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Chapter 2

Challenge to Standing of MERS (Mortgage Electronic Registration Systems, Inc.) to Foreclose in its Own Name

Brigitte Amiri is an attorney with the Foreclosure Prevention Project of South Brooklyn Legal Services, 105 Court Street, Brooklyn, New York 11201, (718) 237-5500. The Foreclosure Prevention Project provides advice, referral and representation to low- and moderate-income homeowners who have been victimized by the predatory practices of unscrupulous mortgage lenders, mortgage brokers, home improvement contractors and real estate companies. Predatory lending practices may involve high-pressure sales tactics; highly inflated fees or interest rates; deceptive and misleading representations regarding the amounts to be financed or the monthly payments, lending when the borrower cannot afford to make the payments; intentional overappraisal of properties in poor condition, fraud; and other illegal conduct and loan terms. The Project provides legal representation for homeowners who are facing foreclosure due to abusive and illegal lending practices, advice and referral for homeowners at risk of foreclosure, workshops and outreach for low- and moderate-income homeowners regarding predatory lending practices, training and advice for community advocates and attorneys who serve at-risk neighborhoods April Carrie Charney is an attorney with the Jacksonville Area Legal Aid, a non-profit agency that provides civil legal assistance to low income persons who cannot obtain private legal assistance. It also provides legal aid to people who are over 60, suffer from HIV/AIDS, have been victims of housing discrimination or are living with domestic violence. Their office is located at 126 West Adams Street, Jacksonville, Florida 32202, (904) 356-8371. Mr. Daniel P. Lindsey is Supervisory Attorney of the Home Ownership Preservation Project (HOPP) of the Legal Assistance Foundation of Metropolitan Chicago (LAF). HOPPs core mission is to help homeowners victimized by predatory lending and by other types of fraud and overreaching to avoid the loss of their homes. Project attorneys represent homeowners in state and federal court litigating claims against lenders, brokers, home improvement contractors, and real estate speculators. In many cases, HOPP attorneys seek to reduce a homeowner's mortgage debt through loan modification or refinance, putting them into a new, affordable loan. In other cases, the goal is to quiet title and to eliminate fraudulently obtained mortgages. HOPP also works for better laws and regulations to protect homeowners. Mr. Lindsey has specialized in housing and consumer fraud litigation and advocacy for over ten years. He worked previously at the Sargent Shriver National Center on Poverty Law, and at a private consumer fraud law firm. Mr. Lindsey clerked in the United States District Court for the Eastern District of Pennsylvania for the Honorable James T. Giles. Mr. Lindsey is a 1990 graduate of Harvard Law School and a 1985 graduate of Davidson College. This chapter includes litigation against the assertion by the Mortgage Electronic Registration Systems, Inc., MERS, that it has the legal authority to stand in for the mortgagee in foreclosures across the country:1 MERS was created by the mortgage banking industry to
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See NCLCs Repossessions and Foreclosures 16.3.4.2.1 (2004 Supp).

streamline the mortgage process by using electronic commerce to eliminate paper. Our mission is to register every mortgage loan in the United States on the MERS System. Beneficiaries of MERS include mortgage originators, servicers, warehouse lenders, wholesale lenders, retail lenders, document custodians, settlement agents, title companies, insurers, investors, county recorders and consumers. MERS acts as nominee in the county land records for the lender and servicer. Any loan registered on the MERS System is inoculated against future assignments because MERS remains the nominal mortgagee no matter how many times servicing is traded. MERS as original mortgagee (MOM) is approved by Fannie Mae, Freddie Mac, Ginnie Mae, FHA and VA, California and Utah Housing Finance Agencies, as well as all of the major Wall Street rating agencies.2 Section 2.1 is an amicus brief by all three of the attorneys explaining what MERS is and why MERS vision of foreclosure does not square with state rules of civil procedure or advance public policy. Section 2.2.1 to 2.2.3 are Florida motions to dismiss foreclosures brought in the name of MERS because MERS was not the owner or holder of the mortgage or note on which it seeks to foreclose. Sections 2.3.1. and 2.3.2 are memoranda in support of motions to dismiss. Section 2.4 is an order of dismissal.

www.mersinc.org, About Us.

2.1

Amicus Brief Explaining MERS and Its Vision of Foreclosure


TABLE OF CONTENTS

TABLE OF AUTHORITIES ............................................................................................. 3 INTERESTS OF AMICI CURIAE .................................................................................... 5 PRELIMINARY STATEMENT......................................................................................... 5 ARGUMENT ................................................................................................................... 6

I. II.

The MERS System Was Designed Without Regard to Consumers Rights. ..6 Because MERS Has No Beneficial Interest in the Mortgage, Recording MERS Instruments and the MERS System as a Whole is Detrimental to Borrowers and Contravenes Public Policy. .....................................................7

A. MERS Claims that the MERS System is Beneficial to Consumers are Unsupported and Unpersuasive............................................................................................................................... 7 B. Despite Significant Complexities in the Modern Mortgage Market, Consumers Have a Right to Know Who Owns Their Loan....................................................................................... 9 C. The MERS System Causes Significant and Detrimental Confusion Among Borrowers. 11 D. Courts Have Cast Significant Doubt on MERS Purported Standing to Bring Foreclosure Actions its Name....................................................................................................................... 13

III.

MERS Subversion of the Public Policy Behind Public Recordings Costs County and City Clerks Over a Billion Dollars. ...........................................17

CONCLUSION .............................................................................................................. 18 TABLE OF AUTHORITIES CASES Davanzo v. Resolute Ins. Co., 346 So. 2d 1227 (Fla. Dist. Ct. App. 3d Dist. 1977) .................... 16 Downing v. First Natl Bank, 81 So. 2d 486, 488 (Fla. 1955)...................................................... 16 In re Shelter Dev. Group, Inc., 50 B.R. 588 (Bankr. S.D. Fla. 1985)........................................... 16 Kumar Corp. v. Nopal Lines, Ltd., 462 So. 2d 1178 (Fla. Dist. Ct. App. 3d Dist. 1985)............. 16 Laing v. Gainey Builders, Inc., 184 So. 2d 897 (Fla. Dist Ct. App. 1st Dist. 1966) .................... 16 Media Placement v. Combined Broad., Inc., 638 So. 2d 105 (Fla. Dist. Ct. App. 3d Dist. 1994) 16 MERS v. Bomba, No. 1645/03 (N.Y. Sup. Ct., Kings County) (Complaint filed Jan. 15, 2003) . 15 MERS v. Estrella, No. 04-2078, 2004 WL 2650795 (7th Cir. Nov. 22, 2004)....................... 12, 13

MERS v. Garwacki, 04 CV 50283 (N.D. Ill. Nov. 30, 2004) ....................................................... 13 MERS v. Griffin, No.16-2004-CA-002155, slip op. (Fla. Cir. Ct. May 27, 2004) ....................... 17 MERS v. Rees, No. CV03081773, 2003 Conn. Super. LEXIS 2437 (Conn. Super. Ct. Sept. 4, 2003) ......................................................................................................................................... 17 MERS v. Walker, 03 CH 06342 .................................................................................................... 12 MERS, Inc. v. Parker, No. 017622/2004, slip op. (N.Y. Sup. Ct., Suffolk Co. Oct. 19, 2004).... 15 MERS, Inc. v. Schoenster, Index No. 16969-2004, slip op. (N.Y. Sup. Ct., Suffolk Co. Sept 15, 2004) ......................................................................................................................................... 15 MERS. v. Burek, No. 12488/03, 2004 Slip. Op. 51135U, 2004 N.Y. Misc. LEXIS 1652 (N.Y. Sup. Ct., Richmond Co. June 7, 2004) ..................................................................................... 14 Merscorp, Inc. v. Romaine, No. 9688/01, slip op. (N.Y. Sup. Ct., Suffolk Co. May 12, 2004)..... 6 Nedeau v. Gallagher, 851 So. 2d 214 (Fla. Dist. Ct. App. 1st Dist. 2003) .................................. 16 Tamiami Abstract & Title Co. v. Berman, 324 So. 2d 137, 139 (Fla. Dist. Ct. App. 3d Dist. 1975) ......................................................................................................................................... 16 Taylor, Bean & Whitaker, Mortg. Corp. v. Brown, 583 S.E.2d 844 (Ga. 2003) .......................... 17 STATUTES 735 ILCS 5/15-1504(N)................................................................................................................ 17 New York Real Property Actions and Proceedings Law 1921.................................................. 13 RPAPL 1921 .............................................................................................................................. 13 OTHER AUTHORITIES HUD-Treasury Report on Predatory Lending, available at www.hud.gov/library/bookshelf18/ treasrpt.pdf ................................................................................................................................ 10 Informal Op. Atty Gen 2001-2 (April 5, 2001) ............................................................................. 6 MERS Internet Cite, http://www.mersinc.com/why_mers/index.aspx............................... 8, 17, 18 9 Andrew Harris, Suffolk Judge Denies Requests by Mortgage Electronic Registration Systems, N.Y. Law J. (Aug. 31, 2004)..................................................................................................... 15 Phyllis K. Slesinger and Daniel McLaughlin, Mortgage Electronic Registration System, 31 Idaho L. Rev. 805 (1995) ...................................................................................................................... 7 RICHARD LORD, AMERICAN NIGHTMARE: PREDATORY LENDING AND THE FORECLOSURE OF THE AMERICAN DREAM (Common Courage Press 2005)................................................................. 11

