Clouded Titles (Dave Krieger Commentaries)

A FEW POLICY CHANGES WON’T CHANGE THE GAME July 27th, 2011 By Dave Krieger As of this post, two states Attorneys‟ General have now decided to investigate Mortgage Electronic Registration Systems, Inc. (hereinafter “MERS” … which decided over a decade ago with the help of Fannie Mae, Freddie Mac, the American Land Title Association, the Mortgage Bankers Association and a host of major banking institutions), which injected itself into the electronic data recording business for securitized mortgages and insodoing, toyed with the chains of titles to over 70,000,000 pieces of American real estate. As expected, MERS spin folk put out a press release welcoming Beau Biden (DE) and Martha Coakley (MA) investigations, saying they look for quick resolve, while wiping the sweat off their brows that the other 48 attorneys general are just willing to roll over as long as the State they‟re in gets some damage money from the banks to put into their respective general funds. That extra budget money doesn‟t solve the general crisis however, it just gives the AG‟s that won‟t investigate thoroughly the mess MERS and its member-subscribers made a campaign platform touting toughness the likes of the tobacco settlements, when in fact, the settlements against the banks just rub salt in an already-gaping wound that are indeed miniscule to the money big tobacco paid. On July 21, 2011 MERS issued a policy change (2011-5) claiming that members were no longer allowed to foreclose in the name of MERS … like that‟s going to change the equation? If MERS is involved in your title, so are unknown intervening assignees … assignees who didn‟t record their interest in the notes they bought and sold on Wall Street and electronically recorded in MERS database. The end result hasn‟t changed. MERS new policy dictates that their 20,000+ robo-officers signoff on assignments, transferring the mortgages and deeds of trust into the names of the real owners, many of which are New York trusts that have in almost all of the cases, violated the terms of their own Pooling and Servicing Agreements in claiming ownership of some 30-million claimed current MERS mortgage database holdings and 40-million past. Many think MERS started out well-intentioned and grew into a monster of catastrophic proportions. My take is that MERS only goal was to show its members how to save billions of dollars by paying it a cheap data entry fee and circumvent the land records, changing the character and status of the promissory notes which they split from the deeds and mortgages, instead of properly sticking to the tried and true (and sometimes slow) process of following state property recordation laws. Judges who look the other way at this mess (in my opinion) haven‟t been economically affected enough to wake up yet. When the states and counties can‟t afford to keep paying their law clerks (take Florida for example) and judges have to do their own research, the system is going to bottleneck even worse than it already is. Foreclosures in Florida are estimated to take over 600 days from start to finish according to one estimate I‟ve read.

Despite all of the claims that MERS is trying to straighten out their preconceived “mess”, the conditions of title have not changed for every single piece of American real estate it has “touched”. The marketability of any MERS-related/mortgaged property hangs in the balance. Two important elements remain a constant here: (1) the damage to the chain of title is on-going and any recordation past the MERS recordations further convolutes the title to the point of uninsurability; and (2) just because MERS claims they‟ve changed their strategies doesn‟t put the “toothpaste back in the tube”. Titles to property are still slandered and clouded and MERS and its parent MERSCORP, Inc. are culpable and negligent to that end. MERS demands to be informed every time one if its members get sued? Why does MERS make itself so hard to serve process on? If you‟re an attorney trying to litigate against MERS and MERSCORP in a quiet title action, service of process against these entities is as obfuscated as the loans they preserve on their databases. Any service of this kind that claims it‟s got nothing to hide shouldn‟t be behaving badly (the latest address of service against both entities is in New Castle, Delaware through CTC). At least with Bank of America, you know it‟s in Charlotte, North Carolina. Depending on the MERS mortgages, deeds of trust and assignments, its agents can be anywhere. Finding and deposing these agents drives up the costs of litigation, discouraging homeowners from pursuing methodologies to restore their titles to marketable condition. Having judges out there that think it‟s okay for MERS to do what it‟s doing further complicates the final resolution to the bigger problem that even Gretchen Morgensen from the New York Times understands. It‟s sad that the paper won‟t let her out of her cage to really unleash this issue. Everyone would be suing the banks and MERS trying to quiet title to their properties, jamming up the court with millions of lawsuits … and by golly, we can‟t have that now, can we? Whether any newspaper reporter, judge or banker smirks at that proposition, there are many who see the groundswell of disgruntled homeowners, foreclosed on or otherwise, chant my new mantra: “If I can‟t convey … neither can they!” I brushed the dust off my old deed of trust (hey, that rhymes too!) recently to find the same thing stated that I‟ve seen on dozens of others I‟ve audited, the phrase that says, “Borrower Covenants that Borrower is lawfully seised of the estate and has the right to convey” … hmmm? If you as a homeowner are left scratching your head on that one, trying scratching someplace else when you realize that you weren‟t the one who caused your title to become clouded (well, actually, you did when you signed a MERS mortgage or deed of trust). You didn‟t know at the time you signed the paperwork and moved into your new home that your problems with conveying clear title had just begun. This is why rumors abound that one-third of Kansas City‟s properties with mortgages issued between 2003 and 2008 are uninsurable. That means the value of your home is worth ZERO because you can‟t sell it … because you can‟t convey clear title. Title companies are going to start feeling the brunt of these legal actions unless they start refusing to insure based on phony or improper assignments and substitutions of trustee. How can a short sale really work if the MERS system has convoluted and obfuscated true ownership of the borrower‟s loan? We can only hope that the issue of MERS legitimacy will be squashed like a cockroach before the Supreme Court of the United States at some point in the near future and will be turned into roadside fauna along with the 30-year mortgage loan. MERS policy changes? They look good on paper but it‟s just another smokescreen on the part of those who would

continue to make the other side think MERS is complying with the April 13, 2011 Consent Order. In my book, there is no indemnification for MERS or MERSCORP, Inc. Dave Krieger is Managing Member of DK Consultants LLC, a title consulting firm based in San Antonio, Texas.

ALEXANDRIA, VIRGINIA JURY CONVICTS FARKAS ON 14 COUNTS & WE STILL CAN’T SEE THE LIGHT AT THE END OF THE TUNNEL! April 21st, 2011 By Dave Krieger A follow-up that is anything but finite … An Associated Press report issued yesterday might have made for cause célèbre, in light of the anniversaries of Waco and Oklahoma City (and what some might make light of as a satanic holiday), however the end result is anything but complete. Lee B. Farkas of Ocala, Florida, who this author had written about in his book CLOUDED TITLES, was convicted on all 14 counts in what amounted to nearly a $3-billion fraud scheme which helped, in part, take down Alabama-based Colonial Bank. Six of Farkas‟s cohorts at Colonial and Taylor, Bean & Whitaker turned government witnesses in exchange for lesser sentences, all turned on the former chairman of the now-defunct and widely-publicized firm now in bankruptcy. At the time of this writing, Farkas is awaiting sentencing. While it was discovered that there were “sweeping” practices (covering overdrafts on a daily basis to keep the accounts solvent) going on, evidence also came to light on the multiple pledging of residential and commercial mortgage loans in the securities markets. U.S. prosecutors alleged that over a billion dollars of these loans ended up at Colonial, who maintained they were legitimate assets on their books when they were anything but. You may remember that during discovery in the TBW bankruptcy, Freddie Mac and Bank of America got into the proverbial “pissing contest” over who would get access to the discovery … at that time it was claimed that multiple pledging of mortgage loans was commonplace. This, my friends, is where this story stops and another begins. Multiple pledging … Multiple investors … Multiple claimants … Now we come to the part of this simple scenario that I hardly find amusing. When you take the same promissory note, whether it be residential or commercial … and you use that note to entice investors to put a “stake” in it via their “retirement” or “investment” funds, knowing that someone else already put up money against that very note, you get multiple claimants. The claimants however, don‟t know that each other has invested in the same note because each of the prospectuses offered to each individual claimant doesn‟t quite spell out all of the assets that each investor was going to expect a return on and who‟s comparing notes anyway? While I‟m not going to dawdle about what went on inside Wall Street brokerage houses, I do wish to point out that each one of these claimants represents what I consider a potential “intervening assignee” in a quiet title action, something that homeowners and their attorneys may wish to think about when putting together their pleadings. What I do find amusing is the way the banks‟ attorneys occasionally poke fun at a given plaintiff‟s allegations that there are “John Does

1-1000” that may be involved as unknown investors, when this whole time, the banks knew that this scenario was not only probable, it was more than likely true according to what the Farkas case shows us. You see the things we learn … a note is a lien against the title to the property. If you hold the warranty deed, doesn‟t that give you superior title to the property? After all, a lien is a lien, except when several lien holders come forward and all claim they have an interest. This has happened before (in Florida) where two lenders came forward and foreclosed on the same house. What do you think that does to title? Clouds it? Maybe? If these interests were never recorded in the county land records … and MERS and LPS were involved in any known recorded assignments … doesn‟t that bring in a whole host of new issues that one could seek to quiet title on? The Farkas case just cracked the lid on another whole host of properties that now face claimant issues that may only be resolved by quieting title. And the banks? What we‟re seeing now is a scramble by trustees to attempt to get out of these suits. They want no part of any allegations of breach of fiduciary duty (to the borrower and the real creditor) and negligence (for failing to exercise due diligence to determine whether the lender involved in the non-judicial foreclosure was really the party in interest). We‟re also seeing banks removing these quiet title actions to federal court, where the jurisdictional issues of a federal court quieting title to property situated in state lands as the banks “hide” their real objectives, to stall as long as possible so they can keep bad case law off the books while they wait for their buddies inside the beltway to step in and “do something”. This certainly is something to watch for and protest against. The calamity of wanton jurisdiction … For the federal courts to think they can quiet title is at best, absurd. Every state has a statute and/or has given every homeowner the right to quiet title on their property, if in fact they can prove their title is superior to that of their known and unknown claimants, as well as defeating those challenges to claimed liens wherein the right to enforce does not exist. But for a federal court to step in and claim it has the right to quiet title on state property? 10th Amendment? Mark Aspey, a federal district court judge in Arizona “gets it”. In the Forde case, he remanded what he stated were clearly state-sanctioned issues back to Maricopa County Superior Court. Other cases however, haven‟t been as lucky. At least one other Maricopa County quiet title action that the author is aware of has been removed to federal court, where another judge asked the attorney why she listed the property as a Defendant in her quiet title action. Excuse me? My answer to that … and this ain‟t legal advice folks, just my researched opinion … is that you have indispensible parties and necessary parties. The Plaintiff in a quiet title action (or one who claims to own the property in title superior) is an indispensible party. The subject property is situated in the county and state that collect taxes from it. If the property owner doesn‟t pay his property taxes, then the County becomes an indispensible party because of its claim by right of jurisdiction to seize and sell the property to someone who WILL pay the ad valorem property taxes. All equity flows from the subject property. Without the property and the Plaintiff, you wouldn‟t have indispensible parties. Necessary parties are all known parties to the contracts and

liens that come against the subject property. Mortgages and deeds of trust represent security interests against the indispensible subject property. When these “liens” are pledged multiple times, you have a real serious problem. Now you can point a finger at MERS and Wall Street. If you have unknown investors, because from what we‟ve seen, there are many ways to hide the chain of custody of the note (this becomes necessary for a judge to decide through declaratory judgment the rights and interests of the parties involved). Discovery may or may NOT uncover these glitches. This is why I do chain of title assessments for the attorneys who retain me. The argument for chain of title assessments … Chain of title assessments are kind of like an x-ray to a doctor. Generally, you see them order an x-ray right before surgery so they can see what they‟re dealing with before they cut. A chain of title assessment kind of works the same way for an attorney. It tells him when and where gaps in the chain of title are suspect. It suggests possible strategies to defeat motions to dismiss wherein the lenders all claim the chain of title is clear up until the time they got ownership of the note. It gives the attorney more information for the purposes of formulating discovery, something else I do as a paralegal. I can‟t litigate it, but I sure can play “Devil‟s Advocate” with counsel when it comes to ferreting out possible challenges from the other side. This is part of my consult work. The attorney has to argue what he feels best about arguing before the judge. That‟s not my call. The attorney will go with what works in court … what a judge can get his head around. There are very few paralegals (to my knowledge) that have grasped the entire concept of comparison of chain of title to chain of note custody; but it‟s there … and so are the agency arguments to go with it. In time, many will have been trained into this procedure. This generally takes a couple of days and several sample sets of documents to grasp the concept in its entirety. Your attorney can order a chain of title assessment for your case by emailing me directly at [email protected]. Assessments start at $750 and go up depending on the number of documents analyzed. There are NOT enough paralegals to handle the prospective number of upcoming quiet title actions, so it becomes necessary to effectuate seminars to accomplish that task. As a result, I have formed an LLC to take on that task. I recommend you read CLOUDED TITLES first because I do not have the time to educate you over the phone and via email. You get up to speed first, then you fight. Securitization and quiet title … What does Wall Street have to do with your title to property, you ask? Multiple pledging of your loan to several investors? There‟s a new quiet title action that was just filed in Lewis County, Washington that actually names two of the known investors (much to their chagrin) as Defendants. “This is probably one of the most complex cases I‟ve ever done,” says Seattle attorney Matthew Hale, who represents clients in quiet title and foreclosure defense actions in the Pacific Northwest. Mr. Hale can be reached through his website at www.sentinellawgrouppllc.com.

