There is a lot of conflicting opinions about this. My opinion is that the confusion arises not from the law, not from application of the law and not from what is written on the note or deed of Trust. If you look at the Bellistri Missouri case the issue is well settled. And the problem is not what is written, it is what is assumed to be written. The Bellistri case, 284SW 3d 619, (Missouri Appeal, cert. reportedly denied) coupled with its quote from Restatement 3rd is simple: put one name on the note and another on the DOT as beneficiary (particularly when the beneficiary is MERS and therefore an undisclosed principal) and you have direct evidence that the intention of the parties was to separate the note from the mortgage. The burden of proof thus shifts to the alleged creditor.

Conflict comes not from the law or the wording on the instruments but from the inherent question of “why would anyone want to do that?” There are of course many answers to that question in a securitized mortgage context. But it is the existence of the question that causes people to lean toward the idea that no reasonable person would have intended that and to assume that the parties, including the borrower, would never have intended WHAT WAS WRITTEN.

I think the point of the Bellistri case is simple: factually, the note and DOT are split and according to the Restatement 3rd, they can never be put back together again. The note, while still enforceable as an instrument by itself, is no longer secured by an encumbrance on the property. The “mistake” is that of the drafter of the instruments. They want to say, much later in time, what we NOW mean is that the beneficiary is X, who is not the payee on the note,, but X has received an assignment of the note. Thus NOW the beneficiary and the payee are the same which means we can foreclose.

So the question put to the Judge is can a note and security instrument, initially made out to two different parties be LATER joined and if so, what does that mean for enforcement. My first comment is that once you have established that facially the note and DOT were split, your prima facie case is met and the burden goes to the “lender” to prove they are the creditor along with a whole bunch of other things that are not unlike the elements of proving up a lost or destroyed note. You can’t just say it happened. You must explain and prove HOW it happened.

But the simple answer to the question as per the Restatement 3rd, is “NO.” The reason why they cannot be joined later is not just because Restatement 3rd says so, it is the reason Restatement 3rd says that, to wit: if you allowed, particularly in a non-judicial setting, parties not named on the note and not named as beneficiary to later act because of a claim as being both, you are introducing uncertainty into the marketplace which is the precise reason we have the law of contracts, property records and such. The moral hazard is raised from possibility to near certainty when you KNOW from the beginning that the payee and the beneficiary are two different parties and the beneficiary is not the real party so the knowledge includes, from the beginning, that there is at least one additional undisclosed party.

Let’s take the simplest example we can given the complexity of securitized residential mortgages. ABC is named the Payee on the note. MERS is named the beneficiary. MERS obviously has some understanding with a third party DEF not to make a claim on the loan (according to their website). So we must presume that they have that understanding and that maybe it is in writing in some general type of contract which was neither disclosed nor revealed to exist at the time of the closing with the borrower. DEF defaults in its payment obligations to MERS. MERS now says we refuse to perform under our contract with DEF. Borrower knows nothing of DEF nor of DEF’s payment default to MERS. Borrower pays the note in full to ABC. ABC returns the note as paid in full. Borrower wants a release and reconveyance (satisfaction) so the title record is clear.

Now it MIGHT be that DEF=ABC. But we don’t know that. So for purposes of your case, you MUST assume that DEF is simply an undisclosed third party. Borrower asks MERS for the release and reconveyance.  MERS refuses because it wasn’t paid by DEF and because it has no idea whether you paid the right person. With MERS refusing to execute a document releasing the lien, Borrower now has a defect in title that is unmarketable.

Borrower files a quiet title suit against MERS. MERS says it was named as beneficiary but that the DOT clearly states it serves only as nominee and therefore has no power to do anything. Now you have, on record, that the beneficiary is not MERS but the undisclosed third party DEF. The court MIGHT grant the final judgment, but it would then be adjudicating the rights of other parties who are not present in court, thus leaving the title clouded and possibly still unmarketable.

Another possibility is that the Court would inquire or allow discovery to allow the identification of DEF. Assuming MERS wishes to comply, there is still a problem. Data entry is NOT performed by MERS employees. Data entry is performed by “members” with passwords and user ID’s. Thus all MERS can say is that at a particular point in time MERS computer records show DEF, which was assigned to ABC or perhaps yet another party. The assignment is executed by Jane Jones as “limited signing officer” for MERS. MERS can’t say they know Jane Jones or anything about her because she doesn’t work for MERS. Therefore the only competent evidence from MERS is the data in fields populated by unknown sources of data input, and references to documents that were never seen or kept by MERS. The evidence from MERS thus has little or no probative value.

