The Deed of Trust (DOT) we signed when we purchased our home was prepared by RPM Mortgage, then in Walnut Creek, CA,  on behalf of Najarian Loans (NL) who is the lender on the mortgage note. The DOT is one of those MERS specials, where NL is identified as the lender, but “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.” I thought the lender was the beneficiary!? No matter. Section 25 of the DOT memorializes the obligation that the “lender may collect a fee not to exceed the maximum amount permitted by Applicable Law for furnishing the statement of obligation as provided by Section 2943 of the Civil Code of California.” Civil Code section 2943 requires “a beneficiary, or his or her authorized agent, shall, within 21 days of the receipt of a written demand by an entitled person or his or her authorized agent, prepare and deliver to the person demanding it a true, correct, and complete copy of the note or other evidence of indebtedness with any modification thereto, and a beneficiary statement.”

So on March 5, 2013 we sent Najarian Loans a letter requesting a beneficiary statement as required by the contact that is the DOT, and State law. We received a somewhat testy response from the attorney for NL and RPM saying

This office is in receipt of your correspondence dated March 5,2013, to Najarian Loans, lnc. in which you request a “Beneficiary Statement.” Additionally, this office is aware that on March 7,2013, you filed a Notice of Appeal regarding the Court’s dismissal of your Complaint against NL Inc. (f/k/a Najarian Loans Inc.), among others. In light of this latest action we must demand that you cease further attempts to contact any of our clients involved in that litigation. Any future requests to our clients are to come to this office in writing.

With regard to your March 5, 2013, request for a ‘Beneficiary Statement,’ we note that pursuant to Cal. Civil Code $ 2943(a)(1), a “Beneficiary” is defined as “a mortgagee or beneficiary of a mortgage or deed of trust, or his or her assignees.” Neither Najarian Loans, Inc. nor RPM Mortgage, Inc. falls under this definition: On May 26,2005, your loan, in its entirety, was assigned/transferred/sold to Countrywide Home Loans, now Bank of America. Therefore, any request for a Beneficiary Statement will need to be made to Bank of America, as our client does not have the information that you request.

While it is correct that we were told the servicing of the Note had been transferred to Countrywide, we never received any notice of who the Note was sold to. Our Declaratory Relief cause of action requests the identity of the current owner of the Note, as designated by proper assignments or allonges. So far all the defendants are adamantly opposed to providing us this information, and continually demurrer to the cause of action claiming there is no reason they should have to prove who owns the Note.

What makes this refusal all the more noteworthy, is that beginning January 1, 2011 new federal regulations (§226.39 of Regulation Z implementing the Truth in Lending Act) requires this exact disclosure whenever a mortgage loan is sold or transferred.

We have a contract (DOT) that says Najarian Loans is responsible for providing a “Beneficiary Statement.” As documented in my previous post, we have tried to determine who owns the Note, and MERS and Bank of America still provide conflicting information. And those who know, claim they should not have to tell us who owns the Note.

It’s tough to fulfill the terms of a contract when you do not know who the contract is with.

Many of those fighting foreclosure have been arguing that no one knows who owns their mortgage note, and they have tried to use this argument as a defense in foreclosure actions. Here in California, the courts have shown this argument no love at all. You owe, you have not paid, end of story. Who owns the mortgage is irrelevant. Unfortunately, in our situation, where we have never missed a mortgage payment, the issue has more complexity. We should be able to contact the note holder and inform them that there was fraud in the origination of the mortgage. So far in our case the court does not care.

Aurora Bank on July 18, 2011

When we obtained the loan in 2005, it was with Najarian Loans located in Alamo, California. Section 8 of the Mortgage Note provides in part “[u]nless the Note Holder requires a different method, any notice that must be given to the Note Holder under this Note must be given by mailing it by first class mail to the Note Holder at the address stated in Section 3(A) above or at a different address if I am given a notice of that different address.” Section 3(A) lists the address for Najarian Loans in Alamo.

The Note was sold by Najarian in 2005 shortly after it was signed to an unknown party, and we were told Countrywide was taking over the servicing. After we filed our lawsuit in February 2012 we learned that the Note might have become part of a securitized trust put together by Lehman Brothers called Structured Adjustable Rate Mortgage Loan Trust Mortgage Pass-Through Certificates, Series 2005-15 (Trust). If the Note was securitized and placed in the Trust, the Trust agreement required that the Note be placed in the Trust no later than June 30, 2005.

