DETAILED EXPLANATION OF SUCCESSOR TRUSTEE DOCUMENT

It is very important that you understand and do this very accurately. Do not deviate unless you really know what you are doing. 1.) Inspect your loan documents, the Note and the Deed of Trust or Mortgage. On the very bottom of the first page of the Note you should find something that looks like this:
MULTISTATE FIXED RATE NOTE-Single Family-Fannie Mae/Freddie Mac UNIFORM INSTRUMENT Initials: ________ 7291 VMP -6N (-2-7)-01 CHL (010/04)(d) Form 3200 1/101 VMP Mortgage Solutions, Inc. (800)521-

And on the very bottom of the first page of the Deed of Trust you should find something that looks like this:

DEED OF TRUST
MISSOURI-Single Family-Fannie Mae/Freddie Mac UNIFORM INSTRUMENT WITH MERS Page 1 of 15 VMP-6A(MO) (0107) 02 GHL (08/05)(d) VMP Mortgage Solutions, Inc. (800)521-7291 Form 3026 1/01 CONVNA

2.)

If you do not find something equivalent to the illustrations shown above you might not have a MERS infected mortgage package and the rest of the explanations here might not apply in your circumstance.

3.)

If your loan documents are MERS type as shown above or similar you should find on page 14 or thereabouts a paragraph #24 which is catch lined substitute trustee and it will look about that as shown here:

The complete text of that paragraph is:

24. Substitute Trustee. Lender, at its option, may from time to time remove Trustee and
appoint a successor trustee to any Trustee appointed hereunder by an instrument recorded in the county in which this Security Instrument is recorded. Without conveyance of the Property, the successor trustee shall succeed to all the title, power and duties conferred upon Trustee herein and by Applicable Law.

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4.)

Because of the nature of a Deed of Trust you should realize that it is in effect a contract between the borrower and the lender which is separate from the contract represented by the NOTE. Because of the nature of the contract in the Deed of Trust one should read and interpret or construe the text of the Deed of Trust in exactly the same way as any other contract, and of course the terms and conditions of the contract prevail.

LATE ENTRY:
[Late entry: SEE: Federal National Mortgage Association v. Howlett ( Mo. 1975) 521 S.W.2d 428 as to the contractual nature of a Deed of Trust.] 5.) In a typical MERS infected Deed of Trust in the first or second pages you will find that the borrower will be specified and likewise the lender will be specified. You will probably find a line associated with the borrower which states Borrower is the Trustor under this security Instrument and at lender the company from which you arranged the loan will be named as the Lender, and further down you will probably find a paragraph which talks about MERS. Note that MERS is neither a borrower, nor a lender. 6.) It is so very common these days that mortgages, meaning the Note and Deed of Trust are bought and sold with a high speed regularity, and whenever a mortgage is sold the originating lender ceases to be the lender. Let us note at this point that when you read about the lender on the first page or so of the Deed of Trust the term Lender is effectively defined as being the originating lender only in that it does not say that the lender is or includes any successors or assigns. 7.) Likewise when reading the text at Substitute Trustee (#3 above) it starts off by stating, Lender at its option -- it does not say lender and successors or assigns. Therefore it is the Lender and only the originating lender who may appoint a substitute trustee. The instant that the original lender negotiates and assigns the Note and Mortgage to a

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subsequent purchaser there is no longer a Lender with a power of appointment under the contract. When the original Lender sells the Note, all subsequent assignees or holders are not Lenders; instead, they are purchasers if they are a holder-in-due-course. 8.) It is said that Trusts arise in equity and that equity cannot abide a Trust without a Trustee. You will recall that at #5 above it was stated that the borrower is also the Trustor, well in a normal circumstance the Trustor, meaning the creator of the Trust, is the one who would appoint a Trustee in the first instance, and it is a function or duty of the Trustor to appoint any subsequent Trustee. 9.) In the Deed of Trust exampled above, the only reason that the (originating) Lender had the power to appoint a Trustee is because that power was included in the contract! Are you one who should appoint a Substitute Trustee?

