How to negotiate a mortgage loan modification with your lender?


[This is a guest post by Peter Harper, Marketing Head & Editor Chicago, Illinois - 60607, USA
Phone : 916-745-8161
Skype name : peterharper99
mail : peterharper99@gmail.com]

The last thing any homeowner may want is losing his home to a forced foreclosure. It is mostly seen that when a homeowner is struggling with his mortgage payments, he thinks of walking away from his mortgage loan by selling off his home through a short sale process. However, this is not the way to act in the present economic condition. Since there are ways like mortgage modification through which you can easily repay the present mortgage loan, you must take some important steps to initiate the entire process and make sure that you complete the entire process with ease. Have a look at some important steps that you must take in order to start off the home loan modification process and end it according to your needs.

1.Get in touch with a housing counselor: The first step that you need to take is to get in touch with a housing counselor who can help you initiate the process and complete it with peace. The housing counselors are all much experienced than you and therefore you can easily get help from them if you want to make sure that your efforts don’t go in vain. Even if the mortgage lender denies your home loan modification request, if it is made by the housing counselor, it may happen that they won’t deny their request. Therefore, to be sure about a positive answer, seek the help of a counselor.

2.Write a mortgage hardship letter: The next step that you must take is to craft a legally binding loan modification letter where you have to mention the reason that is keeping you from making the monthly mortgage payments on time. When you approach a lender about a home loan modification, there are some people who lie about their hardship and just want to lower their payments due to their ease. Thus, they can easily come to know whether or not you’re actually going through a financial mess.

3.You must plan the entire process: There are many reasons to go for a home loan modification and you must find the exact reason for which you want to modify your home loan. If it is an interest rate drop, you should check whether or not the mortgage lender truly takes into account all the factors that can easily let him lower the interest rate on the mortgage loan. If you have some other intention, you must negotiate in that manner with your mortgage lender.

4.Show them a budget: When you modify your home loan, if you can show them that you have a budget ready following which you can make payments towards the loan, this will be a more authentic approach towards the loan. Craft a frugal budget where you can show them how you’re planning to manage all your unsecured and secured payments just after your home loan is modified. This will build the authenticity between you and your mortgage lender.

5.Have realistic expectations from your lender: You must have some realistic expectations from your lender so that you do not expect something huge and then get disheartened. As they agree to a home loan modification, it is most likely that they will want you to pay the most that you can according to your affordability. The best way is to agree on something from which both you and the lender can benefit.

Therefore, if you’re interested in taking out a mortgage modification, you must make sure that you take the steps mentioned above in order to initiate the process and end it up successfully. Make timely payments after the loan modification so as to save your home from a foreclosure.

Our Military Is Protected from Foreclosure under The Servicemen Act (SCRA)


We have been approached by few military families whose home were foreclosed while the owner were performing military services overseas. This is very painful, but unfortunately, it has been done and the homes were foreclosed in clear violation of the SCRA. In one case, our law office helped getting back garnished wages of a police officer back. Two mortgage servicing companies have agreed to settle federal complaints that they wrongfully foreclosed on the homes of at least 178 military service members and to set aside a minimum of $22 million to compensate those victims. This is a great victory for the Justice Department that various lenders had settled such cases. The lenders include, of course the notorious one i.e Countrywide Home Loan Servicing and Saxon Mortgage Services. These companies knowingly and repeatedly violated the Service members Civil Relief Act, a federal law that extends an array of financial and legal protections to military personnel. The former Countrywide unit agreed to pay $20 million to approximately 160 victims of illegal foreclosures from January 2006 to May 2009. It also agreed to reimburse victims of any other illegal military foreclosures found to have occurred from May 2009 to the end of last year.
NY Times has posted one such painful story of Sgt. James B. Hourley who was away on war duties in Iraq. In violation of a law intended to protect active military personnel from creditors, agents of Deutsche Bank foreclosed on his small Michigan house, forcing Sergeant Hurley’s wife, Brandie, and her two young children to move out and find shelter elsewhere.

“When the sergeant returned in December 2005, he drove past the densely wooded riverfront property outside Hartford, Mich. The peaceful little home was still there — winter birds still darted over the gazebo he had built near the water’s edge — but it almost certainly would never be his again. Less than two months before his return from the war, the bank’s agents sold the property to a buyer in Chicago for $76,000. Since then, Sergeant Hurley has been on an odyssey through the legal system, with little hope of a happy ending — indeed, the foreclosure that cost him his home may also cost him his marriage. ”Brandie took this very badly,” said Sergeant Hurley, 45, a plainspoken man who was disabled in Iraq and is now unemployed. ”We’re trying to piece it together.”

“In March 2009, a federal judge ruled that the bank’s foreclosure in 2004 violated federal law but the battle did not end there for Sergeant Hurley. Typically, banks respond quickly to public reports of errors affecting military families. But today, more than six years after the illegal foreclosure, Deutsche Bank Trust Company and its primary co-defendant, a Morgan Stanley subsidiary called Saxon Mortgage Services, are still in court disputing whether Sergeant Hurley is owed significant damages. Exhibits show that at least 100 other military mortgages are being serviced for Deutsche Bank, but it is not clear whether other service members have been affected by the policy that resulted in the Hurley foreclosure.”

In court papers, lawyers for Saxon and the bank assert the sergeant is entitled to recover no more than the fair market value of his lost home. His lawyers argue that the defendants should pay much more than that — including an award of punitive damages to deter big lenders from future violations of the law. The law is called the Service members Civil Relief Act, and it protects service members on active duty from many of the legal consequences of their forced absence.

We suggest as a foreclosure defense attorney, and working in this field for long time, we encourage any military family (living in Nevada) to ask our free legal help in this regard. We would not charge any money upfront from any such familiy AND EVEN ADVANCE COURT COST, if they have meritorious case while their loved one were performing military services overseas. Call us at (702) 270-9100 and even get a free consultation over the phone.

Can the economy revive without help to homeowners?


The homeowners are bleeding for long time and the scant help has given them no respite. The statistics are increasing and still Las Vegas is number one in foreclosure sale. None of the higher constitutional authorities had done any thorough probe in this matter. We hear lots of news but no solution so far. Only half-hearted measures had been taken and none of that has produced any tangible result to correct the rampant situation. Now, we have another fiasco and that is that the Standard and Poor’s has purposely overrated the toxic mortgage rating/securities before this financial fiasco erupted with full force. Yes, the same S&P which has decreased the rating on USA which resulted and still bleeding our markets by a descent of 1500 points so far.

We rather not say much about Congress as much has been said in the media. As usual we have assembly of incompetent, nincompoop, and do nothing people who like to come to the house, fight and then go to long vacation. As we know,tens of millions of Americans are continuously being crushed by this mortgage crisis. See for example, the stock of Bank of American. They had taken a big hit–some 10 billion loss only this years, and there stock price has been reduced to half the size. Yet, when it comes to loan modification, they resisted every request for loan modification. At least the homeowners were reaffirming the original debt. But BAC rather let it go to short sale for one third of the original loan, then give a reduced payments to the genuine, and hardprssed homeowners. We tried, we called several times, sent innumerable paperwork, and yet same annoying people gave us the same annoying news.