Who owns our Note was a bit irrelevant until 2009 when we tried to get refinancing or modification of our mortgage. By this time Bank of America (BAC) had bought out the corrupt floundering carcass of Countrywide and assumed the servicing of our mortgage. Initially, BAC Home Loans Servicing LP, a subsidiary of BAC was the servicer. In 2011 BAC Home Loans Servicing LP was merged back into BAC and they did away with the charade of the separate home loan servicing branch.

In July 2009 I phoned and spoke with the Foreclosure Department of BAC and inquired as to possible modification of the Note. BAC told me that the Note was in review and there would be a response in 60 to 90 days. Having not heard back from BAC, on December 9, 2009, I called BAC and spoke with Kevin Mohrman who stated that BAC currently put a value of $184,000 on the Property, while we still owed almost $350,000 on the Note. The following day I again called BAC and the Default Prevention office informed me that the investor on the Note was Aurora MSF Lehman. I was transferred to Jessica Wedell in the Home Retention office who could not, or would not identify the investor on the Note and reiterated that BAC is only the servicer of the Note, not the investor. After much running around BAC refused to work with us because we were so far underwater. BAC did say we could get a refinance if we put enough cash into the deal to bring the loan amount down to 80 percent of their appraised value, which was definitely a low ball appraisal. This meant to get refinanced, we would have needed to bring about $200,000 cash to the deal and be left with roughly a $150,000 mortgage.

On May 6, 2010 I spoke with Raymond Rinn in Loan Modification at BAC. Mr. Rinn refused to identify the investor on the Note and said BAC would send a modification proposal. As a part of that conversation Mr. Rinn told me that we should not make a payment on the Note for the month of May 2010, and that the May 2010 payment would be rolled into the modification. On May 14, 2010 BAC sent us a proposed Loan Modification Agreement (Modification), including the addition of the May 2010 mortgage payment to the principal on the Note. We had made the May 2010 payment on the Note prior to receiving the proposed Modification because the payment was due by May 15, 2010.  The proposed Modification included the designation of BAC Home Loans Servicing LP as the lender on the Note. The obvious question at this point was how could BAC be the lender on the Modification when they don’t know who owns the Note?

Raymond Rinn from BAC called me on June 3, 2010 and stated that the offer on the Modification had only been open until May 23, 2010, but that they would leave it open until June 3 to allow the opportunity to sign it. I asked Mr. Rinn if BAC was the lender, and again he reiterated that BAC was not the lender but would not explain why BAC was listed as the lender on the proposed Modification. No way we were signing that Modification.

After the wait we tried again and on May 13, 2011 we faxed BAC a letter requesting “the name, address and phone number of the bank or investor that currently owns my mortgage.”

Part of the response BAC sent to us was a copy of the loan history statement for the Note. The loan history show only one “Investor Payment” since the history was started on May 27, 2005. The single “Investor Payment” occurred on June 30, 2005 when the servicing of the Note was transferred to Countrywide, and the investor on the Note was changed to an unknown entity.  We assume the one payment went to either Najarian Loans or Countrywide. This did not explain who had been getting the“Investor Payments” in the following six years.

The Customer Service Department of BAC sent a letter dated June 15, 2011 stating that “the owner of this loan is Aurora MSF Lehman, whose address is 10350 Park Meadows Dr., Littleton, CO 80124. Bank of America services the loan on behalf of the owner.” We were vacationing in Colorado the next month, so on July 18, 2011 I drove to the address in Littleton Colorado where BAC claimed Aurora MSF Lehman was located. The building  holds the offices of Aurora Bank. When I went in and inquired as to the location of the Aurora MSF Lehman offices I was informed they were not at that location and no one there could provide me with the location of the offices. So on July 25, 2011 we faxed a letter to BAC once again asking for the identity of the owner of the Note. The letter explained that I had visited the offices of Aurora Bank in Littleton, Colorado on July 18, 2011 and that Aurora MSF Lehman was not located at that address.

Where is Aurora MSF Lehman?

A Statement of Reservation of Name for Aurora MSF Lehman was filed with the Colorado Secretary of State on August 6, 2011and was registered to Melvin Eugene Olsen in Lindon, Utah. BAC sent a letter on August 17, 2011 saying “the owner of this loan is Aurora MSF Lehman, whose address is 10350 Park Meadows Dr. Littleton, CO 80124. Bank of America services the loan on behalf of the owner.” We followed that with another letter on August 30, 2011 again asking BAC for the identity of the owner of the Note. On September 2, 2011 I spoke by telephone with Customer Service representative “Devin” at BAC who again reiterated that Aurora MSF Lehman was the owner of the Note.