INTERESTS OF AMICI CURIAE Amici are non-profit legal services organizations, namely South Brooklyn Legal Services (SBLS), Legal Assistance Foundation of Metropolitan Chicago (LAF), and Jacksonville Area Legal Aid, Inc. (JALA), which provide free legal representation to low-income individuals. In their respective organizations, the undersigned have developed special expertise in defending foreclosures, typically in situations where the homeowner has been targeted for a predatory loan. Amici strive to assist all low- to moderate-income homeowners who are in need and eligible for their services. Collectively, amici represent or counsel thousands of low-income homeowners each year. Amicis efforts to prevent foreclosure include defending foreclosure actions in court and raising additional legal claims against bad actors; negotiating with the foreclosing lender to modify the mortgage to give the client a fresh start; filing administrative claims with city, state, and federal agencies; conducting community outreach and education on the issue of predatory lending; and working on various policy issues to protect consumers and prevent predatory lending. As described below, the MERS system is disadvantageous to amicis homeowner clients in several respects, and therefore amici urge this court to find in favor of Respondents-Respondents-Appellants.

PRELIMINARY STATEMENT Through their experience in representing individual homeowners, amici have learned first-hand the nationwide effect of the Mortgage Electronic Registration Systems, Inc. (MERS) on homeowners. Although the instant action turns on a question of New York law, amici and the homeowners they represent have experienced the same obstacles, confusion, and frustration that are created by the MERS system nationally. 5

Although the MERS system impacts borrowers in many ways, amici would like to focus on three issues relevant to the instant action. First, because MERS obfuscates the true owner of the note, MERS creates significant and detrimental confusion among borrowers/homeowners, their advocates, and judges. Indeed, the MERS system is so confusing that the attorneys hired to represent MERS in foreclosure actions often do not understand the MERS system or know the identity of their client. Second, MERS routinely commences foreclosure actions solely in its name, even though it is not the true owner of the note. Third, MERS frustrates established public policy, which dictates that title information must be publicly available, and deprives the county clerks of millions of dollars. Accordingly, amici urges this Court to find in favor of Respondents-Respondents-Appellants cross-appeal, and against Petitioners-AppellantsRespondents. ARGUMENT I. The MERS System Was Designed Without Regard to Consumers Rights. It is well settled that MERS is not a mortgage lender; additionally, it never owns the note or mortgage, nor does it have any beneficial interest in the note or mortgage. See, e.g., Merscorp, Inc. v. Romaine, No. 9688/01, slip op. at 2 n.3 (N.Y. Sup. Ct., Suffolk Co. May 12, 2004); Informal Op. New York State Atty Gen 2001-2 (April 5, 2001); see also Record on Appeal (hereinafter R.__) 430. Instead, MERS is the brainchild of the mortgage industry, designed to facilitate the transfer of mortgages on the secondary mortgage market and save lenders the cost of filing assignments. See, e.g., Brief for Petitioners-Appellants-Respondents (hereinafter MERS Br.) at 5 (listing the founding members of MERS as, inter alia, Mortgage Bankers Association of America and Federal National Mortgage Association). The rights, interests, and input of consumers were completely absent from the MERS initial design. See, e.g., Phyllis K. Slesinger and Daniel McLaughlin, Mortgage Electronic Registration System, 31 6

IDAHO L. REV. 805, 811, 814-15 (1995) (stating that MERS initially sought input from industry representatives). Similarly, the end MERS product ignores the rights and interests of consumers. Although MERS claims that the MERS system is beneficial to consumers because the cost savings are substantial, the flow of funds are speeded up, and the consumer can determine which company services her mortgage by calling a toll-free number, MERS Br. at 52-53, these arguments, which are unsupported and unpersuasive, disregard the significant obstacles and confusion that is created by MERS. As described below, the smokescreen that the MERS system creates to hide the true note and mortgage holder, and insulate that entity from potential liability in situations involving predatory loans, substantially outweighs any purported benefit to consumers of the MERS system. Indeed, the MERS system is fundamentally unfair to homeowners who are trapped in MERS system because information about who holds their mortgage debt is not publicly, and therefore readily, available. II. Because MERS Has No Beneficial Interest in the Mortgage, Recording MERS Instruments and the MERS System as a Whole is Detrimental to Borrowers and Contravenes Public Policy. A. MERS Claims that the MERS System is Beneficial to Consumers are Unsupported and Unpersuasive.

MERS seeks to persuade this Court that it has ushered in a beneficent new regime in the mortgage lending industry, one that will impart both cost savings and greater access to information to homeowners everywhere. See MERS Br. at 49-54. In fact, as described below, the opposite is true. The true beneficiaries of the MERS system are MERS itself and its member lenders. The losers are county clerks offices and the tens of millions of homeowners who are unwittingly drawn into MERS virtual black hole of information. Indeed, rather than filling an information void as MERS repeatedly claims, see, e.g., MERS Br. at 50, the MERS system, by

supplanting the county clerks public recording function, actually erects significant barriers to previously public information by hiding the true note holders identity. To some extent the losers are also the judges and the other court staff who are forced to deal with the confusion spawned by the increasing number of foreclosures brought in the name of MERS. MERS claims that it saves money. Indeed, its raison dtre is to save money, namely, the costs of filing mortgage assignments. The punch line of the What is MERS? glossy in MERS promotional materials sums up its core purpose: This [MERS process] eliminates the need to record an assignment to your MERS Ready buyer, saving on average $22 per loan. Again, on the Benefits glossy, the first benefit listed is: Save at least $22 on each loan by eliminating assignments. See also http://www.mersinc.com/why_mers/index.aspx (last visited Dec. 13, 2004). MERS disingenuously attempts to persuade this Court that it is the tens of millions of homeowners whose mortgages name MERS as nominee for the original lender, or whose mortgages have been assigned to MERS who are the beneficiaries of the MERS system. MERS Br. at 52-54. MERS claims that its member lenders pass on savings to their borrowers. MERS Br. at 53. While perhaps in theory it is possible for a lender to pass the savings on to the borrower, there is no indication this is actually happening, and it is certainly not part of the MERS sales pitch to lenders. To the contrary, thanks to MERS, an additional fee is beginning to appear on the HUD-1 Settlement Statement: a MERS fee of $3.95. See R. at 48. MERS itself encourages its member lenders to charge this additional fee, as per its FAQ glossy in MERS promotional materials: Q. A. Can I pass the MERS registration fee on to the borrower? YES. On conventional loans you may be able to pass this fee on to the borrower, but you should check with your legal advisors to ensure that you

are in compliance with federal and state laws. On government loans, please check with your local field office for availability and approval. It is a stretch, to say the least, that MERS would encourage its members to pass on the MERS registration fee to borrowers while at the same time expect its members to pass on the (larger) savings on assignment fees. Indeed, there is no indication that any costs savings are being passed on to borrowers. There is no assignment fee, denominated as such, which is now disappearing. Rather, anticipated assignment fees are built into the standard fees charged by lenders at closing and variously (but meaninglessly) denominated as origination fee, underwriting fee, processing fee, administration fee, funding fee, etc. There is no evidence that these fees are now decreasing to reflect no-assignment discounts being passed on to borrowers. Under the MERS system, it is MERS and its member lenders who are winning financially, and consumers who are losing (as well as clerks offices around the country, as described below, who are losing valuable operating funds). MERS also touts its system as providing greater access to information. See MERS Br. at 50. It is true that the MERS system affords the option of calling the toll-free number to learn who is servicing the loan, but MERS repeated emphasis, MERS Br. at 9-10, 50, of this issue is a red herring; indeed, access to the identity of the servicer has nothing do with the instant action. Moreover, the homeowner already knows who is servicing the loan: that is who contacts the homeowner on a monthly basis to collect payments. However, a homeowner caught in the MERS system doesnt know who owns her note and mortgage. B. Despite Significant Complexities in the Modern Mortgage Market, Consumers Have a Right to Know Who Owns Their Loan.

