Exhibit 1 to Declaration of Jody m. Mccormick. Document 41-1

7/24/2019 Exhibit 1 to Declaration of Jody m. Mccormick. Document 41-1

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Case 8-10-77338-reg Doc 41-1 Filed 02110111 Entered 02/1011114:13:10

Mortgagee status

The Movant's failure

to

show that

U.S.

Bank holds the Note should

be

fatal

to

the

Movant's st.anding. However, even

i

he

Movant

could

show

that

U.S.

Bank

is

the holder

of

he

Note, it

still would

have to

establish that

it

holds

the Mortgage in

order

to

prove that

it

is

a

secured creditor with standing

to

bring th is Motion before this Court. The Movant

urges

the

Court

to

adhere

to

the adage that a mortgage necessarily follows the same path as the note

for

which

it

stands as collateral.

See

Wells Fargo Bank N.A. v Perry 875 N.Y.S.2d 853, 856 (N.Y.

Sup. Ct. 2009). In simple tenns the Movant relies

on

the argument that a note and mortgage

are

inseparable. See

Carpenter

v. Longan. 83 U.S. 271,

274 (1872). While it

is

generally true that a

mortgage

travels a parallel

path with its

corresponding

debt

obligation,

the

parties

in

this case

have adopted a process which by its very terms alters this practice

\Vhere

mortgages are held by

MERS as

mortgagee

of

record.

By

MERS's own account, the Note

in

this case

was

transferred among its members, while the Mortgage remained in MERS's name. MERS ad1nits

that

the very

foundation

of ts

business model

as

described

herein

requires that the Note

and

Mortgage travel on divergent paths. Because the Note and Mortgage did not travel together,

Movant must prove not only that

it

is acting on behalfofa valid assignee

of

he Note, but also

that it is

acting

on

behalf

of

the valid assignee of

the

Mortgage.$

'

MERS argues that notes and mortgages processed through the MERS System are never

separated ' because beneficial ownership of the notes and mortgages are always held

by

the same entity, he Court will not address that issue in this De(:ision, but leaves open

the issue as to

whet11er

mortgages processed through

the

MERS syste1n are properly

perfected and

valid

liens. See Carpenter v Longan,

83

U.S. at 274 (finding that

an

assignment of the mortgage without the note is a nullity);

Lancbnark

Nat l

Bank

v. Kesler,

216 P.3d 158, 166-67 (Kan. 2009) ( [l]n the event tha t a mortgage loan somehow

separates interests

of

the note and the deed of trust, with the deed of rust lying with some

independent entity, the mortgage may become unenforceable ).

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MERS asserts

that its right

to

assign the

Mo11gage

to U.S.

Bank in

this case, and in

what

it estimates to be literally millions of other cases, stems from three sources: the Mortgage

documents; the

MERS

membership agreement; and state law.

In

order

to

provide some context

to

this discussion,

the Court will begin

its analysis

\Vith an

overview

of

mortgage and

loan

processing within the

MERS

network of lenders as set

forth

in the record

of

this case.

ln the most

com1non

residential lending scenario, there are

two

parties to a real property

mortgage- a mortgagee,

i.e.

a lender, and a mortgagor, i.e. a borrower. With some nuances

and

allowances for

the

needs of modern

finance this model has been followed

for

hundreds

of

years. The MERS business

plan as

envisioned and implemented by lenders and others involved

in

what

has

become known as the mortgage finance industry, is based in large part on amending

this

traditional model and introducing a third party

into

the equation.

MERS is in

fact neither a

borrower nor

a

lender, but rather purports to be both mortgagee of record and

a

nomitiee

for

the mortgagee.

MERS

was created

to

alleviate problems created

by

what was determined by the

financial

community

to

be slow

and burdenso1ne

recording processes adopted

by

virtually every

state and locality.

In

effect the MERS system was designed to circumvent these procedures.

MERS as envisioned

by

its originators, operates as a

replace1nent

for our traditional system of

public recordation of mortgages.

Caselaw

and

commentary addressing MERS's

role in the

mortgage recording

and

foreclosure process abound. See Christopher L. Peterson, Foreclosure S11bprin1e Mortgage

Lending and the Mortgage Electronic Registration System 78 U. Cin. L. Rev. 1359 (2010). ln a

2006

published opinion, the

New York

Court of Appeals described

MERS

system

as follows:

In 1993 the MERS systen1 was created

by

several large participants in the real

estate 1nortgage industry

to

track ownership interests

in

residential mortgages.

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Case 8-10-77338-reg Doc 41 1 Filed 02/10/11 Entered 02/10/1114:13:10

Mortgage lenders and other entities,

known

as MERS members, subscribe to the

MERS system and pay annual fees

for

the electronic processing and tracking

of

ownership and transfers of mortgages.

Me1nbers

contractually agree

to

appoint

MERS

to

act as their corninon agent

on

all

mortgages they register

in

the

MERS

system.

The

initial MERS mortgage is recorded in the County Clerk's office with

'Mortgage Electronic Registration Systems, Inc.' named as the lender's nominee

or mortgagee of record on the instrument During the lifetime of the mortgage,

the beneficial ownership interest

or

servicing rights

may

be transferred among

MERS members

(MERS assignments). but these assignments

are

not publicly

recorded; instead they are tracked electronically in MERS's private system.

In

the

MERS system, the mortgagor is notified of transfers

of

servicing rights pursuant

to the Truth in Lending Act, but not necessarily of assignments of the beneficial

interest in the mortgage.

Merscorp Inc. v Romaine 8 N.Y

.3d 90 N .Y.

2006) (footnotes omitted).

In

the words ofMERS's legal counsel, [t]he essence ofMERS' business is

to

hold legal

title to beneficial interests under mortgages and

deeds

of trust

in

the

land

records. The MERS®

System is designed to allow its members, which include originators, lenders, servicers, and

investors,

to

accurately and efficiently track transfers

of

servicing rights and beneficial

ownership. (MERS

Memorandu1n

of

Law

at 5).

The MERS®

System eliminate[s] the

need

for frequent, recorded assign1nents of subsequent transfers. (MERS Supplemental

Memorandum of Law at

4). Prior

to

MERS, every time a

Joan

secured

by

a mortgage

was

sold,

the assignee would

need

to record the assignment

to

protect the security interest. fa servicing

company serviced the

loan

and the servicing rights were sold, - an event that could occur

multiple times during the

life of

a single mortgage

loan

- multiple assignments were

recorded

to

ensure that

the

proper servicer appeared

in

the

land

records

in

the County Clerk's office.

(MERS Supplemental Memorandum ofLaw at

4-S).

When the beneficial interest in a Joan is sold, the promissory note is

still

transferred by

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an endorsement and delivery from the buyer to the seller, but MERS Members are obligated to

update

the MERS® System to

reflect

the change in o\vnership of the pro1nissory note So

long as the

sale

of the note involves a

MERS

Men1ber, MERS remains the named

1nortgagee

of

record, and continues

to

act

as

the mo1tgagee,

as

the

nominee for

the

new

beneficial owner of he

note (and MERS' Member). The seller of the note does not and need not assign the mortgage

because under the

terms

of that security

instrument.. t-.1ERS

remains the

holder

of title to the

mortgage, that is, the

mortgagee,

as the nominee for the purchaser of he note, who is then the

lender's successor and/or assign. (MERS Supplemental Memorandum ofLa\v at 6). At

all

times during this process, the original mortgage

or an

assignment of the mortgage

to

MERS

remains of

record in

the public

land

records where the security

real

estate is located, providing

notice of MERS's disclosed role as the agent for the MERS

Me1nber

lender and the lender's

successors and assigns. (Declaration

of

William C. Hultman, ,9).

MERS

asserts that it

has

authority to act

as

agent

for each and

every MERS

n1e111ber

which claims ownership of a note and mortgage registered in its systen1. This authority is based

not in

the statutes or case law, but rather derives

from

the terms

and

conditions

of

a

MERS

membership agreement. Those terms

and

conditions provide

that MERS shall

serve as

mortgagee of record with respect

to

all such mortgage loans solely as a no1ninee,

in an

administrative capacity, for the beneficial owner or owners thereof from time to time.

(Declaration of William C. Hultman, ,5 . M£RS holds the

legal

title

to

the mortgage and acts

as the agent or nominee for the MERS Member lender,

or

O\vner of the 1nortgage loan.

(Declaration

of William C. Hultman, ,6 . According to MERS, it is the intent of the parties

for

MERS to serve as the comn1 11 nominee r genl for MERS

Member

lenders and their

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successors and assigns. (MERS Supplemental Memorandu1n of

Law

at 19

(e1nphasis

added by

the Court). Because MERS holds the mortgage lien for the lender \Vho 1nay freely transfer its

interest in the note, without the need

for

a recorded assignment document

in

the land records,

MERS holds the mortgage lien for

any intended

r n ~ f e r e e of h

note.

(MERS Supplemental

Memorandum of Law at 15) (emphasis added by the Court). If a MERS member subsequently

assigns

the note

to a non-MERS member, or if the

MERS

member which holds the

note

decides

to foreclose.

only then is an

assignment of

he

1nortgage from

MERS

to the noteholder

docu1nented and recorded in the public and records where the property is located. (Declaration

of William C. Hultman,

,12).

Before commenting

on

the legal effect

of

the MERS n1embership rules or the alleged

"common agency agreement created among MERS n1embers, the Court will review the relevant

portions of the documents presented in this case

to

evaluate v.•hether the docu1nentation,

on

its

face, is sufficient to prove a valid assignment

of

the Mortgage to

U.S.

Bank.

The Mortgage

First Franklin is the Lender named in the Mortgage. With reference to MERS's role in

the transaction, the Mortgage states:

MERS

is a separate corporation that is acling solely as a non1inee

for

Lender

and

Lender's successors nd assigns.

MERS

is organized and existing under the laws

ofDelaware, and has

an

address and telephone number of P.O. Box

2026.

Flint,

Ml

48501-2026, tel (888) 679 MERS.

FOR PURPOSES

OF

RECORDING

TJDS MORTGAGE, MERS IS TH

MORTG GEE

OF

RECORD.

(Mortgage at I (emphasis added

by

the Court)).

The

Mortgage also purports to contain

a

transfer to

MERS

of the Borrower's (i.e., the

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27

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37

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8 10 77338 reg Doc 41 1 Filed 02110111 Entered 0211011114:13:10

Debtor's) rights in the subject Property as follows:

BORROWER'S TRANSFER

T

LENDER OF RIGHTS IN THE PROPERTY

[The

Borrower) mortgage[s], grant[s]

and convey[s] the Property to MERS

(solely

as

nominee

for

Lender and Lender's successors

in interest)

and

its

successors

in

interest subject

to

the terms of his Security Instrument. This means

that, by signing this Security Instrument, [the Borrower is] giving Lender those

rights that are stated in this Security Instrument and also those rights that

Applicable Law gives

to

lenders

who hold

mortgage

on

real property.

[The

Borrower

is]

giving Lender these rights to protect Lender

from

possible

losses

that might result if[the Borrower] fail[s] to [comply with certain obligations

under the Security Instrument and accompanying Note.]

[The Borrower] understand[s] and agree[s] that MERS holds only legal title to the

rights granted by [the Borrower]

in

this Security Instrument, but,

if

necessary to

comply

with

law

or custom,

MERS

(as

no1nineefor Lender and Lenders s

successors and assigns) has the righ1.·

(A)

to exerc1 .<;e any or all those rights

including,

but not limited lo the right

to

foreclose and sell the Property; and (BJ

to

take

any action required o Lender including but not lirnited to, releasing and

canceling this Security

Jnstrun1ent.

[The Borrower gives] MERS (solely as nominee for Lender and Lender's

successors

in

interest), rights

in

the Property

(Mortgage at

3)

(emphasis added).

The

Assignment

of

Mortgage references

the

~ o r t g a g e

and defines the Assignor as

' Mers' Mortgage Electronic Registration Systems, Inc., 2150 North First Street. San Jose,

California 95131,

as

non1ineefor First Franklin a division

of

National City Bank

of

IN, 2150

North First Street San Jose, California

95153.

(E1nphasis added

by

the Court). The Assignee

is U.S. Bank.

Premised on the foregoing documentation, MERS argues that it

had full

authority to

validly execute the Assignment

of

Mortgage to U.S. Bank on February J, 2008, and that as

of

the

date the foreclosure proceeding was co1nmenced U.S. Bank held both the Note and the

Mortgage. However, without more, this Court finds that MERS's ''nominee status and the

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case 8-10-77338-reg oc 41-1 Filed 02110/11 Entered 02110/1114:13:10

rights bestowed upon MERS within the Mortgage itself,

are

insufficient to empower MERS to

effectuate a valid assignment of mortgage.

There are several published New York state trial level decisions holding that the status of

nominee or 'mortgagee of record bestowed

upon

MERS

in

the mortgage documents,

by

itself,

does

not

empower

MERS to effectuate an assignment of

he

mortgage. These

cases hold

that MERS

may

not validly assign a mortgage based on its nominee status, absent so1ne evidence

of specific authority to assign

the

mortgage.

See Banko/Nev.•

York

v. Mulligan

No. 29399/07,

2010 WL 3339452,

at

*7 (N.Y. Sup. Ct. Aug. 25, 2010);

One West Bank

F.S.B. v. Drayton 910

N.Y.S.2d 857, 871 (N.Y.

Sup. Ct. 2010); Bank o

New

Yorkv. Alderazi 900

N.Y.S.2d 821, 824

(N.Y. Sup. Ct. 2010)

(the

party

who

claims

to

be the agent

of

another bears the burden

of

proving

the agency

relationship by a preponderance

of he

evidence );

HSBC Bank

USA

v.

Yeosmin No. 34142107, 2010

WL

2089273, at '3 (N.Y. Sup. Ct

May

24, 2010); HSBC Bank

USA

v. Vasquez

No. 37410/07,

2009

WL 2581672,

at '3

(N.Y.

Sup.

Ct. Aug.

21, 2010); LaSalle

Bank NA. v. Lamy

824

N.Y.S.2d 769, 2006

WL

2251721, at

'2

(N.Y. Sup. Ct. Aug. 7,

2006)

( A nominee of he owner of a note and mortgage may not effectively assign the note and

1nortgage to another for want of

an

ownership interest in said note and

1nortgage

by the

nominee. ). See also MERSv. Saunders 2 A.3d 289, 295 (Me. 2010)

( MERS's

only right

is

to

record the

mortgage. Its designation

as

the

'mortgagee of

record'

in

the document does not

change

or

expand that

right

. ). But see

US Bank N.A.

v. Flynn

897

N.Y .S.2d 855 (N.Y. Sup.

Ct.

2010) (finding

that MERS's nominee

status and the

mortgage documents give

MERS

authority to

assign);

Cru1n

v. LaSalle Bank N.A. No. 2080110, 2009 WL 2986655, at *3 (Ala.

Civ. App., Sept. 18, 2009) (finding MERS validly assigned its and the lender's rights

to

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assignee); Blau

v. An1erica

s Serv;cing Co111pany, el al.. No. CV-08-773-PHX-MHM, 2009 WL

3174823, at 8 (D. Ariz. Sept. 29, 2009) (finding that assignee of MERS had standing to

foreclose).

In

LaSalle a n ~ N.A. v. Bau/oute, No. 41583107,

2010

WL

3359552, at

2

(N.Y. Sup.

Aug. 26,

2010),

the

court

analyzed the relationship between

MERS

and the original lender

and

concluded that a

nominee

possesses few or no

legally

enforceable rights beyond those of a

principal whom the nominee serves. The court stated:

MERS . . .

recorded the subject

mortgage as nominee for FFFC. The

word

nominee

is

defined

as

[a] person designated

to

act

in

place

of

another,

usu.

in

a

very limited way

or

[a]

party

who holds bare legal title for the benefit of

others.'' (Black's Law Dictionary 1076 [8th ed

2004]

). ''This definition suggests

that a nominee possesses few or no legally enforceable rights beyond those ofa

principal

whom

the nominee serves. Landmark National Bank v. Kesler,

289

Kan 528,

538

[2009) ). The Supren1e Court ofKansas, in Landn1ark

National

Bank,

289

Kan

at 539, observed that:

The legal status of a nominee, then, depends on the context of the

relationship of the nominee

to

its principal. Various courts have

interpreted the relationship ofMERS and the lender as an agency

relationship.

See Jn

re

Sheridan,

2009 WL631355, at

*4

(Bankr. D. Idaho.

March

12, 2009)

(MERS acts not

on

its

own account.

Its capacity

is

representative. );

Mortgage Elec. Registrations Systems, Inc.

v.

Southwest,

2009 Ark. 152

---,

30 I SW3d

l,

2009 WL 723182 (March 19, 2009)

( MERS,

y

the terms

of

he deed of trust,

and

its own stated purposes,

was the lender's agent );

La

Salle

Naz.

Bankv. La1ny,

12

Misc.3d 1191 [A),

at

'2

{Sup Ct, Suffolk County

2006])

... ( A nominee of the o\vner of a

note

and

tnortgage may not effectively assign the note and mortgage to

another for

want

of

an

ownership

interest

in

said note and

mortgage by

the

nominee. ).

LaSalle Bank, N.A.

v. Bouloute,

No. 41583/07, 2010 WL 3359552, at *2;

see also Bank of

Nell

York v.

Alderaz;, 900 N.Y.S.2d 821,

823

(N.Y.

Sup.

Ct. 2010) (nominee

is

' [a]

person

designated to act in place of another, usually in a very limited way. ') (quoting Black's Law

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Dictionary)).

In LaSalle Bank N.A. v. Bouloute the court concluded that MERS

must

have some

evidence o authority

to

assign the mortgage

in

order

for

an assignment o a mortgage

by

MERS

to

be effective.

Evidence

ofMERS's authority to assign could be

by

way of a power of attorney

or some other document executed

by

the original lender. See

Boufoute

2010

WL

3359552,

at

*I; Alderazi 900 N.Y.S.2d

at 823

(' To

have

a proper assignment of a

mortgage

by

an

authorized agent. a power o attorney

is

necessary

to

demonstrate

how

the agent

is

vested with

the authority to assign the mortgage.' ) (quoting HSBC Bank USA

NA

v. Yeasmin

866

N.Y

.S.2d

92 N.Y. Sup.

Ct.

2008 .

Other

than

naming MERS

as

nominee , the Mortgage also provides that the Borrower

transfers legal title t the subject property

to

MERS,

as

the Lender's nominee, and acknowledges

MERS's rights

to

exercise certain o the Lender's rights under state

law.

This too, is insufficient

to bestow any authority upon

MERS to

assign the

111ortgage. In

Bank

o

New

York

v. Alderazi

the court found [t]he fact that the borrower acknowledged and consented to MERS acting

as

nominee o the lender has no bearing on what specific powers

and

authority the lender granted

MERS. Alderazi

900 N.Y .S.2d

at

824. Even if

it

did bestow some authority upon MERS, the

court in

Alderazi

found that the mortgage did not convey the specific right to assign the

mortgage.

The Court agrees with the reasoning and the analysis in Bouloute and Alderazi and the

other

cases cited

herein and finds that the Mortgage,

by

naming

MERS

a nominee, and/or

mortgagee o record'' did not bestow authority upon MERS to assign the Mortgage.

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he

M RS

membership rules

According to MERS in addition to

the

alleged authority granted to it in

the Mortgage

itself

the

documentation

of

the Assignment

of

Mortgage comports with all the legal

requirements

of agency when read in conjunction with the overall MERS System. MERS's

argutnent requires that this Court

disregard the

specific words of

the

Assignment of

Mortgage

or,

at

the

very least, interpret the Assignment in light of the overall MERS System of tracking the

beneficial interests

in

mortgage securities. MERS urges the Court to look beyond

the

four

comers of the Mortgage and take into consideration the agency relationship created y the

agreements entered into y the lenders participating in

the

MERS Syste1n including their

agreement

to be bound by the tenns and conditions of membership.

MERS has asserted that each of its member/lenders agrees to appoint MERS to act as its

agent. In tltis particular case, the Treasurer ofMERS, William C. Hultman, df:clared under

penalty of perjury that pursuant to the MERS' s Rules

of

Membership, Rule 2, Section 5 First

Franklin appointed MERS to act as its agent to hold

the

Mortgage as nominee on

First

Franklin's

behalf and on behalf of First Franklin's successors and assigns. (Affirmation of William C.

