DECLARATION of Jody M. McCormick Filed by Defendants. DOCUMENT NO. 41

7/24/2019 DECLARATION of Jody M. McCormick Filed by Defendants. DOCUMENT NO. 41

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The Honorable Benjamin H. Settle

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF WASHINGTON

T

TACOMA

PAMELA

S.

OWEN,

Plaintiff,

vs.

FEDERAL HOUSING FINANCE AGENCY;

FEDERAL HOME LOAN MORTGAGE

CORPORATION; MTC FINANCIAL, INC.,

dba TRUSTEE CORPS; BISHOP,

MARSHALL WEIBEL, P.S.; CHUCK

E.

ATKINS, in his official capacity as Clark

County Sheriff,

Defendants.

Case No. 3:15-cv-05375-BHS

DECLARATION OF JODY M.

MCCORMICK IN SUPPORT OF

FEDERAL HOUSING FINANCE

AGENCY'S ND

FEDERAL HOME

LOAN MORTGAGE CORPORATION'S

JOINT MOTION TO DISMISS

PLAINTIFF'S COMPLAINT

NOTE

ON

MOTION CALENDAR:

November 6 2015

I Jody M. McCormick, make the following declaration:

1.

I am a partner with the law firm Witherspoon Kelley. I

am

counsel of record for

Defendant Federal Housing Finance Agency ( FHF A ) and Defendant Federal Home Loan

Mortgage Corporation ( Freddie Mac ) in the above-captioned case. I submit this Declaration

in support

of

the accompanying Joint Motion to Dismiss Plaintiffs Complaint submitted by

FHF A and Freddie Mac.

DECLARATION OF JODY M. MCCORMICK

IN

SUPPORT

or FEDER.AL HOUSING FINANCE AGENCY'S AND

FEDERAL HOME LOAN MORTGAGE CORPORATION'S

JOINT MOTION TO DISMISS PLAINTIFF'S COMPLAINT - I

Case No. 3: 15-cv-05375-BHS

Sl2790lODQCX

~ W I T H R S P O O N K L L

Attorneys Counselors

422 W. Riverside Avenue, Suite l

100

Phone: 509.624.5265

Spokane, Washington 99201-0300

Fax:

509.458.2728

Case 3:15-cv-05375-BHS Document 41 Filed 10/14/15 Page 1 of 63


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2 I contacted Plaintiff on two occasions

to

inform Plaintiff that she had not

2

properly effected service upon Freddie Mac and FHFA. On behalf

of

Freddie Mac and FHF A, I

3

represented that both parties would be willing to accept service on the condition that Plaintiff

4

agree to seek a stipulated order that would establish a briefing schedule for Freddie Mac and

5

FHF A to respond to her claims.

6

7

3.

y

letter dated August 4, 2015, and by email dated September 30, 2015, Plaintiff

s rejected the offers described above.

9

4

Attached are true and correct copies of the August 4, 2015 letter (Exhibit A) and

10

September 30, 2015 email (Exhibit B).

I I

5

Attached hereto as Exhibit C

is

a true and correct copy of the Motion and

12

13

Declaration to Vacate Judgment and to Stay Enforcement and Writ of Restitution filed by

14

Plaintiff in

Clark County Superior Court Case No. 15-2-00924-2 (the Unlawful Detainer

15

Action ).

16

6

Attached hereto as Exhibit D is a true and correct copy of Motion to Quash

17

18

Service

of

Summons filed by Plaintiff in the Unlawful Detainer Action.

19

7

Attached hereto as Exhibit E is a true

and

correct copy of the Judgment for Writ

20 of Restitution Only entered

in

the Unlawful Detainer Action.

