Non-Judicial Foreclosures

  Pro Se Foreclosure By Steve Skidmore

  By Bobie Kenneth Townsend

Non-Judicial Foreclosures should be outlawed throughout the several states for any mortgage company that intends to sell their interest in the property during the life of the mortgage contract, creating clouds on titles throughout the country, remaining forever until found, corrected or forgiven by a quiet title action.

The non-judicial foreclosure procedure was reasonable when people got a mortgage loan from a single source and it stayed there. At closing, the borrower received a Warranty Deed that is recorded in the county records, showing the borrower owned the subject property. The borrower and the lender signed a loan agreement, which conditioned the amount of payments paid, to a third party escrow company—known as the mortgage servicer; whereby, the escrow company would transfer the borrower’s payments, to the lender—minus a service fee. At closing, the borrower would sign over a Special Warranty Deed, in favor of the lender, and it is held by the escrow company. The escrow company is under contract, to give such Special Warranty Deed document to the lender, on the condition the borrower gets behind a certain amount of payments. The lender receives the loan payments from the escrow company, which it gets from the borrower. This is NOT to say that the lender could NOT sell an amount of future payments to a third party as to generate cash flow for the lender, but the lender still remains the “Person Entitled To Enforce” (PETE) the Non-Judicial Foreclosure, if a default were to occur by the borrower. When the loan is completely paid off, the escrow company returns the original loan document (The Promissory Note), the Special Warranty Deed and a release of lien to the borrower. The borrower has a mortgage and Special Warranty Deed papers-burning party—to see the negotiable documents go up in flames. If there is a document in the county records showing a lien is against the property, the release of the lien is filed in the county clerk’s records. That is that.

But, let's say the borrower fell on hard times, and missed a payment to the lender. The escrow company is obligated, in behalf of the lender, to notice the borrower a payment was late; and now a late charge was owed to the lender, as well. The borrower, still on hard times, is late, again. And then, the escrow company notifies the borrower a default has occurred, and a final default will occur—if accrued payments, interest and late fees are NOT offered in good faith, by such and such date, otherwise the subject property will be non-judicially foreclosed—and the Special Warranty Deed will be transferred to the lender. The lender would then file the Special Warranty Deed, in the county clerk's office, transferring the property back to the lender, without having to go to court. If the borrow failed to leave the property on his own behalf, the lender could file a forcible detainer with a Justice of the Peace and have the borrower removed from the property, like any other renter that failed to pay rent.

What would become of the Special Warranty Deed made out to the lender, held by the escrow company if the lender sold the loan, to another? Think of the problem the one who bought the loan would have, if there was a default. It definitely would turn into a judicial matter.

Today's non-judicial foreclosures create clouds on titles, throughout the United States of America. There is no Special Warranty Deed associated with getting a loan from the banking institutions. But rather, a Deed of Trust is created, worded clearly against the borrower, with no accountability, to the lender or its assignees. Ninety-Nine point Ninety-Nine percent of all bank loans are NOT associated with the original lender, either days before, or days after, closing on the subject property. Yes, I did say, 'days before closing on the subject property.' A cloud on the title of the subject property probably occurs, at the time of the signing of some of the closing documents—before the day of the actual closing. A cloud on the title of property occurs, when someone claims interest in a piece of property, and has NOT recorded his chain of title claim in the county records. Filing a claim where no chain of title exists in the county records creates a cloud on the title. Title companies will have a BIG problem giving title insurance where the chain of title is lacking in the county records.

Today, most mortgages involve a Note and Deed of Trust being created at closing, where the Deed of Trust is filed in the county records, but NOT the Note. In Texas, the Texas Legislature created a provision in the Texas Local Government Code, Section 192.007 that specifically apply to the Deed of Trust:

Sec. 192.007.  RECORDS OF RELEASES AND OTHER ACTIONS.  (a)  To release, transfer, assign, or take another action relating to an instrument that is filed, registered, or recorded in the office of the county clerk, a person must file, register, or record another instrument relating to the action in the same manner as the original instrument was required to be filed, registered, or recorded. (b)  An entry, including a marginal entry, may not be made on a previously made record or index to indicate the new action.