Obama administration has no mechanism to enforce, no accountability other than advice to bank to “do their best”. There were two other crook organization who thanks got are bankruptcy now i.e Freedie Mae and Fannie Mae. Banks took advantage of their idiocy and incompetence and made millions dumping bad securities upon them. Of course, there is no let up in sight. We have left with one thing, and that is reducing principle once for all. The reckless borrowers are no more on the horizons. Thus, this is good time to reward genuine homeowners. Also, we suggest to let the bankruptcy courts do the loan modification. Somehow they are already involved via chapter 13 this time.

Homeowners Needs Help–The Economy is Not Reviving


href=”http://www.nytimes.com/2011/08/22/opinion/homeowners-need-help.html?_r=1&hp”>

Nevada Mediation Rules Changed


The Supreme Court of Nevada has changed rules effective March 1, 2011.
Here is the set of new and amended rules.

http://www.nevadajudiciary.us/index.php/viewdocumentsandforms/func-startdown/5925/

How to bounce back after bankruptcy?


Can you bounce back after bankruptcy?
I have been asked many times what would be the life after bankruptcy and how the debtors can reestablish their credit again and acquire credit again. Of course, it would be difficult and time consuming, but it is not impossible. Soon after the discharge of bankruptcy, one start getting offers from credit card companies and a secured credit card is an ideal form for reestablishing credit. Actually, almost anyone can get credit soon after a bankruptcy. It’s just a matter of knowing how and what steps to take. Of course, bankruptcy deals a devastating blow to your credit and your credit score, the three-digit number lenders use to gauge your credit-worthiness. your FICO is at the bottom of scores, but you should not be discouraged by this devasating score. Of course, you can build it slowly and surely. But the effects don’t have to be lasting. Long before the bankruptcy drops off your credit report, you could be qualifying for loans with good rates and terms. I still consider FICO a fiction but it still runs your credit life, and all the lenders use this tool all the time. So, it is an important yardstick.

Nothing in credit remains forever. A bankruptcy legally can remain on your credit report for up to 10 years, but its effect on your credit score can start to diminish the day your case is closed — if you adopt responsible credit habits such as paying your bills on time, using only a small portion of your available credit and not applying for too much credit at once. Well, to start, one must learn some lesson, some financial education after declaring bankruptcy and devise a saner financial course. The days of wasteful expenditure should be gone forever and one must always learn new tools, education, train, or get a professional training to acquire more money. Of course, if you become wealthier, it may solve lots of your financial problems.

You may live on cash for quite some time and paying by cash is a good habit, but still one has to use credit. Afterall, we live in a credit society and we have to travle, hire a cab or rent a car and buy grocery sometime on credit cards. You have to get and use credit to build your credit score. But if you want to rebuild your credit score, you can’t sit on the sidelines.

Did you ever try to make a budget? Of course a written budge, and not something on whims only. No technical knowledge is required. Simply write one page all sources of your income and on the next page write faithfully all of your expenditure, and see why there is so much widespread deficit in both. Why can’t you balance the budget and live a healthy life.
Of course it is time to clean up your credit report. You may find someone who can help you or you can write simple letters to all the credit bureaus. Possibly, your credit report may still show some of the delinquencies which ought to have been wiped out but still lingering there like a bad dream. Also, if you have other serious mistakes on your credit report, those need to be corrected as well. Your credit score is based on information in your credit report, so errors on your report can seriously dampen your score.

Nevada Scam Loan Modification Agencies Fined by MLD


The Division of Mortgage Lending continues to diligently enforce mortgage lending laws by disciplining 10 entities for various violations of those laws.

* The Division fined now former mortgage agent Charmaine A. Hicks $2,500 plus administrative costs for failing to cooperate in a Division investigation.

* Henderson-based mortgage broker Evofi One was fined for sharing office space with unaffiliated businesses. The Division issued a fine of $5,000, plus administrative costs.

* Las Vegas-based The Sussex Group, an escrow agency, and its sole shareholder, Barry L. Fulco, were ordered to Cease & Desist operations after the Division discovered that the physical location listed on the application did not match the location provided to clients, after the business vacated a location without disclosing it to the Division, and after the Division was unable to subsequently find a permanent office location for the business. The Sussex Group was ordered to provide a full accounting of all transactions and moneys held in trust and was issued a $30,000 fine, plus administrative costs.

* Las Vegas-based mortgage broker Pinnacle Lending Group has entered into a Stipulated Settlement Agreement with the Division because the company improperly compensated its mortgage agents. This activity resulted in a fine of $10,000 (a portion of which was suspended) and administrative costs.

* Pea Management Group, Inc., dba Escrow Unlimited, entered into a Stipulated Settlement Agreement with the Division because the company did not maintain complete and suitable transaction records. Pea Management has been fined $3,500. The company has corrected the records deficiencies and has also agreed to increase its surety bond.

* The Division has fined Home Plus Financial, Inc., formerly licensed as a mortgage banker, a total of $5,000: $2,500 for failing to submit financial information and $2,500 failing to permit an examination.

* Cedar Mortgage Company, Inc., dba Cedar Mortgage, based in Fallon, Nevada, has entered into a Stipulated Settlement Agreement with the Division. Cedar Mortgage providedmortgage broker services out of an licensed California office. The company agreed to pay a fine of $2,500 and surrender its mortgage broker license.

* The Division has revoked Las Vegas-based OneCap Mortgage Corporation’s mortgage broker’s license because of its failure to abide by the terms of a previous settlement agreement.

* The Division has issued a Cease & Desist Order to Las Vegas-based Homekeepers RSVP, formerly dba Homekeepers, LLC, for performing unlicensed loan modification services. The company is prohibited from advertising for and/or soliciting foreclosure or loan modification consulting business and cannot provide these services to Nevada consumers. The company has also been fined $20,000 and must pay the Division’s investigative costs.

* After investigating numerous complaints, the Division has issued a Cease & Desist Order to Las Vegas Paralegal Services and Maria D. Davila for providing foreclosure and loan modification consulting services without a license from the Division. Ms. Davila and Las Vegas Paralegal Services are prohibited from advertising for and/or soliciting foreclosure or loan modification consulting business and cannot provide these services to Nevada consumers. They have each been fined $10,000 and are required to pay the Division’s investigative costs as well as any attorney’s fees the Division may incur.

“Today’s announcement once again highlights our continuing commitment to protecting Nevada consumers,” said Mortgage Lending Commissioner Joe Waltuch. “Those allowing or participating in inappropriate mortgage-related activity will be held accountable.”

For more information about the Division of Mortgage Lending, visit http://mld.nv.gov/index.htm

How to prepare financial information before you talk to your lender?