Armed with a declination letter and a very irate title company executive, Hale believes that the service of process could be a problem, “because we don‟t know where all of these investors are”. Still more problematic is the fact that it‟s common knowledge that all of these investors, which run the gamut from 401(k) and retirement accounts for schoolteachers‟ unions all the way to private source investors seeking to make a fair return, purchased non-recourse bonds. What the end result of this has caused is lawsuits brought against banks and brokerage houses and the trusts they represent in the Southern District of New York for fraud and misrepresentation, mostly on the prospectuses issued by these brokerage houses to entice investors to purchase these collateralized debt obligations. The trust that is foreclosing on Hale‟s client is one of those trusts being sued by investment groups. It will be interesting to see how the judge will react when these investors come to court and tell the court why they are suing this particular trust and the title company executive tells the court why Hale‟s client‟s property is uninsurable. This is sure to raise potential issues for summary judgment, something the lender doesn‟t want to hear and will certainly have trouble arguing against. Even though the investors in many cases have no direct claim to the Plaintiff‟s property (because after all, they bought and held non-recourse bonds), if these investors were told that they suffered a loss because the trust was written down or written off as a loss, then any agency relationship tying the trust to any loan it attempts to foreclose on may be at issue because the trust as a party would then lack standing to pursue an action; an issue of course which will have to be determined by a court. Still, the agency arguments may be defeated simply by the information contained in the front of the pooling and servicing agreement (“PSA”). Sorry, but I just don‟t see the need for a full accounting of a trust that may have NOT gotten the promissory note tied to your mortgage or deed of trust. Who knows … it could have been bifurcated by MERS or some other entity with no known pecuniary interest. Agency relationships and contract law pretty much dictate the chain of custody of the note. Securitization is only the process by which the note was resold multiple times to different investors (or so we think). When you talk about securitization to a judge, they don‟t get it. That‟s what we‟re seeing (“we‟re” meaning my group of attorneys I work for) in the courts now. The question still remains … if the investors bought non-recourse bonds, what makes them necessary parties to a quiet title action? They don‟t hold an agency relationship with the tablefunded lender, even though they may have contributed the funds that constituted your loan. We still have clouds on title … I spoke with Jeff Thigpen, the Register of Deeds for Guilford County, North Carolina, who quickly informed me of the search he‟d done of all of his records after the 60 Minutes piece aired on LPS‟s Linda Green. “I found 1300 documents, mostly assignments, with Linda Green‟s name on them,” he said. The issue then becomes HOW to deal with this problem. Can you imagine 1300 separate quiet title

lawsuits being filed out of Guilford County, North Carolina alone against multiple parties, including MERS and Lender Processing Services, Inc.?

THE WHO’S WHO PUTS OUT A WHAT’S WHAT ON MERS AND MERSCORP April 15th, 2011 By Dave Krieger Download pdf The following op-ed piece is being issued following my review of Consent Order #2011-044, issued yesterday (04.13.2011) by the “Band of 5”. You can decide for yourself what this Consent Order really stipulates. The one thing I find it does NOT stipulate, is how nearly 70 million titles to real property in America (between MERS and LPS) have clouds on them, which by most standards, would render these properties unmarketable as to clear title! This Consent Order says NOTHING about the mess already made and who bears the responsibility for cleaning it up! (My analysis is in italics, not legal advice … just my analysis.) This Order is one of 10 Consent Orders issued by the OCC. These agreements cover unsound and unsafe banking and foreclosure procedures of Bank of America, Citibank, HSBC Bank, JPMorgan Chase Bank, LPS/DOCX, MetLife Bank, MERSCORP/MERS, PNC Bank, US Bank NA and Wells Fargo Bank, NA (and remember Wells Fargo heavily stated, “We didn‟t do that!”) The Order (which if you want to read all 31 pages of it you can download the .pdf here) was issued jointly by the Comptroller of the Currency (“OCC”), the Board of Governors of the Federal Reserve System (the “Fed”), the Federal Deposit Insurance Corporation (“FDIC”), the Office of Thrift Supervision (“OTS”) and the Federal Housing Finance Agency (“FHFA”, which now oversees Fannie Mae and Freddie Mac as its conservator). The release of this Order on Page 2 refers to this Order “as part of an interagency horizontal review” (which the author surmises here is nothing more than an interagency horizontal mambo to cover someone‟s butt). As a side note … Lender Processing Services, Inc. and its now-defunct subsidiary DOCX are still being scrutinized by the USDOJ for possible criminal action. The recent release of the 60 Minutes episode which featured Florida attorney and fraud investigator Lynn Szymoniak and its specific coverage of one “Linda Green” also surely set off warning bells with many uninformed borrowers. Yes, Linda Green actually exists … as BOTH a man … a woman … and many other unknown John and Jane Does who can write her name! This Consent Order basically states what we‟ve already known in the hinterland … that MERSCORP and MERS‟s blind authority has wreaked havoc on the chains of titles of millions of pieces of property, something the United States Government has done NOTHING to correct. Basically, because quiet title actions are “states‟ rights” actions, it would seem the 10th Amendment to the U.S. Constitution forbids the U.S. Government from sticking its nose in such affairs; not that we don‟t expect it will try to at some point. The Order also states that MERS and MERSCORP “have begun implementing procedures to remediate the practices addressed in this Order”. By mutual consent, stated within this Order, “MERS and MERSCORP have committed to take all necessary and appropriate steps to remedy

the deficiencies and unsafe or unsound practices identified by the Band of 5” [the Agencies]. Bear in mind that “agencies” operate under administrative jurisdiction. You as a property owner brought this administrative jurisdiction upon yourself when you signed a mortgage or deed of trust with MERS‟s name on it! Geez … did I get your attention now? Hence, we move onto “ARTICLE I – JURISDICTION”. Did you not see that one coming? First, this Order defines (and you have to look at definitions) MERS and MERSCORP being providers to “Examined Members” (such as Fannie and Freddie) under the meaning of the Bank Service Company Act. This is the statute that the Band of 5 claims they can “examine” the behaviors of MERS and MERSCORP (the way I read it). Second, this Order also says that MERS acts as an “agent for lenders with respect to serving as mortgagee in a nominee capacity for the lender” (it does NOT define what a “nominee” is) and goes on to state that the examination was conducted because the Band of 5 says they have the authority to do it. Third, the Band of 5 also claims it has the authority to enter into this Consent Order. This makes the “interagency horizontal mambo” a little more palatable, doesn‟t it? Then we move onto “ARTICLE II – AGENCIES‟ FINDINGS (it took them three pages just to get to this point). And the very first sentence is: “The Agencies find, and MERS and MERSCORP neither admit nor deny, the following:” (well … what did you expect from a stipulated consent order anyway?) (1) They just officially announced that MERS is a wholly-owned subsidiary of MERSCORP. They just NOW figured this out? Then they announce that MERSCORP‟s shareholders include Fannie and Freddie and a host of other federally-regulated financial institutions, not to mention servicers and all of other “other secondary entities” covered under the term “participants”. (2) They formally define that MERSCORP operates a national electronic registry. Remember this as part of their policies and procedures! They further identify 31-million active residential mortgage loans on the current MERS system. The author would surmise here that these are most likely the bifurcated notes that homeowners continue to pay not, despite the fact that “legally”, within their respective chain of titles, which is problematic anyway. (3) This set of findings admits that MERS has infiltrated the local land records on behalf of its membership. This Order states that MERS “takes action as mortgagee through documents executed by “certifying officers” … you know, those robosignors you‟ve heard about that really have no personal knowledge of anything they sign, usually borne out in depositions past. This section (Page 4) goes onto say that MERS‟s designations of these “certifying officers” as able to execute “legal documents” in the name of MERS, such as mortgage assignments and lien releases.” Well … these are the subject of the legal challenges to date that are going to topple the „house of cards‟!

Up to this point in my analysis, it appears that this official “Consent Order” makes the “findings” agreed to by MERS and MERSCORP … including their fundamental screw-ups which could affect your very own chain of title to your real property! When you move onto Page 5 of this Order, you find that MERS and MERSCORP screwed up the processes by failing to monitor what their underlings (who number some 40 people internally) were doing … not to mention the some-20,000 robo-officers out there that claim they know what‟s going on with your loan! When you get to Paragraph 5 of the Order (remember this is an “agreed-to” Order folks, without admitting or denying anything, the findings indicate that “MERS and MERSCORP engaged in unsafe or unsound practices that expose them and their „examined members‟ to unacceptable operational, compliance, legal, and reputational risks.” So now we move onto “Article III – Compliance Committee” … which is what all Cease and Desist Orders stipulate, right? Not here. By the end of April, 2011 (or thereabouts), the Boards of Directors of MERS and MERSCORP (which now don‟t officially include R. K. Arnold and a major contributing factor of William Hultman, who was replaced by Sharon Horstkamp (not to be confused with „Mein Kampf‟), get to form and maintain a committee to comply with the terms of this Order, including written progress reports („I will not cloud title.‟ „I will not cloud title.‟ „I will not cloud title.‟) Geez, another committee? Go figure. Every set of findings has to include an “Action Plan”, right? Well … this one does! “ARTICLE IV – ACTION PLAN” … the Order gives MERS and MERSCORP ninety (90) days to develop an “action plan” for submission to the Band of 5. Once approved, MERS and MERSCORP can‟t deviate from it. Sorry folks, the chain of title is already affected … what action plan other than quieting it is going to fix it? How about the major banks start up their own title companies to white-wash over the clouds, eh? Watch for this development! Maybe you should read Page 8 … it gets dicey here … especially the part about involving MERS and MERSCORP‟s decision-making policies for the need for “additional capital”, “control of funding and liquidity risk”, plans to “reduce discretionary expenses and improve and sustain earnings” … albeit this inures to the benefits of its “members”! Then we present … “TA-DAH!” … “development and implementation of a comprehensive litigation strategy to effectively manage lawsuits and legal challenges involving MERS and MERSCORP, regardless of whether either is a named party, including early identification and tracking of such lawsuits and challenges;” I would surmise that this “tracking” would include every single residential mortgage loan, numbering nearly 70-million strong, in which the borrower would one day „wake up‟ from his sound sleep and analyze his chain of title only to find „issues‟ with it … not to mention the backlash from a MERS foreclosure wherein judges are going to rely more on Carpenter v. Longan than they ever have in American history!

The Order also makes reference to MERS‟s informing its members NOT to foreclose in the name of MERS anymore. (Announcement 2011-01; 02/16/2011). By the time you get to Page 10, your head is spinning with directives. By the time you get to “ARTICLE V – BOARD AND MANAGEMENT SUPERVISION”, you finally come to realize that the U.S. Government, through the Band of 5, has not only intervened in MERS and MERSCORP operations, it‟s telling them that they‟re going to monitor their progress in helping them to “circle the wagons”. If you read between the lines, you will recognize that the Band of 5 knows that an onslaught of litigation is going to be commenced within the next two years and they have to help MERS and MERSCORP gear up for by making sure that its “house is in order”! By the foregoing statement, I refer to Page 10, Paragraph (1), subsection (iii), which in essence, beefs up the parts of the MERS process dealing with assignments and/or foreclosure services; which also requires that “certifying officers” complete a “certification process”. Geez, is this going to make robo-signing more „official‟ than before? Does this appear that now the Band of 5 is going to actually „condone‟ MERS‟s past behaviors? Page 11, subparagraph (d) is pretty clear about HOW a certifying officer for MERS gets to become “more qualified” to sign affidavits so that these MERS mortgages can be more easily foreclosed upon … and this is the more scathing epitome of wagon-circling. ARTICLE VI – COMMUNICATIONS RELATING TO LEGAL PROCEEDINGS … this looks to be nothing more than issuing reports containing a summarization of court cases for and against MERS and its members; and to develop a tracking process for all of the lawsuits where MERS or MERSCORP is involved. And just what the heck does “analysis and recommendations concerning litigation contingency reserves” have to do with the price of beans? If 100,000 people file separate quiet title actions against MERS, MERSCORP and its members per year; multiply that number times a minimum of $200,000 in legal fees (because outside foreclosure mills are going to read this as „billable hours‟) for each year each party maintains its position in each suit [that‟s $20billion a year, minimum]; multiply 70,000,000 potentially-clouded titles times the potential number of those who can afford to bring a quiet title action … and you have legal costs on one side of the coin in defense of over as many potential clouds on title of better than one-tenth of the nation‟s total gross domestic product! And Florida wants to eliminate 2,800 clerical positions in its court systems in an effort to cut costs? Great time to be in the legal profession, huh? Definition of “insanity”: Doing the same thing you‟ve been doing for the last 12 years expecting different results. (The last 12 years is from the time MERS-3 was „conceived‟ and put into operation.) I pity the errors and omissions carriers for the title companies and all of the “trustees” out there that have to have E&O coverage. How many lawsuits will be effectuated before the E&O carriers refuse to insure? How many title companies will need to be sued before they “get the message”?