LATE ENTRY
[Late entry: In the case, Adams v. Boyd (Mo. 1933) 58 S.W.2d 704, the court stated that the Mortgagor may appoint a Trustee and a successor Trustee for a Deed of Trust.]

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RE CASES: Appointment of Successor Trustee

A trustee in a deed of trust acts in a fiduciary capacity and he/she must act with complete integrity, fairness, and impartiality toward both the debtor and the creditor. Edwards v. Smith, 322 S.W.2d 770 (Mo.1959); West v. Axtell, 322 Mo. 401, 17 S.W.2d 328 (1929). The duties and powers of a trustee are fixed by the terms of the contract, namely, the deed of trust, Adams v. Boyd, 332 Mo. 484, 58 S.W.2d 704 (1933),

FROM: Spires v. Edgar (Mo Banc 1974) 513 S.W.2d 372.

Even if the statutory requisites to foreclosure had been satisfied and the Coxes had failed to properly restrain the sale, this trustees actions, along with the grossly inadequate purchase price, would result in a void sale. See Lovejoy v. Americus, 111 Wash, 571, 574, 191 P. 790 (1920); Miebach v. Colasurdo , 102 Wash.2d 170, 685 P.2d 1074 (1984). Because the deed of trust foreclosure process is conducted without review or confirmation by a court the fiduciary duty imposed upon the trustee is exceedingly high. Washington courts do not require a trustee to make sure that a grantor is protecting his or her own interest. However, a trustee of a deed of trust is a fiduciary for both the mortgagee and mortgagor and must act impartially between them. G. Osborne, G. Nelson and D. Whitman, Real Estate Finance Law 7.21 (1979). The trustee is bound by his office to present the sale under every possible advantage to the debtor as well as to the creditor. He is bound to use not only good faith but also every requisite degree of diligence in conducting the sale and to attend equally to the interest of the debtor and creditor alike. Swindell v. Overton, 310 N.C. 707, 314 S.E.2d 512, 516 (1984). See Blodgett v. Martsch, 590 P.2d 298, 302 (Utah 1978), (duty of the trustee under a trust deed is . . . to treat the Trustor fairly and in accordance with a high punctilio of honor); McHugh v. Church, 583 P.2d 210, 213 (Alaska 1978), Spires v. Edgar, 513 S.W.2d 372 (Mo. 1974); Whitlow v. Mountain Trust Bank, 215 Va. 149, 207 S.E.2d 837 (1974), Woodworth v. Redwood Empire Sav. & Loan Assn, 22 Cal.App.3rd 347, 99 Cal.Rptr. 373 (1971)

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We agree with a recent Alaska decision which emphasizes that a trustees management responsibilities under a deed of trust are less extensive that those of trustees in other fiduciary settings. McHugh, 583 P.2d at 214. See also S & G Inv. Inc. v. Home Fed. Sav. & Loan Assn, 505 F.2d 370, 377 n. 21 (D.C. Cir. 1974). The trustee of a deed of trust is not required to obtain the best possible price for the trust property. Compare, e.g., Allard v. Pacific National Bank, 99 Wash.2d 394, 406, 663 P.2d 104 (1983). Nonetheless, the trustee must take reasonable and appropriate steps to avoid sacrifice of the debtors property and his interest. McHugh, 583 P.2d at 214.

