Fuleihan v. Wells Fargo Bank, N.A. et al

MOTION to Vacate Ruling dated September 15, 2010 Declearation and Points and Authorities

D. Nev.March 24, 2011

/( 1 DENISE FULEIH AN 209 Royal Aberdeen W ay ) .j. ..t y ,) k! )-: ' .4 ?,2 Las Vegas, NV 89 l44 ' 3 702-400-0910 4 Plaintiff in Pro Per 5 6 7 8 UNITED STATES DISTRICT CO URT 9 DISTRIC T OF NEV ADA 10 11 D EN ISE FULEIHAN , an12 IND IVID UAL, CA SE NO . 2:09-cv-0l 877-RC1-PALl 3 ) )14 Plaintiff, ) M OTION TO VACATE RULING ) DATED SEPTEM BER 15, 201015 ) OSCLARATION AND ) POINTS AND AUTHORITIES16 ) jx SUPPORT ) FRCP 60(b)17 ) )l 8 IIATE:Vs. 4 mjajxys;19 COURTROOM :) 20 w El -t,s FARGO dba AM ERICA 'S SERVICING COM PANY, a foreign Before the Honorable Robert C . Jones I21 ion FREM ONT ) 1corporat INVESTMRNT Axo LOAN. a ) I22 foreigp corporation, Doej 1 -.5, . ) '! lncluslve and Roes 1-V, lnclusive, Ej23 Defendants.24 E )25 26 11 Plaintiff D enise Fuleihan , m oves for an order vacating the court's order of5 28 201 O as follow s . The basis of this m otion is m istake, inadvertenceSeptem ber 1 5, l M OTION TO VACATE DISM ISSAL Case 2:09-cv-01877-RCJ -PAL Document 116 Filed 03/24/11 Page 1 of 27 1 and surprise. ln addition the m otion is based on new ly discovered cvidence 2 consisting of an expert opinion concerning the standing of W ells to foreclose or to 3 appear further in the matter. This motion is based on FRCP 60(b). 4 1. STATUS OF M ATTERS IN SEPTEM BER, 2010. 5 l . There were five m atters set for hearing before this Court on September l 6, 6 20 l 0. Those matters were Plaintiff s Motion to Modify the Preliminary lnjunction, 7 W ells Fargo's M otion to Dismiss the First A mended Complaint, Frem ont 8 Reorganizing Corporation's M otion to Dism iss the First Am ended Com plaint, 9 Frem ont Reorganizing Corporation's 1 2 M otion to Strike Plaintiff s lm proper 1() Sur-reply, and W ells Fargo's M otion to Strike Plaintiff s Im proper Sur-reply. 1 1 2. Also relevant to the m atters being heard was the filing of a chapter 1 3 I12 bankruptcy proceeding in the United States Bankruptcy Court for N evada, case no. i I13 09 -25738. No m otion to lift the automatic stay had been made in the Banknlptcy 14 Court as to the federal civil action as of the date ofludge Jones Order in 15 Septem ber, 2010. The bankruptcy proceeding was and is still active. 16 3. A s noted above, the Plaintiff had tiled a second am ended com plaint which 17 w as pending at the tim e of the court's action in Septem ber, 201 0. No motion had 18 been Gled to dism iss this complaint nor had to Court agreed that it could be filed. 19 4. Plaintiff has received an expert opinion from a w ell know expert of 20 securitized mortgage trusts, nam ed N eil Garfield. This opinion is dated Novem ber 21 l4. 20 10. A copy of this opinion is attached hereto as Exhibit A . Plaintiff did not 22 havc this in tim e to subm it the opinion to the Court in time for the hearing in 23 Septem ber , 2010. Such expert opinion constitutes new evidence and should be read 1 24 d conside red by the court in passing on this motion.j an 1 25 ! 26 // i 27 28 2 M OTION TO VACATE DISM ISSAL Case 2:09-cv-01877-RCJ -PAL Document 116 Filed 03/24/11 Page 2 of 27 l 1I. LAW PERM ITTING SETTIN G A SIDE DISM ISSALS UNDER FRCP 2 60(b). 3 5. A motion to set aside ajudgment on the grounds of mistake or newly 4 discovered evidence must be m ade within a reasonable tim e and not m ore than a 5 year after the order is entered. Rule 60(b)(1-3). Brandon r. Chicago Board (?/- Ed. 6 (7* Cir. l 988) l43 F.3d 293, 296. This motion is made within the time limit. 7 6. Besides the grounds set forth herein Plaintiff also m oves to set aside the 8 order of the Court for lack of jurisdiction. Pursuant to 1 l U.S. C. 362, the tiling of a 9 bankruptcy proceeding triggers the issuance of an autom atic stay. The stay prevents 10 any action being taken against the Debtor without the consent of the Bankruptcy 1 l Court. As noted herein and at prior hearings the Plaintiff made it clear that a 1 2 Bankruptcy Petition had been filed and was pending. No order lifting the stay had 1 3 been issued at the time of the hearing in September, 2010. Any action taken in this i 1 4 action in violation of the automatic stay is void. fn re s'clwtw-/z (9* Cir. 1992) 954 15 F.JJ 569. There is no time limit on a motion based on lack ofjurisdiction. Rule 16 60(b)(4). Foster v. Arletti 3 Sarl 44* Cir. 2002) 2 78 F.3d 409, 414. Thus, the 17 m otion is proper and tim ely. 18 19 111. ORDER OF JUDGE JONES IS VOID FOR LA CK OF JURISDICTION . 20 7. Judge Jones order of September 1 5, 201 0 purported to dism iss Plaintiftos 21 first almended com plaint. At the tim e the Plaintiff had filed a proposed second 22 am ended complaint. Therc was no m otion to dism iss her second am ended 23 complaint. W hether Judge Jones m ade the correct decision in his ruling of 24 September 1 5, 2010 is not the issue. Thc issue is the jurisdiction of the Court to 25 consider and take any action that had an im m ediate and detrim ental effect on the 26 Plaintiff and her property in light of the autom atic stay then in effect. The nlling of 27 Judge Jones clearly im pacts Plaintiffs rights. A s the order violates the autom atic 28 stay, the order is void. 3 M OTION TO VACATE DISM ISSAL Case 2:09-cv-01877-RCJ -PAL Document 116 Filed 03/24/11 Page 3 of 27 1 lV . NEW LY D ISCOV ERED EVIDENCE SHOW S THAT THE M OVIN G 1 PARTIES LACKED STAND ING TO M OV E FOR DISM ISSA L. 3 8. Attached to PlaintifR declaration as Exhibit A, is an expert opinion of M r. 4 Neil G arficld, LLB, who is a lcading expert on consum ers rights. As the Court is 5 well aware the path of Plaintiff s note and deed of trust was tw isted and tortured. 6 Several of the original parties to her loan are out of business or bankrupt. Som e of 7 those parties had entered into securitized trttst agreem ents whereby Plaintiff s 8 obligation was the subject of an offering of mortgage backed securities. The loans, 9 including Plaintiffs, were to be held in a trust for the benetit of those securities 10 holders.! I E 1 1 9. The parties to these agreem ents had a m any layered approach to funding the . 12 trust. The purpose was to m ake it bankruptcy proof should any of those who 13 originated the loan or transferred it to the trust go out of business or become 14 bankrupt. The original lender, Fremont Financial, filed for bankruptcy a few years 15 ago. lts assets were sold to a succcssor entity that likewise went out of business. 16 Thereafter the trail of the note and tnzst deed becom e hard to trace as the parties 17 failed to follow their ow n procedures as dictated by thcir agreements. The parities 18 ignored procedures of thc uniform com mercial code for the endorsem ent and 19 transfcr of security instruments and the law s relating to their own bankruptcy and 20 reorganization. W ells Fargo, who was far down the chain, claim ed it had the right 21 to foreclose on the Plaintiffs home, but has not been able to present proper 22 docum entation to support its standing to foreclose. lf it did not own the Plaintiff's 23 note it had no standing to foreclose. Further it did not have standing to appear and 24 m ove for dism issal of Plaintiff's action. 25 10, Plaintift-requested M r. Gartield to review the evidence that w as available 26 and opine on the rights of W ells and others to forcclosc or appear in this court in 27 opposition to Plaintiff's suit. ln his review M r. Garfield stated, ûW ccording to 28 infonmation from Debtor, (tplaintiff'lDebtor has made unsuccessful attempts to 4 M OTION TO VACATE DISM ISSAL Case 2:09-cv-01877-RCJ -PAL Document 116 Filed 03/24/11 Page 4 of 27 1 obtain from MovanttçtW ells and Fremonf'land others the identity of the 2 lnvestor/creditor and possession of docum entation authenticating this identity. 3 N either A ffiant, M ovant, nor the Court will be able to ddcrm ine the identity of the 4 Creditor, if any still rem ains, until requests for information and docum entation 5 have been com plied with. 6 1 l . According to the expert, tçlt is also m y opinion that there is a very high 7 probability that all or pa14 of the Debtor's N ote was paid in whole or in part 8 parties, based upon industry practice, my personal review of hundreds of sim ilar 9 transactions including the one at bar, and published reports. Until such time 1 0 identity of the Creditor, the docum ent trail, and the precisc m oney pertaining to 1 1 paym ents by third party sources is disclosed, neither A ffiant, M ovant, nor the 12 will be able to determ ine the amount of Debtor's equity in the Property. Debtor's l 13 tr bligation'' is the amount of money owed to the Creditor . The ObligationI j 14 originated with the advance of capital by lnvestors who purchased m ortgage- i 15 backed securities and ended with the promise to pay by the hom eowner who is the 16 debtor in the transaction.'' See ExhibitA, page 14-15. 