In recent years it has become very rare for a mortgage lender that originates a loan to keep that loan in its portfolio. Instead, most loans are sold into the secondary mortgage market to create capital for originating mortgage lenders to perpetuate the lending cycle. The secondary mortgage market is an industry that has boomed in the last few years. For example, the issuance of mortgage-backed securities mortgage which are sold to Wall Street firms in pools and securitized - increased from $11 billion in 1994 to $83 billion in 1998. See HUD-Treasury Report on Predatory Lending at 2, available at www.hud.gov/library/bookshelf18/ treasrpt.pdf. (last visited March 28, 2003) Although the secondary mortgage market involves several different entities, a consumer is usually most familiar with her mortgage servicer, the company that sends bills and collects payments on behalf of the mortgagee, the owner of the mortgage and note. A consumer also has the right to know which entity is the actual mortgagee; although the servicer usually has the authority to act in many respects for the mortgagee, the mortgagee also retains the power to make certain decisions about the loan. Often a servicer will tell amici that it must obtain permission from the holder of the note prior to agreeing to resolve issues. For example, some servicers will (or must, depending on the loan servicing agreement) defer to the mortgagee when making decisions about structuring a modification of the loan if the borrower has fallen behind in her payments. If a servicer is not helpful to the borrower, she should be able to turn to the true mortgagee for assistance. It may be beneficial for the borrower, and her advocate or attorney, to contact the mortgagee directly, especially since the servicers primary purpose is to collect payments and may not be as amenable as the mortgagee in finding a way to get the borrower back on track in her payments.

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Normally, the easiest way to determine who currently owns the mortgage is to check the public records for the last assignment of the mortgage. The recording of an assignment is beneficial to the borrower, and the public, by openly stating the current owner of the mortgage. In the MERS system, however, assignments are never filed except when the mortgage is initially assigned to MERS or assigned to a non-MERS member mortgagee. Accordingly, when MERS is the nominee for a mortgage, the homeowner cannot determine who owns her note by checking the public records. The MERS system actively subverts the public policy of maintaining a transparent, public title history of real property. C. The MERS System Causes Significant and Detrimental Confusion Among Borrowers.

In a recently published study of the predatory mortgage lending industry, the author summarized the MERS system as follows: MERS . . . represents the future of foreclosure: a brave new world of anonymity and unaccountability . . . The ostensible purpose is to save companies the county filing fees they often must pay when they buy mortgages or transfer servicing. An added benefit: if a foreclosure filing becomes necessary that filing, too, can be in MERS name. That makes it harder for journalists, community groups and researchers to determine whose mortgages are actually ending in foreclosure. If MERS has its way, it will become increasingly difficult to tell whose mortgages are failing. RICHARD LORD, AMERICAN NIGHTMARE: PREDATORY LENDING AND THE FORECLOSURE OF THE AMERICAN DREAM 157 (Common Courage Press 2005). The confusion and obstacles that are created by the MERS system are significant. Many of amicis clients are unaware of MERS involvement in their mortgages and are thoroughly confused when MERS begins to act on behalf of their servicer or mortgagee. For example, one of SBLS elderly clients was in default on her mortgage and was receiving a tremendous number of solicitations from foreclosure rescue companies and mortgage brokers and lenders which were purportedly offering to save her from foreclosure. When she received the foreclosure 11

summons and complaint naming MERS as the plaintiff, she disregarded it because she thought that MERS was simply another company trying to scare her into thinking that she would lose her home. As a result of her confusion over MERS, the client nearly lost her home. Similarly, the attorneys who represent MERS in foreclosure proceedings often do not know the identity of their client, the true note holder. In fact, most of them dont know who or what MERS is, or how it works. For example, in one foreclosure case filed by MERS in Illinois state court, MERS v. Walker, 03 CH 06342 (Cir. Ct. of Cook Co., Chancery Div.) (Complaint filed April 8, 2003), initial foreclosure counsel withdrew, telling amicus LAF that another firm would substitute in. None ever did, and eventually the foreclosure complaint was dismissed for want of prosecution. However, LAF had also filed a third-party complaint against the original lender, Novastar, who was listed on the original note and mortgage (with MERS as nominee). As prosecution of the third-party complaint has continued, LAF asked counsel for Novastar who owns the note and mortgage; thus far, counsel have stated that they do not know. LAF is still litigating its third-party claims, but to this day do not know for sure who is the current holder of the note and mortgage (and it is not apparent from looking at the public record, which only lists MERS). A recent decision by the Seventh Circuit Court of Appeals highlights another aspect of the problems and confusion created by the MERS system. In MERS v. Estrella, No. 04-2078, 2004 WL 2650795 (7th Cir. Nov. 22, 2004), the Seventh Circuit dismissed the appeal of a foreclosure case for lack of jurisdiction because the case was not final and appealable. In addition, the court noted: [T]here may be a problem with subject-matter jurisdiction as well. MERS is not the lender. It is a membership organization that records, trades, and fore-closes loans on behalf of many lenders, acting for their accounts rather than its own. Its web site, <http://www.mersinc.org/>, describes its organization and operation.

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MERS is a Delaware corporation with its principal place of business in Virginia, and as the Estrellas are citizens of Illinois everyone (including the district judge) has treated complete diversity as established. Yet it is the citizenship of the principal, and not that of the agent, that matters. Id. at *4. As the court noted, MERS is a nominee only, holding title to the mortgage but not the note. Id. at *5. Having ruled that there was a lack of finality depriving it of jurisdiction, the appeals court did not rule on the issue of diversity jurisdiction, and instead instructed the district court to do so upon remand. However, the appeals court noted that the lender was identified in district court pleadings as an Illinois corporation, so federal jurisdiction is doubtful. Id. at *5. Accordingly, the Estrella decision demonstrates yet again that MERS is not the note-holder and has no beneficial interest in the loan.3 D. Courts Have Cast Significant Doubt on MERS Purported Standing to Bring Foreclosure Actions its Name.

Despite MERS contentions to the contrary, see MERS Br. at 35-40, MERS standing to commence a foreclosure action in New York is highly suspect. While MERS is correct that it can act as agent on behalf of the true note-holder in some respects, it does not inevitably follow that MERS can commence a foreclosure action on behalf of the true mortgagee. For example, MERS points to New York Real Property Actions and Proceedings Law (RPAPL) 1921, which affirmatively requires mortgagees to issue and record a satisfaction for a mortgage once it has been paid off and provides a cause of action if the mortgagee fails to comply with this provision. MERS Br. at 35. The definition of mortgagee in RPAPL 1921, which includes a mortgagees agent, only applies to that statutory section and has no bearing on MERS purported standing to bring foreclosure actions.
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In the wake of the Estrella decision, a local district court, in Rockford, Illinois, has asked plaintiffs counsel to follow the progress of Estrella upon remand and to report back to determine what should happen with about two dozen MERS cases filed by that counsel. MERS v. Garwacki, 04 CV 50283 (N.D. Ill. Nov. 30, 2004). 13

Moreover, the cases cited by MERS, MERS Br. at 36, also do not establish that MERS can commence a foreclosure in its name. None of the cases cited by MERS directly address the issue of whether MERS which is not a servicer or mortgagee and has no beneficial interest in the mortgage can commence foreclosure. Recently, however, the Supreme Court of New York in Richmond County considered precisely this issue and refused to grant summary judgment in favor of MERS. MERS. v. Burek, No. 12488/03, 2004 Slip. Op. 51135U, 2004 N.Y. Misc. LEXIS 1652 (N.Y. Sup. Ct., Richmond Co. June 7, 2004). In Burek, the foreclosure was brought in MERS name and the complaint alleged, upon information and belief, that MERS is the sole, true and lawful owner of the bond/note and mortgage securing the same. Burek, 2004 N.Y. Misc. LEXIS 1652, at *4-5. In denying MERS motion for summary judgment, the Burek court determined that MERS was not the true owner of the note and stated that the plaintiff is merely the self-described agent of a principal, and may not have the standing it asserts. Burek, 2004 N.Y. Misc. LEXIS 1652, at **2, 4-5. The Burek court also rejected MERS reliance on Fairbanks Capital Corp. v. Nagel, 289 A.D.2d 99, 735 N.Y.S.2d 13 (N.Y. App. Div. 1st Dept 2001), cited in MERS Br. at 36, because in Fairbanks, the plaintiff expressly maintained that [the] action in its capacity as servicing agent for the Trustee, which the complaint identified as the mortgage holder. Burek, 2004 N.Y. Misc. LEXIS 1652, at **4 (quoting Fairbanks, 289 A.D.2d at 100). The insufficient and incorrect pleadings in the Burek complaint are not an isolated incident with respect to MERS foreclosures. Amici have witnessed several cases in which MERS has commenced a foreclosure in its name, withheld the true note-holders identity, and claimed to own the note and mortgage. For example, in Kings County Supreme Court, MERS sued Jean Roger M. Bomba and Martin C. Bomba in a foreclosure action. MERS v. Bomba, No.