This author predicts that the United States Supreme Court will declare MERS‟s practices as contributory in the systemic clouding of millions of titles to American property … and it will come via a writ of certiorari out of a quiet title action; even in light of this Order! By the time I got to “ARTICLE VIII – QUALITY ASSURANCE AND DATA INTEGRITY”, it became clear to me that the Band of 5 is trying to protect MERS and MERSCORP; however, there is no guaranteed quality when: (1) consumers do not know who owns their loan; (2) MERS posts a disclaimer on its website stating it‟s not responsible for the accuracy of the content therein, especially when this Order asks for a plan of elimination of certain elements of date currently reported by Members of MERS and MERSCORP that are not related to the two of them; and (3) when this electronic database is allowed to continue to operate AND allowed to continue to circumvent county recordation fees and to insure proper assignments to chain of title. By the time I got to “ARTICLE IX – eREGISTRY”, I was freaking out. You gotta be kidding? MERSCORP has to get an independent, external review of and recommendations regarding the electronic registration of notes? What is this? The next step in making every state judicial system eCOMPLIANT? Wouldn‟t that work counterproductive to the established registry we‟ve come to know and love as our state property recordation system? “I‟m mad as hell and I‟m not going to take it anymore!” [Peter Finch, in the movie Network] “ARTICLE X – COMMUNICATIONS PLAN” purports to beef up the lines of communications between MERSCORP and its members of issues involving litigation with MERS, MERSCORP and its membership collectively, whether it be offensive or defensive. “ARTICLE XI – APPROVAL, IMPLEMENTATION AND REPORTS” pretty much describes how the Deputy Comptroller (of the OCC) shall oversee implementation of the Action Plan. “ARTICLE IXX – COMPLIANCE AND EXTENSIONS OF TIME” gives MERS and MERSCORP the right to whine at the Deputy Comptroller if it can‟t meet and of the deadlines on this deal. Well … what did you expect from a mutual consent order? “ARTICLE XIII – OTHER PROVISIONS” looks to be more of the same monitoring provisions until you get to Paragraph (3), any of the Band of 5 can exit this Order if they think they‟ve met their goals in helping MERS and MERSCORP maintain its system of „status quo‟. Paragraph 6 however doesn‟t make this a „binding contract‟ between the Band of 5 and MERS/MERSCORP. Paragraph 9 of this section makes the Order binding on MERS and MERSCORP. Paragraph 10 insists they consented to the Order WITHOUT a formal proceeding being filed. The last of this document is for the actual Order of Stipulation and for signatures of the parties, because, after all, we have to make this look „official‟, don‟t we? Now what do you think all of this accomplished? Is MERS and MERSCORP shut down? Hardly. In fact, the U.S. government, by and through its agents, is sticking its nose into MERS and MERSCORP‟s business, in essence helping it to circle the wagons to defend future litigation. And we all know what happens when you have government involvement … more paperwork … more procedures … more studies … more committees … more expense … more litigation … more employees …

This Order did NOTHING for the consumer/homeowner/borrower/taxpayer. It did everything to perpetuate the MERS system. If you signed a MERS mortgage, it‟s your problem! Conveying clear title to property? That‟s your problem too!

FLORIDA TRAVELS PRODUCTIVE … 60 MINUTES HAS MEANING QUIET TITLE ACTIONS IN FLORIDA UPCOMING! April 10th, 2011 By Dave Krieger (OpEd Piece … my opinion … not legal advice!) I had enough of a break in the action of preparing chain of title assessments to take two weeks and decompress. It really helps to get out there and experience a little bit of life while at the same time helping your fellow man entertain the concepts of quiet title. As a result of my experiences, I managed to share these concepts with over a half-dozen top attorneys in a state that certainly could use an infusion of strategy. There are several attorneys in South Florida that are already filing and/or are entertaining becoming a haven for those seeking quiet title actions to right issues with clouds on their chains of title. I can safely say that you can add Tampa, Orlando and Destin to that list. Among the biggest concerns are the conflicts of filing a quiet title action under Chapter 65 of the Florida Statutes with the laws governing mortgage loans and seemingly, a 5-year tolling of the affected lender has reared its ugly head; however, my question is, what happens to that tolling period if the lender that accelerated the borrower‟s note really wasn‟t the lender after all? Does that 5-year period apply? My take is: NO. But your attorney who‟s filing your quiet title action may take a different viewpoint. Quiet title actions are not new. They‟re not sexy. They‟re not even cool. They‟re mind-boggling and tedious and will wreak havoc on the conscious mind if you‟re not prepared to deal with all of the issues surrounding chain of title. There is Florida case law that says pending adjudication doesn‟t affect the filing of a quiet title action. I guess the way to find out if this conflict really has clout here is to file one and see what happens, but unfortunately, no one wants to be the “guinea pig” here. Don‟t worry … that will change in short order. While out gallivanting around all that the Sunshine State has to offer, I managed upon a viewing party for the “60 Minutes” episode that featured Florida attorney Lynn Szymoniak, who I must say was not only a delight to meet in person but also was very daring and prolific on camera as she spelled out the frauds committed by DOCX and Lender Processing Services, Inc. that she claims to have become aware of and thus, has put into affidavit form. Sitting in a room full of affected homeowners, Lynn, and her attorney Mark Cullen, was certainly rewarding, especially when you heard the male robosignor who claimed to be “Linda Green”, demonstrate his signature on camera for the 60 Minutes news magazine piece that Chris Pelley did on Lynn. Many claimed that his signature looked just like the signature on their assignments. All in attendance concluded the piece did justice to their respective campaigns. I only wished that more judges could have seen it. I have a feeling at least a few did. In short, the visit I considered to be a potential public relations campaign, resulted in new friendships, new understanding of the concept of quiet title, and at least a look-see to the future in filing these

actions across the state on behalf of affected homeowners. With some 1.6-million affected homes, I look for the already cash-strapped court systems in Florida to be overburdened for at least the next decade.

JACKSON COUNTY JUDGE STAYS QUIET TITLE ACTION UNTIL JUNE 9TH; WANTS ALL PARTIES INVOLVED IN THE PROCEEDING PRESENT IN COURT! FEDERAL JUDGE DENIES QUIET TITLE ACTION REMAND IN MISSOURI’S WESTERN DISTRICT; MOTION TO DISMISS FEDERAL CASE FILED April 10th, 2011 By Dave Krieger (KANSAS CITY) – Things are starting to get dicey in the Caranchini v. Bank of America et al quiet title case in Division 7 of the Jackson County Circuit Court. Judge Ann Mesle stayed the case not only against Defendant Trustee Kozeny & McCubbin‟s (K&M) but against all the defendants until June 9, 2011, by which time Judge Mesle hopes to have all the defendants in the action, answering or filing their Motions to Dismiss which she can then address. June 9 is to be a scheduling conference between the parties and is meant to outline a discovery schedule. Caranchini hopes to file her Motion for Partial Summary Judgment against all defendants once that scheduling conference is had. Publication of the quiet title action in Jackson County‟s Daily Record, the legal newspaper, will have run its course and anyone else will or should have come forward by that time. The ruling came following a two-hour hearing on the matter between Caranchini and K&M. In her decision to stay the proceedings, Judge Mesle advised the parties that she had become aware of the rulings by the Federal Court refusing to remand, dismissing some claims that Caranchini had requested be dismissed and granting a Second Amended Complaint requested by Caranchini BEFORE Caranchini filed her state court case. After the State Court hearing before Judge Mesle, Caranchini filed her Motion to Dismiss the Federal Claim without prejudice. Another issue facing the Court is what if anything did the trustee do to contribute to the problems and is the trustee liable for them. Caranchini also stated that K&M‟s counsel skirted a lot of the Court‟s questions concerning their role in enforcing the note; stating “that if K&M is not claiming to own the note and not claiming to have an interest in the deed of trust, why don‟t they just say so and then they can get out of the quiet title action having admitted to this.” According to Caranchini, K&M has yet to turn over any of its foreclosure files to her, one of the reasons Judge Mesle stayed the case until all parties were present and are able to raise any objections they may have to the production of the file to Caranchini. According to Caranchini, Judge Mesle continues to believe that the issues are very complicated as pled and there is some difficulty sifting thru the allegations. She is not sure whether that is her lack of knowledge of this type of lawsuit, the complicated nature of the pleading or both. It remains an issue for her. The questions before the court in the declaratory judgment-quiet title action pretty much run the gamut from who owns the note (if anyone); what did the servicers do along the way to cloud the title; is the title, in fact, clouded; and if so, who contributed to it. Judge Mesle immediately prior to the conclusion of the hearing cited two principles affecting the Defendants in this action that she has focused upon based on reading the Wall Street Journal and the New York Times: (1) the Carpenter v. Longan case, wherein the splitting of the note from the

deed of trust occurred; and (2) actions involving Mortgage Electronic Registration Systems, Inc. (MERS) and how those actions contributed to problems involving Caranchini‟s chain of title and custody of the note. Judge Mesle seems to have a basic understanding of the requirements under the pooling and servicing agreement that allegedly claims an interest in Caranchini‟s note; but according to Caranchini, the complexity of the issues surrounding securitization is something Judge Mesle won‟t discuss at this point, stating the need for simplicity. For most judges, events involving the securitization of borrower‟s promissory note are still a learning curve. Caranchini believes that Judge Mesle will follow the letter of the law.. . “If I was going to say what I think will happen, I would say she (Judge Mesle) will make the defendants produce documents and then listen to arguments that are substantiated by the law–she wants solid law on agency”, Caranchini added. “She is unsure about the liability of the trustee but understands that they need to be a party for the declaratory judgment action and quiet title and until the defendant admits they have no interest she is not going to dismiss them. She is not going to let the Defendants foreclose now that they are all before her.” “If you are going to win before judges like this, be prepared to prove your case an inch at a time. You will not get from A to D without proving B and C and don‟t try”, Caranchini says. Bank of America, Bank of America Home Loans, Mortgage Electronic Registration Systems, Inc. and its parent company MERSCORP, Inc. are among the Defendants in this quiet title action. Due to the fact an affidavit was submitted by Caranchini from the original lender, claiming they sold the note BEFORE they recorded their interest in it in the county land records complicates the issues. Bank of America and MERS removed Caranchini‟s original complaint to the U.S. District Court for the Western District of Missouri, where it sat idle for months, until yesterday‟s rulings, which this author does not believe are coincidental. This case is getting a lot of attention from not only the local media, but from officials in both state and federal courts, trial lawyers and title companies.

CARANCHINI CASE GOES ON NOTICE AND PROTECTIVE CUSTODY HSBC SUSPENDS U.S. FORECLOSURES FLORIDA ATTORNEYS RAMPING UP ON QUIET TITLE ACTIONS MARCH POWER HOUR TALK SHOW SLATED March 2nd, 2011 By Dave Krieger HOT OFF THE PRESS … The case of Gwen Caranchini v. Gwen Caranchini et al was published in the legal notices last week by order of the Jackson County, Jackson County. Judge Ann Mesle of Division 7, who is overseeing the case, also approved and issued an order granting Caranchini‟s Leave to File a Second Amended Petition. The case, No. 1016-CV28122, now shifts to state court where Caranchini has filed suit against a local foreclosure mill, Kozeny & McCubbin, L.C. et al, for breach of fiduciary duty and negligence/gross negligence claims. The case file is in the custody of the court itself. Caranchini filed suit to quiet title, which she claims was slandered and clouded by the Trustee, in addition to multiple actors on behalf of Wilshire Credit Corporation, Bank of America, Bank of America Home Loans, MERSCORP, Inc. and MERS, among others, are also named as defendants. The suit also seeks unspecified damages. A trial date of October 24, 2011 has been set by the Court. What‟s significant about this case is that this is case has a declination letter involved (which you can find out more about in Section 12 of the book CLOUDED TITLES) and the judge has already viewed Caranchini‟s title as uninsurable. Even more significant … discovery in this case will more than likely be granted. Meanwhile, news reports are circulating that HSBC has become the latest major mortgage player to suspend foreclosures nationwide due to government scrutiny of its foreclosure practices; particularly (and why are we not surprised), in the affidavits tendered by the lender. Three different law firms in the State of Florida are reportedly gearing up to start filing quiet title actions on behalf of clients in Orlando, Miami and Tampa. The author was recently in Miami visiting with the firm there that is preparing briefs and publication notices for at least two different cases. Expect to see more of these filings as banks refuse to come to court with verified pleadings and get dismissed with prejudice as the exposure of the frauds on the court increase. Dave Krieger will again be a guest of The Power Hour on Monday, March 21st at 9:00 a.m. CST. Check www.thepowerhour.com for your local station listings or to hear the program streaming live. Krieger is slated to be on the show once a month with updates on quiet title actions from around the country. On February 21st, Seattle Attorney Matt Hale was on with Krieger, talking about the latest news in foreclosure defense. Check the archives and click to listen to the hour-long broadcast.