HOUSEHOLD FINANCIAL INFORMATION INCOME BUDGET FOR HOUSEHOLD

SOURCE OF INCOME LAST MO. ACTUAL THIS MO. EXPECTED THIS MO. ACTUAL ADJUSTED MONTHLY
Employment $ $ $ $
Overtime ______________________________________________________
Child Support/Alimony ___________________________________________
Pension _______________________________________________________
Interest _______________________________________________________
Public Benefits _________________________________________________ ______________________________________________________________
Dividends
Trust Payments ________________________________________________
Royalties ______________________________________________________
Rents Received _________________________________________________
Other (List) ____________________________________________________

TOTAL (MONTHLY) $ $ $ $

NOTES/ANTICIPATED CHANGES:______________

EXPENSE BUDGET FOR HOUSEHOLD

TYPE OF EXPENSE LAST MO. ACTUAL THIS MO. EXPECTED THIS MO. ACTUAL ADJUSTED MONTHLY
Payroll Deductions $ $ $ $
Income Tax Withheld ____________________________________
Social Security _________________________________________
FICA
Wage Garnishments ____________________________________ Credit Union _______________________________________
Other ________________________________________________
Home Related Expenses
Mortgage or Rent ______________________________________
Second Mortgage ______________________________________
Third Mortgage ________________________________________
Real Estate Taxes ______________________________________
Insurance _____________________________________________
Condo Fees & Assessments ______________________________
Mobile Home Lot Rent ___________________________________
Home Maintenance/ Upkeep ______________________________
Utilities _______________________________________________
Gas __________________________________________________
Electric ___________________
Oil _______________________
Water/Sewer ____________________
Telephone:
Land Line _______________________
Cell ____________________________
Cable TV ________________________
Internet
Other __________________________
Food
Eating Out ______________________
Groceries _______________________
Clothing ________________________________
Laundry and Cleaning _____________________
Medical ________________________________
Current Needs _______________________
Prescriptions _______________________
Dental _______________________
Insurance Co-Payments or Premiums
Other _________________________________
Transportation _________________________
Auto Payments ________________________
Car Insurance ________________________
Gas and Maintenance _________________________
Public Transportation _______________________
Life Insurance _________________________
Alimony or Support Paid _________________________
School Expenses _________________________
Student Loan Payments _________________________
Entertainment _________________________
Newspapers/Magazines _________________________
Charity/Church _________________________
Pet Expenses _________________________
Amounts Owed on Debts _________________________
Credit Card__________________________________
___________________
Credit Card
___________________
Credit Card
___________________
Medical Bill
___________________
Medical Bill
___________________
Other Back Bills (List)
___________________
___________________
Cosigned Debts
Business Debts (List)
___________________
___________________
Other Expenses (List)
___________________
___________________
Miscellaneous
TOTAL _______________________________________________________

Other Important Debt Issues:

Wage Garnishments Yes______ No______
Pending Court Cases Yes______ No______
Pending Utility Shut-offs Yes _____ No _____
Car Loan Defaults or Repossessions Tax Debts Yes ____ No____
Student Loan Debts Yes_____ No_____

Other:
Notes/Anticipated Changes:
Describe Assets and Other Resources:

Savings Yes______ No______ Amount $__________________

Court Cases Pending Against Others Yes______ No__________
Value $______________

Anticipated Tax Refunds Yes______ No____________
Amount $______________

Assets Which Can Be Sold Yes ______ No______ Value $______________

Pension or Retirement Funds Yes______ No______ Value $______________

Other Assets and Notes:

INCOME AND EXPENSE TOTALS

Last Mo. Actual This Mo. Expected This Mo. Actual Adjusted Expected
A. Total Projected Monthly Income
B. Total Projected Monthly Expenses
Excess Income or Shortfall (A minus B)

Notes:

OTHER INFORMATION

1. Have you made an effort to arrange a workout on their own? What result?

2. Have you filed bankruptcy? If so when? Current status of case if still pending? If bankruptcy is over, what result?

3. Other issues which came up during this time.

4. Questions and open issues that must be resolved

Strategic Defaults or Walkaways–New Threats to Homeownership


We are hearing new and new words again and our real estate terminology is becoming richer every day. Until only couple years ago, we did not even know what is a short sale or deed in lieu. Now, a new word is becoming familiar every day and it is called strategic default. A strategic default is the decision by a borrower to stop making payments (i.e. default) on a debt despite having the financial ability to make the payments.
This is particularly associated with residential and commercial mortgages, in which case it usually occurs after a substantial drop in the house’s price such that the debt owed is (considerably) greater than the value of the property — the property negative equity or “underwater” — and is expected to remain so for the foreseeable future, such as following the bursting of a real estate bubble. Such borrowers are called “walkaways”.
Even distinguished economists Paul Krugman and Hal Varian have acknowledged that strategic default will be an inevitable result of the collapse of the finance and property bubble of the era following 2006. They also note that this is one of the few ways of freeing people from the burden of mortgage debt
The walkaways are the people who find themselves unable to meet their mortgage payments—and to solve the problem simply move out their belongings at night, drop their house key in the mailbox and disappear. In West Texas, largely because of walkaways, the Federal Government currently has 1,800 repossessed houses on its hands. In seven South Florida counties, walkaways have abandoned 3,000 FHA-homes. The rate of mortgage foreclosures has tripled during the past ten years, to an estimated 3.77 per 1,000 mortgages. Most housing economists agree that the leveling off of home prices in many parts of the U.S. accounts for most of the increase. As long as home prices were rising, a homeowner who could not meet his payments could always sell out—usually at a profit. Now, with prices steady, an overextended homeowner must either sell at a loss or face foreclosure.
WAlkAWAYS are done by homeowners who are financially savvy and had calculated that there is no outcome or light at the end of the tunnel. A strategic default is done by smart and educated people compared to Walkaways who are financially not that savvy and no solid jobs and can move easily. While strategic defaulters calculate and savvy and knows the financial market well. They have good income jobs and mostly both the spouses are working in middle income bracket.
Again, this walkaways and strategic default is a dangerous phenomenon and would nullify all the efforts by federal government in solving this home foreclosure crisis. If it continues, there would be no end in sight and it would engulf all of us. Our situation would not be different than say from Greece or Portugal.

Foreclosures Are Coming Down-Finally something better to read!


The good news is that foreclosure rate is coming down. It is happening all across USA. Nevada is a bit slow to catch up. However, things are improving in Nevada as well. Please read the following article.
http://247wallst.com/2010/05/13/a-little-relief-in-foreclosure-rates/

What About 2nd Mortgages?


JPMorgan Chase this week became the latest big bank to say it is willing to modify second mortgages for some struggling borrowers. It can be termed as baby step as we had seen a continuous neglect by lenders to modify second mortgages. They had frowned upon this idea for long time. As we know, most of the homes in Nevada has a second loan which are called junior liens in legal language and they are subordinate to the first loan.