So now the Court or borrower goes to DEF and says “Who is Jane Jones?” DEF replies they don’t know because the assignment document was prepared by a foreclosure processing firm in Jacksonville, Florida named DOCX. DOCX has no contract with ABC or DEF or MERS. They were just following orders from yet a fourth party who is unidentified, and whose instructions were relayed through a fifth firm that serves as the correspondent or document manager once the loan goes into foreclosure (perhaps ordered by the servicer, BAC).

Thus the reason that a note and DOT can never be joined at any time other than the creation of those documents and executed contemporaneously with the funding of the obligation is that the contract and its performance is not based upon a condition subsequent (because such a condition would render the contract inchoate until the condition subsequent arrived or which would extinguish the obligation, note and mortgage). For there to be enforceability there must be certainty in the contract. Certainty can only be achieved if the terms and parties who are expected to perform are identified with sufficient clarity that any reasonable person would say they are known.

A borrower who signs papers without having a known party who is required by law to execute a satisfaction (release and reconveyance) has in effect executed documentation without a counterparty. The document is therefore void. Since the document (note, DOT, etc.) is only evidence of the obligation that arose because the borrower did in fact receive a benefit from the funding of the loan, the obligation survives while the note and/or DOT do not. However, in order to achieve certainty in the marketplace, the obligation is not secured unless and until some party identifies itself as the creditor and establishes a subsequent encumbrance through judgment lien, equitable or constructive trust or some other means.

Such a creditor action would be subject to rigorous requirements of pleading and proof. In the context of a securitized residential mortgage, the creditor can only be the party(ies) who advanced actual money, from which money the borrower’s loan was funded. In the context of mortgage-backed securities, a creditor who pleads that he expected a secured loan, must also plead all the documents and transactions that gave rise to advancing the money. This would mean that the creditor would be required to disclose and account for credit enhancements, insurance, credit default swaps, over-collateralization, cross-collateralization, and payments received from all sources pursuant to the terms under which the creditor advanced said funds.

Those terms are included in the prospectus and bond indenture which incorporate the pooling and service agreement, Depositor Agreement, Assignment and Assumption Agreements etc. In other words, the actual terms upon which the creditor advanced money were different from the actual terms accepted by the borrower. A court in equity would thus be required to allocate equity and liability for the various unpaid and paid obligations of multiple parties whose existence was unknown to borrower at the time of the loan closing, and whose existence even now would be at best dimly understood by the borrower or any other person who was not extremely well-versed in the securitization of credit.

26 Responses

  1. James, sent you an email. Mike


  2. I spent over two years, 2,000 hours of research and thousands of dollars as a Pro Se litigant fighting my lender, servicer, trustee and others. I just received notice from the Superior Court of Burbank, California:

    Fannie Mae’s unlawful detainer complaint was “quashed” and I won my Motion for Summary Judgment against them voiding the foreclosure, unlawful detainer and all assignments.

    Although I listed five (5) broken chains of title in my paperwork, the Judge only wanted to discuss one. I had to prove through case law citations that it is unlawful for a note to separate from the mortgage or deed of trust. I gave the judge more than 20 decisions including a US Supreme Court case. With that, I finally won!

    As of today, I launched a one page website http://www.HOWIWONMYFORECLOSURE.COM My intention is to teach others how to do what I did through seminars throughout the country in mass (if there is an interest) and a maximum of eight people one-on-one; by phone, Skype or in person. I think I discovered one Achilles heel that may get through the courts. Time will tell.

    Dr. James Chappell


  3. Hard Money lenders: Just saw that my balloon/promissary note was not recorded with the deed of trust. At first I thought nice mess up and the title company is in trouble. Now I am reading posts and think it was maybe not an accident.
    The trust that lent has seemed phoney and that smoke and mirrors are involved in the trust. The servicer I think is involved with securities. has a pool or something going on. So what is the scoop?
    Did he sell my note and leave somebody else holding the dot?

    So back at the recorders office the dot is Kind of messed up with a poor notary job and altered docs that were not initialed. Mention is made of a balloon rider but no balloon note is recorded

    The Balloon note is not in any other recordings in that time frame or elsewhere. So where is it? They just filed judicial foreclosure and they stuck
    the note in. Not notarized, un recorded 4 page balloon note in with the papers…..