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1645/03 (N.Y. Sup. Ct., Kings County) (Complaint filed Jan. 15, 2003). The Bomba complaint is riddled with mistruths and obfuscations, including: (1) the true note holder is never mentioned; (2) MERS alleges that its address is 400 Countrywide Way, Simi Valley, CA 93065 (which is actually Countrywide Home Loans address, not MERS address); and (3) MERS alleges on information and belief that it is the sole, true and lawful owner of said bond/note and mortgage. Id. Amicus SBLS is representing Martin C. Bomba, and has raised defenses, including the lack of MERS standing to bring the foreclosure, but the merits have not yet been reached in the case. Moreover, there have been a recent wave of unreported decisions in New York in which courts have prohibited MERS from foreclosing because MERS is not the true owner of the note. See Andrew Harris, Suffolk Judge Denies Requests by Mortgage Electronic Registration Systems, N.Y. LAW J. (Aug. 31, 2004) (discussing four foreclosure cases in Suffolk county that were dismissed in one day because the judge held that MERS cannot foreclose because it is not the owner of the note or mortgage). For example, in MERS, Inc. v. Schoenster, the court refused to grant MERS a default judgment against the defendant homeowners and denied MERS motion to appoint a referee to conduct a foreclosure sale because the moving papers establish that the plaintiff has no interest in the subject note and mortgage sought to be foreclosed herein by assignment or otherwise. Index No. 16969-2004, slip op. at 2 (N.Y. Sup. Ct., Suffolk Co. Sept. 15, 2004) (raising the issue sua sponte and citing, inter alia, Kluge v. Fugazy, 145 A.D.2d 537, 536 N.Y.S.2d 92 (1988)); see also MERS, Inc. v. Parker, No. 017622/2004, slip op. at 2 (N.Y. Sup. Ct., Suffolk Co. Oct. 19, 2004) (same). Additional frustration arises as a result of the secrecy of the true note-holders identity when a borrowers attorney is defending a foreclosure action. For example, if a defendant in a

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foreclosure action raises defenses and counterclaims against MERS as the plaintiff, it is unclear how to allege those defenses and counterclaims since MERS is only the agent in some respects for the true note-holder. Since the real party in interest the true note-holder should be a party to the foreclosure, borrowers attorneys are faced with the challenge of first discovering the true note-holders identity, and second, bringing the true note-holder into the case as a third-party. MERS has created similar obstacles in foreclosure proceedings around the country. For example, in Florida, MERS does not meet the standing test to bring a foreclosure action. Standing depends on whether a party has a sufficient stake in a justiciable controversy, i.e., whether a legally cognizable interest would be affected by the outcome of the litigation. See Nedeau v. Gallagher, 851 So. 2d 214 (Fla. Dist. Ct. App. 1st Dist. 2003); see also Kumar Corp. v. Nopal Lines, Ltd., 462 So. 2d 1178, 1182-83 (Fla. Dist. Ct. App. 3d Dist. 1985) (to have standing, the plaintiff must be a real party in interest.). Moreover, in a mortgage foreclosure action, the plaintiff must actually hold the note to prosecute the case. A plaintiff that does not hold the original note has no standing and such action must be dismissed with prejudice. In re Shelter Dev. Group, Inc., 50 B.R. 588, 590-91 (Bankr. S.D. Fla. 1985); Downing v. First Natl Bank, 81 So. 2d 486, 488 (Fla. 1955); Tamiami Abstract & Title Co. v. Berman, 324 So. 2d 137, 139 (Fla. Dist. Ct. App. 3d Dist. 1975); Laing v. Gainey Builders, Inc., 184 So. 2d 897, 900 (Fla. Dist Ct. App. 1st Dist. 1966). See also Davanzo v. Resolute Ins. Co., 346 So. 2d 1227, 1228-29 (Fla. Dist. Ct. App. 3d Dist. 1977) (one who holds legal title to a mortgaged property is an indispensable party in suit to foreclose a mortgage). In addition, an agent does not have a cause of action against a party allegedly breaching a contract with its principal; the principal must authorize the agent to bring suit. Media Placement v. Combined Broad., Inc., 638 So. 2d 105, 106 (Fla. Dist. Ct. App. 3d Dist. 1994). As a result of amicus JALAs advocacy in defending

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foreclosures brought in MERS name in Florida, one court rendered a decision that prohibits MERS from foreclosing in its name. MERS v. Griffin, No.16-2004-CA-002155, slip op. at 1 (Fla. Cir. Ct. May 27, 2004) (granting defendants motion to dismiss on the standing issue and giving plaintiff 30 days to file an amended complaint). In other states, courts have cast substantial doubt on MERS standing to foreclose. See MERS v. Rees, No. CV03081773, 2003 Conn. Super. LEXIS 2437 (Conn. Super. Ct. Sept. 4, 2003) (denying summary judgment to MERS because a genuine issue of fact existed regarding the current ownership of the note; a discrepancy existed between the affidavit submitted by MERS claiming that it owned the note and the information on the note); Taylor, Bean & Whitaker, Mortg. Corp. v. Brown, 583 S.E.2d 844 (Ga. 2003) (reserving for the trial court a determination of whether MERS as nominee for the original lender and its successors, has the power to foreclose . . .). In addition, the Illinois Mortgage Foreclosure Law casts MERS ability to foreclose in its own name in serious doubt. 735 ILL. COMP. STAT. ANN. 5/15-1504(N) (the note-holder is the proper party with standing to bring a foreclosure action under Illinois law). III. MERS Subversion of the Public Policy Behind Public Recordings Costs County and City Clerks Over a Billion Dollars. In addition to contravening the public policy, MERS also costs county and city clerks, throughout the country, significant revenue; in contrast, MERS profits from supplanting of the clerks functions. Approximately a year ago, MERS announced that 20 million mortgages were registered with MERS. MERS Registers the 20 Millionth Loan (Dec. 17, 2003), available at http://www. mersinc.com/newsroom/press.aspx. Moreover, MERS admits that a loan is transferred many times during its life. MERS Br. at 51. MERS also estimates that assignments on average cost $22 each to record with the county clerk. See

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http://www.mersinc.com/why_mers/index.aspx (last visited Dec. 13, 2004). Accordingly, for 20 million loans on the MERS system, assuming that they are all assigned three times each during the life of the loan, at a cost of $22 per each assignment, the county and city clerks nationwide have lost, as of December 2003, public revenue of $1.32 billion since the inception of the MERS system. This figure continues to increase as new mortgages are registered on the MERS system. In contrast, MERS charges $3.95 per loan, R. at 48, and has registered 20 million loans; accordingly, MERS has grossed $79,000,000 as a result of supplanting the county clerks functions. CONCLUSION For the foregoing reasons, because MERS has no beneficial interest in the mortgage, and because recording MERS instruments subverts public policy and confuses homeowners, this Court should find in favor of Respondents-Respondents-Appellants and against PetitionersAppellants-Respondents.

Dated:

December 23, 2004 Brooklyn, NY

Respectfully submitted, ________________________ Brigitte Amiri Foreclosure Prevention Project South Brooklyn Legal Services 105 Court Street Brooklyn, New York 11201 (718) 237-5500

Daniel P. Lindsey* Home Ownership Preservation Project Legal Assistance Foundation of Metropolitan Chicago 111 W. Jackson, 3rd Floor Chicago, IL 60604 (312) 347-8365

April Carrie Charney* Jacksonville Area Legal Aid, Inc. 126 W. Adams Street 18

Jacksonville, FL 32202 (904) 356-8371 *Pro Hac Vice Motion to be Filed CERTIFICATE OF COMPLIANCE I hereby certify that the above brief was prepared on a computer using Microsoft Word, and using Point 14 Times New Roman typeface, in double space. The total word count, exclusive of the cover, table of contents, table of citations, proof of service, and certificate of compliance, is 4,452.