The banking institutions and the Judicial Branch of government ignore Section 192.007 thereby creating clouds on every title of property where the original lender elected to transfer its interest to others without documenting the transfer in the county records. Why? Because they have the false belief that Mortgage Electronic Registration Systems, Inc. (MERS) created a system that documents such transfers, which it does NOT.

There is a book that anyone can acquire that will explain the MERS scam better than I could ever do. That book is “Fighting the Foreclosure Machine” by Robert M. James B.B.A., M.P.A., J.D.. Mr. James also has a research paper called “Shellgame-MERS” that you can acquire that goes into MERS in more detail. I will attempt to summarize what Mr. James can explain better about foreclosures. But, first….

In re Mitchell, Case No. BK-S-07-16226-LBR (Bankr. D. NY 2009): There is no evidence of the alleged relationship of the principal of which MERS#1 assumes to act.

In re Vargas, 396 B.R. 511, 517 (Bankr. C.D. CA 2008): MERS#1 failed to identify the source of the authority to assign the Note making such assignment improper.

Mortgage Electronic Registration Systems, Inc. v. Graham and Martinez, 229 P.3d 420 (KS Ct.App. 2010): “… there is no evidence that MERS received permission to act as an agent for Countrywide.”

OneWest Bank v. Drayton, 2010-20429 (NY S.Ct. 2010): “MERS as ‘nominee’ has no independent authority and must prove its authority on behalf of the true owner of the note and mortgage.”

Saxon Mortgage Services, Inc. v. Hillery, 2008 WL 5170180 (USDCt. N.D. CA 2008): Being no evidence that MERS#1 was ever the holder of the Note or given authority to assign, the assignment and recordation of the assignment was ineffective.

In most, ‘IF NOT ALL’ Deed of Trust documents have:

"MERS" is Mortgage Electronic Registration Systems, Inc. MERS is a separate corporation that is acting solely as a nominee for Lender and Lender's successors and assigns. MERS is the beneficiary under this Security Instrument. MERS is organized and existing under the laws of Delaware, and has an address and telephone: number of Post Office Box 2026, Flint, Michigan 48501-2026, tel. (888) 679-MERS.

I have found that MERS canNOT be a beneficiary of anything; and MERS can and does mean more than one entity.

This Court finds that MERS's theory that it can act as a "common agent" for undisclosed principals is not supported by the law. The relationship between MERS and its lenders and its distortion of its alleged "nominee" status was appropriately described by the Supreme Court of Kansas as follows: "The parties appear to have defined the word [nominee] in much the same way that the blind men of Indian legend described an elephant - their description depended on which part they were touching at any given time."

Landntark Nat'l Bank v. Kesler, 216 P .3d 158, 166-67 (Kan. 2010).

It is common knowledge among the ranks of the banking associations “MERS” means, “Mortgage Electronic Registration System, Inc.” (I’ll call this MERS#1.)  But, I found, through research, “MERS” may also mean, “MERSCORP, Inc.” (I’ll call this MERS#2.)

As you go through the research of MERS, you run across a term, “bankruptcy remote single purpose entity.

"As a requirement for mortgages that were securing loans or promissory notes that were sold to securitize trust, the rating agencies would only allow mortgages MERS — well let me step back. They required that a bankruptcy remote single purpose entity be created in order for transactions holding loans secured by MERS, by mortgages MERS served as mortgagee to be in those pools and receive a rating, an investment grade rating without any changes to the credit enhancement. They required that to be a bankruptcy remote single purpose subsidiary of MERS, of Merscorp."