17 1 2 . M r. Garfield continues: ttlt is also m y opinion that m any diflkrent parties in 18 the securitization chain cam e to express title or claim rights to enforce the DOT 19 Note and that there w as an intention to split the Note from the DO T, while 20 heretofore unusual in the m arketplace w as comm onplac,e in seeuritization of 21 residential Ioans. The recorded encum brance was never effectively or 22 constructively transferred because it was never executcd in recordable form nor 23 was an effort m ade to create such a docum ent by the parties to the instant case 24 they dccided to pursue foreclosure. Al1 transfers or purported transfers of the Note were not accom panied by the encum brance being incident to said transfers because the DOT interest as recorded rem ained in the nam e of the Originator, or that party 25 26 27 detined as the tt ender'' in the N ote and DOT .' See Exhibit A, page 14-1 5. 28 5 M OTION TO VACATE DISM ISSAL Case 2:09-cv-01877-RCJ -PAL Document 116 Filed 03/24/11 Page 5 of 27 I ! l 1 3. M r. G arfield notes that applicable Arizona Deed of Trust statutes require that 2 every change of beneficiary interest in a DOT to real property is to be recorded. 3 Arizona recording statutes require that every change of beneficiary interest in a 4 DOT to real property to be recorded to be enforceable against a bone tide 5 purchaser for value w ithout notice of a com peting claim .'' Exhibit A, page 15. 6 l4. Based on his extensive experience and review of docum ents, M r G arfield 7 stated: eûl-lence, it is m y opinion. that the holder of the Note, either singular or 8 plural, w ere not the sam e parties as those who purportedly held the DOT at any 9 tim e pertinent to this case and that this was the result that was intended by the I j 10 mortgage Originator and the Participants in the securitization chain, since it was a l 1 typical practice in the investment banking industry in their process of securitizing! I 12 loans throughout the period of 2001-2009 ,'' Exhibit A, p. l 5.i ! 13 15 . M r. Garfield continued, t'ln my opinion, with a high degree of certainty, theI ! 14 Debtor's title was and is subject to a cloud on title , a claim of unmarketable title! : 15 and possibly a title defect that cannot be cured without court order as a result of the 16 m anner in w hich Debtor's loan was securitized. In al1 cases reviewed by 17 m e , w hich include m ore than fifty securitization chains, the Prospectus and other l 8 published docum ents clearly express that a securitized mortgage is treated 19 som etim es as being secured by real estate, and som etim es as not being secured by 20 real estate, depending on the context and pup ose of the accounting. The nam ing of 21 a party other than the lnvestor as Beneficia:y under the DOT as distinct from a 22 third party nam ed as Payee on the prom issory note and the sam e or other third party 23 nam ed as Bendiciary under the policy of title insurance dem onstrates an intent or 24 presum ption or reasonable conclusion that there was intent by som e or a1l ofthe 25 parties at various tim es in the stcps of the securitization process to separate the 26 N ote from the Deed of Trust, thus creating a cloud on title for both the owner of the 27 property and any party secking to express or claim an interest in the real property 28 by virtue of the encumbrance.'' Exhibit A, p. 1 5. 6 M OTION TO VACATE DISM ISSAL Case 2:09-cv-01877-RCJ -PAL Document 116 Filed 03/24/11 Page 6 of 27 1 l6. M r. G arfield next discussed the different practices of those involved in the 2 securitization process. Exam ination of the accounting records of the entities that 3 were involved in the securitization process 1ed him to comm ent as follow s. 4 'Tarticipants in the securitization schem e followed the rules, they did not post the 5 instant transaction as a loan receivable. The transaction m ost likely was posted on 6 their ledgers as fee incom e or profit w hich was later reported on their income 7 statem ent in com bination with aIl other such transactions. These rulcs explain how 8 and why the transactions were posted on or off the books of the larger originating 9 entity. These entries adopted by said com panies constitute adm issions that the 10 transaction was not considered a loan receivable on its balance sheet, or on the l l ledgers used to prepare the balance sheet, but rather shown on the incom e 12 statem ent as a fee for service as a conduit. These adm issions in m y opinion are fatal 13 to any assertion by any such party currently seeking to enforce m ortgages in their 14 own nam e on their own behalf, including but not limited to the securitization 15 Participant in this case.'' Exhibit A p. l 5- l 6. 16 l7. The impact of this opinion is significant. lf thc party seeking to foreclose and 17 take possession of Plaintiff's hom e never booked the note as a loan receivable their 1 8 interest in the loan is illusionary at best. This opinion by a well regarded expert 19 shows that the court erred in granting the defendant's m otions to dism iss the 20 plaintiffs t'irst am ended complaint. This expert opinion show s that the assum ptions 21 m ade by thc court in granting the m otions to dism iss were erroneous. Based on this 22 new evidence the dism issal should be vacated. 23 1 8. In tlze m ost recent proceedings in the Bankruptcy Court t14e Judge there 24 indicated substantial doubt as to the standing of W ells and Fremont to foreclose . 25 This opinion dem onstrates the folly of this court procecding on a matter that is 26 strictly within the jurisdiction of the U.S. Bankruptcy Court. lt further show that 27 the ruling of Judge Jones on Septem ber 1.5, 2010 is likewisc subject to substantial 28 doubt as Plaintiff advocated the defendant's lack of standing as a basis for her 7 M OTION TO VACATE DISM ISSAL Case 2:09-cv-01877-RCJ -PAL Document 116 Filed 03/24/11 Page 7 of 27 I 2 ! 1 claim s set forth in her second am ended com plaint. lt was error for Judge Jones to !. 2 deny review of the second amended complaint without even allowing a motion to 3 dism iss to w hich the plaintiff could have responded. N ow, the new evidence of M r. 4 Gartield shows that if Judge Jones hadjurisdiction he would havc becn making the 5 wrong decision in granting the m otions to dismiss. 6 7 V . CONCLU SION . 8 The motion to vacate the dism issals should be reversed based on tlze 9 foregoing facts and law . 1 O 11 l 2 Respectfully subm itted, l 3 zx. 1 .61' t' .. / I , , ,7 k.- - ,,y1 5 tg . ,so s.7.z- etc-r'ok ,. ...- - - .- ..r 16 Plaintiff, (lenise Fuleihan 17 18 19 D ECLARATION OF PLAIN TIFF 20 I s Denise Fuleihan, declare. 21 I am the plaintiffherein. Attached hereto as Exhibit A is a tnle and correct 22 copy of the legal opinion of Neil Franklin Gartield, dated N ovem ber 1 0, 2010. 23 I declare under penalty of perjury that the foregoing is true and correct. 24 Executed at Las Vegas, Nevada this 2 l st day of M arch, 20 l 1. 25 26 27 Denise Fuleihan 28 8 M OTION TO VACATE DISM ISSAL Case 2:09-cv-01877-RCJ -PAL Document 116 Filed 03/24/11 Page 8 of 27 I 1 2 3 4 5 6 7 8 9 I 1 () ! I I 11 I 7 12 i ! 