__________________________ Brigitte Amiri

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2.2

Motions to Dismiss Foreclosure (FL)

2.2.1 Motion to Dismiss Foreclosure, Case #1


IN THE CIRCUIT COURT OF THE FOURTH JUDICIAL CIRCUIT, IN AND FOR DUVAL COUNTY, FLORIDA CASE NO.: DIVISION: MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., et al Plaintiff, v. [DEFENDANT], A/K/A/ [DEFENDANT], et al., Defendants. ______________________________________/
SEPARATE DEFENDANT [SEPARATE DEFENDANT]S MOTION TO DISMISS PLAINTIFFS AMENDED COMPLAINT; ALTERNATIVELY TO MAKE MORE DEFINITE AND CERTAIN

Separate Defendant, [Separate Defendant] moves to dismiss Plaintiffs Amended Complaint, or in the alternative, for more definite statement, pursuant to Rules 1.210(a), 1.130(a) and 1.140(b)(7) of the Florida Rules of Civil Procedure, and states, in support thereof: 1. The right to prosecute a claim in Florida courts rests exclusively in those persons granted by substantive law, the power to enforce the claim. Kumar Corp. v Nopal Lines, Ltd, et al 462 So. 2d 1178, 1985 Fla.App. LEXIS 11940.41U.C.C. Rep. Serv. (Callaghan) 69; 10 Fla. L. Weekly 189 (3rd District1985). 2. No Florida case holds that a separate entity can maintain suit on a note payable to another entity unless the requirements of Rule 1.210(a) of the Florida Rules of Civil Procedure and applicable Florida law are met. Corcoran v. Brody, 347 So. 2d 689 (Fl. 4th DCA 1977) 3. The plaintiff must allege that it is the owner and holder of the note in question in order to be entitled to maintain this action for a residential foreclosure of a promissory note and mortgage. The plaintiff in this case cannot and does not allege that it owns the promissory note attached to its amended complaint. Your Construction Center, Inc. v. Gross, 316 So. 2d 596 (Fl. 4th DCA 1975)

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4. This defendant previously filed a motion to dismiss the plaintiffs original complaint which was granted because the plaintiff was not identified as an assignee or successor to the original lender. See paragraph 5 of the April 8, 2005 Order Granting Defendant [Separate Defendant]s Motion For Relief From Order and Corrected Order Granting Motion To Dismiss 5. Plaintiff now files its amended complaint in a failed and confused effort to establish its ownership of the promissory note involved in this foreclosure as an assignee or successor to the original lender, Fortress Mortgage, Inc. 6. In paragraph 5 of its amended complaint, plaintiff alleges that the Note was endorsed to Countrywide Home Loans, Inc.; Countrywide Home Loans, Inc. is the assignee and/or successor to the Lender. 7. The plaintiffs amended complaint fails to allege that it owns the note; fails to allege that that it is an assignee of the promissory note and fails to allege that plaintiff owned or held the subject note at the commencement of this action. Jeff-Ray Corp. v. Jacobson, 566 So.2d 885 (Fla. 4th DCA 1990) 8. This action should be dismissed pursuant to Rule 1.210(a) and 1.140(7), because it appears on the face of the amended complaint that a person other than the Plaintiff is the true owner of the claim sued upon and that the Plaintiff is not the real party in interest and is not shown to be authorized to bring this action. In re: Shelter Development Group, Inc., 50 B.R. 588 (Bankr.S.D.Fla. 1985), citing Downing v. First National Bank of Lake City, 81 So.2d 486 (Fla. 1955)], See also 37 Fla. Jur. Mortgages and Deeds of Trust 240 (One who does not have the ownership of the obligation secured by a mortgage, may not foreclose the mortgage) The Plaintiff cannot amend its complaint to assert facts that did not exist when the action was filed. 9. The plaintiff alleges in its amended complaint that the note was endorsed to Countrywide Home Loans, Inc. The only way the plaintiff can establish that it is the assignee or successor to the original lender is through an assignment of the note that predates the commencement of this foreclosure action. The Uniform Commercial Code and endorsement is not applicable to transfer ownership of the promissory note which is the subject of this foreclosure action because, among other things, the promissory note is not a negotiable instrument under Florida law as that term is defined in F. S. 671.101, et. seq. because the promissory note at issue is not an unconditional promise to pay which is required by F. S. 673.1041(1) because:

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a. paragraph 7(A) of the note attached to the plaintiffs amended complaint assesses and requires the payment of late charges in the amount of 4% of the overdue amount of each payment (i)f Lender has not received the full monthly payment by the end of fifteen calendar days after the payment is due... b. paragraph 7(C) of the note gives the Lender the right to require Borrower to pay costs and expenses including attorneys feesSuch fees and costs shall bear interest from the date of disbursement at the same rate as the principal of this Note. c. paragraph 8 of the note requires Borrower to waive the rights of presentment and notice of dishonor and defines Presentment as the right to require the Lender to demand payments of amounts due.; d. the promissory note incorporates another writing (the security agreement) for the purpose of knowing the rights between the parties contra to the limitations of F.S. 673/1061(1)(b) and (c); and e. the promissory note at issue in this case is not just a promise to pay as it has and requires additional undertakings besides the promise to pay that defeat negotiability and therefore eliminates the possibility of a holder in due course.

WHEREFORE, this Defendant requests the court grant his motion to dismiss the plaintiffs amended complaint/alternatively to make more definite and certain and award this Defendant attorneys fees and all other relief to which this Defendant proves himself entitled. CERTIFICATE OF SERVICE The undersigned certifies that a true copy of this document has been mailed to [Attorney for Plaintiff] by U.S. Mail this ______________________________. JACKSONVILLE AREA LEGAL AID, INC., ________________________________________ [Attorneys for Separate Defendant] Attorneys for Separate Defendant

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2.2.2 Motion to Dismiss Foreclosure, Case #2


IN THE CIRCUIT COURT, FOURTH JUDICIAL CIRCUIT, IN AND FOR CLAY COUNTY, FLORIDA GENERAL JURISDICTIONAL DIVISION CASE NO.: MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., Plaintiff, vs. [Defendant], et al., Defendants. ________________________________/ SEPARATE DEFENDANT [SEPARATE DEFENDANT]S AMENDED MOTION TO DISMISS PLAINTIFFS AMENDED COMPLAINT 1. Rule 1.210(a) of the Florida Rules of Civil Procedure provides, in pertinent part: Every action may be prosecuted in the name of the real party in interest, but a personal representative, administrator, guardian, trustee of an express trust, a party with whom or in whose name a contract has been made for the benefit of another, or a party expressly authorized by statute may sue in that persons own name without joining the party for whose benefit the action is brought... The plaintiff in this action meets none of these criteria. 2. Standing requires that the party prosecuting the action have a sufficient stake in the

outcome and that the party bringing the claim be recognized in the law as being a real party in interest entitled to bring the claim. This entitlement to prosecute a claim in Florida courts rests exclusively in those persons granted by substantive law, the power to enforce the claim. Kumar Corp. v Nopal Lines, Ltd, et al 462 So. 2d 1178, 1985 Fla.App. LEXIS 11940.41U.C.C. Rep. Serv. (Callaghan) 69; 10 Fla. L. Weekly 189 (3rd District1985). 3. No Florida case holds that a separate entity can maintain suit on a note payable to another

entity unless the requirements of Rule 1.210(a) of the Florida Rules of Civil Procedure and applicable Florida law are met. Corcoran v. Brody, 347 So. 2d 689 (Fl. 4th DCA 1977) 4. The plaintiff must allege that it is the owner and holder of the note in question in order to

be entitled to maintain this action for a residential foreclosure of a promissory note and