Most of the homeowners who are behind on their first mortgage payments are also behind on their second mortgage payments. All the modification programs by federal government only has tackled first mortgages . The Home Affordable Modification Program, which is intended to ease mortgage payment reductions, is aimed at several million struggling borrowers. Of 1.4 million trial modifications offered so far, only 170,000 have resulted in adjustments that the program calls “permanent.” In reality, even after modification many borrowers are still overburdened, and further defaults look inevitable.

That ought to focus banks’ attention on their second-lien loans. There may be little or no chance many of them will ever be repaid. But banks have avoided writing down second liens because accounting rules allow them to consider the loans performing so long as borrowers make interest payments. It’s easy to understand why the banks are avoiding the issue. According to Amherst Securities, of $1.05 trillion in outstanding second liens, commercial banks hold $767 billion. Bank of America, Citigroup, JPMorgan Chase and Wells Fargo alone hold $442 billion of them.
A government modification program for second liens, known as 2MP, was first put forward a year ago. But Bank of America, Wells Fargo and now JPMorgan Chase have only recently joined. It is not likely to reach many borrowers since it focuses on only those few who do “permanent” modifications under the federally sponsored program. Assuming around half of distressed homeowners have second mortgages, this would cover some 85,000 second liens, of the millions that are outstanding.

Now Delinquency in the Modified Loan–What Next?


It was not easy to get the trial loan modification under the HAMP. Borrower had to sent financial documents, that too repeatedly. The lenders was asking non stop pay stubs, 4506-T signed, hardship letter, tax return and bank statements. After resending these many times, the lender may qualify the borrower/homeowner for a trial loan modification. Now, folks who were happy with these trial and finally permanent loan modifications, are becoming delinquent again. Now, they are not sending their payments and either want to do a strategic default or just get rid of the home through any means. This is really bad for the economy and bad for all the contractual obligations. Homeowners reneged on their contractual obligations. The loan modification replaced their old contract. It is unfortunate that the homeowners are again becoming delinquent.

This is released into a new Treasury’s report stated goal is for the modification program to help as many as four million households, the oversight report said, “but only some of these offers will result in temporary modifications, and only some of those modifications will convert to final, five-year status.” The report continued: “Even among borrowers who receive five-year modifications, some will eventually fall behind on their payments and once again face foreclosure. In the final reckoning, the goal itself seems small in comparison to the magnitude of the problem.”

The Treasury took issue with the report and said the pace of modifications was picking up. The number of active permanent modifications in March was 227,922, an increase of 35 percent from those in February. An additional 108,212 permanent modifications are awaiting borrower approval.

The number of homeowners who defaulted on their mortgages even after securing cheaper terms through the government’s modification program nearly doubled in March, continuing a trend that could undermine the entire program. More Fall Behind on Lower PaymentsData released Wednesday by the Treasury Department and the Housing and Urban Development Department showed that 2,879 modified loans had been ended since the program’s inception in the fall, up from 1,499 in February and 1,005 in January.

The Treasury Department said it could not explain the growing number of what it called cancellations, almost all of which were apparently prompted by the borrower’s being unable to make the new payment. A scant number — 37 — were because the loan had been paid off, presumably because the borrower sold the house. About seven million households are behind on their mortgage payments.

The Obama administration’s modification program has been widely criticized for doing little to help them. The program received another bad review on Wednesday with the release of a report from the Congressional Oversight Panel. The Treasury’s stated goal is for the modification program to help as many as four million households, the oversight report said, “but only some of these offers will result in temporary modifications, and only some of those modifications will convert to final, five-year status.”

The report continued: “Even among borrowers who receive five-year modifications, some will eventually fall behind on their payments and once again face foreclosure. In the final reckoning, the goal itself seems small in comparison to the magnitude of the problem.”

The Treasury took issue with the report and said the pace of modifications was picking up. The number of active permanent modifications in March was 227,922, an increase of 35 percent from those in February. An additional 108,212 permanent modifications are awaiting borrower approval.

Shaun Donovan, secretary of Housing and Urban Development, said in an interview that those were the important numbers to focus on.

“One percent of these loans defaulting is a tiny fraction,” Mr. Donovan said. “Given how stressed these borrowers are, even in the best situation, there will be redefaults. But I don’t think there is any evidence that would cause us to worry at this point.”

Sixty percent of modifications undertaken by banks in late 2008 were in default a year later, according to the latest Mortgage Metrics Report compiled by the Office of Thrift Supervision and the comptroller of the currency

More Fall Behind on Lower PaymentsData released Wednesday by the Treasury Department and the Housing and Urban Development Department showed that 2,879 modified loans had been ended since the program’s inception in the fall, up from 1,499 in February and 1,005 in January.

The Obama administration’s modification program has been widely criticized for doing little to help them. The program received another bad review on Wednesday with the release of a report from the Congressional Oversight Panel.

The Treasury’s stated goal is for the modification program to help as many as four million households, the oversight report said, “but only some of these offers will result in temporary modifications, and only some of those modifications will convert to final, five-year status.”

The report continued: “Even among borrowers who receive five-year modifications, some will eventually fall behind on their payments and once again face foreclosure. In the final reckoning, the goal itself seems small in comparison to the magnitude of the problem.”

The Treasury took issue with the report and said the pace of modifications was picking up. The number of active permanent modifications in March was 227,922, an increase of 35 percent from those in February. An additional 108,212 permanent modifications are awaiting borrower approval.

“One percent of these loans defaulting is a tiny fraction,” Mr. Donovan said. “Given how stressed these borrowers are, even in the best situation, there will be redefaults. But I don’t think there is any evidence that would cause us to worry at this point.”

Julia R. Gordon, senior policy counsel for the Center for Responsible Lending in Washington, said she expected the number of post-modification defaults to continue to rise.

“It’s definitely alarming to look at those statistics,” she said. “The current model for modifications doesn’t necessarily produce sustainable results.”

While the program is too new to predict its long-term success, the data on previous modification efforts is not encouraging.

Sixty percent of modifications undertaken by banks in late 2008 were in default a year later, according to the latest Mortgage Metrics Report compiled by the Office of Thrift Supervision and the comptroller of the currency.

Here is the full article published in NYTimes:

http://www.nytimes.com/2010/04/15/business/15mortgages.html?scp=13&sq=&st=nyt

Class Lawsuite filed Against BAC for Reneging on Loan Modification


Finally, a lawsuit is filed in Seattle against Bank of America. It says that Bank of America dragged its foot in every matter denying the homeowners of the true benefits of both TARP and HAMP

http://www.seattlepi.com/local/417333_mortgage24.html?source=mypi

What Are Nevada Bankruptcy Exemptions?


When a debtor files bankruptcy, all his property becomes part of the estate and a trustee is entrusted to handle all the matters of his estate. However, a debtor is entitled to get back his property which is exempted. Exemptions are handled under Nevada laws.
This article describes various exemptions and provided an answer to the various exemptions under bankruptcy.