Hultman ~ 7 ) . However, Section S of Rule 2 which

~ a s

attached to the Hultman Affim1ation

as

an exhibit, cont.ains no explicit reference to the creation of an agency or nominee relationship.

Consistent with this failure to explicitly refer to the creation

of

an agency agreement, the

rules of

membership do not grant any clear authority to MERS to take any action with respect to the

mortgages

held

by MERS members, including but not limited to executing assign1nents.

The

rules of membership do require that MERS members name

MERS

as mortgagee of record and

that

MERS

appears in the public

land

records as such. Section 6

of Rule

2 states that MERS

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shall

at

all

tilncs comply with the instructions

of

the holder

of

mortgage loan promissory notes,''

but this

does

not confer

any

specific

power

or authority to MERS.

State

law

Under

New

York agency Jaws, an agency relationship can

be

created by a 1nanifestation

of

consent

by

one

person to another that

the

other shall

act on his behalf

and

subject to his

control, and the consent by the other to act. Meiselv. Grunberg 65\ F.Supp.2d 98, 110

(S.D.N.Y. 2009)

citing

N.Y.

Marine

Gen.

Ins. Co.

v.

Trade/ine L.L.C. 266F.3dI12,

122 (2d

Cir.2001)).

'Such authority to act for a principal

may

be actual or apparent.' Actual

authority arises from a direct 1nanifestation of consent from the principal to the

agent The existence ofactual authority 'depends

upon

the actual interaction

between the putative principal

and

agent, not

on any

perception a third party may

have

of

the relationship.'

Meisel v Grunberg 651 F.Supp.2d at 110 (citations omitted).

Because MERS's me1nbers, the beneficial noteholders, purported to bestow upon

MERS

interests in real property sufficient to authorize the assignments

of

mortgage, the alleged agency

relationship must be committed to writing by application

of

the statute of frauds. Section 5-

703 2)

of he

New York General Obligations Law states that:

An estate or interest in real property, other than a lease for a term not exceeding

one year, or any trust or power, over or concerning real property, or in any

manner relating thereto, cannot be created, granted, assigned, surrendered or

declared, unless by act or operation of law, or by a deed or conveyance in writing,

subscribed

by the

person creating, granting, assigning, surrendering or declaring

the same,

or by his lmvfal agent thereunto aulhorized by writing.

See N.Y. Gen. Oblig. Law§ 5-703(1) (McKinney 2011); Republic

o

Benin v Mezei No. 06 Civ.

870 (JGK), 2010 WL 3564270, at 3 (S.D.N.Y. Sept. 9, 2010); Urga v.

Pare/

746 N.Y.S.2d 733

Page

33

of 37

EXHIBIT -

P GE OF 37




Case 8-10-77338-reg

Doc

41-1 Filed

02110111

Entered 0211011114:13:10

(N.Y. App. Div. 2002) (finding that unwritten apparent authority is insufficient to satisfy the

statute of frauds) (citing

Diocese o

Buffalo v.

McCarthy

91 A.D.2d

1210

(4

1

h

Dept

1983));

see

also

N.Y. Gen. Oblig. Law§ 5-1501(McKinney2011) ( 'agent' means a person granted

authority to act as attorney-in-fact

for

the principal under a power of attorney ). MERS

asks

this Court to liberally interpret

the laws

of

agency and

find that an agency agreement may take

any form desired by the parties concerned. However, this does

not

free MERS fron1 the

constraints of applicable agency Jaws.

The Court finds that

the

record of this case

is

insufficient

to

prove that an agency

relationship exists under the laws of he state of New York between MERS and its members.

According to MERS, the principal/agent relationship ainong itself and its members is created by

the MERS rules of membership and tenns and conditions, as

we I

as the Mortgage itself.

However, none of

the

documents expressly creates an agency relationship

or

even mentions the

word agency. MERS would have this Court cobble together

the

documents and draw

inferences from the words contained in those documents. For exa1nple, MERS argues that its

agent status can be found in the Mortgage

wAich

states that

MERS is

a no1ninee and a

mortgagee of

record.

FCowever, the

fact

that

MERS

is named nominee in the

Mortgage

is

not dispositive of the existence

of

an agency relationship

and

does not, in

and

of itself, give

MERS any authority to act

See Steinbeck

v

Steinbeck Heritage Foundation

No. 09-J 8360cv,

2010

WL

3995982, at '2

(2d

Cir. Oct. 13, 2010) (finding that use of the words attorney in fact

in documents can constitute evidence

of

agency

but

finding that such labels are not dispositivc);

MERSv.

Saunders 2

A.3d 289,

295

(Me. 2010) (designation as the 'mortgagee of record' does

not qualify

MERS as

a mortgagee ).

MERS

also relies on its rules

of

membership

as

evidence

Page

34

of

37

EXHI IT -,--I

-__ .

P GE 4 OF3 7




Case 8-10-77338-reg Doc 41-1 Filed 02/10/11 Entered 02110/1114:13:10

of the agency relationship. However the rules Jack.any specific mention of an agency

relationship,

and

do not bestow

upon MERS any

authority

to act

Rather, the rules

are

ambiguous

as to

MERS's authority

to

take affirmative actions with respect to 1nortgages

registered on

its

system.

In

addition

to

casting itself

as

nominee/agent,

MERS

seems to argue that its role as

mortgagee cf record gives

it

the rights

ofa

mortgagee in its own right.

MERS

relies

on

the

definition

of mortgagee

in the

New

York Real Property Actions and Proceedings aw Section

1921

which states that a mortgagee

vhen usr:d in the context

of

Section 1921

means the

current holder of the mortgage of record or their agents, successors or assigns.

N.Y.

Real

Prop. Acts. L. § 1921 (McKinney 2011 ). The provisions of Section 1921 relate solely

to

the

discharge of mortgages and the Court will not apply tbat definition beyond the provisions of that

section

in

order

to find

that

MERS is

a tnortgagee \vith full authority

to

perforin the duties of

mortgagee

in its

own

right.

Aside from the inappropriate reliance upon the statutory definition

of mortgd.gee, MERS's position that

it

can be

both

the mortgagee

and

an agent of the

mortgagee

is

absurd, at best.

Adding

to

this absurdity, it is notable

in

this case that the Assignment of Mortgage

was

by MERS

as nominee/or First Franklin, the original lender.

By

the Movant's and MERS's

own admission,

at

the time

the

assignment

\vas

effectuated, First Franklin

no

longer held

any

interest in the Note. Both the Movant and

MERS

have represented to the Court that subsequent

to

the origination of the loan the Note was

assigned

through the

MERS

tracking systen1

from

First Franklin to Aurora.

and

then fro1n Aurora

to

U.S. Bank. Accordingly,

at

the time that

MERS

as nominee ofFirst f ranklin, assigned

the

interest

in

the Mortgage

to

U.S. Bank,

U.S.

Page 35 of 37

EXHI IT

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P GE 5 OF

31




case

8-10-77338-reg oc 41-1 Filed 02110/11 Entered 02110/1114:13:10

Bank allegedly already held the Note and

it

was

at

U.S. Bank's direction, not First Franklin's,

that

the

Mortgage was assigned to U.S. Bank. Said another

way,

when MERS assigned the

Mortgage

to

U.S. Bank on First Franklin's behalf,

it

took

its

direction from U.S. Bank, not First

Franklin, to provide documentation of

an assignn1ent

fron1

an

entity that

no

longer had any rights

to

the Note or the Mortgage.

The

documentation provided

to

the Court

in

this case

and

the

Court has

no

reason

to believe that any further documentation exists), is stunningly inconsistent

with

what the parties define

as

the facts

of

this case.

However, even

i

MERS had assigned the Mortgage acting on behalf

of

the entity which

held the Note at the time

of

the assignment, this Court finds that MERS did not have authority,

as

nominee or agent, to assign the Mortgage absent a showing that it was given specific

written directions

by

its principal.

This Court finds that MERS's theory that

it

can act as a common agent for undisclosed

principals

is

not supported by the

law.

The relationship between MERS and its lenders and

its

distortion

of

its alleged nominee status was appropriately described

by

the Supreme Court of

Kansas as follows: The parties appear to have defined the word [nominee) in much the same

way

that the blind men

of

Indian legend described

an elephant

their description depended

on

which part they were touching at any given time.

Landmark Nat I Bank

v.

Kesler

216 P

3d

158,

166-67 (Kan. 2010).

onclusion

for all

of

the foregoing reasons. the Court finds that the Motion

in

this case should

be

granted. However, in all future cases which involve MERS, the moving party must show that it

Page 36 of 37

EXHIBIT__

P GE

3

OF 3 7




Case 8-10-77338-reg

Doc

41-1

Filed

02/10/11 Entered 02/10/1114:13:10

validly

holds

both the mortgage and the underlying note in order to prove standing be fore this

Court.

Dated:

Central

Islip

New

York

February I 0 2 11

I fl

Robert

E

Grossman

Hon Robert E

Grossman

United States Bankruptcy Judge

Page 37

o 37

EXHIBIT_ --_

P GE 3 70F37




l

2

3

4

5

6

7

8

STATE OF WASHINGTON

KING COUNTY SUPERIOR OURT

9

STATEOFWASHINGTON,

NO.

10

11

12

13

14

15

Plaintiff,

v.

RECONTRUST COMPANY

N.A.

Defendant.

COMPLAINT FOR INJUNCTIVE

AND

OTHER RELIEF

UNDER

THE

CONSUMER

PROTECTION

ACT

Tue

Plaintiff,

State o Washington,

by

and

tluough its

attorneys Robert M. McKenna,

Attorney

General, and James

T.

Sugarman,

Assistant Attomey General, brings this

action

16

against

the

defendant

named

below.

The

State

alleges

the

following

on

infonnation

and

belief;

17

I PLAINTIFF

18

1.1

ThePlaintiffistheStateofWashington.

19

1.2 The

Attorney General

is

authorized to commence

this action pursuant

to

20

RCW

19.86.080 and

RCW

19.86.140.

21

II

DEFENDANT

22 2.1 Defendant

RECONTRUST COMPANY

N.A, ReconTrust

or

Defendant) is a

23

for-profit

business

entity permitted

by

the

U.S. Office

o

the Comptroller

o

the

Currency

as

a

24 nondepository, uninsured, l i m i t e d ~ p u r p o s e national trust bank

25 2 2 ReconTrust

is a California

corporation and

is a wholly owned

subsidiary o

26 Bank o America, N.A.

EXHIBIT :2 ::;__

~

~ · P GE OF V

~

E • • • , m A T T i l l l F O W v ' " ~

-

I

LE . illDG\CTCOP'fOfTII

A T I O R N E Y G E N E R A L ~ f ' \ ' . A : S ~ N G T O N

TH Consvnicr Protec:uon

DiY S on

BOO flfthAvenua, SUitclOOO

_ Sellnle, WA 9 1 1 ~ - l l l l

~ o r (2<16)464-774

COMPLAINT

- I




1 2.3

ReconTrust

forecloses

19ans serviced

by

Bank of America,

N.A. and its

wholly-

2 owned subsidiary, BAC Home Loans Servicing, L.P.

3

2.4

ReconTrust claims CT Corporation,

1801

West Bay Drive NW, Suite 206,

4 Olympia, WA 98502 as its sole registered agent for service ofprocess.

5

2.5

ReconTrust claims

CT

Corporation,

1801

West Bay Drive NW, Suite 206,

6 Olympia,

WA

98502 as its sole physical presence in the State

of

Washington pursuant to

7 RCW 61.24.030(6).

8 2.6

2.7

ReconTrust is acting as a foreclosure trustee

in

the State of Washington.

Foreclosure trustees are responsible for conducting nonjudicial foreclosures,

10 called trustee's sales, in accordance with the Deed

of

Trust Act, RCW 61.24

er

al and the

11 tenns

of the

mortgage transaction documents.

12

2.8

Foreclosure trustees must perform their duties in good faith

and

owe that duty to

13

the

borrower and the beneficiary'. RCW 61.24.010(4). A foreclosure trustee may not be the

14 same entity as the beneTiciary. RCW 61.24.020.

15

16

3.1

III JURISDICTION AND VENUE

The

State

files

this complaint and

institutes these proceedings under

the

17 provisions of the Consumer Protection Act,

RCW

19.86.

18

3.2

The Defendant bas engaged

in

the condu.ct set forth in this complaint in King

19 County and elsewhere

in

the state of Washington.

20

21

22

3.3

4.1

Venue is proper

in

King County pursuant to RCW 4.12.020 and RCW 4.12.025.

IV.

SUMMARY OF ENFORCEMENT ACTION

Defendant

is

now, and has been at all times relevant to this lawsuit, acting as a

23 trustee on thousands

of

deeds

of

trust throughout the State

of

Washington and is thus engaged

24

in

trade

or

conunercc within the meaning ofRCW 19.86,020.

25

4.2 Homeowners facing foreclosure are captive to ReconTrust's trustee services.

26 Homeowners cannot shop around for another trustee, they cannot negotiate the cost of

COMPLAINT • 2

ATTORNEY

OENERAL

OF WASHINGTON

Consumer l r o t ~ c t i 0 1 1

OiviGioct-vHIBrT

9

soo

ifth Awnuc. s ~ 1 1 1 1 2 > C A t

Senll e, WA

98104·3188 <')

""",.,.m,

P GE OF J




1 ReconTrust s services or

the o ~ t of

the third

party

services ReconTrust chooses, and they

2

cannot

direct

ReconTrust s activities.

This

vulnerable

situation

is

compounded for

3 homeowners by the complexities

of

the foreclosure process, by the homeowners highly

4 distressed financial circumstances, and the high stakes nature

of

the proceeding. Foreclosure

5 sales are

usually

irreversible.

Any defense

must be asse11ed before

the sale occun;. Because

6 courts are not involved in foreclosures, homeowners only protections are the detailed

7

procedures

and

requirements contained

in the

Deed

of

Trust Act, and a neutral foreclosure

8 trustee who insures those procedures arc followed to the Jetter.

9

4.3

ReconTrust is a foreclosure trustee that has failed to comply with

the

procedures

10 of the Deed ofTrust Act in each and every foreclosure it has conducted since at least June 12,

11

2008, and it is a trustee who

is

wholly owned

by

the Joan servicer seeking to foreclose.

12

13 5.1

v. FACTS

ReconTrust regulurly acts as a successor trustee for deeds

of trust

secured by

14 residential real property located in the State ofWashington.

IS

16

17

18

19

20

21

22

23

24

25

26

5.2 ReconTrust has been at all times relevant to this action in competition with

others engaged in similar activities

in

the

state

of

Washington and engages

in

the acts below as

a

matter

ofpractice.

ReconTrust

Fails to

Maintain

an Office in the

State

of

Washington

as Required y

Law.

5.3 Defendant has failed to maintain the statutorily-required physical presence in

the State ofWashington, with telephone service

at that

address. RCW 61.24.030(6).

COMPLAINT· 3

a. By issuing Notices of Trustee s a l ~ conducting trustee s sales, and

issuing Trustee s Deeds without maintaining the required physical

presence, Defendant has misrepresented its authority to issue such

notices, conduct trustee s sales, and issue Trus tee s Deeds.

T T O R N E Y O E N E R L O F W ~

]

COllSW IU

Prolection

Dhisio

8

IT

800 ifth

Avenue

Suite

· toFm

WA

9Bl<H-3lU P GE OF I

(206} 464-7745 -




l

2

3

4

6

7

8

9

10

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

b.

By conducting the nonjudicial foreclosure process while failing to

maintain a physical presence with telephone service, the Defendant has

unfairly:

i

prevented homeowners from having face-to-face contact

with

their trustee, ii

prevented

homeowners from gaining responses to time

sensitive foreclosure issues, iii) prevented homeowners from physically

presenting time-sensitive payments to stop a foreclosure, iv) prevented

homeowners from delivering payments in a inanner that insures that the

beneficiary

can

not

deny

pay1nent was made,

v

prevented homeowners

from physically presenting mortgage-related documents

in

a manner that

will stop the beneficiary

from

claiming the bomeowner failed to provide

such

documents, and

vi

potentially clouded title to homes

it

has sold at

auction.

ReconTrust Fails

to

Conduct Foreclosures as a Neutral Third Party With a Duty

of Go-od Faith Towards the Borro\vcr and the Lepder.

5.4

a trustee on deeds

of

trust, Defendant

h s

a duty

of

good faith tov. ards the

borrowe; nd

granter on

the

deed of trust,

as

well

as to

the beneficiary.

5.5 ReconTrust has agreements wit beneficiaries and/or their agents to the effect

that ReconTrust will only cancel or continue nonpjudicial foreclosure sales

if the

beneficiary or

agent

approves.

5.6 When borrowers have asked ReconTrust to cancel a sale date because of issues

they

believe require cancellation or continuance of the sale, ReconTrust has told borrowers that

it will not or cannot stop a sale without the permission of the lender or servicer.

5.7 ReconTrust h s committed unfair and deceptive acts at1d violated its duty of

good faith

by

noticing

and

conducting trustee sales

while

failing to perform statutory requisites

for

conducting such sales as contained in the Deed of Trust Act, RCW 61.24.030 and .040.

Those failures include:

COMPLAINT

• 4




1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

COMPLAINT·

5

a.

Failing

to maintain a

physical presence

with

telephone service at that

address.

b

Failing

to

identify the actual owner o the Promissory Note in the Notice

of Default.

c.

Failing to obtain proof that the beneficiary is the owner o the

promissory note

secured

by the deed of trust.

d. Failing to clearly and conspicuously identify in the Notice of Trustee s

Sale the defaults, other than nonpayment, that entitle the beneficiary to

foreclose and which

may be

cured

by

the borrower. lnstead,

ReconTrust s Notices identify every possible default and demand those

defaults be cured whether those defaults have actually occurred or not.

e. Conducting foreclosure sales in non-public places such as

the

garage

o

a private office building

and

a hotel ballroom.

f Creating or using documents essential to a valid trustee s sale, or

to

a

reconveyance

o

the deed o trust, that are improperly executed,

notarized or sworn to, including:

i)

documents that were not signed in

front o a notary, ii documents that had both the signature and

notarization applied mechanically while claiming that

the

signatory

personally appeared before

the

notary, iii) using signatories who

simultaneously claim to

be

officers o

the

beneficiary, ofMERS, and of

a servicer, all while actually being employees o ReconTrust, nd

iv) executing documents without direct knowledge

o the facts

contained

therein.

g. Conducting joint prosecution and/or defense o legal claims with the

beneficiary or its agent on matters related to its duty o good faith to the

borrower.

A T I O R N E Y G E N E R A L O F W A ~ R ~

ComrumerPron:ction Divisio

ltlilT

OJ

800 Fi fib Aven.ie, SuiL _ ; ; _

Se1nlc, WA 981 ).1.3\SS PAGE i; Qf

( 2 0 6 ) ~ 6 1 - 7 7 4 S




1

5.8

Homeowners have the right to stop a tbreclosure by paying an amount (the

2

''reinstatement aniount") set

by

staMe and itemized

by

the foreclosure trustee.

3 RCW 61.24.090.

4

5.9

The Deed of Trust

Act 1imits

the reinstatement amount

to

the following charges:

5

arrearagcs on the

loan; expenses "actually incurred" y the trustee

to

enforce the note; a

6 reasonable trustee's

fee;

a reasonable attorney's fee; and, the costs

of

l'ecording a notice of

7 discontinuance

of

the foreclosure. RCW 61.24.090 ( )(a) and (b).

8 5.10 Defendant

bas

failed to properly itemize and/or misrepresented the

9 reinstatement amount

by,

including but not limited

to,

overcharging for recording fees, posting

10

fees,

and

mailing fees.

11 5.11 By demanding inaccurate amounts and failing to properly itemize amounts,

12

13

4

15

16

7

18

19

20

21

22

23

24

25

26

Defendant has prevented borrowers from determining whether fees are reasonable, has

overcharged borrowers and has prevented borrowers from curing their default within the

statutory guidelines for reinstatement.

