Daniel Pennell Explains why MERS is Completely out of Control
By Daniel Edstrom
DTC Systems, Inc.
Daniel Pennell has the following qualifications:
- Certified Lean Six Sigma (Process & Quality Control)
- Certified Technical Program & Risk Manager
- Former investment advisor and insurance broker
- 16 Years designing and automating & business processes in regulated environments
- Florida State Supreme Court
- Florida 20th & 6th Judicial Circuits
- Chubb Insurance
- Other State, Federal and Fortune 500 clients
Mr. Pennell goes on to give a professional analysis of the Frankenstein (MERS) process. Which can only be described as completely out of control. It is of significance to note that the very entities that created and brought forth Frankenstein are governed by the Office of the Comptroller of the Currency. It is just as important to note that Frankenstein is NOT governed by the Office of the Comptroller of the Currency, nor governed by federal, state or county land recordation laws. The OCC requires that national banks have “effective risk management procedures and internal controls to conduct the activities safely and soundly.” It is apparent to everyone except OCC that this is not and has not been the case (i.e. rampant industry standards of notary violations, no personal knowledge, forgery, perjury, etc). It is also apparent that the national banks are using other entities such as Frankenstein and foreclosure mills such as the Stern Law Firm and Dolan Media (NDEx West) to perpetuate these activities. Dolan Media specifically states to their investors they are proudly not involved in the robo-signing fiasco (notary violations, no personal knowledge, forgery, etc). If Mr. Pennell did an analysis of the shoddy work done by Dolan Media he would find that they give Frankenstein a run for its money. What I want to emphasize though is that Frankenstein, because of the very nature of its work, is required to have “effective risk management procedures and internal controls to conduct activities safely and soundly.” But this was the OPPOSITE of the INTENT of the parties when they created this monster in their laboratories. I can still hear the echos of their diabolical laughter. As a side note, see Fred Smith explain why Frankenstein (MERS) was involved: http://livinglies.wordpress.com/2011/01/23/fred-smith-explains-why-mers-was-involved-multiple-securitizations/
Mr. Pennell’s analysis is right on the money. Look at what he brings up from MERS own website:
- MERS makes no representations or warranties regarding the accuracy or reliability of the information provided
- Users of this information have the responsibility to verify the accuracy, currency and completeness of the information
- The information does not constitute the official legal record and is for informational purposes only
Mr. Pennell is also right on the money when he says MERS will likely die on the vine.
By the way, rumor has it that R.K. Arnold is leaving MERS: http://www.scribd.com/doc/47342546/MERS-CEO-to-Leave-Company-WSJ
So who cares if these internal controls are “out of control?” What does that mean to me? Well, you might care if you knew that the OCC says that when national banks do not have the appropriate risk management in place or if they don’t have adequate internal controls in place they are operating ultra vires. This means without capacity. In otherwords, actions performed ultra vires, or which exceed one’s powers can be illegal. It is my contention that the entire servicing and foreclosure of securitized loans exceeds the national banks charters (their authority). It is also my contention that national banks acting as trustees of securitized trusts exceed the national banks charter (their authority). This is because the banks are acting to as a guaranty and/or surety by taking on the responsibility of being required and obligated to make payments on homeowners loans. Banks can only act as a guaranty or surety, or otherwise lend their credit when they have the following (according to the OCC):
- A substantial interest in the transaction
- Internal controls and risk measurement procedures relative to the complexity and sophistication of the underlying transaction
Without having a substantial interest in the transaction and adequate internal controls and risk measurement procedures in place, the national banks are operating ultra vires (again, according to the OCC). Remember that the laws were changed to allow national banks to lend their credit, act as a guaranty or bind themselves as a surety, subject to the above requirements of the OCC (12 CFR Section 7.1017). What does this mean? I say the following applies to national banks which are acting ultra vires:
- “A bank may not lend its credit to another even though such a transaction turns out to have been of benefit to the bank, and in support of this a list of cases might be cited, which-would look like a catalog of ships.” [Emphasis added] Norton Grocery Co. v. Peoples Nat. Bank, 144 SE 505. 151 Va 195.
- “In the federal courts, it is well established that a national bank has not power to lend its credit to another by becoming surety, indorser, or guarantor for him.”’ Farmers and Miners Bank v. Bluefield Nat ‘l Bank, 11 F 2d 83, 271 U.S. 669.
- “The doctrine of ultra vires is a most powerful weapon to keep private corporations within their legitimate spheres and to punish them for violations of their corporate charters, and it probably is not invoked too often…. Zinc Carbonate Co. v. First National Bank, 103 Wis 125, 79 NW 229. American Express Co. v. Citizens State Bank, 194 NW 430.
- “It has been settled beyond controversy that a national bank, under federal Law being limited in its powers and capacity, cannot lend its credit by guaranteeing the debts of another. All such contracts entered into by its officers are ultra vires . . .” Howard & Foster Co. v. Citizens Nat’l Bank of Union, 133 SC 202, 130 SE 759(1926).
- “A promise to pay cannot, by argument, however ingenious, be made the equivalent of actual payment..” Christensen v. Beebe, 91 P 133, 32 Utah 406.
- “Any false representation of material facts made with knowledge of falsity and with intent that it shall be acted on by another in entering into contract, and which is so acted upon, constitutes ‘fraud,’ and entitles party deceived to avoid contract or recover damages.” Barnsdall Refining Corn, v. Birnam Wood Oil Co., 92 F 26 817.
- “Any conduct capable of being turned into a statement of fact is representation. There is no distinction between misrepresentations effected by words and misrepresentations effected by other acts.” Leonard v. Springer 197 Ill 532.64 NE 301.
- “If any part of the consideration for a promise be illegal, or if there are several considerations for an unseverable promise, one of which is illegal, the promise, whether written or oral, is wholly void, as it is impossible to say what part or which one of the considerations induced the promise.” Menominee River Co. v. Augustus Spies L and C Co., 147 Wis 559.572; 132 NW 1122.
- “The contract is void if it is only in part connected with the illegal transaction and the promise single or entire.” Guardian Agency v. Guardian Mut. Savings Bank, 227 Wis 550, 279 NW 83.
- “It is not necessary for rescission of a contract that the party making the misrepresentation should have known that it was false, but recovery is allowed even though misrepresentation is innocently made, because it would be unjust to allow one who made false representations, even innocently, to retain the fruits of a bargain induced by such representations.” Whipp v. Iverson, 43 Wis 2d 166.
The end is near indeed.
You can view Daniel Pennell’s presentation to the Virginia House of Delegates here: http://www.scribd.com/doc/47394379/VA-House-Presentation-HB-1506-by-Daniel-Pennell
For the OCC’s views of national banks acting as a guaranty, surety or lending their credit, see the OCC’s September 7, 2004 Interprative Letter 1010: http://dtc-systems.net/wp-content/uploads/2011/01/OCC_Interpretive_Letter_1010.pdf
For an analysis of Interpretive Letter 1010, read this article from 5/19/2005: http://www.mofo.com/pubs/xpqPublicationDetail.aspx?xpST=PubDetail&pub=7056
To understand why the OCC says that the Trustee’s of securitized trusts do not own the loans: http://dtc-systems.net/wp-content/uploads/2011/01/OCC_Letter-BanksDontOwnLoans.pdf