  4. […] week I read Neil Garfield’s post about the Bellistri v. Ocwen Loan Servicing case in […]


  5. […] The Bellistri case, 284SW 3d 619, (Missouri Appeal, cert. reportedly denied) coupled with its quote from Restatement 3rd is simple: put one name on the note and another on the DOT as beneficiary […]


  6. […] SEPARATION OF DEED OF TRUST FROM NOTE: Bellistri Opinion Posted on April 28, 2010 by Neil Garfield There is a lot of conflicting opinions about this. My opinion is that the confusion arises not from the law, not from application of the law and not from what is written on the note or deed of Trust. If you look at the Bellistri Missouri case the issue is well settled. And the problem is not what is written, it is what is assumed to be written. The Bellistri case, 284SW 3d 619, (Missouri Appeal, cert. reportedly denied) coupled with its quote from Restatement 3rd is simple: put one name on the note and another on the DOT as beneficiary (particularly when the beneficiary is MERS and therefore an undisclosed principal) and you have direct evidence that the intention of the parties was to separate the note from the mortgage. The burden of proof thus shifts to the alleged creditor. […]


  7. A motion in the Bellistri v. Ocwen Loan Servicing case for rehearing and/or transfer to the Missouri Supreme Court was denied on Apr 6, 2009. It is decided law in MO.


  8. I am still confused about how the note and the mortgage become split and the note becomes unsecured. I bought my home through a mortgage broker. The lender is out of business. The lender assigned the note to US Bank. US Bank has the original note but endorsed it in blank. The Freddie Mac site says it owns my loan. Does this mean that Freddie Mac bought the note and securitized it? And if so, does the language in the Freddie Mac Master Trust Agreement about FM selling the mortgages to the pool and giving up its interest in the mortgages constitute a splitting of the note and mortgage? Help. I am confused.


  9. Michael, sorry it’s “Two faces of debt”


  10. Duval,

    I asked same question with no response.

    Michael, believe it or not banks do not loan their or their depositors money.

    Money for loan is created through the signing of the promissory note and fractionial banking.

    Read the booklet, two faces of credit by Chicago federal reserve bank.

    Very interesting,



  11. Only question I have is the trustee suppose to be separate arms length party to the named beneficiary on the DOT in order to be impartial?


  12. Hello,

    Re: Securitization Theory

    Since many of us were duped into believing that we were in contract as borrowers from lenders and that the transaction was secured by grant deed of trust, would’nt it make sense to determine who funded the apparent “loan or mortgage” to begin with?

    If the bank who originated the mortgage funded the note by way of its depositors, which is ordinary protocol for a mortgage contract, then the mortgage can be secured by a grant deed of trust, allowable under UCC-9 where there is a functioning borrower and lender to the transaction and as intended.

    However, if the apparent contract for mortgage was funded by a SPV (Special Purchase Vehicle) aka an ABS, (Asset Backed Security) Trust for the purpose of backing such a trust, then the note cannot be secured by a Grant Deed of Trust. This type of structured finance is allowable only under UCC-8.

    It seems to me that if this is true, then it would make sense to pinpoint the source of the funding. Where did the funds get wired into escrow from???

    Would’nt this information determine the legal classification of the transaction and further determine the role of all parties to the contract? Was I a borrower on a mortgage contract, or a seller of a note to a trust?

    Is there a better way to confirm or deny the truth to this “Securitization Theory”?

    What was the real intent of the Banks?



  13. […] week I read Neil Garfield’s post about the Bellistri v. Ocwen Loan Servicing case in […]


  14. MIKE–there is a small group of us in the Bay area who are doing APs.

    Pls email me at


  15. So at what point do we all file our quiet titles?

    Do we wait for class action lawsuits?

    Should we still attempt to modify our loans or do we lose our right to damages/awards if we do?


  16. Good question Mike. I’ve wondered the same thing. Recontrust was my trustee, countrywide my lender. Countrywide owned recontrust. How does that allow recontrust to be impartial?


  17. Question anyone.

    Is the trustee suppose to be separate arms length party to the named beneficiary on the DOT in order to be impartial?


  18. By the way, what Restatement 3rd are we talking about here?


  19. what a coincidence. i was just thinking about this very thing earlier today.

    here are my thoughts:

    1. the mortgage and note are separated so that the note can be freely bought and sold over the years by different investors. what they don’t realize is that they are really getting an unsecured note, because the mortgage stays in the name of the original servicer, ttee, funder, etc. (“promoter”).