Has state opted out of federal bankruptcy exemptions?
Yes. Nev. Rev. Stat. § 21.090.
Is opt out limited to residents or domiciliaries of the state?
Yes. Nev. Rev. Stat. § 21.090:
‘‘Any exemptions specified in [§ 522(d)],
do not apply to property owned by a resident of this State. . . .’’
Do state’s exemptions have extraterritorial application?
Homestead: $550,000.00
Personal property: Uncertain.
Wages: Nev. Rev. Stat. §§ 21.090, 31.295 to 31.298.
How much of a debtor’s earnings can be garnished via garnishment in Nevada?
Earnings.
Amount: Garnishment may not exceed the lesser of 25% of disposable earnings for the workweek or the amount by which disposable earnings that week exceed 50 times the federal minimum wage.
Survival after payment/deposit: Yes. Earnings are defined to include compensation received by the judgment debtor, in the possession of the judgment debtor, held in accounts in a bank or any
other financial institution, or, in the case of a receivable, compensation that is due the judgment debtor.
Waiver: Not specified in garnishment statute.
Homestead: Nev. Rev. Stat. §§ 21.090, 21.095, 115.005, 115.010,
115.040.
Amount: $550,000 in either land and a dwelling or a mobile home, subject to certain liens; land held in spendthrift trust for debtor is exempt. Unlimited exemption if ‘‘allodial title’’ has been established.
(Nevada residents can acquire ‘‘allodial title’’ to their land by buying out the property tax right from the government. Then the landowner does not have to pay property tax on the land.) The
primary dwelling, including a mobile home, and land may not be executed upon for a medical bill during the lifetime of the debtor, debtor’s spouse, a joint tenant who was a joint tenant at the time
judgment was entered, or debtor’s disabled dependent adult child, or during the minority of any child of debtor. A 2007 amendment added an exemption for sums reasonably deposited with a landlord,
to secure the rental or lease of debtor’s primary residence (except not exempt as to landlord’s claims for rent).
Procedural requirements: Procedure available for filing declaration of homestead. Exemption available even without declaration. Once declaration is filed, spouse must join in any encumbrance or sale.
Special provisions: None specified.
Waiver: Spouse must join in conveyance or encumbrance of declared homestead.

How much of a tangible personal property is exempted?
Nev. Rev. Stat. §§ 21.080, 21.090,
21.100.
Household goods: $12,000 necessary household goods, furnishings,
electronics, wearing apparel, other personal effects and yard
equipment.
Motor vehicles: $15,000, no limit if specially equipped for disabled
debtor or dependent.
Tools of trade: $10,000 tools of trade; $4500 mining equipment;
$4500 farm equipment.
Clothing and jewelry: Jewelry is included in the $5000 wildcard
exemption.
Miscellaneous and wildcard: $5000 in private library, works of art, musical instruments and jewelry, all family pictures and keepsakes; health aids; property held in a spendthrift trust; uniforms debtor is legally required to keep, one gun, a collection of metal
bearing ores, geological specimens, art curiosities or paleontological remains if the debtor catalogues them and the catalogue is kept near the collection for the free inspection of all visitors; coin collections are not exempt. $1000 in any property, including accounts in a financial institution.
Waiver: Not specified in exemption statute.
Benefits, retirement plans, insurance, judgments, and other intangibles:
Nev. Rev. Stat. §§ 21.080, 21.090, 21.100.
Public benefits: Social Security benefits, including without limitation,
retirement, survivors, SSI and disability. See Nev. Rev. Stat.
§ 422.291 (assistance awarded pursuant to public welfare administration
laws is exempt). Earned income credit or any similar credit pursuant to state law.
Pensions, retirement plans and annuities: Up to $500,000 (present value) in tax-qualified retirement plan.
Insurance, judgments or other compensation for injury: Money or benefits in any manner growing out of life insurance, if premium not more than $15,000 per year (for higher premium, the proportion that $15,000 bears to the premium paid); $16,500 personal injury judgment; wrongful death judgment for person on whom debtor was dependent; compensation for loss of future earnings of debtor or person on whom debtor was dependent, so far as needed
for support; criminal restitution.
Bank accounts: Not specified in exemption statute.
Alimony, child support: Court-ordered family support.
Survival after payment or deposit: Not specified in exemption statute.

What Are the Nevada Exemptions for Bankruptcy?


NEVADA
Has state opted out of federal bankruptcy exemptions?
Yes. Nev. Rev. Stat. § 21.090.

Is opt out limited to residents or domiciliaries of the state? Yes. Nev. Rev. Stat. § 21.090: ‘‘Any exemptions specified in [§ 522(d)],
do not apply to property owned by a resident of this State. . . .’’

Do state’s exemptions have extraterritorial application?Homestead: Uncertain.
Personal property: Uncertain.

Wages: Nev. Rev. Stat. §§ 21.090, 31.295 to 31.298.
Scope: Earnings.
Amount: Garnishment may not exceed the lesser of 25% of disposable earnings for the workweek or the amount by which
disposable earnings that week exceed 50 times the federal minimum wage.

Survival after payment/deposit:
Yes. Earnings are defined to include compensation received by the judgment debtor, in the possession of the judgment debtor, held in accounts in a bank or any other financial institution, or, in the case of a receivable, compensation that is due the judgment debtor.
Waiver:
Not specified in garnishment statute.
Homestead: Nev. Rev. Stat. §§ 21.090, 21.095, 115.005, 115.010, 115.040.
Amount:
$550,000 in either land and a dwelling or a mobile home, subject to certain liens; land held in spendthrift trust for debtor is exempt. Unlimited exemption if ‘‘allodial title’’ has been established. (Nevada residents can acquire ‘‘allodial title’’ to their land by buying out the property tax right from the government. Then the landowner does not have to pay property tax on the land.) The primary dwelling, including a mobile home, and land may not be executed upon for a medical bill during the lifetime of the debtor, debtor’s spouse, a joint tenant who was a joint tenant at the time judgment was entered, or debtor’s disabled dependent adult child, or during the minority of any child of debtor. A 2007 amendment added an exemption for sums reasonably deposited with a landlord, to secure the rental or lease of debtor’s primary residence (except not exempt as to landlord’s claims for rent).
Procedural requirements:
Procedure available for filing declaration of homestead. Exemption available even without declaration. Once declaration is filed, spouse must join in any encumbrance or sale.
Special provisions:
None specified.
Waiver: Spouse must join in conveyance or encumbrance of declared homestead.
Tangible personal property:
Nev. Rev. Stat. §§ 21.080, 21.090, 21.100.
Household goods: $12,000 necessary household goods, furnishings, electronics, wearing apparel, other personal effects and yard
equipment.
Motor vehicles: $15,000, no limit if specially equipped for disabled
debtor or dependent.
Tools of trade:
$10,000 tools of trade; $4500 mining equipment; $4500 farm equipment.
Clothing and jewelry:
Jewelry is included in the $5000 wildcard exemption.
Miscellaneous and wildcard:
$5000 in private library, works of art, musical instruments and jewelry, all family pictures and keepsakes; health aids; property held in a spendthrift trust; uniforms debtor is legally required to keep, one gun, a collection of metal bearing ores, geological specimens, art curiosities or paleontological remains if the debtor catalogues them and the catalogue is kept near the collection for the free inspection of all visitors; coin collections are not exempt. $1000 in any property, including accounts in a financial institution.
Waiver: Not specified in exemption statute.
Benefits, retirement plans, insurance, judgments, and other intangibles: Nev. Rev. Stat. §§ 21.080, 21.090, 21.100.
Public benefits:
Social Security benefits, including without limitation, retirement, survivors, SSI and disability. See Nev. Rev. Stat. § 422.291 (assistance awarded pursuant to public welfare administration laws is exempt). Earned income credit or any similar credit pursuant to state law.
Pensions, retirement plans and annuities:
Up to $500,000 (present value) in tax-qualified retirement plan.
Insurance, judgments or other compensation for injury: Money or benefits in any manner growing out of life insurance, if premium not more than $15,000 per year (for higher premium, the proportion that $15,000 bears to the premium paid); $16,500 personal injury judgment; wrongful death judgment for person on whom debtor was dependent; compensation for loss of future earnings of debtor or person on whom debtor was dependent, so far as needed for support; criminal restitution.
Bank accounts:
Not specified in exemption statute.
Alimony, child support:
Court-ordered family support.
Survival after payment or deposit:
Not specified in exemption statute.