13 I j 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 EXH IBIT A 9 M OTION TO VACATE DISM ISSAL Case 2:09-cv-01877-RCJ -PAL Document 116 Filed 03/24/11 Page 9 of 27 E X H IB IT A E X H IB IT A Case 2:09-cv-01877-RCJ -PAL Document 116 Filed 03/24/11 Page 10 of 27 UNITED STATES BANKRUPTCY COURT DISTRICT OF NEVADA IN RE: Case # BK-S-25738-BAM Denise Fuleihan, Debtor EXPERT DECLARATION OF NEIL F US Bank Htrustee', Movant GARFIELD Re: Real Property Located at 209 ROYAL ABERDEEN W AY, LAS VEGAS, NEVADA 89144 Chapter 13 STATE OF ARIZONA COUNTY OF MARICOPA ) Neil Franklin Gadield, Esq., deposes and states unsworn under penalty of perlury as follows: ) ) d'I am over the age of eighteen years and qualified to make this a#idavit. I have no direct or indirect interest in the outcome of the case at Bar for which I am offering my observations, analysis, opinions and testimony. I have been a Iicensed member in good standing of the Florida Bar since May 31 , 1977. I am a m ember of the Federal Trial Bar and a Member of Bankruptcy :ar. My Resume was filed by Debtor and is incorporated herein. As an investment banker or investment banking consultant l have been active since the Iate 1960's is the use, sale, trading, hedging and issuance of derivative products, l.e., financial products whose value derived from something other than the instrument itself. $'My area of expertise, based upon knowledge, training and experience is in the field of securities, the securities industry, derivative securities, securities regulation, special purpose vehicles, structured investment vehicles, creation of trusts pooling agreements, issuance of asset backed securities and specificaly mortgage backed securities by special purpose vehicles in which an entity is named as trustee for the holders of Case 2:09-cv-01877-RCJ -PAL Document 116 Filed 03/24/11 Page 11 of 27 certificates of mortgage backed securities, 1he economics of securitized residentiai mortgages, securitization of mortgage Ioans, accounting in the context of said securitizations and REMIC vehicles and pooling and sewicing of securitized Ioans. I have been what might be referred to as a 'W alI Street Insider' with contacts in investment banking, including intermediary conduits, underwriters of reissued securities that were sold to Investors (singular ltlnvestor' also stands for the plural), in the form of modgage-backed securities. I have knowledge, training and experience of various precursor asset protection strategies, including minimization of tax Iiabili/y which also are constructed to be made bankruptcy remote in commercial and real estate setlings. l have knowledge, training and experience in Ioan origination, underwriting and the assignment and assumption of securitized residential mortgage Ioans. I also have Iegal knowledge, training and experience, including the areas of securities law, real property Iaw, Internal Revenue Code 1aw as applicable to REMICS and Uniform Comm ercial Code Iaw. I also have knowledge, training and experience in the practices prevalent during the period of 2001-2010 that enabled the accumulation and availability of an overwhelming abundance of investment dollars, made possible because the derivatives sold to investors were made to appear that they contained both exceptional growth and zero risk, because the history of mortgage success up to that point In time had been high, and because these instruments were in addition made to appear undeniably and excessively guaranteed by 3rd party soufces. I also have knowledge, training and experience that this abundance of funding was one of the direct and inevitable causes of violations against homeowners and purchasers perlaining to funding of modgage Ioans for purchases and refinancing, including predatoly Iending practices and Truth in Lending Act violations. l have also been on the advisofy board and consultant to community banks. I was the author and editor of the SMARTBankS Fax Newsleder from 1996-1999, published daily by American Bank Card to the officers of several hundred community banks , providing information, business models, loan strategies, and advice on ATM and electronic funds transfer. I am also the creator of intelectual property consisting of computer programs and business models for sale, maintenance and growth of commercial customers for community banks. I have been the attorney of record on hundreds of foreclosures in the State of Florida representing Banks on residential and commercial mortgages , and community association enforcing Iiens for assessments. As the author of the update of Harrison Publications' Florida Real Pronertv Law (1977) 1 have been considered an expert in title Iending practices, priority of modgages ,!perfection of Iiens , and enforcement of oblgations related to real estate for more than 30 years and have appeared as an exped in many state and Federal lawsuits relating to sam e. $'AIl factual testimony made by me is true and correct to the best of my knowledge and belief. AI1 opinion testimony made by me Is beyond a reasonable degree of probability in my area of expertise, which is set forth in the above paragraph and in my Resume . I 2 Case 2:09-cv-01877-RCJ -PAL Document 116 Filed 03/24/11 Page 12 of 27 have no direct or indirect interest in the outcome of the case at Bar for which 1 am offering my observations, analysis, opinions and testimony. As the adorney and consulting investment banker I have drahed, sold and managed dozens of pools used to fund Ioans, purchases of commercial and residential real estate, using Iayered (now known as Iaddered) bankruptcy remote vehicles that were derivatives as they are defined in the current markets, but were referred to as interests in limited partnerships when I created those instruments. Granting the Motion to Lift Stay would be interpreted as this Court's finding that the MOVANT is qualified to foreclose and would prevail in a judicial foreclosure action. As a matter of practice this is how it is perceived by state judges and other parties. The effect on title of this property would be a cloud, probably a defective (probably fatal defect) on the title and would be contrary lo the intent of the Nevada legislature when it passed real propedy laws and Iaws pedaining to title. Based on prior experience with the Law Firm of Tiffany and Bosco, P.A. it is highly probable that some or alI of the documents presented by Movant were both created and executed by employees of that firm . The Movant is not a creditor and cedainly not a secured creditor and therefore cannot subm it a credit bid at auction. The Movant has no authority, standing or power to execute a satisfaction of mortgage, modification, shorbsale, or reconveyance of the property or any encumbrance on the property. No independent title company will issue a new policy without exceptions for the securitization of the receivables on this obligation. Based upon my involvement with these same padies and the LUMINAQ Repods, US Bank is not described as 'Trustee' nor does it possess any powers reasonably expected of a dTrustee' pursuant to a Trust document describing the trustor, trustee, beneficiaries, terms and conditions. The securitization documents along with previous testimony in other cases, clearly show that the powers of a fiduciary are split between the Mastef Servicer (controled by the underwriter) and the servicer. Based upon forensic research, no trust instrument exists for this 'pool' and no assets were ever actually transferred to or into the pool as required by applicable securitization documents, applicable state and federal Iaw, and as required by the Internal Revenue Code (REMIC). The encumbrance shown in the public records in the county property records is an illusion. As an interloper, Movant may bid on any Iegally authorized exercise of a power of sale or foreclosure sale ordered by a final judicial judgment. The subject transaction consists of a securitization structure in which the securitization documents (in particular the pooling and servicing agreement) create the parameters of future transactions including first, the sale of mortgage-backed securities to investors, second fees and profits to padicipants in the securitization chain, third the purchase of insurance (including credit default swaps) and the creation of credit enhancement instruments. Case 2:09-cv-01877-RCJ -PAL Document 116 Filed 03/24/11 Page 13 of 27 The purpose of the subject transaction was to sel mortgage-backed securities and accumulate a pool of money, pad of which would be used to fund mortgage Ioans in the future. The fourth element of the subject transaction is the funding of a f'mortgage Ioan' from the above referenced cool of money. Therefore the creditor (s) are the investors who purchased the mortgage-backed securities. The debtor consists of a group of parties in the securitization chain. This group includes but is not limited to the borrower that executed mortgage documents at the time of the closing of the loan. There are significant differences between the terms of the obligation undertaken by the Petitioner, the note that was intended to recite the terms and the Deed of Trust (mortgage) that was incident to the note. In addition there are significant diflerences between the evidence of Iiability received by the putative trust (which does not appear to have been Iegaly constituted) and the terms expressed at the closing of the Petitioner. Hence. unlike conventional Ioans there are two conclusions that I reach , to wit: (1) W hile there are questions of fact that require resolution by a trier of fact within a