21

22

23

25

26

27

28

DECLARATION OF JODY M MCCORMICK IN SUPPORT

OF FEDERAL HOUSING FINANCE AGENCY'S AND


JOINT MOTION TO DISMISS PLAINTIFF'S COMPLAINT- 2

Case

No 3: J5-cv-05375-BHS

1279016

DOCX

l ~ W I T H R S P O O N K L L

ttorneys Counselors

422 W Riverside Avenue, Suite l 100 Phone: 509.624.5265

Spokane, Washington 99201-0300 Fax: 509.458.2728



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Respectfully submitted this 14'" day

of

October, 2015.

WITHERSPOON KELLEY

s Jody M McCormick

Jody M. McCormick WSBA # 26351

422 W. Riverside Ave., Suite 1100

Spokane,

W

99201-0300

Phone: 509-624-5265

Fax: 509-458-2728

[email protected]

Attorneys

or

Defendants Federal Home Loan Mortgage

Corporation and Federal Housing Finance Agency

DECLARATION

OF JODY

M

MCCORMICK

IN

SUPPORT

OF FEDERAL HOUSING FINANCE AGENCY'S AND


JOINT MOTION TO DISMISS PLAINTIFF'S COMPLAINT - 3

Case

No 3: l 5-cv-05375-BHS

W I T H R S P O O N K L L

ttorneys Counselors

422

W

Riverside Avenue, Suite 1100 Phone: S09.624.S265

Spokane, Washington 99201-0300

Fax:

509.458.2728

Sr/.790 6DOCX



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CERTIFICATE

OF

SERVICE

I hereby certify that on the 14

1

day of October, 2015,

1. I caused to be electronically filed the foregoing DECLARATION OF JODY M.

MCCORMICK IN SUPPORT OF FEDERAL HOUSING FINANCE

AGENCY S

AND

FEDERAL HOME LOAN MORTGAGE CORPORATION'S JOINT MOTION TO DISMISS

PLAINTIFF'S COMPLAINT with the Clerk

of

the Court using the CM/ECF System which will

send notification

of

such filing to the following:

Michael Steven DeLeo [email protected], [email protected]

Barbara L Bollero [email protected], [email protected]

William P. Richardson [email protected],

[email protected], [email protected]

Pamela S. Owen [email protected], [email protected],

parnela. [email protected]

David A Weibel [email protected]

2. I hereby certify that I have mailed

by

United States Postal Service the foregoing

document to the following non-CM/ECF participants at the address listed below:

None

3. I hereby certify that I have mailed by United States Postal Service the foregoing

document to the following CM/ECF participants at the address listed below: None

4.

I hereby certify that I have hand-delivered the foregoing document to the

following participants at the addresses listed below: None

s Jody M McCormick

Jody M. McCormick WSBA

#

26351

WITHERSPOON KELLEY

422 W. Riverside Ave., Suite 1100

Spokane,

WA

99201-0300

Phone:509-624-5265

Fax: 509-458-2728

[email protected]

DECLARATION OF JODY M.

MCCORMICK

JN SUPPORT

OF

FEDERAL

HOUSING FINANCE AGENCY'S AND

FEDERAL HOME

LOAN MORTGAGE CORPORATION'S

JOINT MOTION TO

DISMISS

PLAINTIFF'S COMPLAINT 4

Case No. 3:15 cv 05375 BHS

~ W I T H R S P O O N K L L

Attorneys Counselors

422

W_

Riverside Avenue, Suite 1100 Phone: 509.624.5'265'

Sl27QIJJ6DOCX

Spokane, Washington 9920\-0300 Fax: 509.458.2728



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EXHIBIT



6/63

Pamela S. Owen

3912 NE 57th A venue

Vancouver, WA 98661

Tel: (360) 991-4758

[email protected]

August 4, 2015

Jody M. McCormick

Witherspoon Kelley

422 W Riverside A venue, Suite 1100

Spokane, WA 99201

Tel: (509) 624-5265; Fax: (509) 458-2728

[email protected]

Cause:

Owen

v

Atkins et al. 15-cv-053 75-BHS; United States District Court for the

Western District of Washington (Tacoma)

Subj: Plaintiffs Rejection of Joint Offer to Stipulate

to

Order Setting Briefing Schedule

Dear Counsel:

l decline to accept your offer received on the above date for the following reasons, among

others not listed:

1.