Secretary and treasurer of MERS: deposition of WILLIAM HULTMAN - (page 32, lines 9-20): BANK OF NEW YORK AS TRUSTEE FOR THE CERTIFICATE HOLDERS CWABS,INC. ASSET-BACKED CERTIFICATES,SERIES 2005-AB3 Vs. UKPE, Case No. F-10209-08, Superior Court of New Jersey (April 20, 2010)(DEPO WH)

Then, you find out MERS has claimed that status. In layman's terms, my understanding, of “bankruptcy remote status,” is that it holds no assets, where lacking such assets could cause a bankruptcy. Logically, MERS could not possess the Note and Deed of Trust without violating its “bankruptcy remote status”. This shows to be confirmed, by MERS v. Estrella, 390 F.3d 522, 524-525, where, in this case, you can find the transcript of the Secretary and Treasurer of MERS, Mr. William Hultman (Mr. Hultman), giving a deposition concerning the business practices of MERS. The following statements, given by Mr. Hultman, will be designated, as “DEPO WH – Page ?-?”.

MERS#1 does not list as an asset on its books any mortgage and it carries no insurance to protect any interest in a mortgage. (See DEPO WH - Page 134-135)

MERS#1 is not entitled to any proceeds of a Note. (See DEPO WH - Page 138)

MERS#1 has no monetary interest in a Note. (See DEPO WH - Page 150)

MERS#1 has no entitlement to money paid under the Note. (See DEPO WH - Page 151)

MERS#1 has no beneficial interest in a Note even if it is said to be the note-holder. (See DEPO WH - Page 153)

The above term, “Note,” references the negotiable instrument the borrower signs, at closing—commonly known as a “Promissory Note.”

I have found, MERS#2 has documented Rules the members of MERS#1 have to go by. The June 2009 "MERSCORP, Inc. Rules of Membership" (MERSCORP Rules) show, specifically, members of the MERS system are members of "MERSCORP, Inc."—and NOT those of Mortgage Electronic Registration Systems, Inc.. MERSCORP Rules, Rule 1, § 1 defines MERSCORP, Inc., as "MERS.” 

MERSCORP Rules fail to state Mortgage Electronic Registration Systems, Inc. has any members.

MERSCORP Rules fail to reference any term in the document, to the Uniform Commercial Code (UCC); and such terms canNOT be presumed, to mean the same thing found in the UCC.

MERSCORP Rules fail to have a requirement either MERS#1 or MERS#2 or its members should comply with, or even know of, the UCC—as they purport to transfer interest, on the Note and Deed of Trusts, under the name of MERS#1.

MERSCORP Rules were apparently created in a fashion to mislead judges—knowing the "MERS" designation is really MERSCORP, Inc., and NOT Mortgage Electronic Registration Systems, Inc.

MERSCORP Rules, Rule 3, § 3(a)(ii)

"..., assign the lien of any mortgage naming MERS as the mortgagee when the Member is also the current promissory note-holder, or if the mortgage is registered on the MERS® System, is shown to be registered to the Member,..."

MERSCORP Rules, Rule 3, § 3(a)(ii) describes a situation that never existed.

MERSCORP Rules, Rule 2, § 5(a) specifically states MERSCORP, Inc. is defined as the wholly-owned subsidiary of Mortgage Electronic Registration Systems, Inc.; or, in other words, 'MERS is the owner and subsidiary of MERS'.

MERSCORP Rules Rule 2, § 4(b) confirms MERS#1 does NOT make decisions or give instructions, pertaining to the Note and Deed of Trust, indicating MERS#1 could NOT be a nominee or agent, for the “Person Entitled To Enforce” (PETE).

MERSCORP Rules Rule 2, § 6 indicates MERS#2 will abide by the PETE, but if there is no instruction from the PETE, then MERS#2 will rely upon what the loan servicer says to be done.

MERSCORP Rules Rule 2, § 6 also indicates that instructions from the PETE must be given to MERS#2 as well as MERS#1, again showing MERS#1 will NOT act as a nominee or agent, for the PETE.