IS THE MERS “HOUSE OF CARDS” STARTING TO TUMBLE? February 24th, 2011 By Dave Krieger (OpEd) A lot of events have come into play lately that makes me wonder that very thing … FIRST GLANCE: I was invited to Gwen Caranchini‟s federal settlement conference last week (02/18) in Kansas City. Wow! I hadn‟t seen the new federal courthouse in the Western District of Missouri in years (since it was built); such architecture. One would wonder what exactly was supposed to happen in such a conference. I was soon to find out: nothing. Of significance however, was my introduction to MERS‟s representative and their attorney. Within a minute, they had discovered I was the one in the same person that posts pieces on this website and wrote a book on the proverbial mess I claim (as well as others in the legal profession) they made in the chains of titles to now over 66-million pieces of real property in the United States of America. It‟s amazing how much of a mess that really is when you look at it in detail. One would have to ask just exactly what these title companies are supposed to insure and … how much new risk are they placing themselves in? When we got into the federal magistrate‟s courtroom and the introductions of the key players were finished, MERS‟s attorney stood up with raised voice and proclaimed that he and his client didn‟t feel I needed to be there and thus voiced his objection. Moi? I rattled their cage? L‟il „ole me? Gwen found it hilarious. So what if I run a blog site? I‟m not going to tell you what went on behind closed doors … because I told the judge I wouldn‟t … and nothing happened anyway. The question is … why did my presence get their panties in a bunch? They acted like I snuck up behind them and gave them a proverbial wedgie; and all I did was say “hello”. Clearly, I didn‟t make their day. The judge was very cordial … and told MERS I was staying. TAKE TWO: On the way up to Kansas City, I had over an hour to re-read and mark up key points in the Ferrel Agard case that had just recently come out of the Eastern District of New York in Central Islip. Judge Robert Grossman had handed MERS a ruling they weren‟t anticipating and as a result (I personally believe) William Hultman is no longer the Secretary-Treasurer of MERS (he‟s now a Senior VP and corporate manager); Sharon Horstkamp, who previously served as MERS‟s General Counsel, has taken over those duties. One would think that if a state judge ruled that a homeowner failed to plead his foreclosure case and was further found to be in default (by not showing up), then why the need to file bankruptcy? Why the need for MERS to stick its nose in to the “cage of a pit bull” only to get it “bit off”? What did MERS hope to accomplish by defending its position as a “nominee” in a case that was already moot due to res judicata and further due to applications of the Rooker-Feldman

Doctrine? Judge Grossman handed MERS its proverbial walking papers as far as agency is concerned. It will be interesting to see how MERS‟s counsel pooh-poohs that ruling. In this case, MERS can‟t be sore about the ruling because as Grossman cited Kesler (Kansas) … I would have to ask which part of the elephant did MERS (acting as the blind man in the Indian legend that described the parts of an elephant he touched) actually touch and exactly who in that organization is now going to clean up the mess left behind in touching the elephant‟s tail? THIRD TIME‟S A CHARM: No sooner did the ink dry on the Agard decision … MERS put out a press release (Number 2011-01) indicating it was revamping its membership rules. Coincidence? You be the judge. What I have a big problem with is those pesky signing agreements that MERS seems to think legally hold water. If you want to establish an agent-principal relationship (in this case, it‟s with over 20,000 alleged “signors” all claiming to be either a “Vice President” or an “Assistant Secretary”) with someone that may have no real, actual knowledge of what they‟re signing (robosignor), how in the heck can you indemnify the principal that gave you as a robosignor that authority in the first place? Hey MERS! How‟s your errors and omissions insurance? If I were an insurance carrier, I‟d dump you like a hot potato! That‟s just my opinion! Just because you have a “new and improved” Corporate Resolution Management System (acronym: CRMS) in the works … doesn‟t make you any less of a principal and thus expose your liability when your so-called “signors” claim to indemnify you in their signing agreements. What most attorneys I think will start doing (is that the little bird out there talking to me again?) is challenging your signing agreements as being worthless. Really … can you delegate authority to a signor through a corporate resolution, allowing them to sign as “virtual subagents” of MERS, using MERS rubber stamps to give the examiner some semblance of authority for what your agents did … and if it‟s discovered that your agents acted recklessly and with wanton disregard in signing and electronically filing these documents in courthouses all over America (wire fraud?) thus proven to be fraudulent … how is it you‟re not liable for giving them that authority by corporate resolution? Law of Agency 101 DON‟T PISS OFF AN IRISHMAN! I can tell you with a certainty that the temper of the Irish is something not to be messed with … I knew it was only a matter of time before someone in a position of power, namely, one John O‟Brien, the Registrar of Deeds for Southern Essex District for the Commonwealth of Massachusetts, would declare he‟s ready to enter the ring with MERS. In the wake of numerous qui tam actions taken around the country, word has it that Christopher L. Peterson, noted Professor of Law at S. J. Quinney School of Law at the University of Utah, who is assisting the qui tams in California and Nevada is a hopeful candidate in some capacity by Mass-AG Martha Coakley‟s office coming after the electronic database for over $200,000,000 in unpaid assignment fees that should have been recorded in the state‟s real property registers, but weren‟t.

If I‟m not mistaken, didn‟t some corporate entity named MERS, tell its subscribers in “The Building Blocks of MERS” (a computer-generated slide show extolling the virtues of itself) that they MUST record their notices and assignments in the county recorders‟ offices? O‟Brien has stated that the lost recording fees owed to county recorders nationwide could run into the billions of dollars. (On the phone, John sounds like a pissed-off JFK … and he‟s mad!) “The fact that they deliberately chose to create a for-profit private cyber Registry of Deeds whose only purpose was to avoid paying the same fees as everyone else and keeping the public in the dark as to who was the rightful owner of the mortgage clearly demonstrates to me that this was a scheme of epic proportions”, according to O‟Brien. According to O‟Brien‟s Assistant, Kevin Harvey, who I spoke with shortly before writing this piece, says Peterson is a familiar face in this state with this help on other cases. Time to put the gloves on … Geez, those Irishmen can fight, can‟t they? Keep your eyes on Massachusetts! THE LAST STRAW: • For every anti-MERS ruling that the foreclosure defense consortium tosses at MERS, MERS PR Department retorts with its own claims of victorious rulings that give it impetus to do what it‟s doing. One thing is clear here … there is an entire chain of case law out there (across the entire U.S.) that is totally inconsistent as to what MERS‟s real authority is; thus further adding to the confusion (perhaps by design?). My take on this is that before this is over, SCOTUS is going to have this mess dumped into its lap. • The citizenry is already up in arms about the attempted passage of legislation being defeated in the Commonwealth of Virginia thanks to MERS and the Virginia Bankers Association. Come to find out, when banker-legislators hold key positions of power, how do you expect the tide to turn in favor of the homeowner? • In Arizona, legislation reforming the Deed of Trust Act has moved from the Senate to the House, despite an appearance from Hultman and the state banking interests … the Senate committee vote: 4 Yeas, 0 Nays, 2 Abstentions. • A major rally is planned up in Seattle this weekend, along with testimony that is on-going in Olympia in an effort to make significant changes to its Deed of Trust Act, pitting disgruntled homeowners against legislators. The outcome is questionable? • Last week, several more documents that were purported to have been signed by MERS agents were turned over to the DOJ in Central Florida by attorneys in Arizona and Washington State, as the feds continue their investigation into LPS/DOCX and robosigning frauds. Linda Green? Are you out there? Go to www.thepowerhour.com and download the archives of my last three shows. Seattle Attorney Matt Hale was on the last program with me discussing the failure of loan modifications; which by the way … the Federal Trade Commission has now ruled that attorneys cannot take advance fees from homeowners for doing loan modifications (especially ones that won‟t or don‟t

work … they rarely do) with a lender. It‟s an $11,000 fine for each day spent and $11,000 fine for signing and taking advance fees. This author feels the likelihood of loan mods in the wake of the MERS debacle are at a futile end. Most homeowners may find solace in quiet title litigation.

THE SHOCKWAVES OF THE IBANEZ-LaRACE CASE CREATE NATIONAL RIPPLE EFFECT; BANKS HAVE A REASON TO BE NERVOUS; E&O CARRIERS WATCH OUT! January 12th, 2011 By Dave Krieger This opinion is based on legal research only and cannot be construed as legal advice! IT‟S HOMEOWNER-PLAINTIFF QUIET TITLE ACTION IN REVERSE The point being here … if you didn‟t learn anything about quieting titles in the book “Clouded Titles”, it would be best suited perhaps to espouse the deeds of U.S. Bank and Wells Fargo as they attempted to do what I call “a quiet title action in reverse”. At first glance, this case involves procedural and agency relationship errors. For those of you in the Commonwealth of Massachusetts, you‟ll note from the slip order issued by the Massachusetts Supreme Court that the actions preceding their ruling were brought “in the Land Court under G.L. c. 240 § 6, which authorizes actions to quiet or establish the title to land situated in the commonwealth or to remove a cloud from the title thereto.” The analysis by the High Court points to the law firms experienced with studying quiet title actions, yet the attorneys missed the boat on proving agency, which is a fundamental element of quiet title actions. Proving standing to foreclose on a mortgage or deed of trust is one thing; proving how you got the note to enforce on the other hand is part of what makes up the chain of title. When those assignments are not recorded, because they happen to be in the MERS system, or simply sold willy-nilly several times over without perfected security interests being recorded in the land records in the county where the property lies, you‟ve got a problem. In these cases, the banks created their own problems without them even knowing it. Both U.S. Bank and Wells Fargo were seeking the same thing … they wanted the lower court to issue a judgment that they were entitled to full right, title and interest of both defendanthomeowners upon which they foreclosed; declaratory judgment on the fact there was no cloud on title arising out of publication of the sale in the Boston Globe, and they wanted declaratory judgment in favor of themselves respectively that title was vested fee simple. The homeowners that are looking into matters quieting title might take note of what the banks were asking for. The problem was … while the original homeowners had title in fee simple established by virtue of a general warranty deed, the banks had to connect the dots coming in the other way … and they couldn‟t do it because they were attempting to prove agency AFTER THEY ALREADY FORECLOSED ON THE PROPERTIES! According to the High Court, the banks foreclosed FIRST. Then after the foreclosures, the lenders attempted to record newly-executed assignments in the Register of Deeds office. The gaps in the chain of title were created by the foreclosure actions themselves, so agency was negated from the point of foreclosure forward up to the point

the actions to quiet title were filed. Both lenders claimed to be the bona fide credit bid purchasers, even though neither had actually proven they had standing to foreclose in the first place! The Land Court invalidated the foreclosure sales, claiming that at the time of publication, the banks didn‟t really own the properties! When asked to produce paperwork, the banks came back with securitization-related documents … another bad mistake when trying to tie agency ends together! THE UNSIGNED LOTTERY TICKET In Ibanez, the lender (Rose Mortgage) executed a note and mortgage on December 1, 2005. The original mortgage was recorded the following day. Days later, Rose Mortgage executed an assignment of the mortgage in blank (handing the unsigned lottery ticket off to another entity) to Option One Mortgage Corporation as the assignee, who recorded the assignment on June 7, 2006. The odd thing is however, is that on January 23, 2006, Option One executed an assignment in blank and assigned the mortgage to Lehman Brothers Bank FSB; who assigned it to Lehman Brothers Holdings, Inc.; who assigned it to Structured Asset Securities Corporation; who assigned it to U.S. Bank NA as trustee for the Structured Asset Securities Corporation Mortgage Pass-Through Certificates, Series 2006-Z. None of this was recorded in the Register of Deeds office [but you can probably bet that MERS was involved somehow]. The Land Court wasn‟t provided with any paperwork identifying whether the Ibanez loan even made it into the mortgage pool. More unfortunately for U.S. Bank, it wore two hats (one as the purported holder and one as the purported purchaser) when it recorded a statutory foreclosure affidavit on May 23, 2008. On September 2, 2008, FIVE MONTHS after the foreclosure affidavit was recorded (which also had a gap of the several intervening assignees, further clouding the chain of title) American Home Mortgage Servicing, Inc. (where‟d they come from?) as “successor-in-interest” to Option One, executed a written assignment of that mortgage to U.S. Bank, as trustee, to try to fill in the blanks. This assignment was recorded on September 11, 2008, almost a year-and-a-half AFTER the sale! [HINT: For those of you who are confused as to procedure, the gaps in the chain of title began the moment Option One assigned the note to Lehman Brothers Bank FSB.] In the LaRace case, Option One set up a loan for Mark and Tammy LaRace on May 19, 2005, who gave a mortgage to Option One as security for the loan. A week later, Option One issued an assignment in blank to Bank of America; who later assigned it to Asset Banked Funding Corporation in a mortgage loan purchase agreement; who then later pooled the LaRace‟s mortgage into ABFC 2005-OPT 1 Trust, AFBC Asset-Backed Certificates, Series 2005-OPT 1, with Wells Fargo as the Trustee of this trust. As with U.S. Bank, the Land Court wasn‟t provided with any paperwork identifying whether the LaRace loan was actually assigned to Bank of America. [HINT: For those of you looking to identify intervening assignees here, the chain of title was broken when Option One failed to record its assignment to Bank of America in the land records.] After the foreclosure sale, Wells Fargo did not execute a statutory foreclosure affidavit until May 7, 2008. The Land Court determined that Option One was still the holder of record of that mortgage!