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mortgage. The plaintiff in this case cannot and does not allege that it owns the promissory note attached to its amended complaint. Your Construction Center, Inc. v. Gross, 316 So. 2d 596 (Fl. 4th DCA 1975) 5. This action should be dismissed pursuant to Rule 1.210(a) and 1.140(7), because it

appears on the face of the amended complaint that a person other than the Plaintiff is the true owner of the claim sued upon and that the Plaintiff is not the real party in interest and is not shown to be authorized to bring this action. In re: Shelter Development Group, Inc., 50 B.R. 588 (Bankr.S.D.Fla. 1985), citing Downing v. First National Bank of Lake City, 81 So.2d 486 (Fla. 1955)], See also 37 Fla. Jur. Mortgages and Deeds of Trust 240 (One who does not have the ownership of the obligation secured by a mortgage, may not foreclose the mortgage) 6. Fla.R.Civ.P. Rule 1.130(a) requires a Plaintiff to attach copies of all bonds, notes, bills

of exchange, contracts, accounts, or documents upon which action may be brought to its complaint. Attached to Plaintiffs amended complaint, is a promissory note payable to North American Mortgage Company as Lender. The Plaintiff in the above-styled case is Mortgage Electronic Registration Systems, Inc.(MERS). 7. Fla.R.Civ.P. Rule 1.310(b) provides that all exhibits attached to a pleading shall be

considered a part of the pleading for all purposes. The promissory note attached to MERS Amended Complaint establishes that the plaintiff is not the proper party to bring this action and the owner of the note in this case, North American Mortgage Company or whoever presently owns the subject promissory note, is an indispensable party to this foreclosure action and is missing. 8. MERS is a for-profit electronic registration and tracking system of residential promissory

notes. A loan registered with MERS is provided an 18 digit number which follows the note when the note is transferred from owner to owner. MERS is just a library and is never the true owner of the note. 9. In an amicus brief filed by Fannie Mae and Freddie Mac in MERSCORP, INC. and

MORTGAGE ELECTRONIC REGISTRATION SYSTEM, INC. V. EDWARD P. ROMAINE, Clerk of the County of Suffolk, State of New York, et al., now pending before the New York Supreme Court, Appellate Division, Docket No.: 04-4735, Fannie Mae and Freddie Mac explain that: The MERS system does not change the relationship among servicers,

24

investors, and borrowers. Servicers still provide loan collection and other adminstrative servicers, investors retain an interest in the loans, and and borrowers are notified of any changes in servicing as required by federal law. The MERS System simply removes the need for servicers to record successive assignments by permitting MERS to serve as mortgagee of record, in a nominee capacity, for both the original and new servicer. Thus, rather than changing the mortgage system, MERS simply increases the efficiency and accuracy of this system so that the mortgage industry can better and more economically serve a greater number of people. 10. In this case, MERS allegations of material facts claiming it is the owner of the subject

note are inconsistent with the documents attached to the Amended Complaint. MERS has not pled or attached an assignment of the note to the Complaint. MERS also has not plead or attached any documentation memorializing the transfer of the subject note to itself. When exhibits are inconsistent with the plaintiffs allegations of material fact as to who the real party in interest is, such allegations cancel each other out. Fladell v. Palm Beach County Canvassing Board, 772 So.2d 1240 (Fla. 2000); Greenwald v. Triple D Properties, Inc., 424 So. 2d 185, 187 (Fla. 4th DCA 1983); Costa Bella Development Corp. v. Costa Development Corp., 441 So. 2d 1114 (Fla. 3rd DCA 1983). 11. In addition, the Plaintiffs amended complaint fails to state a cause of action for foreclosure because the record establishes that at the time this action was filed the alleged assignment of the mortgage attached to the plaintiffs amended complaint did not exist at the commencement of this action. The Plaintiff cannot amend its complaint to assert facts that did not exist when the action was filed. 12. The plaintiff does not own the note and fails to establish in its amended complaint that it owned or held the mortgage at the commencement of this action. 13. This separate defendant incorporates by reference herein her answer and affirmative defenses to the plaintiffs amended complaint previously filed with this court. WHEREFORE, this separate defendant requests the Court dismiss the Plaintiffs complaint with prejudice; and award this defendant attorneys fees and all other relief to which she proves herself entitled. CERTIFICATE OF SERVICE

25

I HEREBY CERTIFY that a copy of the foregoing has been furnished to [Attorney for Plaintiff] by U.S. Postal Service on ___________________________.

JACKSONVILLE AREA LEGAL AID, INC. [Attorney for Separate Denfendant] Attorney for Separate Defendant

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2.2.3 Motion to Dismiss Foreclosure, Case #3


IN THE CIRCUIT COURT, FOURTH JUDICIAL CIRCUIT, IN AND FOR DUVAL COUNTY, FLORIDA CASE NO.: DIVISION: MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC. AS NOMINEE FOR PRINCIPAL RESIDENTIAL MORTGAGE, INC. Plaintiff, v. [DEFENDANT], et al, Defendants. / DEFENDANTS MOTION TO DISMISS PLAINTIFFS COMPLAINT COMES NOW Separate Defendant, [Defendant], and for her motion to dismiss the Plaintiffs complaint, states: 1. Defendant requests the court dismiss this action pursuant to Rule 1.210(a) of the Florida Rules of Civil Procedure because it appears on the face of the complaint that a person other than the Plaintiff is the true owner of the claim sued upon and that the Plaintiff is not the real party in interest and is not shown to be authorized to bring this foreclosure action. 2. In Florida, the prosecution of a foreclosure action is by the owner and holder of the mortgage and the note. 3. In this case, the complaint and attached exhibits identify an inconsistency between the Plaintiffs allegations of material fact as to who the real party in interest is and therefore such allegations cancel each other out. Greenwald v. Triple D Properties, Inc., 424 So. 2d 185, 187 (Fla. 4th DCA 1983); Costa Bella Development Corp. v. Costa Development Corp., 441 So. 2d 1114 (Fla. 3rd DCA 1983); see also: Taylor, Bean & Whitaker Mortgage Corp. v. Brown, 583 S.E. 2d 844 (Ga. 2003) 4. The Plaintiff in this case is identified in the complaint as the nominee for Principal Residential Mortgage, Inc.. In the mortgage and note attached the Lender is identified as

27

Bankers Home Mortgage, Inc. Edition, 1999) as:

5. A nominee is defined in Blacks Law Dictionary (7th

...A person designated to act in place of another, usually in a very limited way... A party who holds bare legal title for the benefit of others or who receives and distributes funds for the benefit of others. 6. A nominee is one designated to act for another as his/her representative in a rather limited sense...In its commonly accepted meaning, the word nominee connotes the delegation of authority to the nominee in a representative capacity only, and does not connote the transfer or assignment to the nominee of any property in or ownership of the rights of the person nominating him/her., Mortgage Electronic Registration Systems, Inc., v. Rees, 2003 Conn. Super. LEXIS 2437, f/n 2 (Conn. Superior Ct 2003) 7. In the absence of contrary evidence, nominee should be given its commonly accepted meaning. It connotes the delegation of authority in a representative or nominal capacity only, and does not connote the transfer or assignment to the nominee of any property in or ownership of the rights of the person nominating him. Winters National Bank and Trust Company v. Saker, 419 N.E. 2d 890 (Ohio App. 1979) 8. Plaintiff Mortgage Electronic Registration Systems, Inc. (MERS) does not have standing to pursue this action. Standing depends on whether a party has a sufficient stake in a justiciable controversy, whether a legally cognizable interest would be affected by the outcome of the litigation. Nedeau v Gallagher 851 So.2d 214, 2003 Fla. App. LEXIS 9762, 28 Fla. L. Weekly D 1537 (1st District, 2003). 9. Standing encompasses not only the sufficient stake definition, but at the at least equally important requirement that the claim be brought by or on behalf of one who is recognized by the law and a real party in interest, that is the person in whom rests, by substantive law, the claim sought to be enforced. Kumar Corp. v Nopal Lines, Ltd, et al 462 So. 2d 1178, 1985 Fla.App. LEXIS 11940.41U.C.C. Rep. Serv. (Callaghan) 69; 10 Fla. L. Weekly 189 (3rd District1985). 10. It is axiomatic that a suit cannot be prosecuted to foreclose a mortgage which secures the payment of a promissory note, unless the Plaintiff actually holds the original note. A Plaintiff that does not hold the original notes sued has no standing and such action must be dismissed with prejudice Shelter Development Group v. MMA of Georgia, Inc 50 B.R. 588 (USBC, S.D. Florida

28

1985) Downing v. First National Bank of Lake City, , 81 So. 2d 486, (Fla., 1955) Tamiami Abstract and Title Company v. Berman, 324 So. 2d 137 (Fla 3rd DCA> 1975) Laing v. Gainey Builders, Inc. 184 So. 2d 897 (Fla. 1st DCA 1966). See also Davanzo v. Resolute Insurance Company, et al. 346 So.2d 1227, 1977 Fla.App. LEXIS 16014 (One who holds legal title to a mortgaged property is an indispensable party in suit to foreclose a mortgage). 11. An agent does not have a cause of action against a party allegedly breaching a contract with its principal. The principal must authorize the agent to bring suit. Media Placement v. Combined Broadcasting, Inc. , 638 So. 2d 104, 1994 Fla. App. 4946, 19 Fla. L. Weekly D 1156.