MERS Appeal Denied by Arkansas Supreme Court


MORTGAGE ELECTRONIC REGISTRATION SYSTEM, INC., APPELLANT, VS. SOUTHWEST HOMES OF ARKANSAS, APPELLEE

No. 08-1299

SUPREME COURT OF ARKANSAS

2009 Ark. LEXIS 121

March 19, 2009, Opinion Delivered

NOTICE:

THE LEXIS PAGINATION OF THIS DOCUMENT IS SUBJECT TO CHANGE PENDING RELEASE OF THE FINAL PUBLISHED VERSION.

SUBSEQUENT HISTORY: Rehearing denied by Mortgage Elec. Registration Sys. v. Southwest Homes of Ark., Inc., 2009 Ark. LEXIS 458 (Ark., Apr. 23, 2009)

PRIOR HISTORY: [*1]

APPEAL FROM THE BENTON COUNTY CIRCUIT COURT, NO. CIV07-223-2, HON. DAVID S. CLINGER, JUDGE.

DISPOSITION: AFFIRMED.

COUNSEL: George Nicholas Arnold – Counsel for the Appellant.

Howard Keith Morrison – Counsel for the Appellant.

Thomas D. Stockland – Counsel for the Appellee.

JUDGES: JIM HANNAH, Chief Justice. IMBER, DANIELSON and WILLS, JJ., concur.

OPINION BY: JIM HANNAH

OPINION

JIM HANNAH, Chief Justice

Mortgage Electronic Registration System, Inc. (”MERS”) appeals a decision of the Benton County Circuit Court denying its motion to set aside a decree of foreclosure and to dismiss the foreclosure action. 1 MERS alleges that the circuit court erred in ordering foreclosure because as the holder of legal title it was a necessary party that was never served. We affirm the circuit court and hold that under the recorded deed of trust in this case, James C. East, as trustee under the deed of trust, held legal title. Because MERS was at most the mere agent of the lender Pulaski Mortgage Company, Inc., it held no property interest and was not a necessary party. As this case presents an issue of first impression, our jurisdiction is pursuant to Arkansas Supreme Court Rule 1-2(b)(1).

1 Mortgage Electronic Registration System, Inc.’s (”MERS”) motion was [*2] entitled Motion to Set Aside Default Judgment; however, the circuit court found, and the parties agree, that MERS was never served. Because MERS was never served, it could not have failed to respond to that service and suffer a default judgment. The relief sought was that the decree of foreclosure be set aside and the foreclosure action be dismissed.

This case arises from foreclosure on a 2006 mortgage granted in a one-acre lot. A prior deed of trust also encumbered the property. In 2003, Jason Paul Lindsey and Julie Ann Lindsey entered into a deed of trust on a one-acre lot in Benton County to secure a promissory note. The lender on that deed of trust was Pulaski Mortgage, the trustee was James C. East, and the borrowers were the Lindseys. MERS was listed on the deed of trust as the “Beneficiary” acting “solely as nominee for Lender,” and “Lender’s successors and assigns.” The second page of the deed of trust states that “the Borrower understands and agrees that MERS holds only legal title to the interests granted by the Borrower and further that MERS as nominee of the Lender has the right to exercise all rights of the Lender including foreclosure.” The deed of trust was recorded.

In [*3] 2006, the Lindseys granted the subject mortgage on the same property to Southwest Homes of Arkansas, Inc. to secure a second promissory note. This mortgage was recorded. On February 9, 2007, Southwest Homes filed a Petition for Foreclosure in Rem against the Lindseys under the 2006 mortgage. The Lindseys, the Benton County Tax Collector, and “Mortgage Electronic Registration System, Inc. (Pulaski Mortgage Company)” were listed as respondents. Pulaski Mortgage was served; however, MERS was never served. Pulaski Mortgage did not file an answer. 2 A Decree of Foreclosure in Rem was entered on April 4, 2007, and the property was auctioned to Southwest. An Order Approving and Confirming Commissioner’s Sale was entered on May 8, 2007. In February 2008, MERS learned of the foreclosure and moved for relief, arguing it was a necessary party to the foreclosure action. The circuit court denied the motion, and this appeal followed.

2 Pulaski Mortgage was the lender of record. No assignment of the deed of trust was recorded nor had Pulaski Mortgage’s security interest been satisfied of record.

MERS asserts that it held legal title to the property and, therefore, it was a necessary party to any action [*4] regarding title to the property. The deed of trust indicates that MERS holds legal title and is the beneficiary, as well as the nominee of the lender. It further purports by contractual agreement with the borrower to grant MERS the power to “exercise any and all rights” of the lender, including the right of foreclosure. However the deed of trust provides that all payments are to be made to the lender, that the lender makes decisions on late payments, and that all rights to foreclosure are held by the lender.

No payments on the underlying debt were ever made to MERS. MERS did not service the loan in any way. It did not oversee payments, delinquency of payments, or administration of the loan in any way. Instead, MERS asserts to be a corporation providing electronic tracking of ownership interests in residential real property security instruments. See In re MERSCORP, Inc. v. Romaine, 8 N.Y.3d 90, 861 N.E.2d 81, 828 N.Y.S.2d 266 (2006). According to MERS, it was developed by the “real estate finance industry” and was designed to facilitate the sale and resale of instruments in “the secondary mortgage market, which include one of the government sponsored entities.”