ReconTrust Conceals or Misrepresents the Identity

of

the Actual Owner

of

the

Debt.

5.12 Defendant systematically conceals, 1nisrepresents or inaccurately diwlges the

true parties to the mortgage transaction in its foreclosure notices

and

related documents.

COMPLAINT - 6

a. ReconTrust accepts and records in county land records Appointments

of

Successor

Trustee

from _purported beneficiaries such as Bank of

America, NA, knowing, or duty-bound to know, that they are not the

holders of he loans and are therefore not beneficiaries under the Deed of

Trust Act.

b. In

Notices of

Default, ReconTrust misrepresents the owner of the

Promissory Note by only naming the servicer, such as BAC Home

Loans Servicing, LP,

when

the actual owner is a securitization trust.

ATTORNEYOENERALOfWASlll IU[tlBIT

Dnaumi:r Protection ivisidiJ\fl I

OO Fifth v e n u ~ Suite 200

'''WA ' '

G E p O

(206) ~ 6 4 1 7 4 5 -




1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

COMPLAINT·

7

Defendant does not identify the actual owner anywhere on the Notices

of

Default. The

Deed

of

Trust

Act requires

ReconTrust

to

identify both

the owner

of

the note and the servicer of the note, with their respective

addresses, as well as the servicer's phone number, on each

N'Otice of

Default. RCW 61.24.030(8)0).

c. In a fonn document with the title "Important

Legal

Notice" ReconTrust

claims that

BAC

Home Loans Servicing, LP is the "Credito to whom

· the debt is owed" when Defendant knows, or should know, that BAC is

not the creditor

to whom

the debt

is owed.

d.

In

Notices of Trustee's Sale ReconTrust claims that the current

beneficiary is

BAC

Home Loans Servicing, LP FKA Countrywide

Home Loans Servicing f,P, (BAC)", or "Bank of America, N.A,

Successor

by

Merger to BAC Home Loans Servicing, LP FKA

Countrywide Home Loans Servicing LP", when Defendant knows or

should know that these entities are loan servicers and not benefici8J.ies

of

the deed

of

trust.

In

some

Notices

of

Trustee's Sale, Defendant fails

to

name any cun-ent beneficiary.

e.

n

Notices

of

Trustee's Sale RcconTrost claims that

the

deed

of trust

secures an obligation in favor

of

Mortgage Electronic Registration

System.s, Inc, (MERS) as beneficiary, when Defendant knows or should

know that MERS is never the party to whom the obligation is owed.

f n its Trustee's Deeds Recon'frust claims that the promissory note was

executed

in

favor

of

MERS when MERS never appears

in

promissory

notes and is never the party

to

be repaid.

g.

In

its

Trustee's Deeds ReconTrust claims that

BAC

Home Loans

Servicing, LP

FKA

Countrywide Haine Loans Servicing LP, was "the

ATIORNEYGENERALOFWASHING fON J)

C O l 1 U l l l ~ J r o \ ~ l i o n Division

EXHIBIT

Fiflh

Avenue,

Sui 2000

~ l e

WA.

98104-3188

' '' ' '· ''

P GE __ .,Z ._

OF




1

2

3

4

bolder of the indebtedness secured

by

the Deed of Trust at the tlJ:ne it

requested that the Defendant foreclose when Defendant knew or should

have known BAC.was not the holder

of

the indebtednesS.

v

ReconTrust' s Trustee's Deeds Contain Material Misrepresentations.

5 5.13 ReconTrust's duty of.

good

faith includes creating and recording a Trustee's

6

Deed

after

the

foreclosure sale which transfers

the

property from the h01neowner

to

the highest

7 bidder at the foreclosure auction.

8 5.14 The Trustee's Deed must recite facts showing that the sale was conducted in

9

compliance

with

the specific requirements of the

Deed

of

Tn)St

Act so that the successful

JD bidder at

the sale may rely on these recitals

as

conclusive evidence the Act

was

followed, and

l 1 clear title is delivered. RCW 61.24.040(7).

12 5.15 ReconTrust's Trustee's Deeds claim that it has complied with every provision

13 of the Deed of Trust Act when ReconTrust does not comply with every provision of that Act

14

ReconTrust believes

the

Deed of Trust Act

is

preempted by federal law

and

therefore

15

consciously does not comply with provisions of the

Act

16

5.16

ReconTrust's Trustee's Deeds claim

that

copies

of

the

Note were

served on the

17 homeowner when Defendant knew or should have known that copies of the Note were not

18 delivered to the homeowner.

19 5.17 ReconTrust's Trustee's Deeds make contradictory assertions regarding a

20 material fact of the trustee's sale: whether the transaction was sold to the highest bidder for

21 cash or whether it was a credit bid where the owner of the debt bid the amount owing in

22 satisfaction of the debt.

This

distinction has

in1portant

ranlifications regarding t t l ~ excise tax

23

consequences, and whether a void foreclosure can

be

set aside.

24 5.18 Defendant's failures to abide by

the

Deed

of

Trust Act have concealed material

25 infonnation needed by homeowoers to assert rights and defenses stemming

from

their loan

26 transaction,

to

meaningfully negotiate the tenns of a loan modification, to exercise their

CbM .PLAINT - B

ATTORNEY GENERAL OP WASHINGTON

')

c ~ - ' ° ' ' '

EXHIBIT

oo

iflh A w n ~ s ~ i t e

zooo

Seaal< , WA

98104..JI 88 n AGE

,,.

206)464-7145 r. ---2-

OF




1 statutory right

to

reinstate their mortgage,

to

cure their defaults, and to postpone or stop a

2

foreclosure sale.

3

4

A

5

VI.

CAUSES OF ACTION

Misrepresentations

6.1

In

the course of conducting

its business

Defendant

made

numerous

6

misreptesentations and failed

to

disclose

material terms

as alleged in

paragraphs 1.1

through 5.18.

7 Such conduct constitutes unfair or deceptive acts or practices in trade

or

commerce, and/or

unfair

8 methods of competition in violation ofRCW 19.86.020, is contrary

to

the public interest, and is

9

not

reasonable

in

relation

to

the development and preservation

of

business.

10

B.

11

Unfair Practices

6.2

In the

course

of

conducting

its

business

DefendWlt

engaged in numerous unfair

12 acts

and

practices

as

alleged in paragraphs 1.1 through

5.18.

Such conduct constitutes unfair

13

practices and violates RCW 19.86.020 is contrary to the public interest,

and

is not reasonable in

14 relation

to the

development

and

preservation of business.

15

VU. PRAYER FOR RELIEF

16 WHEREFORE, Plaintiff: State of

Washington, prays

for

relief

as

follows:

17

7.1

That

the

Court adjudge and decree that the Defendant has engaged

in the

conduct

18 complained ofherein.

19

7.2 That the Court adjudge and decree that the conduct complained of constitutes

2

unfair or

deceptive

acts and

practices

and

an unfair method of competition and

is

unJawful in

21 violation of the Consumer Protection Act, Chapter 19.86 RCW.

7.3 That the Court issue a permanent injunction enjollring and restraining the

23 Defendant and its representatives,

sucCessors

assigns, officers, agents, servants, employees,

and

24

all

other persons acting or claiming to act

for

on behalf of, or in active concert or participation

25 with the Defendant, from continuing or engaging in the unlawful conduct complained of herein.

26

C O M P L I N T ~ 9

A

TORNEY

GENERAL OF WASKINOTON

CPllSUmu rrotcctlM Divisi ivHIBIT

)

800 Fifth Avenue Suite 2llCllA - ~ t J ' - o . _

See.tile WA 9810o\.J\S8

PAGE___ ]_ OF jQ




1 7.4 That the Court

assess

civil penalties, pursuant

to

RCW 19.86.140, of up to two

2

thousand

dollars ( 2,000) per violation against

the

Defendant

for

each

and every violation

o

3

RCW

19.86.020 caused by the conduct complained of herein.

4

7.5 That

the Court

make

such orders pursuant

to

RCW 19.86.080

as

it deems

5 appropriate to

provide for restitution

to

consumers

of money

or property

acqWred by

the

6

Defendant as

a result of the conduct complained ofherein.

7

7.6

That

the

Court make such orders pursuant

to

RCW 19.86.080 to provide that the

8 p l i n t i f f ~ State of Washington, have and recover from the Defendant the costs of this action,

9

including

reasonable attorneys'

fees.

10

7.7

For such other relief

as

the Court may deem just and proper.

11 DATED this fi'1'tdayof rfl fwf=, 2011.

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

COMPLAINT- 10

ROBERT M. MCKENNA

Attorney General

107

A

TORNEY

OENERAL OF WASHlNGTON

Consumerl fcl1ectian DiliisicmVHIBIT 1

aoo Fiftll Avenue, Sui1<120C& _,..,,,-..,__

_

' '· • '°'' p·'GE

r

o

r

106)464-7145 I \ _

F




I

·

3

4

s

6

7

8

9

JO

J2

13

14

JS

16

J7

18

J9

20

21

22

23

24

5

26

Case 2:11-cv-01460-JLR Document 17 Filed 08/20/12 Page 1 of 13

case 2:11-cv-01460-JLR

Document

16

Filed 08114112

Page of 3

11111111111 DIR Ulll lllU 111111111111 1

mllll IH m 111IUI111

IHI

ll-CV-Ol460-0RD

UNITED STATES DISTRICT COURT

WESTERN

DISTRICT

OF

WASHINGTON

AT SEATTLE

STATE OF WASHINGTON No.

2:11-cv-J460

CONSENT

DECREE

laintiff

v.

RECONTRUST COMPANY N.A.

Defcndanc

L JUDGMENT

SUMMARY

1 1

1.2

1.3

1 4

1.5

1.6

1.7

Judgment Creditor

Judgment Debtor

Principal Judgment

Amowrt

Post

Judgment

lntereot JWe:

Attorneys

for Judgment-Creditor.

.Aitomcys

for

Judgment Debtor:

State of

Wasbing100

ReccmTrust

Company NA

SJ,090,000

12% per annum

James

T. Sngannan. .

Assistant Attorney General

Johns.

Devlin. l l

Lane

Powell, PC·

Plaintiff State

of

Washington

having

oondootod

Investigation

8lld

commenced

this action

pursuant

to RCW 19.86,

tho Consumer Protection Act ( CPA ); and

ATl'ORNEY

OiiNERAL

Oll WASHIW<l l'Oll'

c ~ ~ h i s k i n

MIO Fitlh.Avcl\llC', Sullll 2000

se1nle, WA 9ll04 JIJI

(2.06} <164 7145

EXHIBIT _ _.3 ___

PAGE OF 13




Case 2:11 cv 01460 JLR Document 17 Filed 08/20/12 Page 2at 3

Case 2:11 cv 01460 JLR Document 16 Filed 08/14/12 Page 2

at

13

1.8 Defendant ReconTnist Company, National Association ("ReconTrust''), a Califor-

2 nir. eoiporation, having been served with the Summons and Complaint; and

Washington.,

appear-

3 ·

ing by

and

through its attorneys, Robert M. ~ Attomey G e n e r ~ and James T. Suganmm,

4 Assistant Attorney General; .00

Defendant,

appearmg

by

and through

ts

attorney John

S.

Devlin,

5 lll, Lane, Powell, PC; and

6 1.9 Washington fUld Defendant having agreed on a basis for the settlement

of

he

mat-

7

tors

alleged

in

the Complaint

and to

the

ontry

of this

CoD3Clll Decree

against

Defendant Without

8 the need for trial or adjudication of any issue of aw or fact;

and

9 1.10

Defendant.

by

entering into

thi '

C ~ t

Decree,

does not

admit

the allegations

of

IO

the

Complaint

other

than thOsc facts deemed necessary to the

Jurisdiction of

his Court; and

11 1.11

Washington

and Defendant agree

this c;onsent

Decree does

not

constitute evi-

12

dence o,r an admission regarding the existence or non-existence

o

any issue, :fact. or violation of

13 any

Jaw

alleged by Washington; and·

14 1.12

Defendant

recognizes and states this Consent Decree is entered into v<1luntarily

1

S

and that no promises, rep1-esentations, or threats have been mftde by the Attorney General's Office

16

or

any member.

officer,

agent, or representative thereof1

induce

it to enter

into

this

Consent

De-

17

cree. except for

the

promises'and representations provided herein; and

18

1.13

Defendant waivCs any

right it

may Ii.ave to

appeal

frQm this Consent Deeree or

to

19 · otherwise contest

the

v ~ d i t y of tliis Consent

Decree;

and

20

1.14 Defendall1 further agrees this Court

shall

retain u r i s d i t i ~ of this action and j u ~

21 risclictlon over Defendant

for the

purpose of

Implementing

and enforcing the temis and conditions

22

ofthis ~ Decree

and

for

all

other purposes related

to

this

matter;

and

23

1.15 Defendant further agrees its

payments

made or due pursuant

to

this Consent

24 cree

Ille

not

amenable to discharge

in

bankruptcy and

it

shall not seek

or wpport

its

discharge in

25

bankruptcy, nor oppose

its

being

determined

not amenable to discharge in bankruptcy; and.

26

CONSENT DECREB 2 ATTORNEY OENERAL Of

WASHIHOTON

Consainu Plotrdlo.n

D Yblon

DO fifth Avenue. Suitt

lOOO

Se.Ille. WA 9 104·3188

(106)464•7745

EXHIBIT

~ - - -

PAGE ~ O F I




Case 2:11-cv-01460-JLR Document l Filed 08120112 Page 3 of 13

Case 2:11-cv-01460-JLR Document 16 Filed 08114112 Page 3

of

13

I 1.16

Defendant

further agrees its payments made or due pursuant to this Consent De·

2 cree

are

not prefereatial

transfers

o assets

and it

shall not

make

nor support

arguments

to

the

con-

3 tr ry in bankruptcy court.or

elsewhere.

4 The Court.

finding

no just reason for delay;

5 NOW TBE.REFORE

it is

h=by ORDERED ADJUDGED AND DECREED s fol-

6 lows:

7

9

10

11

12

13

14

15

16

17

18

19

20

21

22

n.

GENERAL

2.1

This

Caurt has jurisdiction of

the subject

matter

of his

action

and

of the parties.

2.2 This

Consent

Decree

or the

fact

of its entry does

not

o n s t i ~ evidence or an ad-

mission by any

party

regarding the existence or non-existence of any issue fact, or violation

of

any law alleged by Washington.

To the

contrary Defcn.dan.t has denied and continues to deny

8ny and all wrongdoing of any kind whatsoever and retains

and

does not waive, any

and

all de.

fenses

Defendant

may

have

with respect to such mattefs.

2.3 This Consent Decree fully Md fmally resolves and forever

discharges

all claims

and couses

of

oction Wider

the CPA

and tho Deeds of Trust Act that the State of

WesblngtOn

has

filed or may in the fulUre file against ReconTrust arising out

of

or relating to the facts and matters

described

in

the

Complaint.

except

that

RcconTrust s

material

failure

to

comply

with

this

Consent

Deeree

s m l

pemiit

the

Attomey General ofWashiogton

to

take

such further action

against

Re·

oonTrusl es provided

for

herein.

Ill INJUNCTION

3.1 The iajunctive provisions of

this Consent

Decree

shall appJy tG Defendant

solely

in its capacity aS foreclosw;c trustee

and

to its SlJ?Cessors and assigns.

23

3.2

Dofendent represents that

it

is no longer dojng busines6 as a foreclosure trustee

24

25

6

under

docds

of

1?ust

with

respect

t<>

property

looated

w

the

State

of

W shlngton, ••ocpt

to

the

extent that

such property has already been

subject to

a foreclomre sale

and

Defendant

is

engaged

in

post.foreclosure activities.

CONSENT DECREE

3

A.TIOIUEY

G5NERAL

OF WASHil ffnON

C O D l l K l l C r ~ Divllkln

800

Fifth

A¥mll0. Suitt

1000

S.:llltle,WA

181044118

(206)

464-774S

EXHIBIT-"'3'--...._

P G E ~

OF Ll_




Case 2:11 cv 01460 JLR Document 17 Filed 08/20/12 Page 4 ot

3

Case 2:11-cv-01460-JLR Document 16 Filed 08/14/12 Page 4 ot

13

1 3.3 f at 8 Y time

in

the future .Defendant .returns

to

operating as a foreclosure trustee

2 in the.state ofWashington, it shall not conduct non-judicial

foreclosure

proceedings involving

l residential property unless it:

4

5

6

7

8

9

10

12

3·

14

15

16

17

18

9

20

21

22

23

24

25

26

CONSENT DECREE

Maintains a physical presence and

street

address where personal service

of process

may be made,

with telephone service at that

address.

For pur

pose of this Consent

Decree only.

physjcal presence

in

this context means

maintaining an office-that:

i.

ii.

. iii.

iv.

v.

iS within

the

geographic

boundaries

of

he state ofWashington;

is

open

during

noimal

business

hours;

is staffed by a

perSon

or persons

capable

of esponding to a.borrow

er s

or grantor's questions concerning a non-judicial

foreclosure

and directing the borrowet or grantor to

another

person or persons

capable of responding to questions conceming the borrower's de-

. f a u l ~

is

autbarized

to

accept payments

of

the amount necessary

to

reins

tate the

note

and deed of

trust

or to direct the

borrower

to another

person or persons

(whether

located in the

State

of Washington or

otherwise) capable of

reasonably

promptly accep1log S ch pay

ments, provided

that

directing

a

borrowef

out.of-state

does not pre

j u d i ~ e

the borrOwer's right to reinstate their

tom;

and

is authori.1.ed,

where appropriate and where warranted

by

the

facts,

to

postpone, reschedule

or cancel foreclosure sales or

to

direct the

borrower to another person

or

persons

(whether

located in the State

of

Washington

or otherwise) capable

of

reasonably promptly,

where

appropriate and where wamm.ted by the facts., postponing, mschc

duling

or n c ~ l i n g foreclosure sales.

4 ATI ORNEY OENERAL

OF

WASHINGTON

COfll;umtr Protee:Lioo

Divisklll

100 i'iftbAwnuc:,SublOOO

Se.We. WA i111Q4.llll

(206)464-7745

EXHIBIT

~ - 3 : - - -

P GE J OF ?




1

2

l

4

5

6

7

8

9

10

12

1l

14

15

16

17

18

19

20

21

22

23

24

25

26

Case 2:11 cv 01460 JLR Document 17 Filed 08/20/12 Page 5of 3

Case 2:11 cv 01460 JLR Document 16 Filed 08114112 Page 5 of 13

b.

c.

d

f,

CONSENT DECREE

Discloses, in

notices

required

by the Deed

of'frust Act, including notices

of oreclosure and notices of trustee's sale." but excluding notic.es of

default,

the street address and telephone number for the office that

constitutes the

Jlbysical presence required

by the

Deed of

Tiust

Act.

Does not

misidentify

the owner

of

he

p1omissocy note or

other

obligation

secured

by the

deed of rost or the

entity

authorized

to

exercise

the

rights

of

the o'Wller, in

any

notices required by the Deed of

Trust

Act.

Ideiltifies in the notice of

default

the name and actual address of the own-

er

of

imy

promissory note

or

other

o b ~ i g a t i o n

secured by

the deed

of trust,

and the name, address. and telephone num ber of

a

party acting as ft servicer

of he obligations

secured

by the deed of trust.

Provides, upo

the

request

of the

deed

of

trust grantor

or borr-0wer

or

its representative, (i)

copies

of

documentation

sufficient to

show the

note

owner bas

an enforceable interest in the mortgage or

deed

of trust andlot

(ii)

copies

of documentation sufficient to

show

that

the

entity claiming to

be the

beneficiary

is the

owner of he promissory

note;

provided,

however,

1hrt for purposes of this Conseu.t Judgment. a copy of the declilJe.ti.on de

scribed in RCW 61.24.0l0(7)(a), when made in good

faith

nd without no-

tice

as

to

its inaccuracy, shall be deemed sufficient proof that the entity

claiming to be

the beneficial')'

is

the owner

of

the

promissoty note. f any

such

d0CUD1ents are unavailable, Defendant shall provide

documents

and

sworn statements sufficient to establish the note owner's authority

to

en.

force the

secUTity interest.