The above-titled action was removed on June 4, 2015, and not June 5, 2015 as

stated in the Stipulation.

2.

The Stipulation erroneously claims that ''Plaintiff did not properly serve your

clients. Plaintiff has never attempted to serve your clients with sun1mons and complaint is a more

accurate statement

of

the fact.

3.

On June 7 2015, your clients were asked to waive service of summons. Your

clients have one choice at this late stage: Waive service or pay the costs of service. Rule 4(d)(2)

makes mandatory that:

lf

defendant located within the United States fails, without good cause, to sign

and return a waiver requested by a plaintiff located within the United States, the

ourt must impose on the defendant

(A) the expenses later incurred in making service; and

(8) the reasonable expenses, including attorney's fees,

of

any motion required to

collect those service expenses.

4. You were provided with a copy

ofmy

motion to stay proceedings pending the

outcome of the unlawful detainer appeal. Your clients may use this opportunity to oppose this

1



7/63

motion and argue against delay. Should your clients prevail on appeal, the District Court would

be left with only one choice to dismiss the action.

5. Defendant Sheriff Atkins informed the District Court that your clients agreed to

have this action ren1oved to Federal Court while being aware

of

the unlawful detainer appeal:

6 Pursuant to J8 lT.S.C . 1446(b)t2)(AJ, consent to this re1110Yal has be

obtained

fro111 all

r

defendants

that

h1Ye filed

a

Notice

of

Appearance. or notified Defendant Atkins

of

their intent to

e

tile

a Kotice of

Appearance.

(Atkins Notice

of

Removal, Dkt. No. 1at2, filed 06/05/15.(

6. Your clients may, without my stipulation, file a 1notion seeking an Order setting a

briefing schedule consistent with your current Stipulation. I will oppose your clients' motion for

the reason herein stated and for the reasons stated in my motion to stay pending outcome

of

the

unlawful detainer appeal.

7.

Your client, Freddie Mac, has a

brief

on appeal due on August 19 2015. You are

required to remind your client of Rev. Code Wash. (ARCW) 40.16.030 (2015) (Offering false

instrument for filing or record); Exhibits 5 and 6 attached to the complaint; the Trustees Deed

Upon Sale; and the Declarations made under penalty

of

perjury to cause the Superior Court and

Sheriff Atkins to allegedly violate my State and Federal constitutional and statutory rights.

On

a

side note,

you mentioned

that

should my settlement

offer

is 7 figures, you

would not take this

amount

to your clients. Washington State Court Rules

of

Professional

Conduct (RPC) 1.2 and 1.4 mandates that a lawyer n1ust communicate with her or his clients all

settlement offers. ''A lawyer shall abide by a client's decision whether to settle a matter. A

lawyer for a government agency, such as yourself, may have authority on

behalf

of

the

government to decide upon settlement or whether to appeal from an adverse judgment. Such

authority must be consistent with the Government's it1-house lawyers. Thus, any failure to

comply with an obligation or prohibition imposed by a RPC would be a basis for invoking the

disciplinary process. While the RPC may not serve as a cause of action against you and your

other lawyers, the Rules do establish standards

of conduct by lawyers and

a

lawyer's violation

of

a Rule may be evidence

of

breach

of

the applicable standard

of

conduct.

Yours truly,

,/)

. ,I_ 1

/-f

I

.: 1 .

._-_ c c L f l c . 1 1 ~ ' ~ _ , , ~ ' : ~ c . : : , , _ ~ ' ~ ~ - - ' ' - ' - ; ' - ' I - ; : ~ . : _ - ~ ; , _ ,

Pamela S. Owen

Plain1ifr

Tel: (360) 991-4758

pan1ela. owcn 9 a ~ g m ai I con1

2



8/63

EXHI IT



9/63

Jody M. McCormick

From

Sent

To

Subject

Dear Counsel:

Pamela

Owen

Wednesday,

September

30, 2015

5:36 AM

[email protected]; Alicia Asptint;

Steven

J

Dixson;

[email protected];

[email protected]; Erin Hill; [email protected];

[email protected]; [email protected];

Emanuel McCray;

[email protected]; [email protected]; [email protected]; Jody

M.