coud of competent jurisdiction, Movant posseu es no colorable right to pursue enforcement of any obligation against the Petitioner as it is no way either a creditor nor the authorized representative of anyone claiming to be a creditor and (2) there is no possible scenario under which the obligation was secured by a perfected Iien, thus foreclosing the availability to non-judicial sale of the subject propedy by any party. A party wishing to be established as a creditor would be required to file an action to reform the documentation and prove standing as a real party in interest, to wit: that it is either the source of funding, or paid consideration for a Iegal transfer of the entire loan (as opposed to merely the receivables) or that it is the authorized representative for a disclosed creditor. None of the documents reviewed and which are tendered in evidence by the Petitioner or the Movant reveal anylhing other than self-serving declarations of authority for what is now an entirely a defunct entity that was used as a stand-in (nominee) at the closing with Petitioner. W hile the Movant has submitted documentation, none of it shows a complete unbroken chain signed by authorized persons for authorized entities. Further there are several documents that were clearly S'robo-signed' in which neither the signatory nor anyone else appearing on the document had any knowledge of the transaction. The funds wired to the escrow agent for funding of the Ioan came from a third party, which meets the exact definition of prohibited table-funded Ioans under the Truth in Lending Act and Regulation Z from the Federal Reserve. Hence while Fremont may be on recofd as Lender in the county records, no funds were advanced or even passed through the hands of Fremont. Hence no money is owed to Fremont nor was any obligation ever created wherein the Petitioner borrowed and received funding from Fremont and owed Fremont money. Thus Fremont was named on the note when it was not the creditor and Fremont and MERS was shown on the Deed of Trust when neither of them was possessed (and in fact disclaimed) at any and aI times a financial interest in the subject Ioan, The obligation therefore is owed by Petitioner to parties unnamed and undisclosed despite due diligence by Petitioner to determine the identity of the Case 2:09-cv-01877-RCJ -PAL Document 116 Filed 03/24/11 Page 14 of 27 obligee. ln any event since both the note and moftgage are fataly defective in failing to describe the proper terms and parties (being at variance with the facts and the terms of the modgage bond received by the source of funding), obligation exists but is unsecured, with no effort by Movant to perfect the Iien or reform the documents. The current status is that there is an obligation to an unidentified creditor that is ! unsecured. ! The closing of the Ioan transaction with the borrower created an obligation in which the borrower was to be the payor and in which the investors were to be the ultimate payee. Unlike conventional loans before the era of securitization the evidence of the obligation consists of the promissory note executed by the borrower PLUS alI of the securitization documentation eventualy resulting in the issuance of a 'bondf payable to the investor based upon the presumed receipt of a flow of funds generated by modgage payments, of which the debtor in the instant bankruptcy proceedings, was one such source. The bond is rarely wel-documented and usualy consist ot bookkeeping entries that should be consistent with the terms of the prospectus that the investor received prior to the advance of funds for the so-caled moëgage-backed security. Hence the promissory note executed by the borrower was evidence of only a portion of the obligation that arose in two steps, to wit: first, the obigation to repay the investment advanced by each investor (the bond being the evidence of that obligation) and second, the included obligation of the borrower (the promissofy note being the evidence of that obligation). The owner of the bond is therefore the owner of the obligation from the borrower, along with aI1 th'e co-obligors that joined in the obligation constituting the bond. Movant is not the owner of the bond, not the payee on the note, not the holder and owner of the note nor the obligee under the obligation of the Petitioner, whether documented or not. No money is owed under any document or set of facts to the Movant. Hence no colorable right to foreclose or exercise a right to sell , nor categorization as payee, beneficiary or otherwise exists. The presence of Societe Generale, the underwriter based in France, strongly indicates that the investors (pension funds etc.) were foreign entities. My prior experience with the padies involved in this transaction indicates that the majority of the investors were based Germany and Southeast Asia. My prior experience with these parties indicates a high probability that this trust was dissolved or reformed, repackaged and sold as part of another pool, the trustee for which is not US Bank (another question of fact for the trier of fact). The borrowers' duties are set fodh in the promissory note and deed of trust (mortgage). The creditor's rights, and in padicular the Movant, since they are not the lender of record defive strictly from the enabling documents for the aleged securitization structure. Since the participants in the securitizalion failed to adhefe to the restrictions , terms and conditions of pooling of assets, the Ioan never moved, although the money did as a result of tacit and explicit agreements amongst participants in the securitization chain. 5 Case 2:09-cv-01877-RCJ -PAL Document 116 Filed 03/24/11 Page 15 of 27 This declaration presumes that neither the identity of the investors nor the securitization documents were disclosed to the borrower. lt further presumes that neither the identity of the borrower nor the Loan' documents were disclosed to the investor, As an expert with superior knowledge of the securities industly, it is my opinion and presumption that this was the standard method of operations in the sale of modgage backed securities and the funding of Ioans. W hile the PSA sets forth the conditions for assignment of a Ioan into a pool that would be structured to sell portions into different Ievels of tranches within an entity typically referred to as a special purpose vehicle or 'Trusr' (without the formal creation of a trust), such assignments are rarely seen until a particular loan is the subject of litigation and an actual hearing is scheduled wherein evidence will be tendered to the coud. AIl other Ioans, with few exceptions, are not assigned, indorsed or delivered to any assignee. This is readily corroborated by the hundreds of Ioans that were not yet in litigation wherein the parties seeking to enforce the obligation could not show even a copy of any such documentation. In many of those cases, the padies seeking to enforce were the sam e as in the instant case. Thus it is apparent that the Movant has established a pattern of conduct, contrary to the representations made in court, in which documentation of assignment, indorsement and delivery is fabricated and often forged strictly for the purpose of Iitigation. Oqen the 'original' note with an indorsement comes to court dressed as the original but upon examination consists of a color printer fabrication. The securitization documents do not alow such an assignment for many reasons, among which are the pool does not allow for an assignment of a non-pelforming Ioan, and the pool has a cutoff date, which has Iong passed. Therefore it is pure speculation as to who controls or owns the Ioan except that Iegally, from the property records, only the Ioan originator has legal title. This can only be resolved by a quiet title action in which the Coud declares the rights of the parties. However, since lhe instant modgage transaction was a table funded Ioan, the originator's bare Iegal title leaves it without any claim for default, deficiency or loss since it did not fund the Ioan in the first instance or at any time thereafter. The party with standing is the party who has a Iegitimate claim to payment. None of the parties before the court have a Iegitimate claim to payment. None of them could prevail in a judicial foreclosure. And, as in aII such cases, none of them are wiling to offer or alow inquify into a ful accounting for the obligation due to the investor, as that would open up the issue as to whether the investor had already been paid through insurance