MERSCORP Rules show MERS#1 never owns any legal ownership or economic interest, in a Note.

MERSCORP Rules Rule 2, § 7 show it is the responsibility, of the members of MERS#2, to track Notes, and NOT by MERS#1 or MERS#2—if any such tracking takes place.

MERSCORP Rules Rule 3, § 1 shows MERSCORP, Inc.—and NOT Mortgage Electronic Registration Systems, Inc.—has the obligation of performance.

MERSCORP Rules confirm, if MERS#1 does NOT perform its functions, MERS#2 is obligated to see such performance is done.

MERSCORP Rules Rule 3, § 3 shows MERSCORP, Inc. can give its members, "a corporate resolution designating one or more officers of such Member, ... as “certifying officers” of Mortgage Electronic Registration Systems, Inc." 

MERSCORP Rules, Rule 3, § 3(a), last sentence, shows MERSCORP, Inc. is indemnified of any wrong doing, by the so-called “certifying officer;” confirming MERS#1 and MERS#2 have no control over such actions, which the members, or their so-called “certifying officers,” may do—in the name of MERS#1.

Since the "certifying officer" is NOT directed by MERS#1 or MERS#2, then such assignments must state who has designated such action to take place—making such alleged assignment vague and improper and creating a cloud, on the title of who the PETE was, at the time of the assignment; and whether the PETE did actually delegate such assignment, to another, with 100% of the rights, as per the UCC.

UCC § 3-203(d) does NOT allow a "certifying officer," in possession of a Note and Deed of Trust, to make the determination to enforce the right to foreclose—as the "certifying officer" would NOT be able to convey 100% of the interest, in the Note, nor transfer it—pursuant to UCC § 3-203(a).

MERSCORP Rules, Rule 8 encourages the violation of the UCC, as indicated above, by NOT requiring any identification of, or permission from, the PETE—for any oreclosure-related dealings.

MERSCORP Rules, Rule 9 confirms information, placed in the MERS System by the members themselves, does NOT belong to MERS#1 or MERS#2, but to the members who entered the information. Federal Rules of Evidence (F.R.E.) § 804(b)(3) allows 'statements against interest,' concerning the admissibility of the MERSCORP Rules and any content of (Link:), which any Defendant Bank might claim to be in force—at the time of the alleged assignment—be made available.

Since the Banksters claim to use the MERS system, the attorneys and judges falsely believe that record keeping of assignments have been documented, but without fling such assignments in the county records the attorneys and judges are advocating violating Texas law and support the reason for clouds on the titles of property in Texas and else where.

A great place to reference what is being done to the county records in Texas is to go to the Williamson County Clerk’s Office website [Link:]. I found out Williamson County Clerk’s Office contracted DK Consultants LLC, San Antonio, Texas, to do an Audit on their records. On January 29, 2013, the report was issued, to Williamson County Clerk’s Office. This audit is a must see, for anyone concerned with foreclosures. It gives sources concerning MERS. On page 10, it states:

It is recommended by the audit team that this report be turned over to the Williamson County District Attorney for further consideration in potential prosecution of those responsible, if in fact any "takings" of property using fraudulent documents were found to be "wrongful" or illegal.

The attorneys referenced Texas Penal Code § 37.01(2) and Texas Civil Practice and Remedies Code § 12, et seq., as a means to deal with the fraudulent documents. This is where I learned about:

Audit Markers are relative indicators that would be utilized to demonstrate suspect issues within the chain of title to any given property. Under the Texas Local Government Code at § 192.007, all documents affecting the chain of title to the property, including all liens and encumbrances, Must be recorded once the claim of lien process to any chain of title has begun.

It would take many pages, here, to give justice to the work DK Consultants LLC has made available to the public, concerning foreclosures that are invalid in Williamson County. You should download your own copy, from the Williamson County’s website.

Non-Judicial Foreclosures that involve an original Lender transferring interest of a mortgage has become a scam to create clouds on titles and to steal property. But, there is remedy, if attorneys are NOT afraid to lose their Bar Card.