McCormick

Re: Owen v

Atkins

As a courtesy, the following is provided per

your

email dated 9/29/2015:

1 Regarding service of summons and complaint on your clients, your attention is directed

to

Dkt.

#s

35

and 36.

2

Pursuant to

R W

238.18.040 and .050. service was complete and ' had by serving the

secretary

of

state

of

the state

of

Washington

[23B.18.040];

and: ''No proceedings shall be had against the

nonadmitted organization nor shall it be required to appear, plead, or answer until the expiration

of

forty days

after the date

of

service upon the secretary of state. ' [238.18.050], which was September 1. 2015.

3

Under Local Civ.R. 55(a): ''A motion for entry of default need not be served on the defaulting

party. However, in the case

of

a defaulting party who has entered an appearance, the moving party must give the

defaulting party written notice

of

the requesting party's intention to move for the entry

of

default at least

fourteen days prior to filing its motion and must provide evidence that such notice has been given in the motion

for entry

of

default.

4

Because your clients have been duly served under Chapter

23B.18

RCW, your request to

stipulate is moot.

I hope the above infonnation is useful to you. Please also confinn the interest of your clients in reaching

a settlement within the next week or two. This will save them the time and costs from sub1nitting an Answer

and Reply.

ls/Pamela Owen

Plaintiff

On Tue, Sep 29, 2015

at 11

:20 AM, Jody M. McCormick wrote:

Ms. Owen:

I

am

writing on behalf

of the

Federal Housing Finance Agency and Freddie Mac about

Owen

v

tkins t

al

Case

No.

3:15-cv-05375 in the Western District of Washington.

Freddie Mac and FHFA have still not been served

with

a summons and complaint in accordance

with

court

rules. However, both Freddie Mac and FHFA are willing

to

waive their objections to the sufficiency of service in order

to

establish a plan to proceed with the case. We therefore wish to enter into a stipulation th t would waive objections to

1



10/63

service

and

set

dates for Freddie Mac and

FHFA to

respond

to the complaint by a

dispositive

motion for you to oppose

that motion and for

Freddie

Mac and FHFA to

reply

to

your opposition.

If

you

agree I will

send you

proposed

dates for a briefing schedule and we can

discuss

further how we can document

the

agreement

in

the

form

of a stipulation.

Jody

Jody

M.

Mc ormick

Principal

IWitherspoon Kelley

[email protected] I Attorney Profile I

vCard

Cont1denr1al1/y Notice The J11forma/1on

r::onlaJ11ed

in ths email

and

any accompanymg attac/Jment(s) s intended

only

for the use of the intended rec fJ e

nd

may be

conf1denlial and/or privileged If any reader

of

Ill

s

comm11mcat1 111s 1101 he111te11ded rec1p1en/ unauthonied

se

disclosure or copying is stnctly prohibited

and

may be

un ai;.1ul If you have recei ved this com1mm1ca1mn in error, please 1mmed1a/e/y notify h ' sender

by

return email

and

delete tl1e origma/ message and

ll

copies from your

system Thank you



11/63

EXHI IT C



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T0:12066220354

FROM:3802187896

Page:

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Plaintiff s),

Defendant s .

FILED

?Dl5APRl1

lt\1119

scan

GWEB R.

CLEM

Cl

ARI\

COUNTY

r ~

No /

5),ocffl -/-8.