and credit enhancements, (which is often the case) and whether the Ioan itself was now part of another package of securities that were created aher the current vehicle was privately dissolved. If the investor was paid, the entire obligation owed to the investor has been extinguished thus satisfying the terms of the 'lbond' which in turn satisfies any Case 2:09-cv-01877-RCJ -PAL Document 116 Filed 03/24/11 Page 16 of 27 expectancy of the investor from the borrower who signed the promissory note. The fact that the intermediaries who either have the note or who have destroyed the note, takes nothing away from the duty to return the note as paid --- unless, the parties that paid the investor did so with rights of subrogation. In no case (out of hundreds examined by mel have I ever seen any insurance (from AIG, AMBAC etc.) ever contained a subrogation clause. In fact, quite the contrary, as was revealed recently in the release of documentation concerning the Federal bailout, the terms of payments were that the insurer or counter party on the credit default swap specificaly waive such a claim. Although politically unpopuiar, the fact remains that the intermedia!y padicipants in the securitization were paid excessive fees and profits and they often redirected the payment due to the investor into their own pockets or an affiliate. The same is being done with the foreclosures where upon sale of the housev the title or proceeds are neither reported nor sent to the investor. The fact that agents of the investor received these vast sums far in excess of any obligation is not a reason to sustain a mistaken claim against the borrower. The obligation is satisfied by payment, and !he misbehavior of entities having bare possession of some documentation is not a reason to give these would-be foreclosers a free house. A decision in favor of the would-be forecloser based upon a d'colorable' claim skips the vital ingredient of standing. As Katherine Poder states in one of her many studies on the subject as an adjunct professor of Iaw at Harvard, the alegation that the borrower must be Iiable for something is not a proper substitute for alleging and proving that the liability in fact exists and that it is owed to the Movant. The fact that the borrower has not made a payment is not necessarily evidence of a default. The claim of non-payment against the borrower must be backed up by a claim that such payments were in fact due. This is only an assertion that can be made by the actual creditor since the securitization documentation provides for multiple channels of repayment. This is a claim that cannot be made as an honest representation to the court In every case in which I was an exped or observer, when the Coud examined the documentation, the disparities between what was on them and what was required forced the Court to accept the realiW that many, if not most of the foreclosures that have been rubber stamped, should have been stopped. I evaluated the materials Iisted below, among other materzals, facts and data in basing my opinions and inferences. Each of these documents and other materials, facts and data are of the type that experts in my field would customarily rely upon in forming opinions and inferences. The information sources l reviewed were sufficient for me to testify as to the facts and opinions that are included herein. W here additional information is required to make other factual statements and express opinions on fudher subject matter, 1 have so stated. To the extent that information was presented to me by way of the forensic review and analysis pe/ormed by LUM INAQ, l have confirmed the 7 Case 2:09-cv-01877-RCJ -PAL Document 116 Filed 03/24/11 Page 17 of 27 information through my review of the loan closing documentation. l also performed independent internet searches as to Securitization Documents available to the public online. Most of the testimony in this Declaration was plainly clear from review of the below Iisted materials, but to the extent that technical or specialized principles and methods were required, they have been reliably applied: A. The closing Ioan documents relating to the Ioan transactions that are the subject of this lawsuit. Not adached, because too voluminous, and those that are relevant to this proceeding have already been filed of record with the Court. B. The factual results of a Title and Securitization Review and Analysis performed by LUMINAQ, which has been subm itted by Petitloner.. C. The Qualified W ritten Request ($'QW R'). Since the QW R asks for answefs to questions that would be required in the pleading and proof of a judicial foreclosure action, a response to the QW R should be irompt, require no research if the property is already declared in default, and is condition precedent to any action, judicial or non- judicial to fofeclose or sel the propel or enforce the obligation or note. D. The Responses are attached without their exhibits, such as they were, have been submitted by Petitioner. E. I have reviewed the correspondence and pleadings and other filings $n this proceeding thus far. D. Various Bankruptcy Court pleadings and the Proof of Claim, which are of record.i i F. The MERS Min Summ ary and Milestone Histow, were unavailable though repeatedly requested. Movant failed to produce the MERS Min Summary and Milestone History, which would have taken Movant approximately 3 minutes to obtain online. l am positive that a full investigation of these reports would contradict and further show to be false evidence presented by Movant and of the position Movant appears to be taking in this case. I am also certain that Movant is aware of this. '1l use the following definition of 'C reditor' taken from research in cases, the Bankruptcy Code and the Uniform Commercial Code. A 'C reditor' is a legal entity that has advanced funds, goods or services in consideration of the right to payment, or has purchased the right to be paid. ln the bankruptcy context, a 'Creditor' is an entity that had a Claim against Debtor before the case was filed. 1 1 U.S.C. ç *101(10). A 'Claim' is a right to payment. j 101(5). Only a Creditor may file a Proof of Claim. j 501(a). The 'Official Form 10 reflects this requirement by describing the SNamc of Creditor' as 'the person or other entity to whom the debtor owes money or propery ' In the context of securitized residential moftgages (including the one in the instant case), a X reditor' is a legal entity or group of entities or persons under the law who have advanced money for the funding of modgage Ioans and who are owed money from those moftgage Ioans. The creditor in the case at bar can be genericaly described as an lnvestor, as defined under the rules and regulations of the Securities and Exchange Commission who has paid money to an intermediary in a chain of securitization that resulted in the funding of one or more residential Ioan transactions; the promise to pay is from an entity usually referred to as a Special Purpose Vehicle (SPV) which is frequently erroneously refered to as a U rusf' with a U rustee. The creditor/investor receives an instrument which is genericaly referred to as a Mortgage Backed Asset Certificate (scertificate'). The Case 2:09-cv-01877-RCJ -PAL Document 116 Filed 03/24/11 Page 18 of 27 Cedificate incorporates terms by which the promise to pay interest and principal is made by the issuing SPV. The promise to pay is conditioned upon several terms, including but not Iimited to the pedormance of a pool of Ioans, the obligations of third parties, and impliedly the receipt of insurance proceeds triggered by partial non- performance of the pool of assets alocated to the SPV . In turn the SPV pool is carved out of other pools created by Aggregators employed by investment banking firms. The Aggregators are palties to Pooling and Service Agreements and Assignment and Assumption Agreements, which are Securitization documents that predate the funding of the loans in any of the Pools. The Cedificate issued to the Investor conveys a percentage interest in the Pool of assets that is allocated to the SPV. To the extent the information in this paragraph was phrased in generalities, they were applicable to the specifics in this case. 