Now … talk about backdating documents (this is fraud by the way because the affidavits don‟t add up to the real actions in the case) … Option One executed a backdated mortgage to Wells Fargo as Trustee on May 12, 2008, TEN MONTHS AFTER THE FORECLOSURE SALE! But the assignment was backdated to a date preceding the publication of the notice of sale and actual sale. Thus, when discovered, Wells Fargo couldn‟t prove agency either. A NEW TWIST TO THE HUMPTY DANCE Since the loans were securitized, no one bothered to record their successive interests in the land records (where the recordation counts). Under the Massachusetts statutes, when Plaintiff banks come in and ask for a declaration of clear title, a judge gets to ask for proof they owned the note at the time they foreclosed. Neither one of them could, so the sales were vacated. All the securitization documents that both banks produced “couldn‟t put Humpty back together again!” It‟s like showing up to class without your homework. What do you expect? In Massachusetts, you show up with a signed lottery ticket (a lawful assignment and convincing evidence of proper conveyances establishing the chain of title) or you don‟t get to cash it in! That was the banks‟ first mistake. Here they try to prove agency going through a gap in the chain of intervening assignees … both banks conceded that assignments in blank did not constitute lawful assignments of the mortgages. Duh. The second mistake that came back to bite the banks in the proverbial kiesters is they did not have perfected assignments proving they actually owned the mortgages they were foreclosing on. In the 1912 statute that established the statutory power of sale, power to conduct the sale is reserved to the mortgagee or his executors, administrators, successors or assigns, but not to a party that is the equitable beneficiary of a mortgage held by another. (Wait a minute … doesn‟t that sound a bit like a MOM mortgage?) The third mistake is reinventing your arguments when the first ones don‟t work. When you argue a case in the lower court, that argument stays with the case all the way up the appellate ladder. The fact remained that the lenders did not have proper assignments necessary to foreclose, so they lacked the authority to foreclose under statute. Post-foreclosure assignments can‟t be backdated to reflect “effective dates”. I should point out here that Massachusetts Law does give the valid holder of a mortgage assignment the right to foreclose even if it‟s unrecorded … but at some point in time, a judge may ask the lender to “own up” to their chain of title, which neither bank could prove. How do you think that will fair when you start comparing chain of title issues like this to a title company? Do you really think the title company will stick its neck out that far, knowing that this case is out and haunting lenders everywhere? In short, if you don‟t have valid assignments at the time you foreclose … you can‟t foreclose! Yet, this case gets better …

CONCURRING OPINION … DON‟T LET THE DOOR HIT YOU IN THE A** ON THE WAY OUT! Judges Cordy and Botsford together issued a concurring opinion in this case … interesting to note the following, before I close this mini-dissertation: • The Plaintiff banks exercised utter carelessness in documenting the titles to their assets! • There is no question that the respective homeowners were in default on their mortgages! • Foreclosures in Massachusetts have strict guidelines, which were not followed here! • You can‟t backdate assignments and expect the court to give you what you want! • Complicated by securitization arguments, the High Court saw through the smoke screen! Now for the noteworthy part of this opinion … while there were several underlying comments issued as part of this slip order, two things stuck out in my mind … • The Plaintiffs were seeking quiet title so they could obtain title insurance and needed a declaration by the court (a decree if you will) to quiet title to those properties. • Massachusetts case law clearly identifies that foreclosure by entry may provide a separate ground for claim of clear title apart from the foreclosure by execution of the power of sale. This means that a mortgage holder who peaceably enters a property and remains for three years after recording a certificate or memorandum of entry forecloses the mortgagor‟s right of redemption. [This was never cited by the banks; so the High Court didn‟t need to discuss it!] • It doesn‟t matter whether you‟re a bank or a homeowner, before filing a quiet title action; the outcome of such a case will depend on who identifies the gaps in the chain of title and who establishes prima facie case evidence first, to make the other side prove a negative. • Also of last-minute noteworthiness is the fact that I have repeatedly stated that even though you may have studied up a bit on quiet title actions, when you serve up a dose of litigation on the banks seeking what U.S. Bank and Wells Fargo failed to do here, you can pretty much surmise that these lenders will not make the same mistake again; yet they still continue to press forward with robosigned documents and falsified notarizations in an attempt to wrongfully take something they can‟t really prove they own, because the chain of title is broken and thus clouded. THE RIPPLE EFFECT Just hours after the release of this decision, Plaintiff Gwen Caranchini handed a copy of the slip order of this case to a Jackson County, Missouri Circuit Court Judge, who became very quickly educated. As a result of invalid assignments, trustees now face damage complaints for gross negligence and breach of fiduciary duty, for which the E&O carriers and title companies had better keep both eyes and ears open if they want their pocketbooks to survive what‟s to come.

TRUSTEE FAILS ON MOTION TO DISMISS IN PENDING QUIET TITLE ACTION January 11th, 2011 By Dave Krieger Most of the judges and foreclosure attorneys on both sides are watching this case carefully. It should be noted here that former civil rights lawyer and 30-year trial litigator Gwen Caranchini, no stranger to the blog sites by any means, had her best day in court in years in her case against Bank of America, MERS and an alleged “substitute trustee”. On Friday, January 5, 2011 at 1:30 p.m., Caranchini showed up to a court hearing in the Jackson County Circuit Court on Friday. The trustee, who in this particular case is going it alone (as Bank of America and MERS removed the initial claims Caranchini filed to federal court) pro se, filed a motion to dismiss her breach of fiduciary duty claims and attempted wrongful foreclosure claims as well as a motion for sanctions for filing the claims. The judge in this case has known Caranchini for some 30 years. Even the judge was stymied by the arguments Gwen was proffering, admitting that she felt as if she was “in kindergarten” when it came to understanding the issues and terms involved in the discussion. The judge set over two hours aside, in part to get educated, as Caranchini came to court loaded with documentation, including the slip order from the Ibanez decision, which she handed a copy of to the judge, who read it at the start of the hearing. The problem in Caranchini‟s case … the documents on file in the Jackson County Recorder‟s office that were relevant to her case “did not make sense” to the judge; as compared to much of the recordation issues in Ibanez. According to this author‟s research, which is used to craft chain of title assessments for review by title companies and attorneys in their preparation for litigation, when the chain of title was properly demonstrated to the court, the judge “got it”. The judge in this instance looked carefully at the stamps (of the signors), the dates, what the documents were proffered to be … and smiled; she had never had this pointed out to her. Caranchini then discussed how Chicago Title, who issued the declination letter which is incorporated into Section 12 of the book “Clouded Titles”, found her chain of title to be irretrievably broken. The judge then inquired as to whether Chicago Title would offer up an expert to testify, to which Caranchini answered in the affirmative. To prove a point about the differences in arguments … Caranchini then went through some of the issues involving securitized loans; the judge did not understand the importance of it. The argument then got down to the note (which you knew it would at some point). The judge looked at the trustee and asked him if he had the original note. Then she asked him if he ever had the original note. Then she asked him if he had ever seen the original note (which he previously attempted to foreclose on). Then she asked him whether the alleged lender had the original note. To all of these inquiries, the trustee responded … NO!

The Court then granted the trustee‟s motion to dismiss the wrongful foreclosure from the lawsuit; however, the trustee‟s motion for dismissal of breach of fiduciary duty was denied! Then the judge urged the trustee that he should join in a settlement conference scheduled by a federal magistrate in U.S. District Court for the Western District of Missouri in Kansas City, which set for February 18, 2011. Then the judge denied the trustee‟s motion for sanctions against Caranchini, saying, “these are developing claims and we have to let them develop”, allowing Caranchini thirty days to amend her petition and to bring the quiet title and declaratory judgment claims back into court that had been previously removed, as the Court indicated they needed to be put back into the litigation in state court to be joined with the trustee. (The trustee was not a party to the action when the quiet title and declaratory judgment counts were removed.) From Caranchini‟s own observations, she is totally convinced that the judge understood the issues involving agency, quiet title, declaratory judgments, breach of fiduciary duty and negligence (some of which have damage claims attached). According to Caranchini however, the judge did not understand all of the terms and arguments involving securitization and essentially admitted that on the record. This goes back to the problems the author has previously written about regarding what is fundamental in proving agency and what is not. Education of the Court in pointing out the flaws on your recorded documents is extremely important. The declination letter is also on the record. The Ibanez decision in this instance proved to gain impetus with the Court as well as to its applicability regarding proving agency. The judge ordered deposition of a Chicago Title expert witness (That‟s part of discovery folks!) by the end of March and set a trial date for October 24, 2011 (unless the parties settle beforehand). Needless to say, the trustee wasn‟t happy. He‟s still a Defendant in the lawsuit. Not having even seen the Note didn‟t sit well with the judge either. You can probably surmise where this case is headed. Two days later, Caranchini received an Order in the mail from another judge in Jackson County Circuit Court, where she had a motion for temporary restraining order against Bank of America et al: “Now on the 5th day of January, 2011, the Court takes up and considers Defendants Bank of America and BAC Home Loan Servicing, LP‟s Motion to Dismiss for Lack of Subject Matter Jurisdiction and Request to Quash Hearing on Plaintiff‟s Request for TRO. After being duly advised on the premises and for good cause shown, the Court hereby denies the same without prejudice. IT IS FURTHER ORDERED that additional proceedings be STAYED due to this cause pending in federal court and the possibility of remand back to circuit court. IT IS SO ORDERED.” This would certainly cause the author to surmise that there is the possibility for a remand of the original case from the federal court back to the Jackson County Circuit Court, where the action to quiet title in the county in which the property is located is supposed to be heard. Because there are both state and federal judges involved, it would also probably be safe to assume that both state judges are in agreement on the procedural aspects of this case and that they‟ve also had at least telephone conferences with both judges in the U.S. District Court. Look for a lot of action on this case in February (the case was filed last April). Look for possible settlements and an

agreement to allow quiet title with the purchase of homeowner‟s indemnity coverage! Caranchini is following my suggestions as I outlined in the book “Clouded Titles”.

H.R. 6460 IS A START; BUT ON THE RIGHT TRACK? December 16th, 2010 By Dave Krieger When you first glance at page 1 of this House Bill, initiated by Ohio Congresswoman Marcy Kaptor, it‟s almost as if you‟d think, “Yes, there is a God!” However, the “Transparency and Security in Mortgage Registration Act”, while nailing MERS in regards to prohibiting Fannie Mae, Freddie Mac and Ginnie Mae from owning or guaranteeing any MERS mortgage where MERS is claiming to be the “mortgagee of record” (which is about 65,000,000 properties), also dabbles with the idea of a “federal land title system”, something this author thinks may shortchange our states‟ rights to real property recordation. While the National County Recorder‟s Association tries to sort out the damage MERS has done in county courthouses all across America, through potential clouding of title and deprivation of income (as in Essex County, Massachusetts‟ Register of Deeds John O‟Brien‟s case of $1.95million a year for every electronic transaction MERS does that circumvents his recordation process), the National Association of Independent Land Title Agents (NAILTA) begs to argue Kaptor‟s real intentions. From its own 7-page “white paper”, NAILTA takes aim at H.R. 6460 in that it seeks to impose a federal land recordation system similar to the Torrens system (wherein the title is essentially judicially determined), wherein the federal government has no business guaranteeing anything that usurps rights under the 10th Amendment that were reserved to the States to delegate. It should come as no surprise to this author that the infighting amongst the title companies has begun as to the opposition of this bill by the American Land Title Association is a virtual “unzipping of the fly” in exposing that fact that ALTA, First American Title and Stewart Title, were all founding MERS members, along with Fannie and Freddie and the major banking entities. As pointed out in this paper, common law title requires a non-judicial abstract. On Page 3 of the “white paper”, NAILTA takes the real “bull by the horns” in analyzing “agency”. This is what this author has been saying for years, is that MERS cannot be both agent and principal of the same instrument, when it claims to be the mortgagee of record. From this author‟s viewpoint, if MERS is going to be proven to be a shell corporation for the purpose of tracking transfers, then anything outside of that parameter becomes agency-problematic. This white paper even went so far as to list all of the applicable case law supporting that conclusion! This white paper echoes the very tenets of the agency arguments that University of Utah Law Professor Christopher Peterson argued in his first “white paper”, issued out of the S.J. Quinney School of Law. The real problem then becomes HOW to deal with the aftermath of what the MERS recordation system has caused to the states and their respective counties, who have been preserving public record for nearly 400 years. Page 4 of this latest white paper also calls to the attention of what many in the foreclosure defense industry and many judges term “robosignors”, leaving out the fact that the “certifying

officers” are not bonded or covered under MERS‟s errors and omissions insurance from the acts they commit. In many instances, case law has shown that these certifying officers were actually employees of a foreclosure mill, acting on one hand as the MERS official and then turning around and acting in their employed capacities to initiate assignments, which are easily picked apart by any attorney that knows how to conduct proper depositions; this despite whether or not the law firm‟s “employee”-turned-MERS-certifying-officer” had any personal knowledge of the mortgage loan at all. This is what is going to make quiet title actions unique in their very nature. Even though the bill itself only purports to commission HUD to do a study on the feasibility of a federal land title system, the scrutiny such a study would bring would certainly further expose the culprits behind the MERS system. Again, this bill is a means to an end. While NAILTA recognizes that legal issues still have to be argued, the premise for title business as it relates to more in-depth title searches to prove clouds on title and other concerns will certainly present certain financial opportunities. The real problem this white paper does address is “What were the people at MERS thinking when they created this monster?” The circumvention of the county recordation processes alone is enough to boggle the mind, let alone the agency-problematic concerns with MERS‟s certifying officers indemnifying the principal for their behaviors in clouding up our tried-and-true system of recordation. The end result appears to be that H.R. 6460: (1) will open doors to solutions, but American property owners and their title companies are going to have to keep their eye on the evolution of this bill and its resulting amended version; and (2) has at least brought healthy debate of the strengths of our original land title recordation system back to the forefront where they belong.

