consulted your, lender, perhaps contacted HERS, your CPA and Attorney for advice on these matters, then consult a professional licensed Realtor to discuss your options. Many homeowners can recover from this crisis of falling into foreclosure during these challenging economic times, with time, focus, perserverence, and a good plan. God Bless all the families that are facing foreclosure crisis in their homes. Sincerely, Saundra Allman, Realtor, Humboldt County

  4. Larry McCoy says:

    While I agree with you wholeheartedly Rex, that’s not the basic matter of this news report.

    People are so afraid of our court system, that they are unwilling to fight for what it right.

    The gentlemen of this news report, should file suit against the bank, to produce the original note, in it’s entirety, and if the bank cannot, then there is NO DEBT, (regardless of what the recorders office shows), and they should own their house outright.

    1. Saundra Allman says:

      Thank you. This is best coming from one of authority. I don’t have such authority. Thank you again for your clarification. This may help alot of people. I pray for them that it will be of great assistance to know there is one more strategy that may make a beneficial difference for these people that are facing the crisis of falling to foreclosure and loosing their homes.

      Very Sincerely,

      Saundra Allman, Realor, Humboldt County

  5. Saundra Allman says:

    This is a very good article. I encourage all who are facing this foreclosure crisis to seek advice from their personal certified pulblec account, their personal attorney, their mortgage lender, contact HERS if you question where is your note and can they help you, then consult a qualified professional licensed Realtor to discuss your options. Remember, it is how we cope, and deal with our crisis that will dictate your result for good or for worst. Perserverence, time, focus, a good plan, be well informed, and desire will make the difference. Discernment in your decision on how to handle and proceed with your pre foreclosure or foreclosure to trustee sale process will dictate your results. Recovery is always possible with right conditions, good strategy, patience, focus, perservance and other great qualities necessary along with determination. God Bless all that are in this foreclosure season of their life in the crisis of falling to foreclosure with their homes. Homeownership, is a great priviledge. Sincerely, Saundra Allman, Realtor, Humboldt County

  6. wrongway says:

    There is an excellent article in the current “Rolling Stones” magazine, by Max Taibbi, exposing the complicity of banks and courts to proceed with foreclosures even though the paper work is fraudulent. There are 600.000 homes that have been foreclosed, and one million more waiting for the filing. The financial system that was saved thanks to the tax payer’s$ is biting the hand that saved it. The year that the stimulus money was handed ou, the banks payed themselved a sixteen BILLION dollar bonus.

  7. EUGENE says:

    Please tell me the exact Rolling Stone magazine, I mean what month and date
    issue so that I can buy it. In my opinion this whole foreclosure thing stinks to
    high heavens especially after the tax payers bailed out the Banks and they
    ended up paying themselves big Bonuses. By the way where are the people
    who caused this crises and enjoying the millions they fraudulently got by deceit. ?

  8. ronald miller says:

    The statement that the recording laws protect the mortgage holder as well as any bona-fide purchaser is wrong…. Each change of ownership of the mortgage would have to be recorded with the county. However, the statute of limitations might apply if they delay, and the necessary signatures might not be available, and the transfers of ownership would have to be done as of the day the signature is attached, and not way back when MERS records might believe it happened. Intent is not enough… signatures and recording is required so that the debtor knows who he is dealing with.

  9. Stop Whining says:

    Let me get this straight, homeowners who rightfully and knowingly have signed a contract and a legal promissory note are now blaming the banks for their unwillingness to pay back the loan. They are scamming banks by saying “show me the note.” You knowingly under your own content signed a promissory note to pay back the loan. Hence that is a legal contract, a PROMISE. Who cares where the note was sold. I don’t care if a pile of dirt owns the note, you have a legal obligation and contract to pay back the note or you should go through foreclosure. What a scam, you should not have the right to get a loan! You know you owe money on a loan, yet you try and intentionally deceit the lender by saying “show me the note”. Last time I checked that is fraud: intentional deception made for personal gain!

    1. bb says:

      . stop whining – be informed. There was no loan. It was an even exchange. The banks started the fraud .Last time I checked that is fraud: intentional deception made for personal gain by the banks. They banks sold the note over and over again without your knowledge. The house is already paid for on your signature.

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