FROM: Cox v. Helenius (Wash. Sup. Banc, 1985) 103 Wn. 2d 383, 693 P.2d 683.
Among cases which have declared the trustee under a deed of trust to be in fiduciary relationship with the Trustor are Furst v. Loftin, 29 N.C.App. 248, 224 S.E.2d 641 (1976), Spires V. Edgar, 513 S.W.2d 372 (Mo. 1974), Woodworth v. Redwood Empire Savings & Loan Assn., 22 CalApp.3d 347, 99 Cal. Rptr. 373 (1971) and Feldman v. Rucker, 201 Va. 11, 109 S.E. 2d 379. The duty of the trustee under a trust deed is greater than the mere obligation to sell the pledged property in accordance with the default provision of the trust deed instrument, it is a duty to treat the Trustor fairly and in accordance with a high punctilio of honor. In discussing the difference between the duties of a mortgagee and the trustee under a trust deed, the Court of Appeals of District of Columbia in Spruill v. Ballard, 61 App.D.C. 112, 58 F.2d, 517 made this statement: The practice of securing money by deed of trust on real estate is the nearly universal method in effect in the District of Columbia. The ease and facility of foreclosure under it commends it over the more cumbersome form of mortgage which must be foreclosed in court, but this very fact imposes upon courts the duty of scrutinizing all sales had under it which are questioned, and of setting those aside in which fraud or overreaching has been practiced by the trustee. In Church Inv. V. Holmes, 60 App.D.C. 27, 46 F.2d 608, we said a trustee named in a deed of trust to secure a loan sustains a fiduciary relation to debtor as well as the creditor, . . . The breach of duty by the dominant party in a confidential relationship may be regarded as constructive fraud. It is unnecessary for the plaintiff to show an intent to defraud; constructive fraud is an equitable doctrine employed by the courts to rectify injury resulting from breach of the obligations implicit in the relationship.

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FROM: Blodgett v. Martsch (Utah Sup. 1978), 590 P.2d 298. In Blodgett v. Martsch, 590 P.2d 298 (UT 1978), it was stated that the duty of the trustee under a trust deed is greater that mere obligation to sell the pledged property, . . . it is a duty to treat the trustor fairly and in accordance with a high punctilio of honor. The Supreme Court in Blodgett went even further and found that the breach of this confidential duty may be regarded as constructive fraud. See also, McHugh v. Church, 583 P.2d 210, 214 (Alaska 1978) In Cox v. Helenlus, 103 Wn.2d 383, 693 P.2d 683 (1985), in which the trustee knew that the right to foreclose was disputed and that the attorney for the trustor had failed to restrain the sale, the court held that the trustee should have either informed the attorney for the trustor that she had failed to properly restrain the sale or delayed foreclosure. As a result of the trustees failure to do so, the sale was held void. ______________________________________________________________________________ See also, Pacific Concrete F.C.U. v. Kauanoe (Hawaii Sup. 1980) 62 Haw. 334 614 P.2d 936;
G.E. Capital v. Yonemaka (Haw. App. 2001) 96 Haw. 32, 25 P.3d 807,

Staff Mortgage Inv. V. Wikle (9th Cir. 1977) 550 F.2d 1228.

Closing Comments:
After studying a number of the above cited cases one should realize that most if not all of the duties and functions of the Trustee on a Deed of Trust are spelled out in that Deed of Trust; that the Deed of Trust is the contract which governs a foreclosure. Some of the cases (above) indicate that a Trustee has a duty, even though it may not be spelled out in the Deed of trust to determine whether there has been an actual default and that the terms of a default should be spelled out in the Deed of Trust and not on a separate document called a Note. By extension from the above it would seem that a Trustee that you appoint to protect your own interests should make it a point to verify that any creditor who might seek to activate the Trustee to perform a foreclosure pursuant state statute law must demand of that creditor that the original wet-ink signature note should be placed into the custody of the Trustee without any assignment to the Trustee. The Trustee in such a circumstance might be a possessor of the Note

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but the Trustee is not a holder of the Note within the meaning of UCC 1-201(20) because the Note has not been endorsed to the Trustee nor is the Note payable to the Trustee.

LATE ENTRY
[Late entry: In the case, West v. Axtell (Mo. 1929) 17 S.W.2d 328, the court indicated that a Trustee in a foreclosure sale must be in possession of the original Note and the Deed of Trust at the time of the sale.]
Then by a further extension, if the Trustee actually sells the realty it seems to me that the Trustee must attest upon the Note by notary that the Note has been foreclosed and is thereafter void. Why? Because when the creditor declares a default and demands that the security for the loan be foreclosed, and that is in fact done, the creditor has subordinated the terms of the Note in favor of the security which supposedly supported the Note, and thereafter cannot be heard to complain about any losses (the borrower lost value also by the foreclosure sale). The creditor should not have any further power to harass the borrower because of the Note still being undischarged. It is here suggested that it is an equitable duty on the part of the Trustee to discharge the Note entirely.