Ensurei that

any

demand

for fees

or response

to

a reinstatement

amount re-

quest is

accurate

and contains

only actual

costs and fees

incurred

and that

5

ATIORNBYGENERAL OF WASHINUTON

~ P10Wlllon DifldOll

IOOFJ8h A\'flllli , S u i ~ 1 0 6 0

Seattlc, WA

911K.:H88

2 0 6 ) 4 6 4 - 7 7 4 ~

EXHIBIT

,__

PAGE 2:._OF Jj_




1

2

3

4

5

6

7

8

9

10

Case 2:11-cv-01460-JLR Document 17 Filed 08/20/12 Page 6 of

3

Case 2:11-cv-01460-JLR Document 16 Filed 08114112 Page 6 of 13

g.

such demand or

amount

is authorized by a

term

of the promissoey

note and/or deed of

trust

and is not pf?hlOited by the Deed of Trust Act.

Acts cansist.ent with

its statutocy duty of good faith toward

the

borrower,

beneficiwy and

grantor

and its duty

to

act

independentiy

when eoforcing

the

deed

of

trust provisions.

For

purposes

of his

Consent

Judgment

only,

h l• a

breach

of the

duty of geed faith to

1llor into

an

agroement

with

a

note owner, beneficiary Or its agent wherein Defendant agrees to stop or

postpone

a foreclosure only when. approved

by the

noteowner,

beneficiary

or

8$ent,

or to

otherwise

defer

solely

to

a

single

party

when

acting as

a

trustee.

11

3.4 Defendam may not

act

es

foreclosure

trustee where

it

is

also

the

beneficiary

of

the

12 deed of rust.

13 3.5 Defen®nt may not describe

in

its notice of trustee's sale defaults that may have,

14 but did not actually, occur.

15

3.6 Defendant shall immediately

cease

operating as a foreclosure

ttustee

with respect

16

17

18

19

20

21

22

23

24

25

26

to

propert). in the State

of

Washington until

it

is

in

compliance

with

the

requirements:

of the

Washington

Deed

of Trust

Act. RCW 61.24,

et

seq ; provided, however,

that

Defendant may coo

tinue

to engage

in Lawful post-sale activities descnbed in Paragraph 3.2, above, fur properties

that

have

been sold at

foreclosure prior to

the

entry

of

this Order. Defendant

sball

infonn its

respec

tive directors, successors

1

assigns. officers, and managemen1 leve1 employees having responsibili·

ties with respect

to the subject matter of this

Consent Decree,

by announcing this Consent

Decree

to

them and by

making

its tenns and conditions available to them.

IV.

MONET RYP YMENT

4.1

Pursuant

to RCW 19;86.080, Weshingt.on

shall recover and Defendant

shall pay

the

Plaintiff

the am.O)lilt of

1,090

1

000 for costs

and

reasonable

attom.ey•s

.fees incurred

by Wash

ington in pursuing this matter,

for.

monitoring and potential enforceaient of this

Consent

Decree,

and

for ~ enforcement

of

RCW

t9.86.

Upon payment

of

this amount

to

Washington. Bank

CONSENT

DECREE

'

ATI'OJUIBY GBNEIW. OF WASfllMOTON

Calsumer

J fOllecliOD Di'rii Clll

800 'Fifth AVIAllO Sulti1000

SMt\11

WA illlD4-3\18

.WiiBif

PAGE

h

OF

-




Case

2:11-cv-01460-JLR

Document

7 Filed

08120112

Page

7of 3

Case 2:11-cv·0.1460-JLR Document 16 Filed 08114112 Page 7 of 13

t of Amcrlca Corporation and its affiliated e n t i t i ~ shall receive credit in the amount o f S l 0 ~ , 0 0 0

2

against _any

obligations

to

make cash payments

to

the State

of

Washington pursuant

3

-to

a

OllSeDSUal settlement of1hc

cuacnt

Jllultistate loan-servicing

related investigation

by the Of-

4

fice of he Attomoy General.

S 4.2

ln

any

successful action to

oillorce

this

C JDScnt Decree against

Defendant. Defen-

6 dant

shall

bear Washington's reasonable costs, including reasonable attorneys' fees.

7 4,3 Defendant's failure to

pay

attorneys' fees and costs tri Washington as required

8

by

this Consent Decree

shall be

a msterial breach of he Consent Decree.

9

v.

TERMS

OF

PAYMENT

10

S.1

Within

30

days of

entry

oftbis Consent

Decree,

or at such other time as

agreed to

It by Washington in writing,

Defendant

shall pay a rota of 1,090,000 fD

the

State

of Washington.

12 hterest

shall

aocrue at the

rate

of

twelve percent

(JPAt)

per annum until

su h

payment

is made in

t3 full

14 · 5 2 Defendant shall

make

all payments owed pursuant to

this

Consent Decree by

IS

16

t7

18

bank cashier's

chcclc payable to the Attorney General

- State

of Washington, and shall mail

or

deliver such payments

to

the Office of : ie Attorney General, o ~ Protection Division.

800

.

.

lthAvenue, Suite 2000, Seattle, Washington 98t04-3188 Attention: Cynthia

Lockridge,

un·

less otherwise agreed

to

inwritins

by

Washington.

19 5,3 ·Defendant's failure to timely

make payments

as

required by this Consem

De-

20

21

22

23

24

25

26

aee, withciuf written

~ m n t

by Washington, sliall

be

a mtrterial breach of this Consent De:·

crce.

VI. ENFORCEMENT

6.1

Defendant shall be in full compliance with all

requirements

end obligations

this

Consent

Decree imposes on Defendant

at

the

time:

it is

entered

by

the Court. other

than

the mone·

uny payment obligation set forth in Paragraph 4.1) _above.

CONSENT

DECREE

7

ATIORNEYOEM RALOPWASHJNGiON

CmmmlltProlecl oa

Division

IOG

FilUI

Av.us,

Suitt

2000

5attll.

WA 91 Q4..1181

(206) 4 714j

EXHIBIT

PAGE

7;:;--0-F

-,I,..




Case 2:11Mcv-01460-JLR Document 17 Filed 08/20/12 Page 8of 3

Case 2:11-cv-01460-JLR Document 16 Filed 08/14112 Page

8of 3

6.2 f

Defendant violates a material condition of

his

Consent Decree. and ifDefendant

2

does

not cure

the

violation after

notice by Washington.

Washington

may seek the imposition

of

3 additional

conditions.

civil penalties,

restitution,

injunctive relief, attorney s fees, costs and such

4

other remedies

as the Court may appropriate

against Defendant ai

an evidentimy

hearing

in

5

which Defentlant has on

opportunity ro

be bwq,

i f

he

Court

find3 by

a

preponderance

of

ovi-

6 dence the1 Defendam bas

violated a

material condition

of his

Consent Decree.

1

6.3

Jurisdiction is retained by this Court for the purpose of enabling any party

to

this

8 Constnt Decree to

apply· to

the Court, to

the extent

permitted herein.

for

.enforcement

of

cotn·

pliance with

this

Consent

Deace.

to

punish violations thereof,

or otherwise

address

1he

provisions

10 of his Consent Decree.

11

6.4

Nothing in

this

Consent Decree shall

grant

any

third·party beneficiary or other

12

rightS

to any person .not a party to this Consent Decree. For the· -avoidance·of

doubt,

nothing

µi

13 this Consent Decree confers any right or ability to sue to any

trust

grantor or borrower, nor does

14 this Consent Decree create

any

obligation on the part of

any party

to such trust

grantO? or

borrow-

IS er.

16 6.5 Nothing in this Consent Decree shall be construed

to

limit or bar any other go-

11 vemmeotal entity

or

person

from

pursuing other available

remedies

against Defendan1 or

any

oth·

1 er person.

19 6.6 Under

no circumstances

shall this Consent Decree, or the name of the Stam of

20 Washington, this Court.

the Office

of

he Attorney

Genoral,

the

Consumer Protection. Division. or

21 n ~ ·

of th ir employees or representatives be used

by

Defendant or any

of

its

respective

owners,

22 members, directors, successors.

'lSSigns.

transferees, officers, agents, servants, employees, repre-

23 septatives, and all other persons OT entities in active concert or partfuipation with Defendant, in

24

connectlon

with

any selling,

d v e r t i s i n ~

OT

promotion

of

products

OJ

services,

or

as

an

endorse·

2S mentor approval of Defendant s acts, practices,

1

·conduct of business.

26

CONSENT DECREE

I

ATIORNEY ClEHERAL OJI W

ASHINQiON

C-llllllltl rottaionDivision

SllO

Flflh

A-Yenws Suil e

2000

Sc«tk.

WA 518104.JIU

(20f)464-7745

3

EXHIBIT

-=---_,_

PAGE if OF

3




Case

2:11 cv 01460 JLR Document

17

Filed

08120 12

Page 9 ol 13

Case 2:11 cv 01460 JLR Document 16 Filed 08 14112 Page 9 of 13

1

6.7

Washington s h l l ~ permitted, upon advance notice o twenty days

to

Defelldant,

2

to access, inspect and/or copy business records or documents

in

possession,

custody or under con-

3 trol

of

Defendant to

monitor compliance with

t i ~ Consent Decree, provided that the

inspection

4

and copying

shall avoid

unreasonable disruption

ofDefendant's

business activitit. .

Washington

S shall not disclose lUJY information described in this Paragraph 6,7

\Confidential

Informirtion")

6 unless

such

disclosure

is required by law. In the ~ c n t

that Washington receives . request

under

7 the Public Records Act, subpoena.. or other demand for production. that seeks the disclosure of

8 Confidential Information, Washington shall notify Ddendant

as

soon as

p r a c t i C a b l ~

mid

in no

.

9 event more

than

ten

(10) calendar days, after receiving such request and shall allow Defendant a

10

reasonable timo,

not

less than ten

(10) calendar

days,

from the receipt of such

notice to seek

a

protective order relating to the Confidential Information or to otherwise resolve any disputes

re-

12

lating to the production

of

the

Confidential.

Information before Washington discloses any Confi-

13 dential Infonnation. Nothing in this

Consent

Decree shall affect State of Washington's com-

14

pliance

with

the Public Record,, Act,

RCW

42.56.

IS 6.8

To monitor compliance

with this Consent

Decree,

Washington

shall

be

permitted

16 to

serve

interrogatories

pursuant to the provisions of CR 26 and CR 33 and to question Defendant

17 or 'any officer, director, agent, or empioyee ofDefendant by deposition pursuant to the provisions

18 of

CR 26

and

CR 30

provided that WaSbington

attempts n good :failh

to schedule the

deposition

19 at a time convertlent fur the deponent

and

his or her legal counsel.

20 6.9 This

Consent Decree

in no wr.y limits Washington from conducting any lawful

21

non-public

investigation

to

monitor

Defendant's compliance

with this

Consent Decree or to

in-

22 vestigate other alleged violations of the CPA, which may include but is not

limited

to interview-

23

~ c u s t o m e r s

or former employees of Defendant.

24

6.10 ThUi Consent

Decree

shall

be

binding upon and inure

to

the

benefit of Recon-

25 Trust's successors nd essigns. ReconTrust, and it:a successors and assigns, shall noUfy the At-

26

tor.:tey General's Office at least thirty

(30) days_

prior

to any

change-in-control of

ReconTrust that

CONSENT DECREE

'

ATTORNEYOSNERALOFWASH NGTON

~ = r = ~ D t v i t ~

Scanlc,

WA 98'104-,1118

(206)464·1745

·EXHIBIT

PAGE

OF

3




Case 2:11 cv 01460 JLR Document 17 Filed 08/20/12 Page 10 of 13

Case 2:11 cv 01460 JLR Document 16 Filed 08/14/12 Page 10

of

13

1 would change the identity of the cor:porate entity responsible for compliance obligations arislng

2 under this Consent

e

including, but not limited to. dissolution, assignment, sele, merger, or

3 other action that would result in the

emergence

o a successor corporation; the creation or

dissolu-

4

tion

o

a

s u b s i d i ~

parent.

1 affiliate that

engages

in

any acts or practices

subject to this order.

S

the

proposed filing of a

bankruptcy

petition;

or

a change in

the

corporate name

or

'address. Pro-

6 vided.

however,

that. with respect to any proposed change in the corporation about which Defen-

7 dant, and its successors and

assiglls,

learp

lesS than thirty

(30)

days

prior

to the date

such action

is

8

to

take place. Defendant

and

its successors and assigns,

sbtilt

notify

the

AO

as soon as is

practica-

9 ble after obtaining such knowledge.

10

6.11 The

injunctive provisions

described

in

Paragraphs 3.2-3.5, above, shall apply

to

11 any bona

fide

purchaser

of the foreclosure tn19tee business ofRecon.Trust (the Purchaser'') in the

12

Purchaser's capacity

as

f o r e c l o ~ trustee, but only with respect

to

aoy foreclosure referrals that

13

the

Purchaser receives from

Ballk

o

America,

N.A. in the

State of

Washington after the closing

14

of the sale o ReconTrust's foreclosure trustee busllless

to the

Purchaser,

This

Consent Decree

lS shall not otherwise apply to any activities of the Purchaser, including,

for

the avoidance of doubt,

·

16

any

foreclosure referrals

thRt

the

Puri:haser

receives from another person or entity in the State o

17

Washington or any ·other business conducted

by the

Purchaser in the State o Washington other

18

than

the business referred to in the foregoing

sentence.

Fo1 the avoidance of doubti

nothing

in

19

t i ~

Consent

Deorce

shall release any claims

that

the Stete

f W a s b i n g t ~ n

has or may have

against

20 the Purchaser, except for any claims that the

State ofWeshington may assert against

the

Purchas·

21

er based cin any theory o successor liability, vicarious liability, de facto

~ g e r

fraudulent con-

22

veyence, or other similar claim or theory

for

the obligations, exposures, or liabilities o Recon-

23 TtuSt

with respect

to

the claims released

in

this Consent

Decree

(such claims, Success0r UabiH-

24

ty

C l ~ j

The

~ u r c h a s c r

is

hereby

released

and

forever discharged

from any

Successor

Lla-

25 bility Claims. The Purchaser

sba 11

not

be

deemed

a successor, assign, or transferee for purposes

26 ofthisConsentDecrea

CONSENT DECREE

to

A T I O R N E Y G E N l i R A L O F W A S H ~ O T O N

' C-onfJll\CI PfOtecl\gn

DMslan

OO P Jfth AvGlllll , Suite 2000

Sc:lltlle. WA

5'Bl64·JL8B

(206)464·7145

EXHIBIT .... ..____,_

PAGE

/OOF 13




Case 2:11-cv-01460-JLR Document 17 Filed 08120/12 Page of 3


1

6.12

Any notice or other communication required or permitted under this Consent

De--

2

cre e

shall

be

in

writing

and

delivered

to

the following persons or any person subsequently desig-

3 oated

y

the parties:

4 For ReconTrust:

5 RabertJ.

McGahan,Esq.

6 Associate General Counsel

7 214 Nor1h Tryon St eet

8 NC1-o27-20-05

9 c,harlottc,

N

28255

10

11 For

Washiniiton:

12

JamesT.Sugerman,

13

Assistant Attorney General

14

Consumer Protection Division

15 800FifthAvenue, Suite2000

16

Seattle, WA98104-3188

17 6.13

The

Clerk of

the

Court is ordered to enter the foregoing Judgment nd Consent

18

Decree immediately.

19

VIL TERMINATION

20 7 1 This Consent Decree, and ell obligations ofDefendent

thereun<lcr,

shall terminate

21

22

23

24

25

26

three

years

from

the date

of

entry

of

he foregoing Judgment

and

Consent Decree, except that,

if

the United

States Securities

and

Exchange Commission

does

not grant the application

fur ' -per

manent

exemption to

be

filed by affiliates of

Defendant from

the provisions ofSection of

he

Jnvestment Company Act

of

1940,

this

C o n ~ e n t

Decree shall thereupon t.ertninate upon expiration

of

lllY

temporary exemption granted

by

the staff of the

o ~ s s i o n

and the parties shall

in

all

~ c t s return

to the

positions that they

were in prior

to

entry

of

his Consent Decree,

it

being

CONSENT DECREE ATIORNiY GENBRAL OF WASHINGTON

Colllll llCr f mleetioii Di rillion

100 Fiftb.A.vl:PllC, SWiii 2000

seattle, WA 9HJ04·llll

(206)

464•7MS

EXHIBIT ~ 3 _

PAGE -1. .._ OF

I

3




Case 2:11-cv-01460-JLR Document 17 Filed 08/20/12 Page 2of 3


1 understood that Wasbington may thereupon assert

any claims

arising out of or relating to the facts

2

and

matters descn bcd

in

the Complaint

notwithstanding

the

release

of

claims

in

Paragraph 2.3,

3 above,

or

any release ofclaims in the multistete settlement referenced in Paragraph 4. 1. above.

4

s

6

7

8

9

io

11

12

13

14

5

16

17

18

19

20

21

22

23

24

5

26

•

CONSENT DECREE

AT?OlNEY Q N£RAL

OF

W

ASHINCJI O)I

Conmmer PntoeOoa DlvblDn

800

Fift IA-c.

S\lllelOOO

S ~ ~ WA 911° 4·3118

(206)

464·77otS

EXHI IT

PAGE

I

7-QF

13




~

Case 2:11 cv 01460 JLR Document 17 Filed 08/20/12 Page 13 of 13

Case 2:11 cv 01460 JLR Document

16

Filed 08/14112 Page 3of 3

ONE

JN

OPEN

COURT1his_\'i_

day

o f _ _ ; l . : $ " " " " 3 t . ~ 2 0

l'Z..

2

3

4

Presontod By:

6

ROBERT

M.

MCKENNA

7 Attorney° '

B y : ~

9

/ ~ 3 9 1 0 7

A ilsiirtant

Attomey General

10

Attomeys

for PlaiutiffS1 1 o f ~ n

1

12 Notlcc

ofPt eSentm.8nt

iv8cl.

and

Approved as

to E,mn

by:

t7

18

19

20

2

22

23

24

25

26

CONSENT DECREE

13

EXHIBIT

_3_.. .__

P GE __ _1_

OF _}_1:_




NO.

10-5523-JCC

SUPREME COURT OF

TH

STATE OF WASHINGTON

KRTSTIN

BAIN

Petitioner

v.

METROPOLl'['AN MORTGAGE GROUP INC. et al.,

Respondents.

BRIEF OF AMICUS CURIAE

ATTORNEY GENERAL OF STA1'E OF WASIUNGTON IN

SUPPORT OF

P TmON R

ROBERT

M.

MCKENNA

ttorney

General

JAMES T. SUGARMAN

ssistant

Attorney

General

WSBA#39 07

800 Fifth Avenue Suite

2000

Seattle,

WA

98104

(206) 389-2514

EXHIBJT--'IJ '--_

P GE _ _ OF --1 £. '




TABLE OF CONTENTS

1 INTEREST OF AM CUS .................................................................

ll. ISSUES ADDRESSED BY AMICUS .............................................. I

A.

Question t; MERS

s Not

aJ..,awful

e n ~ f i c i a r y Under

the Deed o Trust Act, ........ ........ ....... ........ ........ ....... ,, ............. 2

1. Severing the Nole from the Deed ofTrust Creates

Havoc n the Marketplace ........................................... , ......6

B. Question

3.

By Aeling

As

Dn

Unlawf11l

-Beneficiary

1

Certain

Acts and Practices by MERS

Violate Uw

Coninuner Protection Act·................................................,. , ... 13

1.

MERS Acts Are Unfair

or

Deceptive ............................... 13

2. MERS Acts in Tl'ade or Conunerce .................................

17

3. MERS Acts In1pact the Public Interest .............................18

4.

MERS Acts injure

C-onsumers.........................................18

5, MERS' Business Practices Cause Consumer Injury ........

19

Ill. CONCLUSION ...............................................................................

20

EXHI IT

f

P G E ~ O F l£




TABLE

O

AUTHORITIES

Beckman 1 .

Ward,

174

Wash.

326,

24 P-2d 1091 1933) ..................................................... 6

Bo}1•ers v.

Transamerica Tille Ins.

Co.,

100

Wn.2d

581, 675

P.2d 193

1983)

...................................................