“… Rogers, as plaintiff, need only demonstrate good title coming from that common source to meet its burden of proof.” See United States v. Denby, 522 F.2d 1358, 1362 (5th Cir.1975).

Rogers v. Ricane Enters., Inc., 884 S.W.2d 763, 768 (Tex. 1994)

“The plaintiff may recover (1) by proving a regular chain of conveyances from the sovereign, (2) by proving a superior title out of a common source, (3) by proving title by limitations, or (4) by proving prior possession, and that the possession has not been abandoned.

Land v. Turner, 377 S.W.2d 181, 183 (Tex.1964).”

"Generally, the earlier title emanating from a common source is better title and superior to others." Diversified, Inc. v. Hall, 23 S.W.3d 403, 406 (Tex.App.-Houston [1st Dist.] 2000, pet. denied). Thus, "[w]hen properly recorded and indexed, an abstract of judgment creates a judgment lien that is superior to the rights of subsequent purchasers and lien holders." Wilson v. Dvorak, 228 S.W.3d 228, 233 (Tex.App.-San Antonio 2007, pet. denied).

Gordon v. West Houston Trees, Ltd., 352 SW 3d 32 - Tex: Court of Appeals 2011

Fee simple or otherwise incontestible title in plaintiff is not necessary for maintenance of suit to remove cloud.

Dalton v. Davis, 1 S.W.2d 571, Commission of Appeals of Texas, Section A (1928)

Where pleadings and proof show that plaintiff owns a tract of land and that defendant is asserting some right, title, and interest and claim thereto, plaintiff seeking to remove cloud from title is not required to establish an incontestable chain of title from sovereignty of the soil or from a common source.

Lee v. Groupe, 223 S.W.2d 548, Court of Civil Appeals of Texas, Texarkana.(1949)

The Texas Supreme Court has recognized that the property owner need only prove that he has a title to property that is free of liens at the closing of the property. This means there is no record in the county showing a previous lien on the property that has NOT been discharged at the closing. Being no clouds on the title at closing, your title (Warranty Deed) becomes the common source title where a quiet title action must originate from. Anyone that claims interest in the property must produce a chain of title from that common source title to their claimed interest. Your burden of proof is complete by the showing that you have produced the Warranty Deed that had no prior liens. The burden of proof then shifts to the party claiming interest in the same property. Any cloud on their title reverts back to the original title until which time a clear title can be produced by another party.

How long does a cloud on a title remain?

A trustee-removal action can also be analogized to a real-property action to remove a cloud on title. We have held that as long as an injury clouding the title remains, so too does an equitable action to remove the cloud; therefore, a suit to remove the cloud is not time-barred. (See Tex. Co. v. Davis, 113 Tex. 321, 254 S.W. 304, 309 (1923).)

Ditta v. Conte, 298 SW 3d 187 - Tex: Supreme Court 2009

Looks like forever, until the title is quieted.

Today, for now, the Banksters, do a non-judicial foreclosure, accelerate your loan, files an assignment that is created by an attorney that pretends to be an employee of MERS which is NOT an employee of MERS. Then an attorney creates a document allegedly appointing a substitute trustee that sells your home to a third party that has nothing to do with the original mortgage of the property.

So, the county records show your Warranty Deed, a Deed of Trust with the name of an original lender, an assignment of the Note and Deed of Trust from a mystery entity to a third party, an appointment of a substitute trustee, and a Substitute Trustee’s Deed made out to someone that has no association with the original lender found in the Deed of Trust creating a cloud on the title as the documentation filed in the county records do not show a release of lien or a chain of title of how the person received the trustee deed from the original lender.

Let's stop the scam of the Non-Judicial Foreclosure, by demanding your legislator make your state a judicial foreclosure state. Make the Banks prove that they are the “Person Entitled to Enforce” a foreclosure or go fish.