WHEREFORE, this defendant requests the court dismiss the Plaintiffs complaint with prejudice; alternatively order the Plaintiff to add the owner and holder of the subject mortgage as an indispensable party to this foreclosure action, and award this defendant attorneys fees and all other relief to which this defendant proves herself entitled.

CERTIFICATE OF SERVICE

The undersigned certifies that a true copy of this document has been mailed to [Attorney for Plaintiff] by U.S. Mail and faxed to them at [Fax number] this ___ day of November, 2004.

JACKSONVILLE AREA LEGAL AID, INC.,

_______________________________________ [Attorneys for Separate Defendant] Attorneys for Separate Defendant

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2.3

Memoranda in Support of Motions to Dismiss Foreclosure

2.3.1 Memorandum in Support of Motion to Dismiss, Case #4


IN THE CIRCUIT COURT, FOURTH JUDICIAL CIRCUIT, IN AND FOR DUVAL COUNTY, FLORIDA. CASE NO.: DIVISION: MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., Plaintiff, vs. [DEFENDANT], DECEASED, ET AL Defendants.

SEPARATE DEFENDANT, [SEPARATE DEFENDANT]S MOTION TO CANCEL SUMMARY JUDGMENT HEARING, DISMISS PLAINTIFFS COMPLAINT, OR IN THE ALTERNATIVE, MOTION FOR MORE DEFINITE STATEMENT The Separate Defendant, [Separate Defendant],by and though her undersigned attorney, files this motion to cancel the summary judgment hearing, and dismiss the Plaintiffs Complaint for failure to join an indispensable party, or in the alternative, for more definite statement, pursuant to Rules 1.460, 1.210(a), 1.130(a) and 1.140(b)(7) of the Florida Rules of Civil Procedure and states: 1. This defendant was not able to access legal representation prior to her contact with Attorney [Attorney for Defendant] of Jacksonville Area Legal Aid, Inc., on February 23, 2. This separate defendant was served with a summons and complaint in this foreclosure action on January 1, 2005 and she was noticed for the February 24, 2005 summary judgment hearing on January 24, 2005. 3. Counsel for Defendant has made known to Plaintiffs attorney this request for continuance of the scheduled hearing so that this defendant is able to have the benefit of legal representation to defend and protect her interests in this residential foreclosure. However, counsel for plaintiff advises that he does not have authority without further contact with the plaintiff to consent to such continuance. 5. No prejudice will result to Plaintiff because of this Motion for Continuance.

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WHEREFORE, for the above stated reasons, Defendants request that the Court grant a continuance of the hearing on the Plaintiffs Motion for Summary Final Judgment.

MOTION TO DISMISS PLAINTIFFS COMPLAINT, OR IN THE ALTERNATIVE, MOTION FOR MORE DEFINITE STATEMENT

1. This separate defendant is the owner of the property which is the subject of this mortgage foreclosure Complaint. She requests the Court dismiss this action pursuant to Rule 1.210(a) and 1.140(7), because it appears on the face of the Complaint that a person other than the Plaintiff is the true owner of the claim sued upon and that the Plaintiff is not the real party in interest and is not shown to be authorized to bring this action. In re: Shelter Development Group, Inc., 50 B.R. 588 (Bankr.S.D.Fla. 1985) [It is axiomatic that a suit cannot be prosecuted to foreclose a mortgage which secures the payment of a promissory note, unless the Plaintiff actually holds the original note, citing Downing v. First National Bank of Lake City, 81 So.2d 486 (Fla. 1955)], See also 37 Fla. Jur. Mortgages and Deeds of Trust 240 (One who does not have the ownership, possession, or the right to possession of the mortgage and the obligation secured by it, may not foreclose the mortgage) 2. Fla.R.Civ.P. Rule 1.130(a) requires a Plaintiff to attach copies of all bonds,

notes, bills of exchange, contracts, accounts, or documents upon which action may be brought to its complaint. The plaintiff has failed to attach a copy of the Promissory Note upon which its claim is based and the assignment attached to plaintiffs complaint is only an assignment of the mortgage and not the note. The assignment attached to the plaintiffs complaint conflicts with the allegation in paragraph 3 of the plaintiffs complaint which alleges that the assignment is of the mortgage and the promissory note. . 3. Fla.R.Civ.P. Rule 1.310(b) provides that all exhibits attached to a pleading shall

be considered a part of the pleading for all purposes. It appears on the face of MERS Complaint that it is not the proper party to bring this action based upon recitation in the mortgage that the lender and the

31

4. Further, although the plaintiff names itself in the complaint as Mortgage Electronic Registration Systems, Inc., as Nominee For Homecomings Financial Network, Inc. the documents attached to the plaintiffs complaint conflict and therefore cancel out said allegations. 5. In this case, MERS allegations of material facts claiming it is the owner of the

subject note are inconsistent with the documents attached to the Complaint. Further, MERS has alleged it does not have the original promissory note. When exhibits are inconsistent with the plaintiffs allegations of material fact as to who the real party in interest is, such allegations cancel each other out. Fladell v. Palm Beach County Canvassing Board, 772 So.2d 1240 (Fla. 2000); Greenwald v. Triple D Properties, Inc., 424 So. 2d 185, 187 (Fla. 4th DCA 1983); Costa Bella Development Corp. v. Costa Development Corp., 441 So. 2d 1114 (Fla. 3rd DCA 1983). 6. Rule 1.210(a) of the Florida Rules of Civil Procedure provides, in pertinent part: Every action may be prosecuted in the name of the real party in interest, but a personal representative, administrator, guardian, trustee of an express trust, a party with whom or in whose name a contract has been made for the benefit of another, or a party expressly authorized by statute may sue in that persons own name without joining the party for whose benefit the action is brought... The plaintiff in this action meets none of these criteria. 7. The plaintiff must allege that it is the owner and holder of the note and mortgage in question in order to be entitled to maintain an action on the note and mortgage which the plaintiff has not properly alleged in this case. Your Construction Center, Inc. v. Gross, 316 So. 2d 596 (Fl. 4th DCA 1975) 8. Plaintiff Mortgage Electronic Registration Systems, Inc. (MERS) does not have standing to pursue this action. Standing depends on whether a party has a sufficient stake in a justiciable controversy, whether a legally cognizable interest would be affected by the outcome of the litigation. Nedeau v Gallagher 851 So.2d 214, 2003 Fla. App. LEXIS 9762, 28 Fla. L. Weekly D 1537 (1st District, 2003). 9. Standing encompasses not only the sufficient stake definition, but at the at least equally important requirement that the claim be brought by or on behalf of one who is recognized by the law and a real party in interest, that is the person in whom rests, by substantive law, the claim sought to be enforced. Kumar Corp. v Nopal Lines, Ltd, et al 462 So.

32

2d 1178, 1985 Fla.App. LEXIS 11940.41U.C.C. Rep. Serv. (Callaghan) 69; 10 Fla. L. Weekly 189 (3rd District1985). 10. It is axiomatic that a suit cannot be prosecuted to foreclose a mortgage which secures the payment of a promissory note, unless the Plaintiff actually holds the original note. A Plaintiff that does not hold the original notes sued has no standing and such action must be dismissed with prejudice Shelter Development Group v. MMA of Georgia, Inc 50 B.R. 588 (USBC, S.D. Florida 1985) Downing v. First National Bank of Lake City, , 81 So. 2d 486, (Fla., 1955) Tamiami Abstract and Title Company v. Berman, 324 So. 2d 137 (Fla 3rd DCA> 1975) Laing v. Gainey Builders, Inc. 184 So. 2d 897 (Fla. 1st DCA 1966). See also Davanzo v. Resolute Insurance Company, et al. 346 So.2d 1227, 1977 Fla.App. LEXIS 16014 (One who holds legal title to a mortgaged property is an indispensable party in suit to foreclose a mortgage).

WHEREFORE, this separate defendant requests the Court to dismiss the Plaintiffs complaint with prejudice; or alternatively to order the Plaintiff to add the owner and holder of the subject note and mortgage as an indispensable party to this foreclosure action, and award this defendant attorneys fees and all other relief to which she proves herself entitled.