The infamous Mortgage Electronic Registration System (MERS) has a MERS Servicer Identification System that lets a borrower obtain the identity of their mortgage servicer and the investor on the note. The MERS System information available on September 8, 2011 showed the investor on the Note as Lehman Brothers Holdings, Inc. Subsequently, we accessed the online MERS System seven times up to July 6, 2012, and in each case the MERS system showed Lehman Brothers Holdings, Inc. as the investor on the Note.

September 11, 2011 we sent another follow-up letter to BAC again asking BAC “[w]hat is the name, address, and phone number of the bank/note holder/investor/lender” for the mortgage. This letter pointed out that the MERS system showed the investor on the Note as Lehman Brothers Holdings, Inc.

I response the Customer Service Department at BAC sent us a letter dated September 20, 2011 declaring that the investor on the Note was Aurora Bank, 10350 Park Meadows Drive, Littleton, CO 80124.  On September 27, 2011 the MERS system showed the investor as Lehman Brothers Holdings, Inc. which of course was followed by BAC sending us a letter dated September 29, 2011 advising “that the owner of this loan is Aurora MSF Lehman; a Lehman Brothers Co.” The address for Aurora MSF Lehman is identified as 10350 Park Meadows Drive, Littleton, CO 80124.

BAC’s October 7, 2011 letter to us declared that “the owner of the loan is Wells Fargo Bank, NA, whose address is 9062 Old Annapolis Road, Columbia, MD 21045. Bank of America services the loan on behalf of the owner.”

BAC and Wells Fargo each signed a Consent Judgment in April 2012 as part of the National Mortgage Settlement. Exhibit “A” to the Consent Judgment is the “Settlement Term Sheet” that includes BAC’s and Wells Fargo’s commitment to ensure note holders can be identified. Page A-8 of the “Settlement Term Sheet” requires that “[s]ervicer shall implement processes to ensure that Servicer or the foreclosing entity has a documented enforceable interest in the promissory note and mortgage (or deed of trust) under applicable state law, or is otherwise a proper party to the foreclosure action.”

On March 22, 2012 Wells Fargo Bank filed a demurrer in our case alleging that “Wells Fargo Bank, as trustee on behalf of Structured Adjustable Rate Mortgage Loan Trust Mortgage Pass-Through Certificates, Series 2005-15 (erroneously sued as ‘WELLS FARGO BANK. N.A.’)” is the investor on the Note. Wells Fargo was now claiming they did not own the note, but were only the trustee for the Trust.

In July 2012 we sent another letter to BAC asking for the identity of the investor and the July 31, 2012 response identified the Investor as Wells Fargo Bank, N.A., 9062 Old Annapolis Road, Columbia, MD 21045 and a phone number of (443) 367-2897. When we accessed the MERS system shortly after receiving the letter it once again showed the investor on the Note to be Lehman Brothers Holdings, Inc. Finally on September 17, 2012 the MERS system showed the investor on the Note as Wells Fargo as trustee. So after almost three years of trying we still have a disagreement about who owns the Note. Is it Wells Fargo Bank or the Trust? If it is the Trust, BAC has no idea, and it Wells Fargo Bank owns the Note, Wells Fargo does not know it. And if MERS is right that Wells Fargo as trustee is the investor, then the trustee for what trust?

In February 2012 the Office of the San Francisco Assessor-Recorder release a report Foreclosure in California, A Crisis of Compliance that detailed reviews of foreclosures in the County of San Francisco. The report found that “[i]nvestor information was available from the MERS database on 192 of the 382 subject loans. The investigation resulted in 112 loans whereby the beneficiary as entered on the Trustee’s Deed upon Sale conflicted with the investor information present on the MERS database. This is a 58% failure rate.”

The final part of this story comes from the case of Bain v. MERS in the State of Washington, that was heard by the Washington Supreme Court. In the video below, shortly after the 11:00 mark the attorney for Bain explains that after three and a half years they still do not know who owns the note. Following that, around the 22:00 mark the attorney for MERS could not identify the holder of the Note even after being directly asked by one of the justices.

In researching the Trust that might be the note holder for our Note I came across this provision in the Prospectus: “Certain documentation with respect to some Mortgage Loans, including in some cases, the related Mortgage Note, Mortgage or title insurance policy, is unavailable. Except as otherwise noted below, the Seller will make only limited representations and warranties with respect to the Mortgage Loans.” This was not the only securitized trust with this language in its prospectus.

Come on. This means these trusts were buying assets that were not assets. If you do not have the original mortgage note, you have nothing. Where are the government regulators?

In an upcoming post we will explain how BAC could become the lender on the note. As you might expect, it is sleazy.