'dI was asked to render an opinion as to the factual basis pertinent to the issue of Standing. As relates to Constitutional Standing, my opinion is premised on the following definition: Constitutional standing under Adicle III requires, at a m inimum , that a party must have suffered some actual or threatened injuw as a result of the defendant's conduct, that the injury be traced to the chalenged action, and that it is Iikely to be redressed by a favorable decision. Valley Forge Christian Coll. v. Am. United for Separation of Church and State, 454 U.S. 464, 472 (1982)., United Food & Commercial W orkers Union Local 751 v. Brown Group, Inc., 517 U.S. 544, 551 (1996). My presumption, in the context of the question posed to me, Is that standing requires that a party will su#er financial Ioss derived from non-performance (i.e., nonpayment) of the subject contract, which in this case is the obligation that arose when the subject Ioan was funded on behalf of the debtor as homeowner and referred to in some documents as the Borrower. Since the funding occurred out of a pool of money received by the investment banker from the investors, the investors are the creditors. By way of indenture (usualy incorporating a prospectus) the investors agreed to an operating plan that defined the functions of the conduit which was used to funnel funds to the investor from the pool. This operating plan is Ioosely and erroneously referred to as a U rusf'. However, since no assets remain in the conduit which is defined under the Internal Rekenue Code as a REMIC (Real Estate Mortgage Investment Conduit). The REMIC is refered to in the world of finance as an SPV (Special Purpose Vehicle). Having been a practicing tax atorney and receiving my M.8.A. in accounting and taxation, and having reviewed the relevant provisions of the lntemal Revenue Code, l presume the words Stonduif' and 'vehicle' convey the fact that no actual business events of taxable or monetary significance takes place in the REM IC . I conclude that this corroborates my opinion that the investors are the creditors, having been the only parties to advance funds from whicb the subject loan was funded. The note signed by said borrower and the modgage-backed bond accepted by the investor who purchased said security are both partial evidence of the obligatinn. The Deed of Trust is intended to be incident to the note and possibly incident to the bond , if the chain of title was perfected. The Payee on the note and the payee on the bond are diferent padies. The bonds were issued with three principal indentures: (1) repayment of principal non-recourse based upon the payments by obligors under the terms of 9 Case 2:09-cv-01877-RCJ -PAL Document 116 Filed 03/24/11 Page 19 of 27 notes and mortgages in the pool (2) payment of interest under the same conditions and (3) the conveyance of a percentage ownership in the pool of loans, which means that collectively 100% of the investors own 100% of the entire pool of Ioans. This means that the 'Trusr' does NOT own the pool nor the Ioans in the pool. lt means that the 'Trust' is merely an operating agreement through which the investors may act colectively under certain conditions. Accordingly, il is my opinion thal the padies with standing in relation to a securitized Ioan are the debtor/borrowers and the creditor/investors. This would be fudher cofroborated if, as a matter of fact, the investment banker followed industry standard of selling the mortgage backed security FORW ARD. dselling forward' means that the security was sold and the money was collected before the first Ioan was funded on behalf of borrowers. However, even if the inveslment banker had not closed the sale of the securities with investors before accepting applications for loans , it would have been on the basis of an expectation of said funding. Ultimately, in aI securitized Ioans there is realy only one transaction - a Ioan from the investors to the homeowner . W ithout an investor there wouid be no Ioan; conversely without a borrower there would be no investor or investment. uIt is accordingly my opinion that none of the above parties are or ever were creditors and that they therefore Iack standing as defined above. None of said parties had or wil at any time relevant to the subject matter before this Court suffered any actual or threatened injury as a result of the Debtor's non-payment of monthly payments pursuant to the original terms of the Note, nor because of her alleged default thereon , nor can any actual or threatened injury be traced to any other proceedings in bankruptcy court, including but not Iimited to the motion for relief from stay proceedings, any action involving a Proof of Claim, the Chapter 13 Plan or otherwise, and therefore there never was any legitimate redress available to any of these parties by a favorable decision. Although specifically, Comunity, named as t ender' in the Note and Deed of Trust, or the co-venturers, including the title agent and escrow agent shown in the closing documents may have at Ieast held physical possession of the Note issued to it by Debtor, it did not and does not have the right to enforce the Note. U he evidence in the Court's record that is contrary to this opinion appears to constitute an intentional attem pt to misleadingly make it appear that MOVANT was the holder of the Note, and that MERS could contend that it could act through its Nominal Beneficiary status on behalf of Fremont. Additionally, it is my opinion based upon a high likelihood and a high degree of confidence (having seen similar events with these parties) that the indorsements on the Note are fabricated. Accordingly, it was impossible for any of Movant's evidence to be legitimate , pursuant to the Iegal and contractual requirements in the herein described Securitization Documents of the above referenced Trust. aAccordingly it is my opinion that, pursuant to the above definition, that MOVANT has failed to provide any credible evidence of Constitutional Standing to invoke the subject matter jurisdiction of the Bankruptcy Coud in this case to file the MLS nor to have the Proof of Claim. In re Foreclosure Cases, 521 F.supp.zd 650 (S.D. Ohio, 2007)., /n re 10 Case 2:09-cv-01877-RCJ -PAL Document 116 Filed 03/24/11 Page 20 of 27 Kang Jin Hwang, 396 B.R. 757, 764 (Bankr.C.D.CaI., 2008); ln re Jacobsonb 402 :.R. 359 (Bankr. W.D.Wash., 2009). 'dAs relates to the issue of Real Party in lnterest, my opinion is that none of the padies mentioned above is a real party in interest in any sense of the word. i'None of the known Participants in the subject securitization chain has supered any financial Ioss relating to the Ioan, nor are they threatened with any future Ioss even if foreclosure never occurs. None of the known securitization Participants has ever been the real party in interest as a Iender or financial institution underwriting a loan while funding same with respect to the loan. None of the known securitization Participants, will suffer any monetary Ioss through non pedormance of the Ioan. AlI of the known securitization Pafticipants received fees and profits relating to the loans mosl of which were undisclosed to the borrower and to the Iender (investortsl). The existence and identity of the real parties in interest was withheld from the Borrowers/plaintips in the closing and servicing of the Ioan, and since alI of the known securitization Participants fail to meet one or more of the folowing two tests required for HDC status: 1 ) without actual knowledge of defects; and/or 2) in good faith, meaning a Iegitimate belief that the loan was solid, based upon the inform ation they had at the time of purchase of the Note. i'In terms of the real estate podion of the transaction, the homeowner was the Borrower and the Investor was the actual Creditor. The investor is still the Creditor if the investor has not sold, transferred or alienated the hybrid mortgage backed security and if the investor has not been directly or indirectly paid through credit default swaps, with or without subrogation, or paid through a federal program with or without subrogation. Since no such instruments appear on record, any right of subrogation would appear to be equitable. Thus for purposes of this declaration, the unknown and undisclosed Investors constitute the only Creditor presumed to exist until the undersigned is presented with contrary evidence of the type that an expert in my field of expertise would normally take into account in forming opinions and conclusions. Therefore l conclude that if there remain any Creditors, pursuant to the Note, they are the unidentified Investors and alI other parties are intermediary or representative or disinterested. Debtor has made unsuccessful attempts to obtain from Movant and others the identity of the Investors, the documentation authenticating their identity, and an