16

Braclford v. HSBC Mortg. C o1p.,

799 f Supp. 2d 625

E.D.

Va. 2011)

...................................................

10

Brmvn

v.

Ifousehold Rtalty

Co1p.,

146 Wn. App.

157,

189 P.3d 233 2008) .............................................. 12

Chris/en.van

v. Raggio,

47 Wash. 468,

92

P.

348

1907) ............................................................. 6

C o t m o n ~ v e a l t h

by

Pac/eel

v.

Tolleson,

14

Pa.Cmwllli. 72,

321

A2d 664 Pa.Cmwlth.

1974)

..........................

16

Co.t

v.

He/enlus,

103 Wn.2d 383, 693 P.2d 683 1985) ...................................................

12

Du11n

v

Neu,

179 WW1h. 351,

37

Pc2d. 883

1934) ...................................................... 7

Dwyer

v. J l

Kislak Mortgage,

103 Wn. App. 542, 13 P.Jd 240 2000) ................................................ 16

Erickson v. Kenddl/,

112

Wash.

26,

191 P.

842 1920)

........................................................... 7

Escalante

v SenJry Inc. Co.,

49

Wn. App.

375,

743

P.2d

832

1987) ................................................

17

Evergreen

ollectors

Holt,

60Wn. App.151,803P.2d10 1991) ..................................................

16

H

EXHI IT t f

PAGE

.. .3_ _0_F

z _ ~ -




E.'T:perience

Hendrix,

L.l.C.

v.

Hendri:-clicensing.co111,

LTD,

766F. Supp. 2d

1122

(W.D. Wash. 2011) ........................................ , ..

16

Fidelity Deposit Co. ofi\{ f v.

T COR Title

Insur.

Co.,

88 Wn. App

64, 943

P.2d

710 (1997)

............................................... 7, 10

FJoersheini v. Federal' Trade G'omm n,

411

F.2d 874 9th Cir. 1969) .............................................................. \6

Godfrey

v Hartford Cas. ln.s. Co.,

\42 Wn.2d 885,

16

P.Jd 617 200\) ...................................................

5,

6

Ha11g111an

Ridge Training Stables

v

Safeco,

105

Wn.2d

778, 7\9 P.2d 531

(1986)

...................................... . ..... 13, \8

lfarrisv OSI Financial

Se1•1 ices,

Jnc.,

595

F.

Supp.

2d 885 (N.D.111.

2009) .....................................................

11

HSBC. Bank v Antrobus,

872N,Y.S.2d 691 (N.Y.

Sup.

2008) ..................................................... 10

lmpac

v Credit

Suisse Bo:,·/011

LLC,

No.: 06-56024, 2008 Westlaw 731050

(9th

Cir.

2008)

.......................... 7

Jn

re

CoJ11mbia

Pac.

Mortgage, inc.,

22 Bankr. 753 (W.D. Wnsh. 1982) ......................................................... 7

In

re Foreclosure ('ases,

521 F. Supp. 2d 650 N.D. Ohio 2007) ................................................. I 0

In

re

Ken1p,

440 B.R. 624 (Bankr. D.

NJ. 20

I

0)

........................................................ 8

lva11 's Tire

Service v. Goodyear

Tire,

10

Wn. App.

IIO, 517

.p, 2d

229 (1973) ............................................... 13

Jackson v

MERS,

770 N.W.2d 487

Minn. 2009)

......................................................... 4, IO

Kennebec, Inc. v. Bank o he West,

88 Wn.2d 718, 6 P.2d 812

(1977)

....................................................... 6

EXHIBIT

t J

iii

-,,..-...,,..

PAGE_ :{_ OF

Z S




Kinkopfv.

Triborough

Bt idge Tunnel

Authority,

I Miso.3d 417, 764 N.Y.S.2d 549 N. Y.City Civ.Cl 2003) ................

16

Lomayaktewa v. J a1hm11ay,

520 F.2d 1324 9th Cir.

1975)

.............................................................. l l

MtJson v.

Mortgage

America,

Inc.,

114 Wn.2d 842, 792 P.Zd 142 1990) ................................................... 19

Miguel

v.

Counlry

Funding

Corp.,

309F.3d1161 9th Cir. 2002) .............................................................. 11

AJ01·tgage

Electronic

Registration

Systems,

Inc.

1•

Nebraska

Dept.

o

Banking

and

Finance,

704 N.

W.2d

784 Neb. 2005) ........................................... 3, 4, l 0, 14, I 5

1.Vordstrom, Inc. v. Tampoul los,

107

Wn.2d

735, 733

P.2d

208 1987) .............................................13, l 8

Panagv.

Fatn1ers

Ins. Co. o

Washington,

66

Wn.2d 27, 204 P.Jd

885

2009) ....................................................... 19

Pe1msylvonia.

Dep

t o

Banking

v. NCA. 3 ofDelmrare, /.,LC-',

995 A.2d 422 Pa. Comm. Ct. 2010) .................................................... 13

Plein v,

IAckey,

149 Wn.2d

214,

67 P.3d 1061 2003) ...................................................

12

Price v.

Northern

Jiond Nlortgage l'o .

161

Wash. 690,

297 P.

786

l

931)

.....................................................

4,

7

l'ublic

Employees

Retire1nent {j;1sten1 qflv ississippi v. Merrill Lynch

Co., Inc.,

277 F.R.D. 97{S.D.N.Y.

2011) ..............................................................

8

Rodgers

v.

Seattie-First

Nat 'I

BC1nk.

40 Wn. App. 127, 697P.2d1009 l 985) .........................................

7,

I l

Ruscal/eda v,' IISBC Bank USA,

43 So.3d 947 Fla. Dist.

Ct.

App. ioJO) ............................................... I 0

;

EXHI IT _ -f..___,,.

P G E ~ O F 2.S




Salois"·

Mutual

o

Or11aha

ins.

Co.

90

Wn.2d 355,

58

l

P,2d

l351 (

1978)

................................................... 17

Scott v. Cingular Wireless,

l

6

WC.2d

843,

161 P.3d 1000

2007)

................................................... 6

Sign-0-lile Sign$,

Inc.

v. DeLautentiFlorests Jtc.,

64 Wn. App. 553, 825 P.2d 714 (1992) ................................. : ............. 19

Sorrel v Eagle Healthcare, i n c ~ ,

lJOWn.

App.

290, 8 P.

3d 1024

(2002) ............................................. 19

State

v:

Kaiser,

161

Wn.

App. 705, 254 P.Jd 850 (2011) ..............................................

14

State v.

A1orley,

134 Wn.2d 588, 952

P.2d

167 1998) .....................................................5

,S1ephens v.

01nni Ins.

Co.

138

Wn. App. IS , l59P.3d 10 (2007) .................................... 13, 16, 18

Teslo

v.

Russ

Du1un;re O l d s n 1 0 ~ 1 / e Inc.,

16 Wu. App. 39, 554 P.2d 349 (1976) ..................................................

16

Te.xas v.

lln1erlcan

Blastfa:c,

Inc.,

164 F. Supp. 2d 892 W.D.

Tex.

2001) ................................................

16

Thepvo11gsa

v

Reg'lonal

Trustee

Servfce C'orp.,

No. 10-cv-1045, 2011

WL

307364,

W.D.

Wash. Jan. 26, 2011) .... 9, 10

Washington

Dept.

o ~ e v . v

Security

}Jae. l)ank oj Jfr 1sh., N.A.,

109 Wn.

App

795,

38

P.3d 354 (2002) ................................................... 8

Wells Fargo Bankv.

Farmer,

867 N.Y .S.2d

21 N.Y.

Sup. 2008) .......................................................

10

Young An1ericansfor Jtl·eedan1

v

Gor1011,

91 Wn.2d 204, 588 P.2d 195 (1978) .......................................................

Zolfagharf v.

Sheikho/esla1ni,

943

F2d 451 (4th

Cir.

1991) .................................................................. 7

v

E X H I B I T ' - / _ ; , , _ _ ~

P GE

( ,,

OF

2 l:J




tatutes

15

u.s.c.

635(Q ..................................................................................

11

RCW 7.04 ................................................................................................... 5

RCW 19.86.010(;1).............................................................................. 17, 18

RCW 19.86.080 ....................................................... : ................................. 1

RCW

19.86.093

........................................................................................

18

RCW 31.04.015(7) ................................................................................... 15

RCW 31.04.015(26) .................................................................................

15

RCW 31.04.035 ........................................................................................ 15

RCW 61.24.005(2) .................................................................................. I, 2

RCW 61.24.030(7) ...................................................................................... 4

RCW 61.24.030(8)(1) .................................................................................. 4

RCW 61.24.130 ........................................................................................ 12

RCW 61.24.130(2) .................................................................................... 12

RCW 61 24 135

........................................................................................ 13

RCW

61.24.172(2) ...................................................................................... I

RCW 62A.3-302 .......................................................................................

RCW

62A.3-302{a)(2)

.............................................................................. 12

RCW 62A.3-305 ....................................................................................... 11

RCW

62A.3-602(a)(ii) ................................................................................ 7

EXHIBIT__ :± __

P GE

_ _ OF }[




Other Authorities

Adam

Ashcraft Til

Schuermann,

Untlerstonding lhe Securifiz ltion

ofSubprime MQrtgage Credit, Federal Reserve anlc ofNew

York, (March 2008),

http://www. newyorlefedorg/reseorch/.'lfqf/

JOport slsrJ

18.pdj. ...............

8

Dale Whitman, How Negotiability Ha.\• Fonlul Up the Seconda1,,

]efortgage Market,

and What To o 1lbo111

Jt 37

Pepp. L. Rev. 738

(2010)

...

, ........... ,.,.,, ..................................... , ............._..... , ................. , ... g

Dj;;uie

E. Thompson, Foreclosing IVlodifications: .J:Jow Servicer

Incentives Discourage

Loan

Modifications,

86·

Wash.

L.

Rev.

755

(2011) .................................................................... ,............................. 17

F r a r ~ d S c h e n e Characteristic, Fannie Vlae,

https://www.efanniernac.com/utility/ egaUpdt7fraudschchnr.pdf

(Jost

visited Feb. 14, 2012) ...................................................................... 6

Kurt Eggert. fiel

Up in ue

Co11r 1:e:

Predatory

Lending,

Securilizalion, and the Holder in Due Course Doclrin1t,

35

Creighton L. Rev. 503 (2002.) ................................................................. 8

N f o r t g a g e ~ B a c k e d Securilie ,

U.S.

Securities

and

Exchange

Co1nmission,

http.:llWl4'W.sec.gov/annversln101·tgagesecirrities.hln1

(lasl visited Feb.

14,

2012); .................................................................... 8

Wash. Proctlcc,

~ a l &tate § 18. l S (2d ed.) ............................................

11

Regulatiggs

16

C.F.R. § 321.l(o) (2011) ......................................................................

16

vil

EXHIBIT _Lf.:..__

P GE ___ '_ OF _bi_




I. INTEREST OF AMICUS

Amicus Curiae

is the Attorney General of Washington. The

Attorney General's constitutional and

s ~ t u t o t y

powers. include the

submission

of

a1nicus cu1 iC1e briefs on matters affecting tbe public

interest.

1

Tl1is mattet: requires an interpretation of the Washington Deed of

Trust Act ( DTA''), RCW 61.24.005(2). The Attorney General is charged

with

enfOr-cing the

Deed

of Trust

Act,

2

and is

currently involved

n

litigation and enforcement actions regarding mortgage lending and

foreclosures

in the

State of Washington.

3

ln addition, this matter concerns

whether lhe actions

of

Respondent Mortgage Electonic Registration

Systems

1

Inc, (MERS) falls within the Consumer Protection ct The

Attorney General enforces the Consunier Protection Act, RCW 19.86 on

behalf of the public.

II. ISSUES ADDRESSED BY AMICUS

The

Attorney General

flies

this brief ' ith respect lo Certilied

Questions l and 3, We do not address Que.c;tion 2 because we believe it is

too broad

to

be answered generically.

1

Ses. Yo1111gA1111:rica 1s fol'

f i·eedo111

v,

Gorto11,

91

Wn.Zd

204, 212, 588 P2d

195

(1978).

1

RCW61.24.172(2).

JLR.

3

See, e.g. Stritll o Wmhf11glon v

Reca11Tr11.t1,

W.D.Wash.

No.: 2:11-cv-1460·

RCW

19.86.080.

EXHIBIT 4

P G E ~ O F

2

0




l)

MERS

is

not a la\vfui beneficiary'' Within lhe terms of

Washington's Deed of Trust Act,

RCW

61.24,005(2), if

t ·never held

the

promis.sory secw·ed by the deed of trust.

(3) Hoineowners may

possess a

cause

of

action under

Wamington's Consumer Protection Acl against MERS when MERS acts

ns nn

unlawful

beneficiary under

the

tei s of Washington's Deed of l'rust

Act.

A.

Questjon

1:

The federal court nsks: (1) ls MERS a lawfnl

1

'benefieiary

within

the tCrms

of Washington's Deed of Trust Act, RCW 61.24.005(2},

i

t

never

held 1he

pr9n1issory note

secured by

the deed

of tmsi?

This question

is

inlfficdiately answered by

the

plain

language

of he

Deed of Trust Act ·- a beneficim'y is defined as the

..

holder of tl1e

pro1nlssory note. RCW 61,24.005(2). Thus,

i

MERS never

"helQ

the

pron1issory note then. it is not a lawful b e n ~ f u : : i a r y The

D1 ·A

unambiguously defines beneficiary as: '"Beneficiary

means the

holder of

the instrument or document evidencing the obligation.s secured by the deed

of ln1st.

Jd The lnstn1ment obviously means the promissory note

because the only other document

in

the transaction is the deed

of

trust and

EXHIBIT

4

------

2

P GE _l Q_ OF

.-2 _




it would

be

absurd

to read

this definition as saying that ' beneficiary

means the holder

of

the deed

of

trust secured

by

the deed

of

trust '

5

The State agrees 'lh Plaintiffs Bain and Selkowitz that MERS

violated the

.statut.Qry

language

of

the Deed

of

Trust

Act,,

the

law of

Negotiable Instruments, and the common law principles

of

real property,

which all provide the legal status

of

the note is determinative

of

the

power to

enforce

·the

11ote. MERS maintains that there is

no

statutory or

public policy l'eason for preventing

it

from ex.panding the definition

of

beneficiary to a

parly thar

holds. only

the deed

of

trust. JvlERS

Selkov.

1 12

Response Br. at 12. The State files t i ~ rl111icus Petition to provide the

Court \Vith both statutory

and

public policy

reasons why

the MERS

system

conceals

t e

true owner of the pron1issory nc>le and why this

is

do.n1aging

to

a

free, fair

and tmnsparen1

mo11gage marketplace.

ln

Mortgage Electronic Rflgistrution

Systems

Inc. v

Nehras.ka

Dern ofBanking and Finance

704

N,

W.2d 784, 787 (Neb.

2 5 ~

MERS

and the Court describe its role in the marketplace:

MERS argues that . , . it only bolds legal title to members'

mortgages

in a

no1ninee

capacity and is contractually

prohibited from

exercising

any

righ\.51

with respect

to

the

mortgages

(Le., foreclosure) without

the

authorization of

the

members. Further, MERS fil gues that it

does not

own

the promissory notes secured b)' the mortgages and has no

right to payments

made

on

the notes, MERS

explains

that

it

5

Respondent MERS advocates for

this absurd

interpretation in pages 3 -

15

of

its

Rcsponso in Selk011•flz

3

EXHIBIT _I./ -_

P GE -1 _ O ]£__




merely immobili2.es

lhe

mortgage lien

-;vbije

tr nsfers

or

the proutisson .notes and servicing rights

co11tinue

to

~ ·

Id. (emphasis added). T11erefot'e

1

the very purpose

of

MI-:RS is to hold

onto the securjty inlerest while ownership

of

he loa11 passes from party to

party.

6

This role is contrary to Washington's fundamental principleof real

property fmance law that the note is considered the obligation, and the

mortgage but an incident of the note which passes with it.

P1·/ce

v.

Norlhern ond Mortgage Co.

161

Wash. 690, 695, 297P 786 (1931).

It

is

nol just decades

of

case law that rely on the note and the

security instru1nent transferring together, The Deed of Trust Act (DTA)

Qssu1ues it throughout its provisions. The

DTA

sta1es U1at the trustee

shall have proof that the beneficiary is lhc owner of any promissory note

p1ior to foreclosing. RCW

61

.24.030(7). The OTA also requires tbe

trustee

to

disclose in

the·

Notice of

Defnult the

nnrne

and

address

of

the

owner of the promissory note. RCW

61.24.030(8)(1).

MERS maintains tb.a t because the defmition section of the DTA

contains the phrase '(t)be definitions in this section apply throl1gl1out this

chapter unless the

contex_t

clearly requires othern

1

isc, MF...RS may expand

the definition

of ' b e n e f i c i a r y

to cover

parties that

do nol hold lhc note

but instead hold the deed of trust. MERS Selkowi1z Resp. at 12. The

6

See

Q/so Jackson v. MERS 770 N.W.2d 487 (MiM. 2009) ( By acting as the

norninal mortgagee

of

record

for

its 1nennbers,

MERS

has essentially separated the

pron1i5socy note and the 5 ~ u r i t y Instrument,

allo\ving

tho debt

to

be trnnsrerrcd without

t tt s s l g n m ~ t

of

the :security instrumonl.

d at 494.)

EXHI IT

4

4

PAGE ..11:::

OF 2i;,




definition of beneficiary

is

not ambiguous, and the phrase unless the

c_m-rtext

clenrly requires otherv,,ise only means that a definition viii not be

_applied

to yield an absurd result. The phrase is not intended to provide an

opportuniiy to disregard

the

plain language of the DTA.

7

MERS contends that it may circumvent

the 'OTA

requirements by

creating a deed

of

trust thal uses a third ·party nominee as the

benefioiary.

8

However,

in pleuary statutes such as

the

DTA,

where

the

legislature J as expressed Washington's- public policy on l1ow f o r e c l o s u r e ~

sbnll occur, parties may not

vary the

tenns

by

contract.

An

analogous situation arose

regru·d.ing

Washington

1

s former

Arbitration

Act.

9

In Godji·ey v Hartford Cas.

Ins.

Co. 142 Wn.2d 885, 16

P3d 617 (2001 ),

the Court examined

the Act and determined that the

defe11,dants

would not be allowed to conlractua1ly alter its leans. The

Court

held that

because the Act

was an

expression of public policy by the

L e g i s l ~ e it inust be apptied as a whole and

\vitho\1t

common law

alternatives

to

its provisions.

10

Not

only

wouJd this violate the

legislature's stated public policy, but also because

the

parties would e

invoking the powers

of

the

st.ate

to enforce the

arb.itration

decision, they

7

8t e

v. Morley

l34 Wn,2d 588, 598, 952

P.2d

l67 (1998) {this phmsc

means

the deftnilion

section should

not

be blindly 11pi:;lied. )

1

The term no1ninee is not round in

the

OTA, negotiable instru1nents lnw or

Washington real property lll\Y

generally.

~ R C W 7 0 4

O God[rf y, l42 Wn.2d at 896.

EXHIBIT

__ ±__

P G E ~




must

provide

the rigb.ts

and responsibilities

contained

i

tbe

stntu101·y

procedure to

arrive

at that decision.

11

The

OTA

is also a

co1nprehensive expression

of p\lblic policy.

12

Like arbitration decisions. a nonjudicial foreclosure is likely to require

state powers to

enforce

the result through an eviction action. The

Legislature bas set

forth

in enormous detail

how

nonjudicial

foreclosures

may

proceed

and

p lrties

should not

be

allowed

to

vary

these

procedures

by contract.

1. Severing the Note from the Deed of Trust Creates

liavoe

in

the Marketplnce.

The. practice of sevel':ing

the note

frotn

the

security interest has a

history

of

causing

havoc

in Wasltington's

mortgage

marketpJace. An

early example of the problem was a scam that has come to be known a.s

"double

selling.1'

13

A lender makes a loan secured by a home and sells the

loan to

an

-investor. ·fhe: lender then sells

the same Joan

again

to

a

different investor, 01· more loans secured by the same mortgage.