MERS contracts with lenders to track security [*5] instruments in return for an annual fee. MERSCORP, supra. Those who contract with MERS are referred to by MERS as “MERS members.” According to MERS, MERS members contractually agree to appoint MERS as their common agent for all security instruments registered with MERS. 3 MERS asserts that it holds the authority to exercise the rights of the lender, and for that purpose, it holds bare legal title. Thus, it is alleged that a principal-agent relationship existed between MERS and Pulaski Mortgage under the contract terms of the deed of trust. 4

3 The Kansas Court of Appeals, in Lankmark National Bank v. Kesler, 40 Kan. App. 2d 325, 192 P.3d 177 (2008), likewise found that Mortgage Electronic Registration System, Inc. acts as an agent. We note the analysis in this case is consistent with our own but also note that the Kansas Supreme Court granted review of the Landmark case.

4 MERS is listed as a nominee on the deed of trust. A nominee is “a person designated to act on behalf of another, usu. in a very limited way.” Black’s Law Dictionary 1076 (8th ed. 2004). A nominee is also a “person who holds bare legal title for the benefit of others or who receives and distributes funds for the benefit [*6] of others.” Id. As discussed above, MERS was not designated to act on behalf of another under the facts of this case. Further, it held no title in this case where title vested in the trustee, and finally, it received and distributed no funds for the benefit of others.

“An agent is a person who, by agreement with another called the principal, acts for the principal and is subject to his control.” Taylor v. Gill, 326 Ark. 1040, 1044, 934 S.W.2d 919, 922 (1996) (quoting AMI 3d 701 (1989)). Thus, MERS, by the terms of the deed of trust, and its own stated purposes, was the lender’s agent, including not only Pulaski Mortgage but also any successors and assigns.

MERS asserts authority to act, arguing that once it becomes the agent on a security instrument, it remains so for every MERS member lender who acquires ownership. This authority is alleged to arise from the contractual relationship between MERS and MERS members. Thus, MERS argues it may act to preserve the rights of the lender regardless of who the lender may be under the MERS electronic registration. We specifically reject the notion that MERS may act on its own, independent of the direction of the specific lender who holds the repayment [*7] interest in the security instrument at the time MERS purports to act. “[A]n agent is authorized to do, and to do only, what it is reasonable for him to infer that the principal desires him to do in the light of the principal’s manifestation and the facts as he knows or should know them at the time he acts.” Hot Stuff, Inc. v. Kinko’s Graphic Corp., 50 Ark. App. 56, 59, 901 S.W.2d 854, 856 (1995) (citing Restatement (Second) of Agency
§ 33 (1958)). Nothing in the record shows that MERS had authority to act. Here, Pulaski Mortgage was the lender and MERS’s principal. Pulaski Mortgage was a named party in the foreclosure action. Thus, MERS was not acting as the lender’s agent at the time it moved to set aside the decree of foreclosure.

However, MERS also argues that it holds a property interest through holding legal title. Specifically, it purports to hold legal title with respect to the rights conveyed by the borrower to the lender. We disagree.

“A deed of trust is ‘a deed conveying title to real property to a trustee as security until the grantor repays a loan.’” First United Bank v. Phase II, Edgewater Addition, 347 Ark. 879, 894, 69 S.W.3d 33, 44 (2001)(quoting Black’s Law Dictionary [*8] 773 (7th ed. 1999)); see also House v. Long, 244 Ark. 718, 426 S.W.2d 814 (1968). The encumbrance created by the deed of trust may be described as a lien. See, e.g., First Amer. Nat’l Bank of Nashville v. Booth, 270 Ark. 702, 606 S.W. 2d 70 (1980).

Under a deed of trust, the borrower conveys legal title in the property by a deed of trust to the trustee. Phase II, supra. “In this state, the naked legal title to real property included in a mortgage passes to the mortgagee, or to the trustee in a deed of trust, to make the security available for the payment of the debt.” Harris v. Collins, 202 Ark. 445, 447, 150 S.W.2d 749, 750 (1941). The trustee is limited in use of the title to passing title back to the grantor/borrower in the case of payment, or to the lender in the event of foreclosure. See Forman v. Holloway, 122 Ark. 341,183 S.W. 763 (1916). The lender holds the indebtedness and is the beneficiary of the deed of trust. House, supra. A trustee under a deed of trust is not a true trustee. Heritage Oaks Partners v. First Amer. Title, Ins. Co., 155 Cal. App. 4th 339, 66 Cal. Rptr.3d 510 (Cal. Ct. App. 2007). Under a deed of trust, the trustee’s duties are limited to (1) upon default undertaking foreclosure [*9] and (2)
upon satisfaction of the debt to reconvey the deed of trust. Id.

In the present case, all the required parties to a deed of trust under Arkansas law are present, the borrower in the Lindseys, the Lender in Pulaski Mortgage, and the trustee in James C. East. Under a deed of trust in Arkansas, title is conveyed to the trustee. Harris, supra. MERS is not the trustee. Here, the deed of trust renamed James C. East as the trustee. The deed of trust did not convey title to MERS. Further, MERS is not the beneficiary, even though it is so designated in the deed of trust. Pulaski Mortgage, as the lender on the deed of trust, was the beneficiary. It receives the payments on the debt.

The cases cited by MERS only confirm that MERS could not obtain legal title under the deed of trust. MERS relies on Hannah v. Carrington, 18 Ark. 85 (1856); however, that case stands for the proposition that a deed of trust vests legal tide in the trustee. We are also cited to Shinn v. Kitchens, 208 Ark. 321, 326, 186 S.W.2d 168, 171 (1945), where this court stated that “[t]he trustee named in the deeds of trust was a necessary party at the institution of the foreclosure suit, as also, of course, was Kitchens, [*10] the holder of the indebtedness.” East, as trustee, was a necessary party. MERS was not. Finally, we are cited to Beloate v. New England Securities Co., 165 Ark. 571, 575,265 S.W. 83 (1924), where this court stated that the real owner of the debt, as well as the trustee in the mortgage, are necessary parties in the action to recover the debt and foreclose the mortgage. Again, this case supports the conclusion that East was a necessary party and MERS was not.

Further, under Arkansas foreclosure law, a deed of trust is defined as “a deed conveying real property in trust to secure the performance of an obligation of the grantor or any other person named in the deed to a beneficiary and conferring upon the trustee a power of sale for breach of an obligation of the grantor contained in the deed of trust.” Ark. Code Ann. § 18-50-101(2) (Repl. 2003). Thus, under the statutes, and under the common law noted above, a deed of trust grants to the trustee the powers MERS purports to hold. Those powers were held by East as trustee. Those powers were not conveyed to MERS.

MERS holds no authority to act as an agent and holds no property interest in the mortgaged land. It is not a necessary party. In [*11] this dispute over foreclosure on the subject real property under the mortgage and the deed of trust, complete relief may be granted whether or not MERS is a party. MERS has no interest to protect. It simply was not a necessary party. See Ark. R. Civ. P. 19(a). MERS’s role in this transaction casts no light on the contractual issues on appeal in this case. See, e.g., Wilmans v. Sears, Roebuck & Co., 355 Ark. 668, 144 S.W.3d 245 (2004).