Motion

and Declaration to

Vacate Judgment and to Stay

Enforcement

o

Judgm1nt and

Wiii

of RHIHutlon

1. Relief reg,uested. The

defendant s} move s)

the

court

for an order vacating the

14 judgment

entered

in this action and

staying enforcement

of the judgment and the

writ of

15

restitution

until the

motion

can be heard.

16

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21 1 1 ~ 0 ~ - f t - - J ~ i ~ 1 ~ W..... ~ H ~ l < ~ c = u 2 ~ 6 ~ ~ : T ~ ~ ~ - - -

otion

and Declaration

to Vacate

Judg. and Stay

_

~ ~

. .......

_.,

-

.



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TO:l2066220354 FROM:3602167696

Page

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Evidence

relied up on This motion

is

based on the

attached declaration

of

9 i c

UJ\ tt ' - - ~ . - f o _ _ , ~ ~ { , = u : ; ' - -

Motion

and O ClaretJon

to

Vacate

Judg

and

Stay

i --

. ' ... -



14/63

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T0:1Z066ZZ0354 FROM:360Z167696

Page

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statement

is true

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signed

in

arieou

ve

City)

Washingtonon

-e ZA-//3,0la;;J.

Date)

Motion ttnd l Hdaration to

Vacate

Jud /. and st y

...... .



15/63

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16/63

4113/2015

Find Your

Legislator

Visiting

the Legtslature

* Agendas, Schedules and

Calendars

t

Biii information

Laws

and

A(Jency

Rules

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Committee

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Information

Center

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i;

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-

the Other

Washington

TVW

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awashington

~ ' ' ' '

' ' ~ ' ' ' '

T0:12066220354 FROM:3602167696

Page

9

Rew a11a.m unawu delalner adloo Dltib essed

tune.

p-evt1J.Slr.

RCWs >

> Chaoter

59.1 >Section 59.18.363

59.18.360

>

59 18.365

RCW

59.18.363

Unlawful

detainer

action - Distressed

home previously.

In

an

unlawful

detainer action Involving

property that

was

a

distressed

home:

1) The plaintiff shall disdose to

the court

whether the defendant previously

held title

to

the

property that

was

a distressed home, and explain how

the plaintiff

came to acquire litle;

2)

A

defendant

who previously

held title to the property

that was a

distressed

home shall not be required

to escrow ny

money pending tr1al when

amaterial

question

of

fact exists as to whether the plaintiff acquired title from the defendant

directly or indirectly through

a distressed

home conveyance;

3)

There must be both an

automatic

stay

of the

action and

a

consolidation

of

the

action with

a

pending

or

subsequent quiet title

action

when

a defendant

claims

that the

plaintiff acquired tltle to the property through

a

distressed home

conveyance.

2ooa

c 2 a

13 J



17/63

EXHI IT D



18/63

I

2

3

4

COPY

ORIG\NA.l, fll,ED

APR

23 26 5

ScottG

Weber

Cieri< Clatk

co

IN THE SUPERIOR COURT OF THE STATE OF WASlllNGTON

IN

AND

FOR THE COUNTY OF CLARK

FEDERAL HOME LOAN MORTGAGE NO. 15-2-00924-2

CORPORATION

6

7

8

10

11

12

13

14

5

16

17

18

19

20

21

22

23

24

25

26

27

28

Plaintiff,

vs.

MOTION

T

QUASH

PAMELA S. OWEN, et al.

SERVICE OF SUMMONS

Defendants.

Hearing Date: May

l

2015

Time:

9:00a.m.

Judge: Honorable Judge Robert

Lewis

Court:

Department

9

COMES NOW Defendant, Pamela S. Owen, fur her motion captioned above, and states:

TABLE OF CONTENTS

Table

of

uthorities ...2

Questions resented

3

I

II

A.

1.

2.

3.

4.

Whether

the

trial court lacks subject matter unlawful detainer

0

urisdicti

3

on

Whether

the trial court erred in directing issuance

of

default

judgment against Defendant by order

entered

on April

3,

201

S

.