accounting that would show aI money paid or received in connection with the subject obligation. Neither Affiant, nor Movant, nor the Court will be able to determ ine amount of Debtor's equity in the property until a complete accounting of aI debits and credits, including but not Iimited to, the 3fd party payments referred to above. Until such time as requests for said information have been answered, I wil be unable to identify with cedainty the exact identity of the current creditor, meaning the true owner of the aleged obligation, other than to say that it is not Movant, nor any Parjcipant in the Securitization chain. useveral transactions have purportedly taken place regarding the subject loan, as the Case 2:09-cv-01877-RCJ -PAL Document 116 Filed 03/24/11 Page 21 of 27 Note was transferred up the chain of securitization to the Trustee of the MBS Pool. In my opinion, the 'tender,' as Get fodh in the originad DOT, or Comunity in this case, in securitized Ioans is at best only a nominee for an undisclosed principal. The transaction with the homeowner was subject to a pre-existing contractual relationship wherein the Investors advanced the funding for the loan and profits, fees, expenses, rebates, and kickbacks. This is known to many of the known and unknown securitization Padicipants, inasm uch as they have been the recipients of memoranda from Iegal counsel and advisers, which in my opinion are not protected by adorney client privilege or the attorney work product privilege, in which they have been informed that it is only a dlNominee' when the i'Lender' does not advance cash for funding the Ioan and does not receive any payments on the obligation. A situation has been created which at least theoreticaly would alow multiple parties to make claims on the same property from the same borrower, claiming the same Note and DOT as the basis therefore, The intended monetary effect of the use of such a Nominee was to provide obfuscation of profits and fees that were disclosed neither to the Investor who put up the money nor to the Borrower in this Ioan. ln the case at bar, it is my opinion based upon a reasonable degree of flnancial analytical certainty, that the total fees and profits generated were actually in excess of the principal stated on the note which is to say that Investors unknowingly placed money at risk the amount of which vastly exceeded the funding on the loan to the borrower. The only way this could be accomplished was by preventing both the Borrower and the Investor from accessing the true information, which is why the industry practice of Nominees Iike the private MERS system were created. Even where MERS is not specifically named in the originating documents presented to the homeowner at the 'closing' it was industry practice from 2001-2008 to utilize MERS 'services', or to implement practices similar to those utilized by MERS. Therefore it is not possible nor probable that the data from the closing was entered into the M ERS electronic registry based on an assignment that was executed by the originator. As a general rule in securitized transactions and especially where M ERS is named as Nominee, documents of transfer (assignments, endorsementsv etc.) are created and executed contemporaneously with the notice of default (years after the cutoff date required by the IRC REMIC codes and years aoer the restrictive cutoff in the securitization documents - thus selecting a Participant in or outside the securitization chain to be lhe parly who initiates colection and foreclosure. The very practice of having a secret system of recording transfers of beneficiai ownership of reai estate notes, ipso facto creates an automatic cloud upon title. The attempt to transfer the Ioan after the express cutoff date required by the Internal Revenue Code (REMIC) and the express conditions of the securitization documents, as well as the attempt to transfer a non-pe/orming Ioan into the pool violates numerous restrictions in the documents which Movant relies upon to demonstrate its authority to act, although the Movant has not actuasly submitted same and that burden was improperly placed on the Petitioner. dln my opinion, it is unlikely that any HDC exists, because of the way securitization was universaly practiced within the investment banking comm unity during 2001 through 12 Case 2:09-cv-01877-RCJ -PAL Document 116 Filed 03/24/11 Page 22 of 27 2010. Hence the loan product sold to the subject homeowner included a Promissory Note that was evidence of a real obligation that arose when the transaction was funded but Iost its negotiability in the securitization process, which thtls bars anyone from successfuly claiming HDC status. This leaves the real parties in interest, once identified, to assert equitable claims or equitable subrogation claims for third party payments. The negotiability of the note was negatively affected by (1) the spjitting of the note and modgage as described herein', (2) by the addition of terms, conditions, third party obligors and undisclosed profits, fees, kickbacks aI contrary to existing federal and state applicable statutes and common $aw (which has relevance to the Tîl.A, RESPA and related alegations in the LUMINAQ Analysis; and (3) knowledge of title and chain of title defects in the ownership of the Note, beneficial interest in the encumbrance, and position as Obligee on the obligation originally undedaken by the subject homeowner. it-rhe only party that can claim to be a Holder in Due Course (SIHDCRI ot the Note are those that paid value for the Note, without knowledge tbat there were any pending challenges to its validity and who fulfill the other requirements for HDC status. This HDC and the Third Party Sources are the only ones that could conceivably suffer a monetaw or pecuniary loss resulting from non-payment of the obligation. The Investor could Iose if because they advanced the actual funds from which the Financial Product Loan was funded, assuming these Investors that purchased asset backed securities were those in which ownership of the Loans were described with sufficient specificity as to at Ieast express the intent to convey ownership of the obligation as evidenced by the Promissofy Ncte and an interest in real property consisting of a security interest held by an entity that was described as the Beneficiaw of a Trust created by an instrument entitled 'Deed of Trust.' These lnvestors were not named. This practice has been intentional, in my opinion, based on the overwhelming commonality of this reoccurring obvious failure, and other overwhelming evidence. The Third Party Sources that could conceivably Iose because they would have paid value prior to default or notice of defaults and fal within one or more of the folowing classifications: a) Insurers that paid some party on behalf of said investors; b) Counterparties on credit default swaps; c) Conveyances or constructive trusts arisinj by operation of Iaw through cross colateralization and over colateralization withln the aggregate asset pools or later within the Special Purpose Vehicle tranchesil d) The United States Treasury Department through the Troubled Assets Relief Program in which approximately $600 billion of $700 billion has been authorized and paid to purchase or pay the obligation on 'troubled' (non pedorming) assets of the LOANS are pad of the class of assets targeted by TARP; e) The United States Federal Reserve, which has extended credit on said troubled assets and has exercised options to purchase said troubled assets; 1 'Tranches' is an industry term of art refening to the types of division within a Special Purpose Vehicle. They are described in the Securitization Documents reviewed and on tile . 13 Case 2:09-cv-01877-RCJ -PAL Document 116 Filed 03/24/11 Page 23 of 27 f) Any other party that has traded in mortgage backed securities from the aggregated pools or securitized tranches containing interests in the Notes. 