11

fd at

&97,

('1T]he)' brought into play

tlro

jurisdiction

and

p_ower of

tho co4rc

aa set foath n the

[Arbitration

Ac1]. By so doi11g, they h11ve

activated

1he c11tire chapter

llDd the policy embodied therein, not just

tho

pnrts tha1 are t1seful to them.") Sec ulso

Scofl

v

Clngillar

Wireless.

lGO

Wn,2d 843, 851, 161 P.3d 1000 (200i') (A

oont\"actunl

agreement "that violates public policy may bt::

void

and unenf'Ql CCable. )

12

KenntJbcC.

Inc.

11

B a n k o f t ~ e

Jl'est,88

W1l.2d

7 8, 725,

565

P.2d 812 (1977)

(''ln 1965 the egislllture, ln enacting what is codified as RCW 61.24, again cha11gcd the

public policy

ofU1is

state."

Id

(citalion omitted).

HSee,

roud

Scho 1e

Charocter'i:ttlc, Fllnnie Mae,

hllps:/Jwww e f a n n ~ a e c o m l u t i l i t y / l e g a V p d f / f r a u d s c h c h a r p d f (last visited

Feb.

14,

2012).

Chrlstrutfon 11, 11.aggfo 47 WQSh. 468, 92

P,

348 ( 1907); B11clu»an 1

1

, Ward

174

Wash, 32lj, 24 P2d l 9l (1933); idelity e p ~ I J Ct J. of

Md · TICOR

f ilfe

EXHIBIT

t.j

PAGE

14-r--oF_,W,.,....

6




A l t e r n a t i v e l y ~ a lender will only sell the note to an investor once, but

conceal tbe transfer and direct the borrower to keep paying- him. Tue

lender wrongfully keeps

1he

money, leaving a.11 investor who beli.eyes she

a defaulted

loan

on

which she can foreclose, and a borrower who

believes ]1e has a satisfied loan on which the security interest should be

released.

1

s

'fhese schen1es result in

two or more innocent parties that have

fulfilled their contractual duties but are denied their contracn1al benefits.

The Court is left

to

pick a winner

among.

the parties and must resort to

usiug procedural failures that would 0U1erwise be non-actiona_ble. As o

example,

the- Cou11

has said that

bo1Towers

who pay otf

their

loans without

knowing t11e owner of the lom.1 should take the risk of loss if another

asserts the same .debt.

16

The Cou1t has also said that a party that hwi

recorded a mortgage but not received a note has priority

QVer n

earlier

assignee

of

he note who did .not record

the

mortgage.

17

Insur. Co., 118 Wn. App

64,

943 P.2d 710 (1997); see. al.so Zolfagf1arl v.

Sheikflole.:/f1ml,

943 F.2d 451

(4th

Cir. 1991) (discussing

n11tional

ltnder that

sold

the same mortgages

more lhan

once

to

several different

investorS); llnpnc

·

CrediJ

Suisse BO ton LLC,

No.:

0&-56024,

2008 ·westlaw

_731050

{9th

Cir.

2008) (same).

15

Erick.ton v Kendall,

112 Wash.

26, 191 P. 842 (1920); D1111n

1'. Neu, 179

Wash,

351,

P.2d 883

(1934);

W t l g e r ~ v. S a a u f e · F i r . ~ l J1lat'I Brmk. 40 Wn. App.

127,

691P.2d1009 (1985);

Price v.

Northern

Boni/ /\' 01•/gage Co .

L61 W 11sh. 690, 297 P.

186

(1931).

16

Rodgers,

40

Wn.

App,

Qt

132,

lt

is

lo11g-selll®

law

that·

one paying a note,

either negotiable or

nonnegotiable, should

demand producllon

of

it

Upon payment or risk

b11ving lo pay again

to

the 118llignee. )

(citing In re

Colu111bia

Pac.

Mr1rf8t1ge,

Inc., 22

Bankr.

753 (W.D. Wash. 1982); RCW 62A.3·602(a)(ii)

(a

loan

is

only considered paid io

lhc extent that the payment

Is

to a person

ei.1till.::d co

enforce the Instrument. )

1

'

P r i c ~ L6l Wash.

690.

7

EXHIBIT _4 __... ..

PAGE _1i_ OF

_2]_




Under

MERS

and the sc:curitization process, \Vhat \Vas once a

sporadic problem has become a systemic and illlll1anageable one. In the

present mortgage

market,

the note, or at least ownership of the loan, IS is

tmnsferred fron1 the originating lender to

an

entity called a sponsor

that

buys hundreds of loans to form a securitization trust. The sponsor lhen

lransfers the loan to a depositor who then transfers the loan to a

securilization

trust

where

it sits as

an asset for

investment products.

19

Investors

can

purchase. certificates in the trust tliat entitle

them

lO a stream

of payments based on

the boiTowers'

payments on their

loons.

20

Sometimes

even·

this is not the

end

of the loan s journey. IF a

bo1To\ver

defaults in the first Few months, the trust

can

often ntake the sponsor buy

it

back. and sometimes the sponsor

can make t h e

originator buy it back. The

trust can also force a l;>uyback. of loans later i the

~ p o n s o r

or originator

18

There

is evidCDte

ihal son1e lenders

never tran$ferred promissory notes

at

1111

g. In re Ken1p, 440 B.R. 624, 628 (Ban.kr. D. NJ. 2010) (bank officer testifies lhal it

\VllS customary for otiginnting

blink

10 maintain

possession

of the original

note

\\•hen the

loan was sold.); Dn.lc Wl1lnnan, Haw Negotiablflry Haf Fouled Up the Secomfq1

Mortgage

Markel, am:I IYhqt

T{J Do

Abf)l1/

II,

37 Pepp. L, Rev. 738, 157-758 (2010),

19

Sss Kurt Eggert, Hold lip in Due Cou/'se:

Preda101''

lending, Securili:Wlon,

and the Holder in D11e Cou1'$e Doctrine, 35 Creighton L. Rev. 503, 538 ( l002);

Morlgage--Backed

Secl1rlflu, U.S. Secw-ities and Exchange Commission,

h L l 1 N l l 1 n n v , s g c . . g o v l g n s w e 1 s f m q r l g q g ~ e e 1 w i f l r . s . h h n (last visited Feb. 14,

2012);

'Washing/on

Dopf.

o

Rev.

v.

Sec11rily ftfc.

Bank

(If

lfrtsfl,,

N.A.,

109

Wn

App

195,

3ti

p,Jd 354

2 0 0 2 ) .

- See P11bllc 1pf0J>ees' Retire111ent S} 1te111 o

A1ississippi

l , AJen·ilf l)'llch

Co., lm:., 277 F.R.D.

97,

102, n. 3-7 (S.D.N.Y. '2011}; Adam Ashcraft.& Ti Scbul tmaru1,

U n d e l ~ l a n d i n g

the Sec11ril/1otfon o/Snbpri1ne Mor1gage

C1·edit, Federal

Rese1ve.

Bank of

New

York, 5 (March 2008), hllp.·Ul\'lvw.11tr Vl'Urifed.oref,.ru·earcW.stq[ reeort.efir118,pdf

EXHIBIT_. : :_

P GE 1112_ OF

_Zi




misrepresented the quality of the lo_an.

21

These ;'putback" cases now

involve disputed

ownership of loans worth

billions

of

dollars.

22

Some

loans are purchased fro1n lenders tha1 have liquidated,

further

complicating

the status

of the

holder.

23

With

this

system n place sonlt parties cannot even locate tl1e note

or trace the path of its ownership. for example, n Thepvongsa

v.

Regional

Trustee

Service

Carp.,

No.

tOwcv·

1045,

2011

WL

307364, (W.D,

Wash. Jan.

26,

2011)

(Unpublished

Opinion)

a

prose

plaintiff

atte1npted

to unravel what happened to his two

loans

after they were originated.

Although

the

Court

had the

MERS deed of trust before t

and

a subsequent

assign1nent of

the

deed

of tnist, si111ilnr to Bain the Court could

not

detc111llnc whether the defendants hnd lbe authority to

f o r e c l o s e ~

stating:

In the a b ~ e n c e

o.I'

a complete record

of

all relevant

dOcuments,

i11cluding

the

promissory notes, and

all

purported transfers of

the

notes , ,

the

Court cannot

·•t ·-'--

-

See B4mi.-

o Nrnv Yot.k

Mel/on ' /l a/n111

Place

l.LC

-

F.Supp. 2d-· 2011

WL 4953907, l (S.D.N.Y. 2011);

Syncora G1jarantll Jnr:.

· Co11111ryivfdi: lfa111e J aciru-.

/11c. 935 N.Y.S.2d

858,

660 (N.V. Sup.

2012),

.ll E.g. lJa11k o Ne1v YGirk M1:11/on v. lf(l/1tur

Pfnt:e

LLC S.D.N.Y No.: I -cv-

5 9 8 8 ~ wblch

involves

530 diftercn sc.:W'hization trusts,

Se.e

Alison Frankel, Banli.1

bawarc:

17111e

l'ipefor

MBS

breridi-of..-cm1trt1cr si1ilJ,

Reuters Edilion

U.S.

Blog, (Sept

. 9, 20 l l)., hllg,;/,'l)loG:1,rcyte 's,C01n t1l

ison-

frankeV2011/09/I9/bt1nk$-beW11J·t- ime-js-ripe·

fot-1r1bJ-hiyach·of..contmct::milll. (idenlifyiJ1g suits regardi11g

trusts

with

face V11lues

of

over$ lOO billion In lo11J15);

P or1n111·

C fonia l Bank Mor1gaga

Lendfng

S11per11isor Plirads

G11ilzy ta Frm1d Sdie111e

U.S.

Dcpartruent of Justice, (Mar. 16,

201.J),

hup://www.lustlcago11/opa/prl20l

J/Marcb/l

J-cnu-J39.htm

(describing

how

n1ortg11ge

lender double sold

loans and

sold

o n - e x l ~ t e n t loans to

investors.)

23

Jackson

v,

MERS

770 N.W.2d 4B7, 492 (Minn. 2009);

Paul

Kiel, Jntarr111l

Raveu/s GA/AC Filed False Docume111

fn

Bid to F o r ~ c / o ; t e l'ro

Publicn,

(July

27,

20

11

),

hup:l/www.prcmublica.orWrtjs;Jelgmac-n1ortas-'vhisde >lwer·

furecl l Jqrefsjnglc

9

EXHIBIT ___,f'--

P GE

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1.R..




determine

who

held

the

promissory

nole and

11nder

what

authority

the

default

and

sale \Vas to occu1'. Additionally,

pun;uant to

the D1'A,

the

beneficiary or trustee was

required to provide ... the name and address of

the

owner

of

any promissory notes

or other obligations secured by

the

deed

f rust. RCW

6

l.24 .030(8)(1).

·

Because they

are

strjpped of he deed of trust

and

·any public record$,

lost promissory notes

may be

conm1onplace. This

is alarming

because

the

overWhe ining

majority of foreclosures ncv_er face judicial scrutiny tCl sort

through ownership

of the note.

The

party

demanding fOreclosure sale

may

or

may

not

be the

owner,

and the

foreclosure proceeds mny or

may

not be

sent

to satisfy

the debt.

25

The

homeowner has

no

way to be

sure

other

than filing suit and engaging in discovery, which for many foreclosed·

upon

homeowners would be financially

impossible.

Given MERS

1

practice

of ..

immobilizing the mortgage lien while

trunstC.rs

of the

protnissory

noles

...

continue

to

occ\lt',

26

it

is

praetically

impossible

for

a

:MSee-a/so,

BraJ[ordv. HSBC ~ 1 o l l i f , . COTp., 799

F.

SUpp.

2d 625,

628

(E.D.

V11.

201

l {homeo\vner faced

with

three defendants e11ch claiming

tho

other

is the

holder

or

the

promissory

note

11nd

MERS will not

identify noteholdcr);

Jackson v

A-IE.RS,

770

N.W.2d 4.87 (Minn. 2009)

( A

side

effect ofthci

MERS

system

is that

a

U'ansfer

of[t.he]

loon

bct\Yeen

t\\'O MERS

meJubers

is

unkno\vn

to those outside the

MERS

system .. ,.

[E]ach named plaintiff in this case bas been unable to obtain informlltion ubo"t the

cutrt-nl

owner of

his

or

her indebtedness

, .. several of the originel

leoll.ers for the

no1ne<l

platntiffs h 'Ve gone

out ofbusiness.'

1

Jd ot

491);

Jn re Ft1rec/0111ro Cases, 521 f Supp.

2d

650, 654

(N.D.

Ohio

2007).

HSBC

Bank

v. Anltobus, 872 N.Y.S.2tl 691 (N.Y. Sup.

2008);

11 ef(.r

.Fargo Bank

v

Fann et,

867 N.

Y.S.2d

2

i

(N.Y. Sup.

2008).

1

See. FitklJty

.

Deposll

G'a,

f

Md. v. 11COR T i l l ~ ln. rir.

Co.,

88 Wn. App

6 4 ~

R//'1.calledo

.... HSB(: bank l Stl, 43 So.3d 947, 949

(Fla. Dis:t.

Ct.

App.

201 O)

(two

bunks

f o r e e l o s ~ o n the

same note).

MQl'lgogv £lecr1'0 lic RegislraJl(Jn Syste11is,

l1:1r v

Nebraska Dep1.

of Banking

and Finance, 704 N.W.2d 784, 787 (Neb.

2005).

10

EXHI IT If.

PAGE _11..,..,).....O_Fz:-.e ...




borrower to comply with the l o n g ~ s e t t l e d Jaw'' that a borrower inust be

certain

he

is paying

the

note bolder or

risk

having to

pay

it

twicc.

27

MERS concealment of

loan

transfers

also

deprives

ho1neowners

of other rights. The federal Truth in J ~ e n d i n g Act allows homeowners to

rescind their -loan U'&nsaction for cert11in violations o that Act.

28

But the

hon1eowner ca11 not

rescind against an agent o a loon holder.

29

Further,

most other suits seeking

to

rescind require

t11c

presence of

t e

actual

owner of the debt.

lG

Borco\VeJ.'S

must

also know what happened

to their promissory

note

to determine whether the O\vner

is

a holder

in

due course.

31

T11ose

who

bave

contract claims

or

recoupment clain1s

ste1nnrin& fi:mn

the original

loa11 transaction cannot assert those claims against a holder

iT due

course.

32

riowever, depending

on how

and wJ1en the note was transferred,

the current assignee may not have this status. For example, i the loan is

27

Rodgers 4{) Wn. App.

127.

11

IS U.S.C. §

1635(1).

•

9

lviig11el

v.

Co1rnt1y

F dlng

Corp .

309 F

3d

I

161,

1162-65

(9th

Cir, 2002.)

( While the-

Bnnk's

servicing agent ... received notice of C11ncelhl.tion

within the relevanl

three-year

period

1

no authority supports

the

proposition that notice to {the loan

set'Vicer]

should

suffice for notice

to

the Bank. }

Jd

al J165; Ha1rls ' OSJ Ffno11cial Services

Inc.

595 F. ·supp.

2d

885, 897

(N.D.IJJ.

2009) (Rescission

is

void

because.

while

the

original

note owner re1:eived the

rescission

nolice,

Um

assignee

did not.)

JQ SetJ Lo111o;iiabei1•0 v.

Jfathaway

520

F d

1324,

1325 9th

Cir.

1975) ( No

procedural

principle is 1nore

deeply

imbcdded in the comn1on law than tbat,

Jn an action

to set

S,ide

a ...

contract..

all parties

wl'lo

ntay

be

affec1ed

by the

deteonination of

the

action

are.

indispensable. }

3

RCW

62A.3-302. Washington tnortgagc loans may use

nego1iab\e

insttum.enl or non-negotiable instrumtnt as the

Writing

evidencing the debt.

See

Wuh.

Pra.ctlCe,

Real

Estate § 18.. 18 .{2d ed.)

ll

RCW 62A.J.j05.

II

EXHIBJT

__.tf

PAGE

_jj_

OF

...18_




transferred after the borrower

has

defaulted the current transferee

would

not be a .holder in due course,

33

MERS practice is

to

not transfer the

loan

until the foreclosure_

process:

is siarted

so

note holder status will always be

e

potenti_al

issue.

Once a defaulted borrower deler1nines who the real note holder

is

the borrower must use the D1 A s injune1ive process to asse1't his-or

her

claims.

4

The

DTA contalns the

only

legal protess borrowers may

use

lO

stop a foreclosure,

end

if their claints are riot asserted before sale their

claims arc forever waived, and title

to

lbe property will not be restored.

15

Under this process hon1eowncrs

only

have fi·om five days to Six months

to

learn the holder of their note and assert their claims:

6

S1ated

succinctly,

tl:ie use

of

MERS as

a placeholder beneficiary

while

the loan flies

from D\vner

to

owner

has

brought chaos

to

the

mortgage 1nw:kctplace and stopped the effmient processing of

foreclosures. This Court would bring

c..'Crtainty ro the

marketplace

by

interpreting the OTA in a 1TI8JU1er 1hal insures that t11e path of r a n s f ~ of

pron1issory

notes is transparent,

and

lhat notes are

~ c r e e d by

their

holder, not the assignee of a nonholder.

RCW 62A.3·302(a)(2).

1

•

RCW 61.24.130.

.I B r ~ w n 11

H 0 1 1 ~ c h o 1 l Rit(l/ry

Corp., 146 Wn.

App.

1 5 7 ~ 163, 189

P.3d

23J

('2008)

{stating

lhat

the

DT

A

is

the

only means to

stop a

foreclosure), (citing,

Co.\·

ir

HeleRiris,

103

Wn.2d

383, 3 8, 69 3

P.2d 683 1 9 8 5 ) ~ P/ein

11 Lael )"

149 Wn.2d

214, 67

P.ld

1061

(200)).

3

RCW

61.24.

130(2).

12

EXHIBIT _ 4 ~ -

P GE

2.0

OF

2 rJ




B. Question

3.

By

Acting As an Unlawful Beneficiary, Certain

Acts

and

Practices by MERS Violate· the onsumer P1·otection

Act.

The Deed

of

Trust Act (D'fA) creates two statulory pr r

violations

of

the CPA: collusio1)

a1noug

bidders at

:

foreclosure sale &lid

bad faith mediation practices.

37

However,

the

existence of statutory·per

se

violatiqns

does

not grant immunity to the parties from the broader CPA

prohibitions

1;1 gainst

other unfair

or

deceptive

practices.

These arc

analyzed like any othe\' business practice, under tl'le five elements of

Hangman R;dge Training Stables v. Safeco, 105 Wn,2d 778, 719 P.2d

531

(1986).

1.

MERS Acts Arc Unfair or c ~ p t i v e

The CPA does not define unfair or deceptive. Instead, courts

have developed stan<:Jatds on a case-by-case basis.

39

To prove that an act

or

practice is deceptive, neither intent

nor actual deception is required. The question is whether

the conduct has the

capacity

to deceive a substantial

pol'tion of the public. Even accurate information may be

deceptive

if

there is a repJ esentation, omission or p1"actice

31

RCW

61.24.135.

31

Nordstrom, inc. v. Tu111po11r/0J, 107 Wn.2d 735, 742-43, 733 P.2d 208 (1981)

C'While we h11ve

eschewed.

the

use

of judicially created per se violations ... we

nevertheless recognize that ce1tain acls, by lteir very nature, must full'illcerlnln

prongs of

the Hang111a1r Ridge tost."); Stepht n.v ,,, On1ni Ins. Co., 138

Wn.

App. 151,

177,

159 P.3U

JO

(2007)

("ThJs is

not a case

wl1ere

the public interest element ls-satisfied per se

by

1 , .

specific legislative declaration of public interest Impact. Whether the public has

an

interest

Is therefore

an

issue to

be e t o n n i n ~

by the trier of tact. );

see

Pe:nn:rylt•onia.

Dep l

of.Banking, v,

NCAS o[Delaivare, LLC, 995 A.2d 422, 442 (Pa. Co1nm, Ct. 2010)

.(acts. not

sr,-eifically

incorporat1.?d by per Se

language

can

still

be

a

CPA violation),

Ivan's TlraService-l'. Goodyear

Tire,

10

Wn: App,

t

10, 517 P.