3

Whether the trial court erred

in

directing issuance ofwrit

of

restitution against Defendant by order entered on

April 3, 2015,

at

Sub. 12 ...................................................3

Whether Defendant is entitled

to

have

the

writ of restitution

quashed,

and

the action dismissed with prejudice .. .. .. .. .. .. .. .. .. .. ..3

Summary

ofLegal Argument

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

3

Plaintiff's Reliefls Barred By Doctrine of Unclean Hands .................3

BriefHistory and

Overview

ofSecuritizationand Mortgage-Backed

Securities

MBS) and the

Active Role ofPlaintiff Federal Home Loan

Mortgage Corporation (FHLMC) or ( Freddie Mac ) Leading

To

DEFENDANT'S MOTION TO QUASH SERVICE OF SUMMONS

1



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I

Recent

Mortgage Crisis

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

4

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

B

c.

III.

B.

IV

Federal

Takeover

ofPlaintiff Freddie

Mac ..........................................

7

Plaintiff

Freddie

Mac s

Role In

the

Creation

of

he Mortgage

Electronic

Registration

Systems MERS) To

Circumvent the

State Land Registry.........

9

PlaintiffDoes Not State In Its Complaint A Claim and Can Never State

A Claim

Cogniz.able

Under Chapter 59.12 RCW ..................................15

Tue Court Lacks Subject Matter Jurisdiction Because

ofPlaintiff s

Unclean Hands

and

Plaintiff s Failure to Strictly Comply

With

Chapter 59 12 RCW 15

Defendant

Was

Never

In Demult As

A Matter ofState

and

Federal

Law

......

18

CONCLUSION

20

AVIHORJIIES

Fedm Q se

Arbaugh

v.

Y

HCorp .

546

U.S. 500, 510-516 (2006)

....................................23

State Cases

In

re Agard, 444 B.R. 231, 247 (Bankr.E.D.N.Y.2011)

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

9, 17

Asuncion

v.

Superior Court

o

San Diego County,

108

Cal. App.

3d 141,

146-147, 166

Cal. Rptr.

306

(Cal. App.

4th

Dist.

1980)

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

23

Bain v. Metropolitan

Mortgage

Group, Inc.,

175

Wn.2d 83, 285 P.3d 34 2012)

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

9, 14

Hangman Ridge Training Stables,

Inc.

v. Safeco Title

Ins. Co

.

105 Wasb.2d 778, 780, 719P.2d 531 1986)

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

15

Housing

Au horll)i ofCil)Io Everett v. Terry, 114 Wn.2d 558 (1990) ... ... ... ...23, 24, 25

Landmark

Nat /

Bankv.

Kesler,

216 P.3d

158,

166-67

(Kan.

2010)

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

12

Little

v. Catania, 48 Wn.2d 890,

297

P.2d255 (1956)..........................19, 23,

24,

24

Sowers

v.

Lewis, 49

Wn.2d 891, 894, 307P.2d 1064 (1957) ... ... ... ... .. ... .. 19, 23, 24,

25

Wilson

v.

Daniels,

31Wn.2d633, 643, 198 P.2d 496 (1948)

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

20, 23, 25

DEFENDANT S MOTION

TO

QUASH

SERVICE

OF SUMMONS

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Statutes

Washington Revised Code

7 28 19

9A 52

21

59.12.030 19, 21

59.12.032

19

59.12.040 20, 21

59.12.050 19

59.12.070 20, 21,

22

59.12.080 20, 21, 22

59.12.090 24

59.12.120 22

59.12.121

23

61.24 et

seq

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

61.24.040 14,18, 20

61.24.040, subd 9) 20

61 24 060

19, 20

OUESJIONS

PRESENTED

Defendant is alleging

that

Plaintiffbas entered this Temple ofJustice with unclean bands

and bas completely failed

to

follow the procedures

mandated

by the Legislature under Chapter

59.12 RCW.

The

issues thus

presented are:

1

Wbether the trial court

lacks

subject

matter

unlawful

detainer jurisdiction.