'dln my opinion, based on evaluation and review of a multitude of Mortgage Backed Securities documentation, financial documentation, from knowledge of the gains that can be made by various Padicipants from various triggers , and from investigations pedormed, and the consistency with which the same situation, with the same problems is seen to exist in nearly every eyample, it is reasonable to conclude that the creation of an untenable situation for Investors in these transactions, or the appearance of an untenable situation for lnvestors, is that paradoxically said situations have been intentionally created. U he Ioan made to Debtor was pad of a two way transaction in which the two parties at each end thereof each purchased a 'Financial Product' On one end , the home buyer or refinancer was 'sold' a residential home Ioan. On the other side, a Modgage Bond was sold to an lnvestor. ln my opinion, both financial products were securities. Neither set of securities were properly registered or regulated, and the information that would reveal the identity of the 'Lender' is in the sole care, custody and control of the Loan Servicer or another lntermediary conduit in the Securitization Chain , including but not limited to the Trustee or Depositor for the Special Purpose Vehicle that re-issued the homeowner's Note and encumbrance as a Derivative Hybrid Debt lnstrument (bond) and equity instrument (ownership of percentage share of a pool of assets, of which the subiecs loan was one such asset in said pool). Said Security, the Bond, thal was sold to an Investor was done by use of the Borrower's identity and obligation without permission. In my opinion, it is equally probable that the Investors were kept unaware that a maxim um of only 2/3 of their investment was actualy going to fund Debtor's Ioan and others similarly situated, with the excess being used to create instant income for Participants. Debtor was unaware that such Iarge profits or premiums were being generated by virtue of his identity and signature on the purported Ioan documents. i'According to information from Debtor, Debtor has made unsuccessful attempts to obtain from Movant and others the identity of the Investor/creditor and possession of documentation authenticating this identity. Neithef A#iant, Movant, nor the Couft will be able to determine the identity of the Creditor, if any still remains , until requests for information and documenlation have been complied with. 'lt is also my opinion that there is a very high probability that aI or pad of the Debtor's Note was paid in whole or in part by third padies, based upon industry practice, my personal review of hundreds of similar transactions including the one at baq and published repods. Until such time that the identity of the Creditor , the document trail, and the precise money pedaining to payments by third party sources is disclosed , neither Affiant, Movant, nor the Coud wil be able to determine the amount of oebtor's equity in the Property. Debtor's 'O bligation' is the amount of money owed to the Creditor. The Obligation originated with the advance of capital by Investofs who purchased modgage-backed securities and ended with the promise to pay by the 14 Case 2:09-cv-01877-RCJ -PAL Document 116 Filed 03/24/11 Page 24 of 27 homeowner who is the debtor in the transaction. dlt is also my opinion that many diperent parties in the securitization chain came to express title or claim rights to enforce the DOT and Note and that there was an intention to split the Note from the DOT, while heretofore unusual in the marketplace was commonplace in securitization of residential Ioans. The recorded encumbrance was never epectively or constructively transferred because it was never executed in recordable form nor was an effort made to create such a document by the padies to the instant case until they decided to pursue foreclosure. AI transfers or purpoded transfers of the Note were not accompanied by the encumbrance being incident to said transfers because the DOT interest as recorded remained in the name of the Originator , or that pa@ defined as the 'Lendef' in the Note and DOT. Applicable Arizona Deed of Trust statutes require that every change of beneficiary interest in a DOT to real property to be recorded. And Arizona recording statutes require that every change of beneficiary interest in a DOT to real property to be recorded to be enforceable against a bone fide purchaser for value without notice of a competing claim. Hence, it is my opinion, that the holder of the Note, either singular or plural , were not the same parties as those who purpodedly held the DOT at any time pertinent to this case and that this was the result that was intended by the mortgage Originator and the Padicipants in the securitization chain, since it was a typical practice in the investment banking industry in their process of securitizing loans throughout the period of 2001-2009. ln my opinion, with a high degree of certainty, the Debtor's titte was and is subject to a cloud on title, a claim of unmarketable title and possibly a title defect that cannot be cured without courl order as a result of the manner in which Debtor's loan was securitized. In aIl cases reviewed by me, which include more than fifty securitization chains, the Prospectus and other published documents clearly express that a securitized modgage is treated sometimes as being secured by real estate, and sometimes as not being secured by real estate ,depending on the context and purpose of the accounting . The naming of a pa@ other than the Investor as Beneficiary under the DOT as distinct from a third party named as Payee on the promissol note and the same or other third party named as Beneficia!y under the policy of title insurance demonstrates an intent or presumption or reasonabpe conclusion that there was intent by some or aIl of the padies at various times in the steps of the securitization process to separate the Note from the Deed of Trust , thus creating a cloud on title for both the owner of the property and any party seeking to express or claim an interest in the real property by virtue of the encumbrance. $'l have also reviewed, for the past 40 years, published Financial Accounting Standards obviously intended for auditors involved in auditing and rendering opinions on the financial statements of entities involved in securitization , securities issuance and securities sale and tradirg. lf the known Participants in the securitization scheme followed the rules, they did not post the instant transaction as a Ioan receivable . The transaction most Iikely was posted on their Iedgers as fee income or profit which was later reported on their income statement in combination wilh all other such transactions . These rules explain how and why the transactions were posted on or ofl the books of the Iarger originating entity. These entries adopted by said companies constitute admissions lhat the transaclion was not considered a Ioan receivable on its balance 15 Case 2:09-cv-01877-RCJ -PAL Document 116 Filed 03/24/11 Page 25 of 27 sheet, or on the Iedgers used to prepare the balance sheet , but rather shown on theincome statement as a fee for semice as a conduit . These admissions in my opinion arefatal t o any assertion by any such pady currently seeking to enf orce mortgages in theirOwn name on their own behalf , including but not Iimited to the securitization Participantin this case . 'This concludes this Unsworn Declaration , made under penalty of perjuly' Signed on November 14 , 2010. / S/ Red V ' S. # Neil Franklin Garfield , Esq. FBN 229318 1 1 16 Case 2:09-cv-01877-RCJ -PAL Document 116 Filed 03/24/11 Page 26 of 27 l pltooF olr sEltvlcc 'I 2 l am employed in the County of Clark, State of N evada. l am ovcr the age of ' : j 3 eighteen (1 8) years and am not a party to the within action. My business address is l ë 4 209 Royal Aberdeen W ays Las Vegas, NV 89144. O n M arch 23, 201 1 , I caused 5 the following document described as: M OTION TO VACA TE RULING DATED 6 SEPTEM BER l 5, 2010 DECLARATION A ND POINTS AND AUTHORITIES IN 7 SUPPORT FRCP 60(b) to be served on the parties who have appeared in the 8 above-captioned lawsuit. I place a true and correct copy of such docum ent in a 9 sealed envelope addressed to the following: 10 Snell & W ilm er, LLP Jones Vargas 3883 Howard Hughes Parkway 3773 Howard Hughes Parkw ay1 1 Suite l l00 Third Floor South Las Vegas, NV 89169 Las Vegas. NV 89 1691 2 X - (BY U.S. MAIL) I deposited such pre-paid postage envelope at Las Vegas,1 3 - Nevada. I am fam iliar w ith the office's practice of collection and processingl 4 j5 correspondence for m ailing. Under that practice, it would be deposited with the 16 U.S. Postal Service on that sam e day with postage prepaid at Las Vegas Nevada in the ordinary course of business.1 7 j g ..X (STATE) l declare under penalty of perjury under the laws of the State of )9 Nevada that the foregoing is true and correct. Executed this 23rd day of M arch, ze 201 l , at Las Vegas, Nevada. 2 l 22 23 24 25 26 27 28 10 M OTION TO VACATE DISM ISSAL Case 2:09-cv-01877-RCJ -PAL Document 116 Filed 03/24/11 Page 27 of 27