2d 229 (1973).

13

EXHIBIT

i

PAGE

.2:-;(- 0-F




that is likely

to

tnis\ead. Misrepresentation

of

the

material

terms

of

a tl'ansaction or the failure to disclose material

terms violates the CPA. Whether particular actions are

deceptive is a question of lnw that we review de novo.

Stare v

Kaiser

161 Wu. App. 705, 719, 254 P.3d 850 (2011)

(citations omitted),

In

i1 deeds

of

r u s t ~

MERS states

that

it

is the beneficiary under

this

Security hIBtllllllent" (Bain Dkt. 147, 3)

1

when it

kno,vs

or should

know tl1at

1u1der

Washington law

it

must hold the note

to

be the

beneficiary. MERS states in its

Assignn1ent

ofDeed of Trust that:

OR VAl.UE RECEIVED, the undersigned, Mortgage

Electonic

Registrl\tion Systc1ns, Inc. [MERS]

as

Nominee

For Its

S u c c e s s o r ~

And Assigns, y these

p1·esents,

grants,

bargains, sells,

assigns, tru lsfcrs and

sets over

unto

IndyMac Federal

Bank.,

FSB all benelicild interest under

that cerlllin Deed

of

Trust dated 319/2007.

(Dkt. I

Ex..

A to Huelsman

Deel.)

What

MERS

is

cJain1ing

in this

document

is

that

MERS

is

the

Tiominee

of

lts

own

successors

and

assigns,

not that it is the nominee of the lender or the nominee of successprs to the

lender.

MERS

is claiming that it

has

its own authority t1 l assign the

deed

of trust, without

reference

to a piincipal.

This

is contrary to MERS'

assertion tbat it is an agent acting

fo1·

lhe actual holder of the l o a n . ~ It

also conceals the identity of wllicbever loan holder MERS purports to be

acting

for when

assigning the deed of trust. This provides MERS with

40

MERS Response in Selkowi1;: at 29; Ne.braRka D.ipt.

a

Br111king

nd

Financ:e 704

N,

W.2d at

787

(MERS is prohibited

from

e x e ~ i s i h g mQJ'liilgc powers

\V lhout

the autboriWian ofa principal).

EXHIBIT ~ i - f - . . . .

P GE _Q ~




considerable flexibility

to

fmd a

party to foreclose

but

is

u

misrepresentation of its status and authority, This odd language is not an

isolated error on MERS'

part. It

uses tbe same language in its

Appointment

of

Successor Trustee

wl1ere

it

states

that:_

[MERS]

as

Nominee For ts Successors

And Assigns is

the beneficiary under that

certain deed of trust dated 3/912007.

Dkt

l Ex. D lo Huelsman Deel.)

Once again, MEilS attempts

to

characterize itself

nQt

just

as

a nominee

of

the

lender but

as the

beneficiary with its own

autl1ority

to appoint ne' '

beneficiaries, v..':ithout

the

demand

of a principal,

and thet1

act as that new

beneficiary's

no1ninee.

The Assignment of

Deed

of Trust contains another

1nisrepresentation, MERS states thal it is also assigning the Note or

Notes ... [and] the

money

due."

(Dkt.

1 Ex. A to

Huelsma11 Deel.)

"fhis

contradicts MERS steadfast

positi.on

that it never bolds or owns the note,

never

collects

money

due, and has

no

interest in the

debt.

41

111us, MERS is

misrepresenting

its

authority

to tr nster

the note as

well as the deed of

lrust.

It

Is a classic CPA violation for a business 10 make statements thnt

confuse the public us

to their

identity, affiliation, authority or stntus. ln

MERS

1nust

rake this

position to avoid being licensed and regulnted

as

11

mortgage lendar or servicer,

RCW 31.04.015(7), (26) and 31.04.035; also

Nel»·asft.a

D lpl.

o

B11nkfflgUJTdFina11ce 704 N.W.2d at

787

(MERS bas no ri,&bt to the Note or i t ~

paymcn s).

15

EXHIBIT

f_'""

P GE t

OF tl:J




part-iculer,

it is deceptive to clai..in son1e authority to take a legal act when

one does not have that a u l h o c i t y : ~ It is also deceptive to conceal the ttuc

party to a transaction,

4

' and, it is deceptive to conceal mnteria1 information

that

a business is bound

to

disclose.

4

'

1

The

OTA

clearly requires that

MERS disclose the actual note bolder in the Notice of Default,

RCW 61.24.030(8)(1).

MERS

contends that it does not

conceal the

identity

of

the

true

note

holder,

MERS

SeJkoVi'ifz

Response,

at

n.

118.

Ho\.veve.r, its explanation is

not

convincing. MER.f> does not state

struightforwardly that it discloses the identity of the note bolder in the

tbmts required by

the

Deed of Trust AcL Instead, it says it runs an

Internet \.Vebsite

that

identifies "lOOo/o of loan servicers , and that 97% of

the MERS System members

disclose their investor identity. MERS

does not claim, and C8 lmot

c l a i m ~

that a servicer is

tl:ie

same

as

a note

Stephen.t,

138

Wn.

App. at 177 (deceptive to 1nischoracterize

the legal SIPtus

of a debt); perience Remirlx. L.LC',

v.

Huul1'ixLic11nsing.wut,

LTJJ, 766

F. Supp. :2d

1122, 1147 (W,D. W11sh. 2011) (deceptive to folscly chdm licenr.ing nuthorily); D\lyer \. ,

J.I. Kis/ak

Morlgqge. l03 Wn. App.

542, .547,

13

P3d

2<10 (2000) (deceptive

10

misch11rnctcr ze a fee

as

legally

required); Oo114 rs

v, Tranra111erica

Tit/a

Ins. c:o.. 100

Wn.2d 581, :592, 675 P.2d 193 {1983) (deceptive

to

falsely claim auihoriiy

to

praccice

law);

Evergreen C..'ollccto1'.t

v. }foll, 60 Wn. App, 151,

803

P.2d

10 (1991)

(deceptive

to

falsely cl11l1n

outJ ority to

collect

attorney

fees);

see u/s(),

Te..\·a.r

v.

An1;::rican Blattja:i.-.

Inc.,

164 F. Supp. 2d

892, 894

(W.D.

Tex.

2001) (deceptive

fnrbusiness lo claim it

collld

lawfully

fax

ads-when t

could 1101 .

43

16 C.F.R. § 321.3{0) (2011)

(FTC Rlllc

makC$ lideceplive to

falsely

claim to

b

cummt mortg11ge lender);

Ffo't1'3hein1 v. f ederaf Trade Co1nm 'n, 411

F

d

874, 876·

77 (9.th Cir.

1969)

(deceptive

lo

conceal

thot act is by

debt

collector

not guvemment

or

third

party);

1(111/u;pfv.

Triborough Brfdge Tunnel

A 1 1 t l w r ~ t y

I Mlsi;:.3d

417, 432,

764

N.Y,S.2d 549, 560 (N.Y.City Civ.Ct. 2003)

d c c ~ t i v ~

to

c11nceal

trul party to contract);

C. on1n10111vea/tlJ bJ• Packel

v.

To/Jesr:J11,

14

Pa.Cmwlth. 72, 12.5,

:321

A.2d 664, 694

(Pa.Cmwlth.

1974)

(deceptive

to

falsely

$ta.le

that one is the owner ofa coanpany).

Testo

v. Russ D11nmire Ol moblfe.

Inc.,

16

Wn.

App. 39.

SJ, $54 P.2d

349

(1976).

16

EXHIBIT __i:f:__

P GE

_d :1

OF

_.lli.




holder. Loan servicers are rarely the note liolder.

45

It is unclear what

MERS means when it says

thfil 97% of

its 1nembers disclose their investor

identity

or

whether this is the

same

as saying 97% of-its loans disclose the

cwrent owner of the note. Whatever is meant by these statements, it is not

equivahmt to

having a public record of

who

owns the Joan and

how

they·

received that interest. as was available before the advent of MERS.

MERS' failure

to

accurately r e v ~ l the note holders and the chain of

transfers remains one· it i

most

in1p0Ltant

legal failings and is U1e

subjec.t

of

several state Attorney General actions.

46

2.

MERS Acts in Trade

or

Commerce.

The

CPA broadly defines ''trade" and con1mercef' to include "the

sale of nssets or services, and ru1y commerce directly or indirectly

affectjng )he people of lhc Slate of Washington." RCW 19.86.010(2).

Trade

or

commerce includes acts after the sale of a good or service and

does not require a consumer relationsltip between the parties.

47

MERS

claims to

hold

interests in Washington real properly, it takes acts ii1

furtherance of collecting on mortgage debts including filing

docun1ents.

in

4

'

SIW

Diane E Thompson, fo 'l:closing Modifications: How· Service\'

Cncentives

Discourafce Loan Modifice.rion1, 86 WR$h, L. Rev.

755

(2011).

Stale

ofDeltTWarl v. MERl?, Del. Chancery C1.

No.:

6987-CS

(alleging tha1

MERS

unlewl\Jlly obscures true ownel' or note); Stale

f

Yol k

v. A{ERS

1

el

al.,

Supreme

Ct of NY {alleging the MERS system is

riddled

with i u c c u r c t ~

and

prevents

J1omcowneB and

tho

public

from

tracking owl\crship};

Con11110/11\ ea/1h

ofMa.rs v.

Bank

of

Ainerlca,

A1ERSCORP, Inc.

e1

al. Super.

Ct.

Suffolk Cty

No.:

11-4363 {alleglng

MERS

falls

to

identify the holder of he mortgage

\Yhcn foreclosing).

'

17

Salois v M r af pf0111aha Ins. Cu. 90 Wn 2d 355, 359-60, 581 P 2d

1351

(1978);

F.scal1J111evSt111try

Inc. Co. 49Wn App. 37S, 3&7, 743 P.2d 832 (19&7).

17

EXHIBIT If

P GE ~ 5 F ~




county land title f(:(;ords. and it charges for its services. Therefore,

it i5

engaging

in trade of commerce with.in the meaning ofRCV/

19.86,0J

0(2).

3. MERS Acts Impact the PU:blic Interest,

A

recent

arnendn1ent to the CPA allows a clain1ant to

establish

the

public interest element if the act injured other persons; had the capacity 10

injure other persons, or has the capacity

to

injure other

persons

RCW 19.86.093.

4

In this matter, the certified questions

assume

1hat

MERS is acting uniformly in acting as beneficiary without holding the

note and that this is MERS'

generalized business practice.

It

jmmohilizes

the deed of trust to allow

successive transfers of

the

promissory

note. It

appears as the beneficiary

on

deeds of 1rust

without

holding the-

note, and

it

uses form

-assignments

in

its

Assignments

of

Deeds of

Trust

atid

Appointments

of

Successor Trustees. These practices

are

unifonn

nnd

repeated and thus

11ave

the capacity

to irtjure others.

49

4. MERS Acts Injure Consumers.

The test

w1der

Ha11gmon Ridge is

not

whether homeowners or

others have been damaged, it is \Yhether they have been injured.

5

Injury

under the; CPA docs not have to involve direct loss of

1noney.

d It is

' A / s ~ Hangi r _ Ridge 105 Wn.2d t 789-90.

49

Stephe111 138 Wn. App. al 178.

'

0

Tampourlos.

I

01

Wn.'2d

at

740,

( RCW 19.86.090 ... uses the tonn injured

rather than

~ u f f u r l n g

1

'damagcs. 'this

distb1ction

makes

It

clear

I.bat

no moru:tary

damages need

be

proYett and that nonq.uantl

fiable

injuries,

sueh as loss (If gnod1\ill

1vould suffice for thi element of

the

Hang1non Ri ge test. This

Is

bolstered by the fuel

lhat

lhe act

allows for

lnjunctlve

relief, clearly implying

thal

injury wichoul monetary

damages

wil\

suffice. )

EXHIBIT - -•._f

-

PAGE

~ OF 1:.£_




enough tbot the act ]tas deprived a person of

son1e

property,s

1

Temporary

loss

of

tltle

to

.real property can be sttfficient.:s

2

Injury may

e

presumed

when the conswner has

to

take time or expend money

to

remediate

his

or

her

status

due to a. CPA

violation.

53

5. MERS' Business Practices Cause Cbnsumer Injury.

There aie many sce.narios where MERS causes consumer injury

through its misrepresentatic;im; regarding its authority to foreclose and its

concealment of1he true holder of the 11ot.c. fl1omcowncrs have to 111ake

calls, visit o f f i ~ s send letters, or consult witb an

attomey

to

determine

who owns their notes because tvlERS does not disclose thiS: critical

infonnation, then MERS has caused that

i n j u r y s ~

lfhotncowners miss the

deadline

to

file for a DTA injunction because they ca11 not locale 1l1e -oote

holder

and

therefore lose

thell·

claints, they have been injured.

If

consumers pay their loan ta the mortgagee identifled by MERS through its

assignment, but

t h ~

dcbl is actually held by another. they can be lnjul'ed

i

the note goes unsatisfied. The use of MERS causes consumer injury

\Vhere

it makes

it

impossible ta find the note or

wl1ere

MERS

has

allowed

51

Sorrel

II.

Eagle J-lea/1hcure

Inc.

110

Wn. App. 290, 38 P. 3d f024 {2002)

( Sufficicn1 injury to satigfy

the

fourth

and

fifth

elements

of 1

Consumer

Protecllon A<:t

claim is established when a plaintiff is deprived oftbe use of his property as a -resullof.o.n

unfuir or dcciiptive

act or practice.")

5 J Mason v. Morfgag11Am11rica Inc. 114

\Vn.2d 842, 854, 792 P.2d l42 ll990) .

'

3

Panag

v

Fartners In f Co.

o fYashi11g1n11 166

Wn.2d

27 204

P.3d 885

(2009).

Sig11-0-Llte

Signx. lnc. 1·. elaurentl

Flm·e.1·u Inc.

64 Wn. App. 553,

82.S

P.2d 7J4 (1992); Pa1rag 165 Wn.2d 27.

EXHI IT -f

19

P G E ~ O F 2g




the note

to

be lost or destroyed because consumers

will

not kt10\v

the

party

entitled

to

enforce it

and how

it obtained its enforcement power. Because

the Note is the essential document to the transaction,. any deprivation of its

use can

be injurious, not ju >t to homeowneni but to subseq11ent tit·le

holders and loau investors, nd MERS

causes

these injuries through its

actions.

Ill

CONCLUSION

This Court should answer

ccrlille<l

questions l and 3 affirmatively.

RESPECTFULLY SUBMITTED this 14th day offebniary, 2012.

ROBERT

M.

MCKENNA

Atlorney General

As >i_stant Attorney ·oeneral

WSBA 39107

Attomeys. tbr Amicus Curla.e

Attorney General

of

Washington

EXHIBIT

I./

. . . . ~ .

20

PAGE

OF

25l




Wlion

itcOfded

mllfl

'

50 £. B01E11d111 SL

Attn: lttlemto.pl.

. Chlf>L-,SCUOU

l l l M I I l l l U M m l ~ I

PodD.' lt4JOli'35S'l7llOJI

Tu.ID: llllCiW-Oll

P r o p f r t y A ~

J9UNl57111AVI

V1acoll\'ff', WA 98661-.»42

. . . ~

.... 1 1 1 1 1 7 1 1\

-----

"'""""-"''

lfl•t.of

.iu.rlao

l ' r fpnd

e,:

ll•lllbC11111a

llllloff).POJJ

•SO

I . lloliDdary

SL

Chapin, SC 191341

M Nt: l 2 3 J L ~ 1 J I O MEIUIP"-1: IU..61M)T1

ASSIGNMENT

OF DEED OP

TRUST

fl lf Vlllua lbe uncllni ped

bolder

of•

Dnd

of Trust (hnlD M,\ujpru r") who-= 9ddrtu ii )JOO .

s

w.34TII

AVENUE., surm 101

OCALJ.,

L ~ . d h.IN iy grmt,

tell, .uipi, ~

c:ga,wy

111110

BANK

OF AMBRICA. NA., succr.ssoa JfY

MPG

ER

TO BAC

KOMI LOANS

SltRVJCINC, LP

FKA

cotlNt'RVWIDE

HOME LOANS

seRVtClNG, LP wt.ost lddi9A

11 4

?11ATJONAL WAY

,SIM)

VALLEY, CA

9>0'5

.U

tatellch1l

ID eni1

\llUStr

lhlil

°"""kl

peed o Tnist

d llKribed

Nlow

toJ*dill' wilh 1111 notc(i) 9llCI

obUptlons lhmin dmcribed Ind

tb,

maal)'

dn 1111

to

bcanno

due

lhmoo

Witb

idvest

and

•II ri1kll .cenied ar10

l Wll8 under

u d

Deed

ofTnuL

Orlcin•T Lender.

LANDMARK MOATGAGE COMPANY

MildeBy:

' PAMELAS.OWENAMil.RU:DWOMANASHIRSlll'ARATl

ISTATE

Oripw Tnislet:

FID LITV

NATIONAL

TITLE INSORANCI

I111eotO.d G Trust: lV"2005

Oripill

Lou

Amallot;

SUIU ll.llO

ll;ecord«l

In

O.rk

COUal]',WA

oo;

Tlfl51100S, book NIA. i g t 'f/A ll>d

ilstnimml

1D1111bcr

41112 1

T

Properry

Lepl Cucdp tool:

LOT - ANDERSON SUBllMSION4,

ACCORDING

TO THE PLAT

11ltlU01,

JtECORllED IN

'VOL.UM& C OF

rt..\1'S,

PAGE 4f ; llt:COJlllli OP Cl.ARK COUl'fl'V,WASHINGTON. A.PJll,

#:

1D8"Ml2.

1N

W TN£SS

WHBR80I'. the

vndmipicd

hll tatHd 111111 Aullftllltllto Doo:d ofTNll 111

be exeeu10d O I

/ O f ~ f t , , .

MQJl.TGAGB BLt:CTRONIC

REOISTRATIOM

5Y'1'1:MS. INC,

. ~

-

EXHIBIT

S

PAGE

I

OF

2

- · -




IRrtify a.oder PINALTY

Oll

l'ElUUR.Y u•dtr 111,

nrt

p(dn saw

lfCo.lllonlllo lh t

forqo Ds

pan npb

b

tnlt •ad

cornrt

·

Docmi

1141069355'111022

Clark Auditor Mon Oct 17 14:38:22 PDT 2011 4799971 Page 2

EXHI IT

P GE r:J;; =O F

c;t




•

RECORDING REQUESTED

BY:

WHEN

RECORDED MAIL

DEED

AND TAX

STATEMENT

TO:

Federal

Home Loen Mortgage

Corporation

o/o BANK

OF AMERICA,

N.A.

2001

NW

46TH ST.

KANSAS

CITY,

MO 64116

TS No: WA0900011fJ-14-1-FT

Rw;I

£ .state

ExdBe

iax

Ch.

Rev. Lawl

1951

Alfd. • 7 . 9 L J ~ 1 ~

I

-

J

- fi

Toi'Detalle of tax

paid

M

Alfd, ., -----== .-----

Doug l.81hllr

Clark county Traa11Uf'lll' Jt/;l I

oep;;iy

APN 108669012

TO

No.: 8417086

TRUSTEE'S

DEEi> UPON

SALE

1Si itfM

P

THE GRANTOR, MTC Financial Irie. dbe Trustee COl'JlS, as present Trustee under

11\al

Deed of Tn.ist, as hereinafter

p1111iculady

described,

Jn

conshleratlon of ttie

p1t1mlaea

end

payment

rec:Hed

below,

hereby grants

and conveys,

wittiout

warranty to Federal Home Loan Mortgage Gorporatlen, GRANTEE, that real property sltua\IK

In the Cour1ty

of

Clark, ~ t l e

of

Washington,

deac:ril?Od

as

folloltlS:

LOT

6, ANDERSON

SUBDIVISION-2, ACCORDING TO

THE PLAT

THEREOF,

RECORDED IN

VOL.UMe

G OF

PLATS, PAGE

467, RECORDS

OF CLARK COUNTY,

WASHINGTON.