NEW QUIET TITLE SUIT FILED IN MARICOPA COUNTY, AZ ON THE HEELS OF A QUIET TITLE ACTION THAT WAS REMANDED BACK TO SUPERIOR COURT IN PHOENIX December 10th, 2010 By Dave Krieger The case is Easton v. Bosco et al with a case number of CV2010-054748; filed four days after U.S. District Court Judge Mark E. Aspey remanded a quiet title action back to the State Superior Court for Maricopa County, previously removed by Defendants First Horizon Home Loan Corporation and others to federal court, which the author views as a typical move to hide from state court discovery actions. The case is Forde v. First Horizon Home Loan Corporation et al, CV2010-01922, filed pro se August 3, 2010 by Barbara J. Forde. The author feels the significance of this case smacks to the heart of jurisdictional issues as to which court has the right to hear the case based on what merits. The Plaintiff in this action cited breach of contract based on negligence and fraud. The trustee, Quality Loan Service Corporation was also named in the suit. On September 22, 2010, the Defendants, who like in most instances asserted diversity jurisdiction and the amount in controversy as the sole basis for their removal to federal court, filed a motion to strike the complaint under Rule 8(a)(2) and (d)(1) of the Federal Rules of Civil Procedure. The author sees this remand ruling as a plus for judicial expediency in quiet title actions throughout the 9th Circuit. Judge Aspey even cited that there were no federal questions up for decision which would confer jurisdiction to the U.S. District Court. On December 3, 2010, Judge Aspey issued the remand order, to “reduce litigation costs and eliminate any need to certify novel state-law issues to the Arizona Supreme Court or speculate how the Arizona Supreme Court would rule on those issues.” After citing eight pages of case law and abstentions, the court denied all of the Defendants‟ pending motions without prejudice. The key significance here is why lenders as national associations feel the need to remove quiet title actions to federal court, when the Plaintiff has listed no federal questions which would give a federal judge cause to keep the case. One also has to question what authority a federal judge would have to quiet title on property situated in a county that is not in a federal territory. This judge appears to understand the fundamentals of a quiet title action very well. There are also numerous state case laws that protect the property owners from foreclosure in the event a quiet title action has been filed, abating ejectment if there are title issues involved. This would further strengthen the author‟s contention that quiet title issues are going to become commonplace very soon and that the state courts had better take these filings seriously. In the Easton case, there appear to be conflicting issues with assignments amidst a potential wrongful foreclosure. A lis pendens has also been filed in the case by the Plaintiff‟s counsel, Scottsdale attorney, Beth Findsen, of which there are at least eight key defendants involved. The trustee in that case is also a defendant.

MERS TELECONFERENCE YIELDS SOME POSITIVE ACTION PLANS November 30th, 2010 By Dave Krieger It was a telephone conference you would have just died to be on. It appears that county recorders are starting to take notice of the losses in revenue with MERS‟s circumvention of their recordation systems. By best conservative projections out of this conference, John O‟Brien, Essex County Massachusetts Register of Deeds head is foaming mad that MERS has skated off with (in the event of at least one recordation past the initial filing of the mortgage) with $1.95million dollars a year that rightfully belongs to Essex County. “I don‟t know of any legal right that MERS has to be above the law, or to even exist for that matter”, claimed O‟Brien, who clearly stated that his department summoned Massachusetts Attorney General Martha Coakley to investigate MERS and its apparent disregard for the law. “Homeowners clearly have a right to know (by recordation) who actually owns their loan.” This author was also on the call, as was Nantucket Attorney Jamie Ranney, who understands the arguments for foreclosure defense thoroughly. He sees MERS being out of existence in 18 months. Republican Delegate Bob Marshall from Manassas, Virginia was also on the call. He is taking legislative aim at MERS through his Congressional resources. He verified by article what this author was talking about regarding Moody‟s Investor Service talking about MERS being a bankruptcy-remote shell entity. Gretchen Morgensen from the New York Times, also on the call, stated that she was more concerned about the aspects of clouded titles being part of the bigger picture here. The author contributed an overview and the consensus agreed that MERS has done major damage to the recordation system and robbed Essex County of millions of dollars a year. You‟ll probably see a blurb on the New York Times about it. The author‟s take on this? Because of the mess at the courthouse with the millions of titles being clouded, attorneys who do quiet title actins will have their work cut out for them, because for every client they represent in court, there will be ten to take their place.

IT DOESN’T CHANGE THE GAME … IT ONLY SHIFTS THE BLAME! October 29th, 2010 By Dave Krieger The title insurance companies have shifted the blame … to the lenders. What did you expect? Just visit the county courthouse and examine the records of a given homeowner who has a MERS mortgage or deed of trust and you‟ll still find problems in the chain of title. On October 1, 2010, when Version 1.1 of the book was launched onto the Internet, the strategy was based on previous information (of the previous six months) that title companies were going to be “exposing” themselves to unnecessary risk by guaranteeing title insurance to properties whose titles were slandered or clouded. This meant that one could get a homeowner‟s indemnity policy with conditions and exceptions and use it to potentially create prima facie evidence in a quiet title action. This method actually “stuck” in one case that appears to be headed for settlement soon. Insider information has revealed that a federal judge has seen this author‟s work (as have some bank attorneys) and they were impressed with the clarity and understanding put forward in the author‟s assessments. Lewis Diuguid from the Kansas City Star viewed the book as “insightful”. Yet, this is no ego stroke. This is frank discussion is about the continued problems that homeowners and investors will face as they attempt to defend foreclosure actions from banks who are now offering “new and improved” versions of their old “assignments”. This author watched the change in strategy by the title companies shift from “erring on the side of caution” to “oh, we‟re not worried … if there‟s a problem, it‟s the bank‟s doing, not ours … we don‟t think we‟re liable.” What that did was apparently appease investors. Fidelity National Title stock went up as a result of the October 28, 2010 announcement. In the October 28th article put out by the Washington Post, Ted Jones, director of investor relations for Stewart Title stated that his company was not asking for indemnification protections from lenders at all; stating they would still continue to issue policies to buyers of foreclosed properties, as long as lenders confirm they have followed all applicable legal processes. This still does NOT solve the problems that still lurk in county courthouses all over America. Back when the author was interviewing attorneys for his research, front line foreclosure attorney Mark Mausert in Reno, Nevada did in fact believe that foreclosure actions “slander title” to property. From the author‟s research, MERS is still the weak link and MERS is still the key cause of the problems that continue to plague our country‟s 400-year-old county land recordation systems. It does not preclude the fact that there are clouds on title because the chain of title is broken because of the lender‟s failure to record its security interest at the time it acquires a property through the transfer or assignment of a mortgage. The only thing the latest title company shift in policy does is change the evidence strategy up a bit. Insofar as preliminary analysis goes, the author still sees issues with title policies, even though

their purpose is to guarantee marketable title. Fidelity National Financial, Inc. is the umbrella company for Fidelity National Title, Chicago Title, Commonwealth Land Title and Alamo Title. There are safeguards in title policies under Schedule B and certain exceptions are made under the “Conditions” section of a policy. If a title company doesn‟t want to cover a specific exception, it will state that exception in plain English. Parts of the exceptions cover items that aren‟t found in the chain of title. That basically shifts the financial burden off of the title company and puts it on the homeowner based on the amount of exposure to liability because of a defect. The sudden change in policy doesn‟t change the strategy to file quiet title suits. It just means that the title companies have figured out they‟re not as liable as they thought. It also doesn‟t mean that you won‟t see lenders handling foreclosed properties making bona fide purchasers sign indemnity agreements holding the lenders harmless from all liability connected with the condition of title. Defects in title still exist because of MERS and its subscribers‟ failure to properly make use of our land recordation systems at the county level. According to attorneys the author deals with, the quiet title actions (coupled with declaratory judgment motions) are still in vogue. There is still a mess in the county recorders‟ offices all across America and homeowners in foreclosure still have a key strategy to make the lenders prove they have their “ducks in a row”. This may only shift slightly the idea that a “declination” by a title company to insure a property won‟t still be a possibility. If there is enough compelling evidence, a smaller title company may still issue a commitment letter stating that they won‟t insure because of slanders and clouds on title. Smaller title companies still don‟t want the exposure and the author feels they will still err on the side of caution. This still doesn‟t stop the evidence pool of MERS illicit transfers. Because of the comments by FNF‟s Peter Sadowski (the chief legal officer) that Bank of America has an agreement that the lender must sign warranties on every foreclosure sale, it does not mean that the homeowner will not have issues at the courthouse. It‟s not what the title company says, it‟s what they don‟t say that worries me. This is why quiet title actions are individual actions and not class actions. Every homeowner‟s situation has different twists to it and each has to be analyzed. Attorneys retain me to do this because it is sometimes very time consuming analyzing these documents. As a result, I am going to be holding seminars on how to do document analysis. Much of this comes from experience and testing the chains of title to see whether they have cause to pursue legal alternatives. This will basically be paralegal stuff; however, attorneys may want to take advantage of this opportunity to strengthen their skills at spotting defects within the chain of title. These seminars are being scheduled on a city-by-city basis as the opportunity arises. On one recent case the author has been working on, even with the filing of a quiet title action looming, Chicago Title still issued a commitment letter on a property in foreclosure where they were told there were three potentially-flawed documents that could be impeached as a result of chain of title issues caused by improper assignments and robosigning activity.

Despite this singular incident, the lenders will be responsible for the title insurance companies‟ costs of suit if a homeowner decides to bring a quiet title suit or wrongful foreclosure action. The author suspects there has been some serious communication between members of the American Land Title Association regarding the strategy of “covering the kiesters” in this change of stance. At closer looks, it may become apparent to some that “they got to the title companies, didn‟t they?” They‟re all in on it, right? This brings the author back to the old adage, “Why buy something you don‟t need?” Sellers get title insurance because they want to give the new buyer peace of mind. The lenders want to put buyers in homes wherein the buyer will be able to make the monthly mortgage payment and the title insurance has to be in place “just because”. The title companies want the blame placed where it belongs … not on them. After all, they aren‟t the ones who slandered title, are they? This still does not mean that title companies are going to insure every property that is brought to them for review, at least not without some sort of corrective action if something is “out of whack”. The smaller title companies will still continue to deny coverage of properties where they see potential exposure. The bigger title companies can obviously take on more risk because they can spread their losses out over a wider coverage area; thus the reason for their change in stance over one month‟s time. Bottom line … your county‟s recordation system is still losing revenue because of MERS and its subscribers‟ failures to properly record; chains of title are still flawed; the title companies want the blame shifted where it belongs (which to me intimates they wish to appear to remain “totally oblivious” to the MERS stench) and line up behind ALTA … ahhh … there is peace in the valley once again? A lot of us knew it would be just a matter of time before the title companies figured out where they stood. However, it still doesn‟t let the E&O carriers off the hook for wrongful foreclosures and this new posturing doesn‟t eliminate all of the errors caused by 12 years of debauchery by corporate, electronic infiltration. That fight isn‟t over yet … and neither is the coming onslaught of quiet title actions!

WHAYYDA MEAN I CAN’T GET TITLE INSURANCE ON A SHORT SALE ? October 27th, 2010 By Dave Krieger Not time for the “I told you so speech” … but the tell-tale signs that the title companies are starting to get nervous about insuring distressed properties is now starting to manifest itself. A Realtor for Keller-Williams in Kansas City had a $600,000 short sale cash buyer all ready to go. The house was worth over a million bucks and the bank agreed to let it go for substantially less and everyone (well almost everyone) was happy. Imagine the commission on a price tag like that … at 6% you‟d be looking at splitting a $36,000 check 4 ways (generally) at $9,000 a pop. Now imagine the agony when you are told by Chicago Title that you are denied title insurance until the backlog of clouds on title gets cleared up. Chicago Title is one of many major players in the insurance game that is seeking to limit its exposure created by problems surrounding the broken chains of title that the securitization of residential mortgage-backed loans has created, especially with MERS dicing up the chains of title of over 62-million (or 60% of all current) mortgage loans electronically registered. Generally, as I‟ve noticed, the propensity for foreclosed homeowners to hire counsel after-thefact and sue their way back up the chain of title has the insurance carriers fretting. It only takes a few huge payouts to start stressing the accounts to the point where denials of homeowner indemnity policies will become commonplace. A recent article in the Seattle Times editorial section even trumpeted: One has to wonder where the title-insurance business is in all this mess. Who indeed are the guarantors of clean titles? Sloppy foreclosure practices and the toxic legacy of casual recordkeeping has to distress anyone looking to buy a distressed property. And if you think that the banks can just toss a little PR out into the mainstream to calm an angry public claiming that “there aren‟t any problems with our foreclosure procedures” hasn‟t fixed the problems that lurk in thousands of public property records in county courthouses all across America. With the number of foreclosures expected to bash an already-stressed housing market in the next six months comes the tragic possibility that insurance companies that indemnify those foreclosed homeowners will pull the plug on underwriting foreclosures and short sales. And the robosignor fraud continues with one case in Tacoma where a quiet title action was filed on behalf of a homeowner-investor and another one for the same Plaintiff on the way in short order. Both alleged fraudulent paperwork. One of them which was personally examined by me showed obvious fraud wherein a California notary swore a party under oath claiming to be a representative of a foreclosing trustee, a woman, signed her name “Chuck (last name illegible)”. They mailed it from San Diego to Tacoma, which if proven fraudulent, constitutes mail fraud and that‟s a 95% slam-dunk for federal prosecutors! Given the fact the same documents were recorded in the courthouse electronically … add a wire fraud charge to the other one. That‟s up to 5 years and $250,000 in fines for each count! When enough robosignors go to prison, maybe

this will stop. The first case was filed in Pierce County Superior Court: 10-2-13490-1 (Nilson v. Quality Loan Service Corporation of Washington et al).