See this case: Wilner v. ODonnell (Mo.App. 1982) 637 S.W.2d

757. The scope and nature of the trustees duties in a non-judicial foreclosure proceeding are exclusively defined by the deed of trust and the governing statutes. No other common law duties exist. (I.E. Associates v. Safeco Title Ins. Co. (1985) 39 Cal.3d 281, 287-288; Residential Capital v. Cal-Western Reconveyance Corp (2003) 108 Cal.App.4th 807, 827; see also Kachlon v. Marowitz (2008) 168 Cal.App.4th 316, 335 [trustee in a nonjudicial foreclosure proceeding is not a true trustee with fiduciary duties. But rather a common agent for the trustor and beneficiary].)

Addendum to Appointment of Successor Trustee Article

This portion tends to get involved and may at first, be very confusing, but it is urged that you manage to study your way through this so that you might glean a basic understanding of it
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and then be more able to pursue researches into your state code of laws in search of comparable provisions which may be applicable in your state. A result in this state (Missouri) is that a still effective provision requires a Missouri co-trustee to be named in a security instrument meaning a mortgage instrument or a deed of Trust. And in a particular case being researched here (Missouri), a Trustee was named in the original Deed of Trust, which was recorded but that Trustee was a foreign corporation which as best as we know was not invested with any fiduciary powers in its home state and therefore could not under the statutory provision allowing for reciprocity even apply for a certificate of reciprocity in Missouri. Then later there was an endeavor (fraudulent) to appoint a successor Trustee done by a party without authority to appoint a successor, and the supposed new Trustee was a foreign law firm (incorporated) which likewise could not obtain a certificate of reciprocity in Missouri and therefore by statute could not exercise the powers of Trustee in Missouri. The result being, effectively, there had never been a lawful Trustee associated with the Deed of Trust. That fact provided the impetus that led to the generation of the above appointment of Successor Trustee document. As applies in your state and your case it is suggested that you find equivalent provisions as might exist in your state code and then consider whether they can be worth your while toward perhaps appointing your own Successor Trustee. Here follows the relevant Missouri statutes as they have been and currently are: 1.) RSMo 456.120 as it existed in the 1994 edition of the Missouri Code but was repealed in 2004. This is shown as an aid only to help you to get a beginning grasp of the subject at hand.

456.120.

Trustee-qualifications, exceptions. 1. The

trustee may be a natural person, corporation, association or partnership with the capacity to take and hold property except as provided in subsection 2. 2. No corporation, partnership or association organized under the law of a state or country other than the state of Missouri and no United States national banking association having its principal
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place of business outside of the state of Missouri shall have the capacity to act as trustee in Missouri except as other wise provided by section 362.600, RSMO.
2.)
(underline added)

Notice in particular the underlined portion in the above enlarged copy from the 1994 RSMo. The effect was that an out of state corporation or partnership or association did not have the capacity to act as a Trustee in Missouri unless they took provisions under RSMo 362.600, which provided for a certificate of reciprocity.

3.)

RSMo 443.350 is found in the Chapter titled mortgages, deeds of trusts, and mortgage brokers of the 1994 RSMo., which section is still valid and effective, and which effectively prohibits a foreign corporation or individual from acting as a Trustee in any security instrument unless in such instrument there is named a Missouri cotrustee. In the case being researched here (Missouri) the first out of state Trustee on the Deed of Trust did not include a Missouri co-trustee in the Deed of Trust. Therefore that out of state trustee was by statute prohibited from acting in Missouri to foreclose on any realty located in Missouri.

4.)

RSMo 443.350 of 1994 edition is a follows:

443.350.