APN:

106669012

RECITALS;

1. Thie conWJyaric:e

l• made pursuant to

the pcwers,

Including the power

of

sale, conferred

upon

said Trustee

by that t:iertaln Dud of Trust dated November 4 2005,

•xecuted

by

PAMELA

S. OWEN A

MARRIED

WOMAN

AS HER SEPARATE ESTATE,

es

Granter, to FIDELITY NATIONAL TITLE INSURANCE, as Trustee, in

favor

cl

MORTGAGE

ELECTRONIC REGISTRATION

SYSTEMS,

INC.

("MERS"), ee das1gnaled nomine

for

LANDMARK

MORTGAGE

COMPANY. Beneftdsry of the aecurity

instrument,

15

successors and &signs,

recorded on November 15, 2005, ss Instrument

No.

40823i7, of official mcords ln

the Office

cf

the

County

Auditor of Clark

County, Washington.

2. Said Oeed of Trusl

was execu Bd

to

secure,

together with other

undertakings,

the

payment

ol

one

Pmmi&sory

Note

in the 11.1m of

~ 0 6 2 5 0 . 0 0 with lntereat

thsreon,

accorolng

to he

terms ther&Of,

In favor of

MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., as nominee 1or LANDMARK MORTGAGE

COMPANV,

ae original BeneflciBry and to ••cure any olher 'ums of money Which might bacome due and

payable under the terme of said Deed ofTrust.

3. The detctlbed

Deed Of Trust provldu

that

the real

property

conveyed therein

la

not used principally fol

agr cultural

or farming purposes.

4.

Derault

/'laving occurred in he

Obligations

seCCJrell

and/or covenants or

Iha Granfelr,

as eel

forth

in No e

of

T1u1tee's Sele described below, v#llch

Dy the

terms

of

the Deed of Trust make opt1rallve

the

power to

sell,

the

thirty·day advance Notice of Default wae transmitted to the Granlor,

or

hie succe.ssor in Interest.

and

a corrt of

11ald

Notice

was

posted or

s•rved Jn alll:oldanco

with

law.

E X H I B I T - - - ~ - - .

PAGE _ _

OF 2:::::




•

TS

No:WA09000118-14-1-FT

APN

106669012

TO

No.:

8417086

5. Bank of America, N.A., Successor by Merger to BAC Home

L.oans

Servicing, LP FKA Countrywide Home

~ n

5e Vlc:lng, LP.

being then

\he holder of lhe

indebledness

secured by

said Deed

of Trust, delivered to

said

Trustee a v.nilten requast direcilng &aid Trustea or his authorized agent to sell the described property In

ee<:ordance

with

law

end

the lerrns

or

ni

Deed

of

Trusl.

6. The defaults

specified

in

the

"Notice

of Defaul1"

not having been cured,

the

Trustee,

In

ccmpllance

with

tile

terms of ;aid Deed

or

TNsl, "Notice of TNstee's Sale" of siiid property record11d on Jun• 18, 2014 as

A1.1dilors File No. S06D743 n

the

Office of

the

Auditor of Cieri<. county, Washington.

7. The Trustee,

in Its aforesaid

"Notice of Trustee's Sale,' fixed the place of

sale

aa el the

main entrance under

the gaiebo

to

the

Clark

CoLJnty

Government

Building 1300

Franklin, Vancouver,

WA

98860,

a pubUo place,

on

January 16 2015 et

11:00

AM and

In

accordance wtlh law

eau1ed

oopiea of the

atetulor'1

·Notice

or Trustee's

Sele" to be

transmitted by

mail

to

ell persons

•nllUed lherela

and

eilher

p05ted

or served prior W 91) days before

the sale; furlher, Iha Truslee tatJ&ed a copy

at

said "Nollce of Tl'U Jtee'a sa1e• to be published once batween the

thlrty·llftfl end

lwenty-a ghth

day before U e date

of

sale, end once between the fourteenth and seventh dey

before the date

f sale in

a legal newtj)tlper

in

each

county ln which

the property or any part thereof

situated;

and

further,

Included

In tlia Notice, which waa transmitted to

or

served upon

the

Grantor

ar

his successor In

lnteresl, e

"Notice

of Foniclosure· in eubetenjjelly the atatutory form.

8. During

foreclosure,

no actiori WllS

pending

on en obligation

secured

by

said

Deed of Trust

9. All

legal requirements

and ell

provisions

of

said

Deed of

Trust have

been complied with,

as to

aWi lo be

parfomiad and

notices to

be given, ea provided In Chapter

61.24

RCW.

10.

The def11ult5 spacilied h

the

N o ~ c e of Truslee'e Sale" nol having

bean

cured eleven days prior to the date

of Trustee's Sale and

aald

obllgationa aecured by sald

Deed of

Trust f9mainln9 unpaid, on January 16, 2015,

the ciate of sale, which waa

no

I

less than i IW days lrom the date or default in the obligation

secured, the Trustee

lhen end

there

sold et public auction to said Grantee, the highest bidder therefotfl,

the

property

herainabove

described, for the sum of $295,860.75,

by

the

satisfacUon In full

of the ob1igetion

then

secured l;Jy said

Deed of

Trust,

together wilh all feea, costs

and expenses

a&

provided

by

statute.

Dat1d; January 19, 2015

MTC

Flnanolal Inc, dbaTrustae Corps

~ . ; . ; : . ; ; : ; g n a t o ~ ...... ·····--·----·····

STATE OF

Washington

C O U N T Y O f _ . . , { , : f ~ f 0 u ~ ~ ' - - - - ~

I certify thel

J

know or

have

aaU&factory

evidence lhal

f Yu

0 l (h..n

la the person who

a p p e a ~ d before me,

and ul parson

1cknow edged than;e:/aiW

&lgned lhl8

lnatrument,

Ofl oath

atated th t +l&leha waa

authorized

to elCllcLl e the Instrument and ackriowledged it es the Authorized Signatory fOf

MTC

Financial Inc. DBA Trust.a Corin lo be

the

fnte end voluntary act of such party for the uses_ and pt.irposea

mentioned ln \he instrument

o .h.n 9 UJ/S"-

MONJQue

P A f t

aTAre a.. A B H ~ i ~

NVNOTARY U B L ~

COMMISSloN EXPIAQ

10-21-17

EXHIBIT o

I

PAGE .,2.

OF

L_




MIN:

1232l94000000473BO

NOVEMBER 4,

2005

[ D ~ t , J

NOT

Loan Number:

105935577

PORTLAND OREGON

City 1511"1

3912 NE 57TH AVENUE,

VANCOUVER,

WASHINGTON 98661

[Propnty

AddrusJ

1. BORROWER'S PROMISE TO PAV

Jn return for a loan lli.t J

have

recelvetl,

I

promise

to pay U.S. S 20 8, 250 • 0 0 {this amount

ls

calkd

~ P t i n t l p a l ~ ,

plus lnlmll tc

lhe

order

of

the Lender. Tho

Lender

1$ LANDt•lARK f I O R T G ~ G E

COMPANY, AN OREGON

CORPORATION

I \VU\ make

payments

under this Nnte

In 1he

form

or cul1,

check or

mo11Cy order.

I

understand Iha the

Lender may

lransfer th J

Note.

The Lc:ruler

or uyone who

take3 lhls

Note Uy

transfer

and

\Yho Is enUlled

lo

receive pay111ents under thil

Note

Is called the

•Nute

H o l d e r . ~

2. INTEREST

Jn1erest will bl: charged

on

unpaid prJndpal unlil the

run

a111oun1 ofPrlnclpal

hu

been

paid.

I1vill pay

interest

atayearlyrateor

6.125 %.

The inh resl

rate required

by his Section 2 Is the r.lle I

\\Ill

pay

both

before and after any default described

in

Secllon

6 8)

of llili Nole.

3. PAYMENTS

{A)

Tline and Place of Payments

I will pay prlndp1l and Interest by Ulilking a payment

every

month.

I 'Vlll make my monlhly payll1\lal

on

the s t day of each month beginning

on

JANUARY l

200 6 . I will n1ake these payments

eveiy

muntb

witll I have paltl all or the prlnclpal and intmst and any other

charges destrlbed

beJow

thal

I

my

owe

under his Note.

Each

monlhly

paymenl

will

be applied as of

Its scheduled

due .Ute and

will

be appUed lo interesl

before Principal.

If, ou DECEMBER 1,

2035

,

f still

owe

an101U1ts wider this Note, 1 will pay those amounts la full

on

that date, which b called

lhe

"Maturlly Date."

lwUlmakemymonthlypaymentsal

10415

SE STARK ST. STE.

D,

POR'l'LAND

1

OREGON

97216

or at

a

different

pUce if

eq1drf d

by lhe Note Holder.

(B) Amount of Monthly Payments

My

monthly

paymem will be

in

ll1e amount

of

U.S. $ 1, 2 6 5 • 3 5

4. BORROWER'S

RIGHT TO

PREPAY

J have th

right

10 make payn1euls ofPrincipal 11 any Ume before

they

are due. A payment of Plillc:ipal

only

is

known u a •prepaymen1," When l male a

Prepayment.

I wlll leJI tbe

Nole

Holder

in writing

lhat

lam -dolng so.

I

may

not d ~ l g . n a t o payment

u

a Prepayment If I have not made all the

monthly

paymen1s doe under lhe Nole,

I may mike a run Prepayment

or

partial Prepaymenrs without paying a Prepayme11t charge. The Nole

Holder

will 115e my Prepaymenls

to

reduce the amount 0£

Principal tltat

l owe under this Note. Howe

Yer,

the Note Holder

may

apply

n1y

Prepay1nent t11

the

accrued

and unpaid lnteresl on

the

Prepaymenl

amounl,

before

applying

my

Prepayruenl

tn

reduce the

PducipaJ

antount of the Nole. If I

make

1

partial

Prepayment, there

will

be no ebanges

in

the due

date

or In the

amowit

of my rnonlhly payment uole.is the Note Holder agrees In writing

to

those cllaoges.

5. LOAN

CHARGES

1£.1 law, which applies ta lhls

loan

1md

which &els maximum loan charges, ls f111ally lnterpteted so

1b11t the

h1.lere.5t

or

other loaP cl1ar&I collected or to be collected In connecUon

with lhi.5

loan

exceed

tbe penniUed limits,

then: (a) any

such

ge

shall

be

reduced

hy

the

amount

necessary

10

reduce

1he

charge

lo

the pennill d

limit:

Borrower InlU1l1:

?age 1 11 3

.: ; . , · .

EXHIBIT_f

~ ~ r :

no




CRPRDHRBS48a

10 /2712011

10:66:15 AM

•

PAOE

8 0 8 4

•

eee-2s4-&B 5B

.... : ··

LLONGE TO

NOTE

LOAN NUMBER ''

•

1 0ANAMOUNTI

s2oe 2sc.oo

~ ADDRUS:3 J12 Nii

57'J'R AV'EllOJ:,

VANCOUVER.

irABHrNGTON

AUONGllTONOJ'EDATIIDNOVSNBU 4

2005

IN FAVOR OJI LANDMARK MORTW\GZ COHPAMY

PAYTOTHEORI>BROF

WUlftnWD>E

BAJll:,. JI.A •

•

TITLB:ASSrB1'AN'l' VJ:CB l'R lSl:D'EN'l'

-

.......... _

EXHIBIT ___,, '....__

~ ~ G

;;....

OF ::2

ase 14 45542 BDL Doc 12 1 lied 10129/14 Ent 10129/14 12:59:46 Pg

10

of 11




5059964

APTTR

i

J h d - - 1 1 ~

. II

P . . - : 1 -

P l ~ S J M G

SOLutlott

lliniu11111•ilili . . ..

RECORDING

REQUESTED

BY

WHEN

RECORDED

MA1L

TO:

Trustee

Corps

170U SevtnlhAvenue

lite

2100

Seattlt,

WA98101

.Trusl&e S•ll NoWA0900011B-14·1

·-·••••

,.,

PropertyAddl'Ks:

S912NE 51THAVENUE,

VANCOllV R.

WA.98681

APPOINTMeNT

OF

successoR

TRUSTee

Tille Order No

8417086

STAM I

NOTICE

IS

HEREBY GIVEN that

MTC Fln1ncf•l Inc. dba

TrustH

Carpi, who68 address Is 17DO Sevef'lthAVtlnua

SUit& 2100, Seattle, WA

98101, I appoin19CI

successor TMtaa

under

that certain Deed or

Trust

in Whictl P A M E ~

s.

O'NEN

A

MARRIED WOMAN AS

HER SEPARATE f:STATE

was

11 1e

Granlor

and

FIDELITY NATIONAL

Tm.E

INSURANCE was

the Criginal Trustee

end MORTGAGe ELECTRONIC REGISTRATION SYSTEMS, INC. -

nominee for LANDMARK MORTGAGE COMPANY was Iha-

Oflglnill

Beneficiary. which Deed or

Trust

dll1Bd

NOYtmber 4, 2005 and 19COfded on November 15, 2005 er.

lnsllUment

No. 4082317 of ofTk:ial records In the OTlloe

ofttia RecOl'der

OI

Clal'k Cl>ll'lty.

Wahington. It

ta haV&

811 the

poVfllr

cf

saidorlg:lnal Trustee,

efJeclMI forthwith,

IN WITNESS

WHEREOF,

the ~ M d Bcno11ci1KY

has

ntrwmD

let

his

hand;

If tft& underaig.ned

16 a

OOl'pMltlon, it 1\89 CllU led 118 corporal& narne lo be isigned

and

affixed hareurio by b duly aulhortzedofficer(a).

0atect

ro -ikb.

11 . l..:.l '...,

I

BANK

OF

AMERICA, N.A.

n

By;

l : \ . . . t o . ~ -

:.... .

_J...._lfc. J

IV 1

S ~ T E O F

Yt,..

0

1

f. ..a

.:

l \ . U 1 f ~

....

T v·, .11.

,('.1,.,.JiJ.

...... .-

COUNTYOF

tlrt

1

'

n

balore

me,

b.M.

rn.

j l

'

Nolary

Public.

pal'SOnlly

•PP11•1'9d

wtlO pru¥ed to me

on

the Oesb

DI salDrac:tory

hat

8ll8CUled the same In hi k' euSitlfited tapaeily(lea), and

that

by h air algneture(a) on

evklance IC

be

e person(t) Mose e aubecribed to Iha within l n s \ n l ~ a n t

c ~ to

me

the

I ~ ilia pef$0fl(S),

or

Iha entity upon

behalf

of which the

pe WJl'l(s)

acted. Instrument

I certify under PENALTY OF

PERJURY undar lhe

Jaws af

the

State

or &.aa,l rtJoi4 U\81

the fofegOlng

paragraph Is

lrua elld correct.

WITNESS my hand and official Beal

EXHIBIT 9

PAGE_L_OF I

-

'




EXHI IT E




2

3

4

6

7

COPY

Original Ked

PR 3

2 15

Scott

a

Wbll;

O u k ) ) .

IN THE SUPERIOR COURT OF

THE STATE OF

WASHINGTON

IN

AND FOR

CLARK

COUNTY

8

FEDERAL HOME LOAN MORTGAGE

9 CORPORATION,

JO

JI

vs.

Plaintiff,

Case

No.:

12 PAMELA S. OWEN

ND

JOHN/JANE DOE

OWEN, WIFE

AND

HUSBAND; AND JOHN

13 AND

JANE DOE, UNKNOWN OCCUPANTS

4

OF

THE PREMISES,

JUDGMENT FOR WRIT

OF

RESTmJTION

ONLY

[Clerk s

Action

Required]

15

16

17

18

19

20

21

22

Defendants

Judgment Creditor:

Attorney for Judgment

Creditor

Judgment

Debtor s):

Federal

Home Loan Mortgage

Corporation

Katherine Christofilis

Bishop, Marshall

&

Weibel, P.S.

Pamela S. Owen and John/Jane

Doe

Owen and

all

Occupants

of the

Premises

JU GMENT

This matter

came on for hearing

before the undersigned

Judge/Court Commissioner

23 of Clark County Superior Court

on

the

Plaintiff s

Complaint for Unlawful Detainer. The

24

Coort, having

reviewed

the

file and records

herein,

having

read and considered

the

25

Declaration

of Katherine

Christofilis and deeming

itself

fully advised, now makes the

following:

JUDGMENT

FOR

WRIT

OF

RESTITUTION ONLY-

1 Bishop,

Marshall

Weibel,

P.S.

720 OLIVE

WAY,

SUITE

1201

Evjdmtnonmoney/452 .1501456 SEA'ITLE,

W

98101

r?-:-;

. : . ~

1

· \i · Y;o6J 622-5306 FAX: (206) 622--0354

··

· ,

\\J Jr-' 1:




2

3

4

5

FINDINGS OF FACT

1 At all material

times herein,

Plaintiff, Federal Home Loan Mortgage

Corporation,

as

authorized to do business

in

the

State

of

Washington and owes no license

fees or taxes to

the

State

of

Washington.

6 2.

Plaintiff

is the owner of the following described real property the subject

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

property):

Lot 6,

Anderson Subdivision-2, according to

the Plat t h r o ~

Recorded in Volume G of

Plats, Page 467,

Records of

Clark

County,

Washington.

Commonly

known

as:

3912

NE

57th

Avenue, Vancouver,

WA 98661

by reason

of

its

successful bid

at a Trustee's

fbreclosure

sale

held on January 16, 2015.

3.

As provided by law,

Plaintiff

was entitled to possession

of

the subject property

on February S,

2015,

the twentieth day following the

Trustee's

sale.

4. Defendants

are

still in

possession

of the subject

property and

refuse

to

surrender

possession

thereof.

Having

made the foregoing

Findings ofFact,

the

Court now

makes

the

following:

CONCLUSIONS OF LAW

1.

The

Court bas jurisdiction over

the parties and subject

matter of his

lawsuit.

2.

The Defendants

are guilty

of unlawful

detainer

from

the date

set

forth

in

22

Finding

ofFact

No.

3 to

the date

judgment

is

entered herein.

23

24

25

3.

The

Plaintiff

is

entitled

to 1) immediate possession

of the subject

real

property;

nd

2) to the issuance

of

Writ

of Restitution.

Based on

the

foregoing Conclusions of

Law, now,

therefore,

IT

IS

HEREBY:

ruDGMENT FOR WR T OF RESTITUTION ONLY- 2

Bvjdm111onmaney/452 .1501456

Bishop

Marshall

Weibel

P.S.

720

OLIVE WAY, SUITE

120

l

SEATTLE, WA 98101

(206) 622-5306 FAX: (206) 622-0354




I

ORDERED, ADJUDGED and DECREED:

2

3

4

6

7

g

9

10

11

2

13

14

15

16

17

18

19

20

I THAT

the

Defendants and any and

all

occupants of the premises, shall

be

evicted

from

the

subject property, as described in

the

Fincling

of Fact

No. 2, commonly

known as: 3912

NE 57th Avenue, Vancouver,

WA 98661.

2. THAT

the

Clerk

of

this c;ourt shall issue forthwith

a

Writ

of

Restitution,

returnable

20 days after

its date

of

issuance,

ordering

the Sheriff of

Clark

County to restore

the

subject

property

to

the Plaintiff; provided, that

if retum

is

not possible within 20

days,

the

return

on

the writ

shall

be

automatically extended for

a

second 20 day period.

The

Writ

aha

also authorize

the

Sheriff to break and enter

the

subject

property,

as necessary.

3.

THAT

any

personal

property remaining on

the above

described real

property

is

deemed abandoned

and

valueless,

and

Plaintiff

is

hereby

authorized to take possession

of

such

property or cliscard or destroy as provided by law.

DONE IN

OPEN COURT this

2;>

2015

/s/

ROBERT

A

LEWIS

Judge/Court Commissioner

BISHOP, MARSHALL

WEIBEL, P.S.

21

i

22 1 1 ; ; ' 7 M ~ t G ~ f * ' A ~ / \ ~ ~ = -

Katherine

C b r i s t ~ l i S , ' \ V S B A

1142584

23

Attorney for Plaintiff


Exhibit 1 to Declaration of Jody m. Mccormick. Document 41-1

Documents

Transcript of Exhibit 1 to Declaration of Jody m. Mccormick. Document 41-1