SPIN DOCTORS, SOOTHSAYERS … AND IS BANK OF AMERICA SOON TO BE “BK” OF AMERICA … AS IN CHAPTER 11 … AND WHAT THAT MEANS FOR YOU! October 20th, 2010 By Dave Krieger The spin cycles are in motion and we haven‟t even done the laundry yet. Reports are out that not only did Bank of America post third-quarter losses of $7.65-billion; the soothsayers are countering with “exposure scenarios”, showing $50-billion worth of risk (representing only 3% of the $2.1-trillion total) as good enough reason for Bank of America to seek Chapter 11 protection. It also appears that in this election season, a bailout or some other government “deal” is highly unlikely and would certainly exacerbate Bank of America‟s problems. I thought I was dreaming until I saw Chris Whalen‟s posting and thought … gee, Bank of America certainly does have a liquidity problem to be forced to start up foreclosures again. One would certainly have to ask why the Obama administration just now announced intentions to launch a criminal investigation into all of this mess. Does someone in DC have a conscience? Or is this just another “CYA” as a cave to public pressure? With these kinds of pictures, the day traders would be “shorting” Bank of America stock and making a killing doing it. One would have to wonder about the liquidity factor with all of this missing paperwork and the investors and insurance companies that certainly will be lining up to file fraud suits against the banking giant will certainly force some sort of decision. For BofA, it is significant. General Motors went into Chapter 11 after all and within three months they emerged stronger than ever. But then again, GM wasn‟t proprietarily trading residential mortgage-backed securities on Wall Street either. This is a different animal. My take? Bank of America‟s decision to absorb Countrywide and Merrill-Lynch probably wasn‟t one of their smartest moves. The paperwork issue that forced the moratorium of some of these foreclosures has forced Bank of America to go after over 100,000 more homes … and then comes the fun part.

All of the bloggers that have any care in the world besides what‟s on the boob tube have surmised that they may just have a chance fighting Bank of America‟s missing and fraudulent paperwork filings under quiet title and other adversarial proceedings. Unfortunately, what most of America doesn‟t understand is what would happen if BofA took the low road and sought reorganization in the Delaware bankruptcy court. If you have a clouded title … ooops! Your home just became tied up in bankruptcy. If Bank of America claims it owns your note, it becomes part of the bankruptcy and you won‟t be able to sell your home until the court trustee and the judge decide its okay for you to do so. Quiet title action, you say? That will put the brakes on your state lawsuit, but for the court trustee handling this affair, his problems are far from over. As a homeowner, I‟d be pretty perturbed. I‟d probably file a notice to the bankruptcy court, claiming I instituted suit but that BofA was hiding behind this Chapter 11 filing just to avoid having to answer to investors. I need to sell my house NOW, not three years from now after the dust settles. And as the wheels of justice grind slowly, BofA foreclosures would also be on terminal hold until the court can figure out who owns what. Meanwhile, the states attorneys general are bucking up to the table and are seriously looking into all of the fraud claims and I expect to see some legislative action before all of this is over. Even the Obama White House is now saying that all of this is “a state problem”. True. As a states‟ rights advocate, I certainly applaud the stance. My only hope is that this doesn‟t turn into a political move on the part of those currently in office as a means to stay in office. On the back side of a Chapter 11 filing, those homeowners who are seriously in default will be in limbo and will be given a chance to regroup before finding out whether or not they‟ll be officially tossed out of their homes or given further reprieve due to BofA‟s failure to prove agency. After all, this is what quiet title is really about. Agency first … then the note argument. If you can‟t prove agency, you don‟t get to argue the note. If you argue the note, in light of the securitization of all of these RMBS‟s, then you get to prove its value. Pardon me if I digress here, but isn‟t the burden of proof on the plaintiff here? If the note never made the pool, then where is it? Who owns it … and why is it listed in the pool when in fact it never was? I keep reverting back to the “Box” case in the Western District of Missouri and the Hon. Arthur Federman‟s invitation to Bank of America to prove agency (especially when title has been slandered). Now a federal judge in Oregon has added his two cents to the opinion pool. No doubt, U.S. District Court Judge Garr M. King‟s ruling under Oregon law does not bode well for Mortgage Electronic Registration Systems, Inc. (MERS), that a lender‟s use of MERS had invalidated the mortgage. The question still remains however, as to whether a bankruptcy court could really sift through all of the paperwork of a banking giant and recognize fraudulent or missing paperwork and disconnect borrowers who have filed quiet title actions from the Chapter 11 because BofA can‟t prove agency vis a vie Box. True, all of this is cutting edge and attorneys are going to have to get themselves up to speed, understanding that when a legal battle ensues, they‟d better understand the law of agency as well as how to unravel a securitized loan … if in fact the note even made it into the pool of mortgages in question that BofA claims to have repurchased … if in fact, this is even so. I‟m still running into attorneys that think “note” … and if there‟s suspected fraud involved or the notes have no

value, then why on earth would a homeowner be getting his home free and clear? Don‟t even get me started on that argument! Agency has nothing to do with a “free and clear” home. Prove you connected all the dots at the county courthouse, Mr. Lender! MERS won‟t save your assets now! Meanwhile, back at the county courthouses, county recorders are still trying to figure out how their departments got shortchanged. Duh! The title companies are denying homeowners indemnity policies on potential-issue properties that are either contested in quiet title actions or have already been foreclosed on wherein a former homeowner, realizing he‟s been duped, hires an attorney and sues his way all the way back up the chain of title, with the title company and the E&O carriers shelling out settlements. Sadly, the insurance companies are going to become victims here; not because of their ignorance either. The author would then pose that what you‟re seeing now (with Old Republic denying coverage to Ally Financial‟s foreclosed homes and Stewart Title erring on the side of caution) is the start of the real crux of the struggle to maintain wealth in home ownership. The fact these county recorders and title agents bought into the MERS argument doesn‟t hold water with uninformed property owners. The title companies have every right to deny coverage. This is why when it comes to any legal premise, as a homeowner, I should be able to liquidate my property with peace of mind, knowing some bank or MERS didn‟t cause past or future problems with my title. Realtors selling these homes now have a whole new meaning for CAVEAT EMPTOR … it‟s now going to mean, beware of the buyer … or should I say … the buyer-turned-litigant who‟s now looking at your E&O coverage as a means to “cash out”. Let‟s also not forget the aggrieved homeowner who‟s been foreclosed on … hired an attorney who‟s well-versed on this stuff … and commenced an action back up the chain of title. If I were a title company, I‟d be freaking out too. With the latest reports of the New York Fed leading a consortium of investors seeking to force Bank of America to buyback $47-billion worth of its “poop” … the ball will start rolling and one has to start planning ahead (like a homeowner with 50 creditors calling at all hours of the day and night threatening legal action) and decide when to “cut its losses”. American homeowners with homes loans tied to Bank of America in any way, shape or form have much to worry about.

WHOSE SIDE ARE YOU ON ANYWAY? October 14th, 2010 By Dave Krieger Stewart Title has erred on the side of caution in its stance against issuing title policies on foreclosed properties due to the “robosignor snafu” that may have effectively clouded those titles. Stewart joins Old Republic Title in its effort to “stop the bleeding” via limiting its exposure to claims by denying Ally Financial-GMAC Mortgage‟s REO properties due to admissions by one of its robosignors, Jeffrey Stephan, that he signed thousands of documents without having personal knowledge as to their contents and then having them notarized to appear “official”. Later, Beth Ann Cottrell, working for Chase, made similar admissions under deposition. Chicago Title has been issuing commitment letters with exclusions and conditions for quite some time in an effort to cover itself against illegitimate claims. However, in the wake of all of this, the CEO for American Land Title Association, Kurt Pfotenhauer is downplaying this whole “cautious” thing, saying (along with Rick Sharpa of RealtyTrac) that this is much ado about nothing. Of late, Steve Bartlett, former Dallas mayor, Congressman-turned Wall Street lobbyist, told Bloomberg News in effect that the 50 states attorneys general should effectively “butt out” of the investigations by Congress in determining the legality of the court and county-recorded filings created by these robosignors that played into the hands of the lenders. While I take issue with ALTA‟s and RealtyTrac‟s stance on this whole affair, I have to stop and ask myself every time one of these “slanted” views comes forward, its like, “Whose side on you on here?” Sharpa, like so many others, seems to believe that challenges to these document snafus are just another form of “prolonging the inevitable”. Inevitable for what? Losing your home so the real estate market can “right itself” and properly hit bottom? This is NOT all the consumers‟ fault fellas. They may have come begging under the pretenses of the American Dream, but the lenders certainly didn‟t have to cater to them … that is … unless there was some other underlying agenda in mind (uh, er, having to do with securitization of RMBS‟s on Wall Street?). Frank and Brian, the two fast-talking pontificators that drop YouTube videos through ThinkBigWorkSmall.com actually came out saying that MERS was a “good thing”? Geez. If Mortgage Electronic Registration Systems, Inc. (MERS) was such a good thing, then why did JPMorgan Chase jump ship? Why did MERS CEO R.K. Arnold post an apparent “damage control” press release espousing the value of MERS four days prior to JPMorgan CEO Jamie Dimon‟s announcement? Is it because he knew that maybe more than just JPMorgan was going to say goodbye to their system of electronic recordation in the face of public and potential criminal scrutiny? What sadly rears its ugly head (again) is the “business world of banking” taking issue with the “less than frivolous and foolish consumer”, who went out and bit off more than he could chew. Is

it not only right that the 50 states AG‟s should at least explore WHAT happened behind the scenes, even if this smacks seemingly of an “October surprise”? Public suspicion also mounts because of the concerns over the bleak economic picture of America, considering the fact that real estate sales play an important role in the overall GNP picture. Everyone is affected by this mess, not just the foreclosed homeowners. Until we “clear the air”, every politician and every banker is going to get a sideways look from every consumer in America. We wait with baited breath to see what Congress won‟t do next. As for the title companies, let them err on the side of caution. It‟s not only proper as a defense mechanism, it‟s just smart business. I predict the insurance companies through the E&O carriers are next to get hit as the legal claims start flying in the face of clouded titles. Just remember there is a time when the title company could be your best friend instead of your worst enemy when it comes to legal pursuits. As for ALTA, watch for membership in-fighting, because it‟s coming!

STATE OF WASHINGTON JOINS THE FIGHT AGAINST ROBO-SIGNORS! MERS FEEBLE ATTEMPT AT CREDIBILITY DEFEATED BY JPMORGAN CHASE! October 13th, 2010 By Dave Krieger It‟s news that‟s almost too good to be true for not only borrowers but also for 49 states attorneys general that have banded together to attack lenders for violation of state laws with the recording of documents that were improperly notarized and attested to by robo-signors, something I cover heavily in the book “Clouded Titles”. The Joint Statement of the Mortgage Foreclosure Multistate Group was just issued by the National Association of Attorneys General; and as of this posting, President-Elect of that organization, AG Rob McKenna of Washington took to the media to explain his state‟s position on the matter and the fact that his office (already known to this author beforehand) was going to launch an investigation into the organizations responsible for filing what are pretty much considered to be “bogus assignments” and conveyances by improper attestations. The sequence of events leading up to this press release was not anticipated so suddenly … On October 9, 2010, Mortgage Electronic Registration Systems, Inc. CEO R.K. Arnold caused to be issued a national press release, of which this author views as doublespeak and damage control, which was posted on major news sites all over America, espousing the value of MERS and its ability to track mortgages …. quoted in part: “MERS is one important component of the complex infrastructure of America‟s housing finance system. Billions of dollars of mortgage money flow through the financial system every year. It takes many, often-unseen mechanical processes to properly get those funds into the hands of qualified homebuyers. Technology designed to reduce paperwork has a very positive effect on families and communities. They may not see it, but these things save money and time, creating reliability and stability in the system.” MERS is a bankruptcy remote entity that has no assets or liabilities, no income or expenses; and no employees. It does not cover the actions of its “certifying officers”, who are now being accused of playing a part in the robo-signing activities which is drawing fire from the attorneys general and further muddying up the recordation system with documents that could clearly be challenged as having clouded the title to a homeowner‟s property. This author suspects that the title companies are going to have something to say about their participation in anything involving MERS with the latest reports of JPMorgan Chase‟s CEO Jamie Dimon, announcing four days later that his bank has stopped using MERS, based on court arguments by Chase‟s lawyers that the MERS system is unable to accurately prove ownership of mortgages. The repercussions of this announcement cut right to the core of MERS‟s credibility; but there‟s more to the eye to those who have been aggressively following this chain of unraveling events. The MERS press release came out four days before the Dimon announcement,

thus it appears that MERS was trying to cover its own rear end, knowing that this announcement was pending. Conversely, for those planning litigation against their lenders and their subordinate trustees in non-judicial foreclosure states to quiet title, the announcement by Chase not only bodes negatively on MERS‟s credibility, it also sets new discovery parameters necessary to attack the rest of the electronic recordation system in the impeachment of recorded documentation by other lenders. “There‟s no qualitative difference between judicial and non-judicial foreclosure states; it‟s a procedural difference. Fraud is fraud, no matter what state you‟re in; if it‟s front of the court, it‟s in front of the court,” says Seattle attorney Jill Smith of Natural Resources Law Group PLLC. “If participating MERS lenders think they‟re going to „fix‟ the broken chains of title they‟ve created in courthouses all over America to millions of titles to property, they are woefully mistaken”, concludes Dallas attorney Wade Kricken, who is launching quiet title actions on behalf of north Texas homeowners. With the release of this latest news comes the forethought that other major lenders may be contemplating similar actions; pulling away from MERS in an effort to further distance themselves from the robo-signors who may be coming under fire personally for their actions. Some insiders the author is talking to are already speculating Chapter 11 filings by some of the major lenders before this mess gets completely out of hand. The author sees that as a potential for the lenders to further write down losses on loans that were actually investor-funded, in order to distance themselves from capital gains issues.