Foreign corporation or person not to act as unless domestic

trustee,

corporation or resident trustee be named as cotrusteedomestic corporation under no disability because articles do not contain specific power.---No foreign corporation or individual shall act as trustee in any security instrument made after August 28,

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1994, affecting any property, real or personal, situate or being in this state, unless in such instrument there is named as co-trustee a corporation organized under the laws of this state, or an individual citizen of the state of Missouri. If any Missouri corporation is designated trustee in any security instrument or is appointed a successor trustee, it shall not be considered to be subject to any disability to act as such because it is organized under a chapter of the Missouri revised statutes other than chapter 362, RSMo, or because its articles of incorporation do not contain a specific power to execute trusts or serve as trustee under security instruments. (underline added) (RSMO 1939 3482, A.L. 1994 H.B. 1312) Prior revisions: 1929 3095, 1919 2254, 1909 2859 CROSS REFERENCE: Trust companys powers under reciprocal corporate fiduciary powers act, RSMo 362.600
5.) Following upon RSMo. 443.350 and the effort to appoint a successor trustee (mentioned above), the Trustee there named was a law firm located in a foreign state and which was not named in the instrument, meaning the Deed of Trust, and therefore there was a double whammy against that Trustee independent of the fact that the appointment document was fraudulent. 6.) RSMo. 362.600 from the 1994 edition of the Missouri code is shown below in full (Page 12 and Page 13) but that section has been revised in 2005. This older version is shown here as to be one that is directly comparable with the above shown code sections. In studying this section you should note in particular that a foreign corporation as defined in this section may act as a Trustee in Missouri only if it had fiduciary powers in its home state and if it currently possesses a certificate of reciprocity from the Missouri

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Director of Finance. But note also that even though a foreign corporation, as defined, might have a certificate of reciprocity, it still may not by itself act as a Trustee under 443.350 (above) unless a Missouri co-trustee is named in the security instrument. 7.) I warned up front that this would involved and convoluted and a bit of a pain in the derriere but after you have struggled your way through it perhaps you will agree that it was worth while. As a closing comment I would point out that if your state has statutes even some- what comparable to the Missouri statutes above, if a Trustee on your Deed of Trust violates the provision of your states statute law in regard to Trustees you might have a particularly strong basis for a suit against that Trustee for unlawful foreclosure and the damages can be as much as the value of the so called loan (NOTE) and more. Should you appoint your own Successor Trustee, that Trustee should insist upon production of the original wet-ink signature note before he or she acts, if requested by a claimed to be holder of the Note and Deed of Trust. Restudy the above article as to this point. By appointing your own Trustee, that by itself might be enough to stall and possibly totally stop any foreclosure activities as might be pursued by a Bank or equal appointed Trustee. It is suggested that its best if your appointed Trustee should be knowledgeable enough and have guts enough to challenge a Banks Trustee if the Banks Trustee attempts to foreclose. Your Trustee might need to confront a Banks Trustee head on at an attempted foreclosure sale; I warn you that your Trustee must have guts, and I mean it. Thank you for your time. I hope it proves to be worthwhile. Now about that appointment of a successor trustee, do you suppose you should pursue it. The author requests comments and or feedback as to other states Trustee statutes and whether you choose to implement the suggested activity. If acceptable post your comments to the website you obtained this article from.

LATE ENTRY
Thompson contends that because the last-named endorsement is made to Delta, Delta was the proper holder of the note when this action was filed, since the prior, first-named endorsement was from an entity other than the current holder of the note. In Adams v. Madison Realty &

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Development, Inc. (C.A.3, 1988), 853 F.2d 163, the Third circuit Court of Appeals stressed that from the makers standpoint: it becomes essential to establish that the person who demands payment of a negotiable note, or to whom payment is made, isnt the duly qualified holder. Otherwise, the obligor is exposed to the risk of double payment, or at lease to the expense of litigation incurred to prevent duplicative satisfaction of the instrument. These risks provide makers with a recognizable interest in demanding proof of the chain of title. Id. At 168.

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