Finally, we note that Arkansas is a recording state. Notice of transactions in real property is provided by recording. See Ark. Code Ann. § 14-15-404 (Supp. 2007). Southwest is entitled to rely upon what is filed of record. In the present case, MERS was at best the agent of the lender. The only recorded document provides notice that Pulaski Mortgage is the lender and, therefore, MERS’s principal. MERS asserts Pulaski Mortgage is not its principal. Yet no other lender recorded its interest as an assignee of Pulaski Mortgage. Permitting an agent such as MERS purports to be to step in and act without a recorded lender directing its action would wreak havoc on notice in this state.

Affirmed.

IMBER, DANIELSON and WILLS, JJ., concur.

CONCUR BY: PAUL E. DANIELSON

CONCUR

CONCURRING [*12] OPINION.

PAUL E. DANIELSON, Associate Justice

I concur that the circuit court’s order should be affirmed, but write solely because I view the decisive issue to be whether MERS was, pursuant to Arkansas Rule of Civil Procedure 19(a) (2008), a necessary party to the foreclosure action. It can generally be said that “[n]ecessary parties to a foreclosure action are parties whose interest are inseparable such that a court would be unable to determine the rights of one party without affecting the rights of another.” 59A C.J.S. Mortgages § 708 (2008). See also 55 Am. Jur. 2d Mortgages § 647 (2008) (”[A]ll persons who are beneficially interested, either in the estate mortgaged or the demand secured, are proper or necessary parties to a suit to foreclose.”). Moreover, “[p]ersons having no interest are neither necessary nor proper parties, and the mere fact that they were parties to transactions out of which the mortgage arose does not give them such an interest as to make them necessary parties to an action to foreclose
the mortgage.” Id. Indeed, our rules of civil procedure contemplate the same.

Rule 19(a) of the Arkansas Rules of Civil Procedure speaks to necessary parties:

(a) Persons to Be [*13] Joined if Feasible. A person who is subject to service of process shall be joined as a party in the action if (1) in his absence complete relief cannot be accorded among those already parties, or, (2) he claims an interest relating to the subject of the action and is so situated that the disposition of the action in his absence may (i) as a practical matter, impair or impede his ability to protect that interest, or, (ii) leave any of the persons already parties subject to a substantial risk of incurring double, multiple or otherwise inconsistent obligations by reason of his claimed interest. If he has not been joined, the court shall order that he be made a party. If he should join as a plaintiff, but refuses to do so, he may be made a defendant; or, in a proper case, an involuntary plaintiff.

Ark. R. Civ. P. 19(a) (2008).

Here, a review of the deed of trust for the subject property reveals four parties to the deed: (1) Jason Paul Lindsey and Julie Ann Lindsey, “Borrower”; (2) James C. East, “Trustee”; (3) MERS, “(solely as nominee for Lender, as hereinafter defined, and Lender’s successors and assigns)”; and (4) Pulaski Mortgage Company, “Lender.” The question, then, is whether MERS, [*14] as nominee, was a necessary party that had an interest “so situated that the disposition of the action in [its] absence may” have impaired its ability to protect its interest or left a subsequent purchaser or other subject to a substantial risk by reason of its interest. The answer is no; MERS, as nominee, was not a necessary party to the foreclosure action, because it held no such interest.

Initially, I must note that my review of the deed’s notice provision reveals that the deed clearly contemplated the Lender as the party with interest, in that it provided:

13. Notices. . . . Any notice to Lender shall be given by first class mail to Lender’s address stated herein or any address Lender designates by notice to Borrower. Any notice provided for in this Security’ Instrument shall be deemed to have been given to Borrower or Lender when given as in this paragraph.

Here, as stated in the circuit court’s order of foreclosure. Pulaski Mortgage, as Lender, was served with notice of the foreclosure action, in accord with paragraph thirteen.

But, in addition, MERS claims that because it holds legal title, it has an interest so as to render it a necessary party pursuant to Rule 19(a). Indeed, pursuant [*15] to the deed of trust, MERS held “only legal title to the interests granted” by the Lindseys,

but, if necessary to comply with law or custom, MERS, (as nominee for Lender and Lender’s successors and assigns) has the right to exercise any and all of those interests, including, but not limited to, the right to foreclose and sell the Property; and to take any action required of Lender including, but not limited to, releasing and canceling this Security Instrument.

“Legal title” is defined as “[a] title that evidences apparent ownership but does not necessarily signify full and complete title or a beneficial interest.” Black’s Law Dictionary 1523 (8th ed. 2004) (emphasis added). Thus, as evidenced by the definition, holding legal title alone in no way demonstrates the interest required by Rule 19(a).

MERS further claims that its status as nominee is evidence of its interest in the property, making it a necessary party. However, merely serving as nominee was recently held by one court to be insufficient to demonstrate an interest rising to the level to be a necessary party. In Landmark National Bank v. Kesler, 40 Kan. App. 2d 325, 192 P.3d 177 (2008), review granted, (Feb. 11, 2009). MERS also [*16] asserted that it was a necessary party to the foreclosure suit at issue. There, the district court found that MERS was not a necessary party, and the appellate court affirmed. Just as here, MERS was a party to the mortgage “solely as nominee for Lender.” 40 Kan. App. 2d at 327, 192 P.3d at 179. Based on that status, the Kansas court found that MERS was in essence, an agent for the lender, as its right to act to enforce the mortgage was strictly limited. See id.

Agreeing with MERS that a foreclosure judgment could be set aside for failure to join a “contingently necessary party,” the Kansas court observed that a party was “contingently necessary” under K.S.A. 60-219 if “the party claims an interest in the property at issue and the party is so situated that resolution of the lawsuit without that party may ‘as a practical matter substantially impair or impede [its] ability to protect that interest.’” Id. at 328, 192 P.3d at 180 (quoting K.S.A. 60-219). Notably, the language of K.S.A. 60-219 quoted by the Kansas court is practically identical to the language of Ark. R. Civ. P. 19(a).

The Kansas appellate court noted that MERS received no funds and that the mortgage required the borrower [*17] to pay his monthly payments to the lender. See id. It also observed, just as in the case at hand, that the notice provisions of the mortgage “did not list MERS as an entity to contact upon default or foreclosure.” Id. at 330, 192 P.3d at 181. After declaring that MERS did not have a “sort of substantial rights and interests” that had been found in a prior decision and noting that “a party with no beneficial interest is outside the realm of necessary parties,” the Kansas court concluded that “the failure to name and serve MERS as a defendant in a foreclosure action in which the lender of record has been served” was not such a fatal defect that the foreclosure judgment should be set aside. Id. at 331, 192 P.3d at 181-82.

It is my opinion that the same holds true in the instant case. Here, Pulaski Mortgage, the lender for whom MERS served as nominee, was served in the foreclosure action. But, further, neither MERS’s holding of legal title, nor its status as nominee, demonstrates any interest that would have rendered it a necessary party pursuant to Ark. R. Civ. P. 19(a). For these reasons, I concur that the circuit court’s order should be affirmed.

IMBER and WILLS, JJ., join.