IT PAYS TO PLAY October 12th, 2010 By Dave Krieger It never ceases to amaze me exactly what a company will do to make a lender look noteworthy. And by that I mean exactly what I say when I refer to the Florida Attorney General‟s investigation into Lender Processing Service (LPS) aka DOCX‟s apparent “manufacturing” of documents use to “prove” that a lender actually owns the note (the unsigned lottery ticket). A lot of attorneys are waking up to the fact (as the author has known for quite some time) that when you see these documents, they aren‟t always real as they seem. I put together a list of 40 items with Section 7 of my book “Clouded Titles” on what to look for in these apparently-fraudulent documents. To let you know that several of the major law firms in Florida that are being taken to task for using LPS, they had to pay a price for this stuff. Here‟s just a sample that was pulled off of their “price list”:
IA03 Create Missing Intervening Assignment $35.00 + TPC IA04 Record Prepared Assignments $12.95 + TPC IA05 Cure Defective Assignment $12.95 + TPC IS01 FHA and VA Mortgage Insurance Submission $95.00 + TPC UC01 Retrieving a UCC Package $15.95 + TPC CF01 Recreate Entire Collateral File $95.00 + TPC

Can you imagine “creating” a missing assignment that would virtually prove the lender that‟s foreclosing on you “really owns the note”? And they‟re spending $35.00 and some change to virtually steal your home whether they really own it or not. There are title companies that will charge you a fee to do what is known as “corrective action” on a chain of title, wherein a missing quit claim deed or release of lien might be called for; however, something this barbaric?

As I point out in the book, “Clouded Titles”, every single document produced is under scrutiny. That‟s what I look for when I work with attorneys on these very exacting challenges. It‟s all about the 5 W‟s (who, what, when, where and why). When you find someone wearing two hats, the judge needs to know, because someone is going to have to crank out an affidavit. Don‟t be fooled by affidavits either, because they‟re supposed to reflect personal, first-hand knowledge of the actual drafting and execution of the documents.

This reflects back on the Robo-Mills … where just last week, the author uncovered a purported Wells Fargo robo-mill in Eagan, Minnesota, wherein the robo-signors were alternating notarial signatures with each other. These documents were filed in the Maricopa County Recorder‟s office; commingled with a host of other assignments by alleged “Vice Presidents of Loan Documentation” for Ashton Woods Mortgage LLC (a table-funding lender owned by Wells Fargo Bank). This frankly will not stop until a bunch of these folks get put in prison orange and a case in East Texas is coming close to doing just that!

BANK OF AMERICA HALTS FORECLOSURES IN ALL 50 STATES! October 9th, 2010 It should come as no surprise that B of A would impose such a moratorium by halting all of its foreclosure actions in light of the scrutiny of its documents that are being filed in courthouses all over the country. Just because Bank of America, along with PNC Bank, Ally Financial (formerly GMAC Mortgage), JPMorgan Chase and others are allegedly examining their foreclosure paperwork for flaws doesn‟t mean they don‟t know what‟s really going on. And while Wells Fargo Bank N.A. isn‟t admitting to any of this alleged fraudulent paperwork, this author has uncovered at least one foreclosure paper mill network in Eagan, Minnesota, full of the robosignors that all of the other lenders are accused of utilizing. All of this is called damage control but it‟s a far cry from the damage that all of these foreclosure actions have done in creating the real estate chaos in the nation‟s county courthouses with the clouds on title. Despite the efforts of MERS, an acronym for Mortgage Electronic Registration Systems, Inc., a Delaware corporation whose parent MERSCORP, Inc., operates as a stock company with 17 known employees out of Reston, Virginia, the mess that MERS has made utilizing “authorized signers” on documents has still not been fully investigated. This author is seeing robosignor activity wherein the trustee will sign for the lender as a ìVice President for MERSî and appoint himself as a trustee so he can foreclose. In virtually all states, the trustee and beneficiary (the holder of the note) must be two separate entities. The challenges to slanders and clouds on titles are only the beginning and title companies are starting to get nervous. The people who think they are getting a great deal on buying foreclosures may find themselves in more trouble than they bargained for when the evicted families find out that the bank that foreclosed on them used fraudulent paperwork and their titles were clouded and now these investors are going to have to spend money quieting their titles, not to mention being caught in a legal crossfire between the foreclosed homeowner and the lender that sold them the foreclosed home. The author predicted in 2007 that this would start happening after the foreclosure meltdown. The frauds are now starting to come to light with the whistleblower activity surrounding Florida attorney David J. Stern. Florida AG Bill McCollum is getting closer to hitting the mark in demonstrating that the banks haven‟t been totally honest with the judges there.

OHIO’S SECRETARY OF STATE HAS REFERRED FRAUD TO THE DOJ! October 3rd, 2010 excerpted from the news release REFERRAL OF CHASE HOME MORTGAGE AND MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC. TO FEDERAL PROSECUTOR: Secretary of State Jennifer Brunner, in two letters dated Aug. 11, 2010 and Sept. 1, 2010, referred matters of alleged notary abuse in thousands of home mortgage foreclosures by Chase Home Mortgage and the Mortgage Electronic Registration Systems, Inc. to U.S. District Attorney Steven Dettelbach in Cleveland. Citing two depositions, (one & two) of Chase employee Beth Cottrell, taken in Columbus in May of 2010, and a deposition of MERS Secretary and Treasurer, William Hultman taken in New Jersey in April of 2010. These depositions contain sworn testimony that at Chase Home Mortgage, 18,000 documents per month are executed and notarized per month by eight people, with admissions that: It is the notary and not the document signer who gives an oath who fills in numbers in the affidavits used in court ordered foreclosures; no oath is administered for the signing of each document; notarized documents are not verified by the person signing and giving oath that they have personal knowledge of the contents of the documents, but rather, signers are relying on verification by others; documents are signed in bulk and notarized in bulk separately; notaries know this at the time they notarize documents in this process. [This is part of what my book CLOUDED TITLES analyzes in Chapter 7.] The MERS deposition of William Hultman demonstrates that after corporate status changes occurred for MERS, new designations of authority were not executed, leaving one or more individuals for the former MERS corporation continuing to delegate authority on behalf of the new corporation without authorization by the new corporation. [This is important to recognize when analyzing slander of title in the assignments and appointments of successor trustee in nonjudicial states. The author has found numerous assignment documents where MERS has conveyed the note with the deed ... a cardinal no-no ... wherein the "VP" or "assistant secretary" uses a 1995 MERS official seal to verify the accuracy of the document. Don't be fooled by this fraud!] According to its website: “MERS was created by the mortgage banking industry to streamline the mortgage process by using electronic commerce to eliminate paper, MERS acts as nominee in the county land records for the lender and servicer. Any loan registered on the MERS eSystem is inoculated against future assignments because MERS remains the nominal mortgagee no matter how many times servicing is traded. MERS as original mortgagee (MOM) is approved by Fannie Mae, Freddie Mac, Ginnie Mae, FHA and VA, California and Utah Housing Finance Agencies, as well as all of the major Wall Street rating agencies.” MERS was created by the mortgage lending industry to: (1) eliminate frequent re-recording of liens;

(2) avoid paying county recorder fees and other local taxes as mortgage loans are assigned as backing or securitization for derivatives trading by banks and other financial institutions; (3) monitor and facilitate the transfer of original mortgage notes in the trading of mortgagebacked securities; and (4) foreclose on mortgage notes for unnamed note holders, even though it is not the real financial party in interest and does not hold the original note for the mortgage. [This is in dispute as MERS doesnít own the note!] Currently, over half of all new residential mortgage loans in the U.S. are registered with MERS and recorded in county recording offices in MERSí name, reducing transparency, leaving consumers unable to determine who actually holds the note on their homes. Secretary Brunner made the following statement on the situation: “Mortgage foreclosure documents must be notarized according to the law. Requiring this is not an afterthought or an exercise of form over substanceóthe law must be followed when taking away someoneís home, regardless of the circumstances. For too long thousands of homes have been taken from consumers without proof that the foreclosing party actually has that right. Our courts must be cautious and require absolute adherence to the law. As the officer in Ohio who licenses notaries, I cannot stand idly by and watch financial institutions concoct a chain of title they never had by abusing the notary process. Itís not fair to consumers or to the employees who by virtue of their jobs, are signing these documents. I urge the U.S. Department of Justice to take up this investigation with vigor and purpose to protect consumers and hold financial institutions to the standards of scrutiny and exactitude required by law, even if it means prosecuting some of our largest corporations. These apparent violations of state law point to schemes that merit federal investigation of large institution lending practices and use of the U.S. Postal Service.” [This would constitute mail fraud under Title 18 U.S.C.A.!] Last week, GMAC Mortgage announced it had suspended evictions and post-foreclosure closings in 23 states over concerns about employees preparing foreclosures with affidavits submitted to judges containing information they did not personally verify. Yesterday it was announced that JPMorgan Chase and Co hired external counsel to review its affidavit process based on the depositions of Beth Cottrell and is delaying approximately 56,000 current foreclosure proceedings. The following document that the author was able to obtain shows the alleged fraudulent document admitted to by GMACís ìauthorized robosignorî, Jeffrey Stephan, which caused the foreclosure shutdown.

FAULTY ADMISSIONS WORK WELL IN QUIET TITLE ACTIONS October 3rd, 2010 By Dave Krieger There may have been a halt to the foreclosure actions in 23 states by Ally Financial (formerly GMAC), JP Morgan Chase Bank and Bank of America but it ís not the end of the line. Those 23 states customarily represent the judicial states, where most of the dirty laundry gets aired with the pleadings that are filed against foreclosed homeowners by their lenders but I am sure you are asking yourself, what about the non-judicial states? Unfortunately for them, it is business as usual. Homeowners in those states get a notice in the mail; and in the 90-day window prior to the trustees sale, they will generally see a complete slander of the titles to their properties in some way, shape or form. However, they remain ignorant by choice because they are convinced that all of this mess is their fault. They are so focused on the debt … they can‟t see the forest for the trees. The book CLOUDED TITLES, explains how that happens. Itís rare that you ever get to see any of these slanderous documents unless you actually take a trip to the courthouse or access the courthouse records over the Internet. Up until that point, it is panic as usual. Of late, as you will see in one of the posted articles, the start of the filing of the quiet title actions in Seattle is starting to take shape. Matthew Hale and Jill Smith, both practicing attorneys that specialize in foreclosure defense, now see this type of methodology as a way to get the lenders attention through his trustee. In the most recent instance, Ms. Smith received a letter from one of the trustee she is suing and they of course, now recognize their mistakes. Unfortunately, the damage has already been done. Any time a trustee makes an admission like that, you can bet the borrowers attorney is going to find it useful. What is going to be more of a challenge is the power of attorneys that were issued between the lenders and their trustees. There are some serious legal questions about the construction of these documents, says Hale. The court systems in this country are going to be in for a rude awakening in the near future when homeowners start showing up with verified and valid prima facie proof that their titles are clouded. The book explains that in full detail. Let the games begin!

WASHINGTON STATE TRUSTEE ADMITS TO SLANDERING TITLE October 2nd, 2010 (Seattle) An attorney for Quality Loan Service has admitted in writing to slandering the title to property of Karen & Barry Nilsen of Tacoma, following receipt of a Motion for a Temporary Restraining Order from Seattle attorney Jill Smith, one of the frontrunner attorneys in quiet title actions in the state. QLS Default Resolution Manager Daniel J. Goulding issued an email to Ms. Smith, stating: I have reviewed our file and would agree that the 10/8/10 sale needs to be cancelled. I say this based on the recorded Assignment having been executed prior to the recorded Substitution of Trustee. Because of this Quality has not been properly appointed and could not have properly issued the Notice of Sale. The balance of the letter to Ms. Smith indicated that QLS wanted to work things out. There was a suit to quiet title filed in Pierce County Superior Court on behalf of the Nilsens. On Thursday (09/30/2010), Smith says she went into court on another motion hearing and was handed a newly-reversed decision by the Washington State Court of Appeals, which reversed and remanded a summary judgment back to the Superior Court of King County for rehearing, citing lack of proof the lender actually owned the note they foreclosed on.

TITLE COMPANIES START REJECTING COVERAGE October 1st, 2010 Mortgaged homeowners using Old Republic Title are starting to receive notices which state: The Company will not insure title to any property which has been foreclosed by Ally Financial, Ally Bank or GMAC until further notice. The title companies are now very much aware (as some of us legal eagles have discovered behind the scenes), of their exposure to the frauds committed by the lenders and their foreclosure mill attorneys in the process of foreclosing on borrowers who they claim are in default. At issue are the affidavits and assignments that claim proof of ownership of the note on the part of the foreclosing lender. Attorney depositions from an Ally Financial employee, Jeffrey Stephan, show that Stephan admitted signing these types of documents without having first-hand knowledge of their contents. Stephan is alleged to have signed thousands of these documents. There are also alleged violations of notarization procedure also coming to light, wherein the persons notarizing these assignments and affidavits were not present at the time of signature. These procedures not only bring fraud on the court but also give rise to wrongful foreclosure actions by ejected homeowners. The other side of the equation involves the new buyer of the foreclosed home. The fraudulent mess left in the wake of the foreclosure action clouded the new buyerís title; thus making the old buyer and everyone else associated with slandering the title to the foreclosed property liable to the new buyer. And who pays those damages? The title company of course! And they don‟t want to. Everyone down the chain of title is involved, says Seattle attorney Matthew Hale. If the documents were improperly attested to, then the trustee that foreclosed on the homeowner acted outside of his legal capacity and is liable to both the old homeowner for wrongful foreclosure and to the new buyer for issuing him a faulty Trustee‟s Deed. This is probably the biggest problem with buying foreclosures.