CERTIFICATE OF SERVICE The undersigned certifies that a true copy of this document has been faxed and mailed by U.S. Mail to [Attorney for Plaintiff] this _______________________________. JACKSONVILLE AREA LEGAL AID, INC.,

______________________________________ [Attorney for Separate Defendant] Attorneys for Separate Defendant

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2.3.2 Reply Memorandum in Support of Motion to Dismiss, Case #5


IN THE CIRCUIT COURT, FOURTH JUDICIAL CIRCUIT, IN AND FOR DUVAL COUNTY, FLORIDA. CASE NO.: DIVISION:

MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., Plaintiff, vs. [DEFENDANT], et al. Defendants.

DEFENDANTS RESPONSE TO PLAINTIFFS REPLY TO DEFENDANTS SUPPLEMENT TO AMENDED MOTION TO DISMISS Defendant, [Defendant], through his undersigned attorney, files this response to Plaintiffs reply to his supplement to amended motion to dismiss to address matters not previously addressed prior memoranda and says: 1. Florida Rule 1.210(a) of the Florida Rules of Civil Procedure governs who can

maintain a suit on a note and mortgage and provides, in pertinent part: Every action may be prosecuted in the name of the real party in interest, but a personal representative, administrator, guardian, trustee of an express trust, a party with whom or in whose name a contract has been made for the benefit of another, or a party expressly authorized by statute may sue in that persons own name without joining the party for whose benefit the action is brought...

2.

The plaintiff in this action meets none of these criteria and has no standing to bring

the subject action. Standing depends on whether a party has a sufficient stake in a justiciable

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controversy, whether a legally cognizable interest would be affected by the outcome of the litigation. Nedeau v Gallagher 851 So.2d 214, (Fla. 1st DCA 2003). 3. Standing encompasses not only the sufficient stake definition, but at the at least

equally important requirement that the claim be brought by or on behalf of one who is recognized by the law and a real party in interest, that is the person in whom rests, by substantive law, the claim sought to be enforced. Kumar Corp. v Nopal Lines, Ltd, et al, 462 So. 2d 1178, (Fla. 3rd DCA 1984). 4. A lawsuit cannot be prosecuted to foreclose a mortgage which secures the payment of

a promissory note, unless the Plaintiff actually holds the original note. A plaintiff that does not hold the original notes sued has no standing and such action must be dismissed with prejudice Shelter Development Group v. MMA of Georgia, Inc 50 B.R. 588 (S.D. Florida 1985) Downing v. First National Bank of Lake City, , 81 So. 2d 486, (Fla., 1955) Tamiami Abstract and Title Company v. Berman, 324 So. 2d 137 (Fla 3rd DCA1975) Laing v. Gainey Builders, Inc. 184 So. 2d 897 (Fla. 1st DCA 1966). See also Davanzo v. Resolute Insurance Company, et al. 346 So.2d 1227, (Fla. 3rd 977). (One who holds legal title to a mortgaged property is an indispensable party in suit to foreclose a mortgage). 5. MERS is not the owner or the holder of the subject note which was originally payable

to Aegis Funding Corporation and, based upon documents filed by the Plaintiff, later assigned to Aegis Mortgage Company. The Security Instrument secures the Lender not MERS. All obligations under the terms of the mortgage are payable to the Lender listed as Aegis Funding Corporation. See for further example paragraphs E, N, and Uniform Covenants. 6. Plaintiffs reliance on Overseas Development, Inc. v. R.A. Krause, 323 So.2d 679

(Fl. 3rd DCA 1975) is misplaced as in Overseas Development, the plaintiff was an investment

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trust organized and existing under the laws of Massachusetts and the trust itself was the named payee on the indebtedness that was the subject of the foreclosure. The Overseas Development Court held that a trustee of a business trust organized and existing under another states laws can be the real party in interest entitled to pursue a foreclosure of a note when the trust is the named payee on the note. Plaintiffs argument that Defendant knew that MERS was nominee has no bearing on the issue of standing as his knowledge does not impart standing upon MERS. See also Corcoran v. Brody, 347 So. 2d 689 (Fl. 4th DCA 1977) (holding a business trust organized under another states laws and qualified as a trust under F.S. Chapter 609 is the real party in interest entitled to pursue a foreclosure of a note and mortgage payable to the trust.) 7. The mortgage provides that MERS holds only legal title to the interests granted by

the Borrower in the Security Agreement. However, this language is inconsistent with Florida law and the terms of the note and the above-referenced terms of the mortgage. WHEREFORE, this Defendant requests the court grant his amended motion to dismiss/alternatively to make more definite and certain and award this Defendant attorneys fees and all other relief to which this Defendant proves himself entitled. CERTIFICATE OF SERVICE I hereby certify that a copy of the foregoing has been forwarded by fax at [Fax no.] and by U.S. Mail to [Attorney for Plaintiff] this ___ day of March, 2005.

JACKSONVILLE AREA LEGAL AID, INC. Counsel for [Defendant]

By:____________________________ [Attorney for Defendant]

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2.4

Order of Dismissal
IN THE CIRCUIT COURT, FOURTH JUDICIAL CIRCUIT, IN AND FOR DUVAL COUNTY, FLORIDA GENERAL JURISDICTIONAL DIVISION CASE NO.: Division

MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., Plaintiff, vs. [Defendant], et al., Defendants. ________________________________/ ORDER OF DISMISSAL Now on this 28th day of March, 2005, came on for hearing the separate defendant, [Defendant]s motion to dismiss the plaintiffs complaint, and the court, upon argument of counsel, review of the record and being sufficiently advised in the premises, finds: 1. Upon agreement of the parties, the promissory note filed by the plaintiff subsequent to the commencement of this action is deemed a part of the plaintiffs complaint. 2. In Florida, the prosecution of a foreclosure action must be by the owner and holder of the mortgage and the promissory note. Rule 1.210(a) of the Florida Rules of Civil Procedure provides, in pertinent part: Every action may be prosecuted in the name of the real party in interest, but a personal representative, administrator, guardian, trustee of an express trust, a party with whom or in whose name a contract has been made for the benefit of another, or a party expressly authorized by statute may sue in that persons own name without joining the party for whose benefit the action is brought... 3. A foreclosure action must be brought by or on behalf of one who is recognized by the law as the real party in interest, that is the person in whom rests, by substantive law, the claim sought to be enforced. Kumar Corp. v Nopal Lines, Ltd, et al, 462 So. 2d 1178, (Fla. 3rd DCA 1984).

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4. In this case, the complaint and mortgage identify the plaintiff as the holder of the mortgage as a nominee for the owner of the note. The complaint also identifies the plaintiff as the owner of the note, but the promissory note identifies the owner of the note as Taylor, Bean & Whitaker Mortgage Corp, not the plaintiff. As a result, an inconsistency exists between the plaintiffs allegations of material fact in its complaint and the promissory note as to who the real party in interest is and therefore such allegations cancel each other out. Greenwald v. Triple D Properties, Inc., 424 So. 2d 185, 187 (Fla. 4th DCA 1983); Costa Bella Development Corp. v. Costa Development Corp., 441 So. 2d 1114 (Fla. 3rd DCA 1983) In this case, the plaintiff did

not attach a copy of the Promissory Note to the complaint: the assignment attached to the complaint is an assignment of the mortgage only and the plaintiff names itself in the complaint as Mortgage Electronic Registration Systems, Inc., as Nominee for Homecomings Financial Network, Inc. but the lender is identified in the mortgage as Oak Street Mortgage L.L.C. As a result, an inconsistency and a conflict exists between the plaintiffs allegations of material fact in its complaint and the documents attached thereto as to who the real party in interest is and therefore such allegations cancel each other out. Fladell v. Palm Beach County Canvassing Board, 772 So.2d 1240 (Fla. 2000); Greenwald v. Triple D Properties, Inc., 424 So.2d 185, 187 (Fla. App. 1983); Costa Bella Development Corp. v. Costa Development Corp., 441 So.2d 1114 (Fla. App. 1983). 5. The allegations in the plaintiffs complaint fail to identify any nexus between the plaintiff and the promissory note and as a result the plaintiff lacks standing to pursue this residential foreclosure action.

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THEREFORE, the separate defendant [Defendant]s motion to dismiss the plaintiffs complaint is granted; the plaintiffs complaint is dismissed without prejudice and the plaintiff is granted leave to file an amended complaint within 30 days of the date of this order.

IT IS SO ORDERED THIS _____DAY OF _____________________, 2005.

________________________________ Hugh A. Carithers, Jr., Circuit Judge

Copies provided to: David Thorpe, attorney for plaintiff [Attorney for Defendant], attorney for separate defendant, [Defendant] Warren A. Zimmerman, asst. U.S. Attorney

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