    2. but since the original promoter has already been paid for the note, he can’t
    foreclose if the 4th investor down the line doesn’t get paid.

    3. but the promoter maintains the mortgage in his name so that he can say that he is the lender and mortgagee, if push comes to shove with the 4th investor.

    4. since nobody is going through the discovery process to challenge this, so the promoter gets away with it.

    5. additionally, by not reassigning the mortgage each time the note is sold, assignment and recording fees are eliminated.

    6. the original promoter doesn’t even know where the note resides after being sold 4 times, because the guy he sold it to doesn’t know, and none of these guys is going to spend the time and resources to help out somebody else, especially since they’ve already been paid.

    7. and if the certificate holders have already been made whole by insurance and CDS, the promoter gets to walk away with the house for free.

    8. the only person that knows of the borrower’s loan default is the servicer, who commences the foreclosure on behalf of the mortgagee, i.e., the promoter. but after default, the original note holders claim is paid (?) and he’s out of the picture.

    Wells Fargo and Provident tried to do this with me, but I defeated them earlier this week by way of obtaining a summary judgment.

    foreclose on the


  20. I have a question though, even if the mortgage and note are separated and the debt now becomes unsecured, isnt the lien still attatched to the property?
    So, If you went to sell the property, you couldnt get a clean title to convey to the new owner. And the house would be damaged goods so to speak.


  21. Thinking about this some more…seems like the situation could be one of the following but not both:

    1. Common law says mortgage follows note. Therefore, whoever has the note has the mortgage also–this is automatic. i.e., note and mortgage can’t be split

    2. The Bellistri scenario above is possible.

    Either way, in my case, the “lender” is SOL…


  22. Neil’s example of ABC v. DEF v. MERS, etc. brings up another bit of language from the standard MERS DOT/mortgage.

    My DOT says that MERS is a “separate corporation.” A reasonable person would assume that “separate” in this case means “separate from the lender.” However, MERS is NOT a “separate corporation” in at least the following respect:

    Employees of other corporations do the work of MERS, such as filing fraudulent assignments. In my case, employees of BAC executed the assignment while saying they were MERS. In other words, if MERS really were a “separate corporation,” it would have its own employees to do its own paperwork instead of disguising its members’ employees as employees of MERS. This also negates the idea, enshrined in the DOT, that MERS is a “separate corporation.” This is fraud and in my opinion, renders the DOT void or voidable.


  23. Has the Bellistri Opinion been appealed again to a higher court?

    Has the appeal window closed?

    Has the appeal been denied?

    Anyone Know?


  24. Great expanation!

    Looking for some guidance from someone in filing an advesarial (?) Complaint with a just filed BK13 action in No. Cal. BK was filed by attorney and is OK with it.

    Foreclosure was scheduled tmorrow by ca reconveyence. WAMU still listed on 2004 5yr ARM. No other entries or assignments since DOT in 04 and notice of default & sale by ca reconveyence, trustee who was/is a WAMU controlled entity now Chase.

    Just sending off QWR to chase who recently sent letter saying they owned the note but not filed.

    Sales price $660,000 – $120,000 cash downpayment was giving a 5 yr. ARM on a 30yr. Note.
    Another $100,000 was spent prior to movein.
    House now worth $400,000 with a note of 528,000.

    Given run around for over a yr on loan MOD. Glad we didn’t do it now.

    First missed payment was in sept. 2009 due to water line under concrete slab leak for second time in a yr. House had to be gutted and repaired. We were living at a hotel for 4 months. Ran our business from house. All income ceased.

    Willing to pay an attorney or paralegal or person who can help. I understand and can articulate what has happened from the creation of the note, etc. Just need need help on filing correct complain, etc.

    Thanks Neal for this great site. I also sent you an email on a biz proposition to help get the word out and drive more biz to this site and your team of attorney’s that get it.

    Anyone who can help, please call me at 831-236-0957

    Monterey California


  25. Excellent Post!


    I want you for my expert witness! How do I reach you?


  26. Very helpful and informative post, thank you!

    One small clarification… DOXC was located in Alpharetta, Georgia. They were a wholly owned subsidiary of Lender Processing Services, Inc. (also known as “LPS”) which is a Delaware corporation with it’s headquarters being located in Jacksonville, FL.

    DOXC has recently been closed, most likely because of the (probably criminal) investigation into them by the FBI.


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