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   Home            9. SUMMARY: What is MERS Real Interest in Property?
 
 
 
 
 
 
 
9. Summary: What is MERS' Real Interest in Property?
 
We started off in the Introduction by repeating several legitimate questions that are circulating in law reviews, the press and the courts.  And we have answered them by focusing on three distinctions.  The first, which really permeates this entire discussion, is the difference between ownership-in-title and ownership-in-equity.  We have seen that MERS does not separate the note and mortgage.  That is a legal illusion caused by the seeming separation of the note and mortgage documents.  But the note and mortgage are an organic whole and cannot be separated by anyone. What MERS did is separate ownership-in-title of the note/morgage from ownership-in-equity of the note/mortgage.  The second distinction that affect our discussion was the difference between the mortgage document (in Lien Theory States) and the deed-in-trust (in Title Theory States). The third source of confusion that we cleared up is the word "beneficiary" in the deed-in-trust.  The following chart summarizes the various problems and solutions: 
 
 PROBLEM
SOLUTION 
Does MERS bifurcate the note and mortgage?
NO. It is impossible for MERS, or anyone else, to bifurcate the note from the mortgage.  While the note and mortgage documents seem to be going in different directions, the note and mortgage are always one organic whole.  Whoever owns one, owns the other.
What MERS has done is separate ownership-in-title from ownership-in-equity.
 
When MERS is the "nominee" in a mortgage, who is the mortgagee?    
 
MERS is the mortgagee-in-title.
The Lender is the mortgagee-in-equity.
How can MERS be the "nominee" and the "beneficiary"?          
In Lien Theory States, MERS calls itself the "nominee" in the mortgage document.
In Title Theory States, MERS calls itself the "beneficiary" in the deed-in-trust document.
 
Who is the "beneficiary" in a deed-in-trust?    
Historically, the Lender was called the "beneficiary".  This is misguided since the land is held in trust for the owner.  Only when the debt is not paid is the land transferred to the lender. If we want to continue to use the word "beneficiary", then the following distinction should be made:
 
The Owner is the present-beneficiary (in a deed-in-trust).
The Lender is a contingent, future-beneficiary (in a deed-in-trust).
 
How then is MERS the "beneficiary" in a deed-in-trust? 
The distinction between ownership-in-title and ownership-in-equity must also be made with regards to the future, beneficial interest in a deed-in-trust, as follows:
 
MERS is a contingent, future-beneficiary in-Title
The Lender is a contingent, future-beneficiary in-Equity
 
Didn't the Supreme Court determine that the mortgage always follow the note? 
The Supreme Court was referring to the beneficial ownership, which translates to:

The Mortgage follows the Note - IN EQUITY
 
That does not contradict the modern reality that:
 
The Note follows the Mortgage - IN TITLE.
 
By clarifying the distinction between title and equity, and applying that distinction to existing terms, we have enunciated the decision of the Supreme Court of Minnesota in Jackson vs. MERS.  (Please see the accompanying spreadsheet of cases from across the U.S.).  That decision, of all the cases I have read, comes closest to resolving the confusion concerning MERS, and to the model which I am offering in this Tutorial.
 
What really happened here?  Was there fraud?  Was there a massive conspiracy to hide information from the American people?  No. As technologies emerge and evolve, as new divisions of labor emerge, as new rights and obligations emerge, the old terminologies do not always serve our needs.  Some words become obsolete.  Some words suddenly appear to be misused.  Some words become eroded.  And some concepts call out desperately for new names and new labels.   By examining the terms and concepts that are being stretched to do new tasks, we can identify the confusion, and resolve the problems that emerge.  Clear terminology, used clearly and logically, can resolve the confusion surrounding MERS.
 
DAVID HOSTYK
Copyright David Hostyk Feb. 1, 2011