2

Wbether

the

trial court erred in directing issuance

of

default judgment

against Defendant by order entered

on

April 3, 2015.

3 Whether the trial court ~

in

directing Issuance ofWritofRestitution

against Defendant

by

order entered on April 3, 2015, at Sub. 12.

DEFENDANT S MOTION TO QUASH SERVICE

OF

SUMMONS

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4.

Whether Defendant is entided

to

have the writ of restitution quashed, and

the action dismissed with prejudice.

J. SUMMARY OF LEGAL ARGUMENT

1.1

The

question at

the

heart of his motion is the Court's subject matter unlawful detainer

jurisdiction and the procedure the Court must

follow

when a Plaintiff intentionally fails to strictly

follow the

statutory provisions governing the Plaintiff's rights and remedies and the Court's

jurisdiction lintited

by

the unlawful detainer statutes, Chapter 59.12 RCW.

1.2 As

more fully

set

forth and supported

herein,

Plaintiff failed

to

follow any of

he

procedure

prescn bed by the unlawful detainer statute. Tho Superior Court cannot assert subject

matter

jurisdiction due to the Plaintiff's failure to follow procedure.

1.3

Plaintiff;

a

Federal government corporation,

is

attempting

to

use

this

Honorable Temple

of

Justice to circumvent the unlawful detainer laws of this State

to

summarily evict Defendant, who

is

the

lawful owner ofher primary residence in violation of the Federal and State constitutions and

laws

and due process of law.

1.4 The law in this State mandates that the proper action

by

the court in this proceeding is to

dismiss Plaintiff's action with prejudice.

D PLAINTIFF'S RELIEF IS BARRED

BY

DOCTRINE OF UNCLEAN HANDS.

A. Brief History and Overview of

Securitizatlon

and Mortaap-Baeked

Seeuritieo

(MBS)

and

lbe Active Role of Plalntttf Federal Home Loan Mortgage Corporation (FHLMC)

or

( Freddie

Mnc ) Leading To

Reeent Mortgage Crisis.

2.1

Securitization is the creation and issuance ofdebt securities, or bonds whose payments of

principal and interest derive from cash flows generated

by

separate pools of assets. It

had

grown

from a non-existent industry

n

1970 to $6.6 trillion

as

of he second quarter of2003, before the

start

of

he recent financial crisis

in 2008.

22 2.2 Financial institutions

and

businesses

of all

kinds

use

securitizatlon to immediately realize

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the value ofa cash-producing asset These are typically financial assets such as loans, but can also

be

trade

receivables or leases.

lo

most cases, the

originator

of

the

asset

aotlcipates a regular stream

of

payments. By pooling

the

assets together, the payment

streams

can be used to support interest

and principal payments on debt securities.

2.3

When assets

are securitized,

the originator receives the payment stream as a

lump

sum

rather than spread out over time. Securitiz.ed mortgages are known as mortgage-backed securities


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MBS), while securitized assets-non-mortgage loans or assets with expected payment streams-

are known as asset-backed securities ABS).

2.4

To

initiate a

securiti7;ation,

a company must

first createwhat

is called a special purpose

vehicle SPV) in the parlance

o

securiti7;ation.

The

SPV

is legally

separate

from the company, or

the bolder of

he

assets. Typically a company sells its assets

to the SPV.

2.5

The payment streams generated

by

the assets can then be repackaged kl back an issue of

bonds, or the SPV can transfer the assets to a trust, which becomes the nominal issuer. In both

cases, the bonds are exchanged

with

an

underwriter

for cssh The

underwriter

then sells

the

securities

to

investors. Unlike other bonds, securities backed by mortgages

usually

pay both

interest and a portion of

the

investor's principal on a monthly basis, in addition

to

including

insurance for

the

financial

product.

2.6

The first mortgage-backed securities arose from the secondary mortgage market in

1970.

Investors had traded whole loans, or unsecuritized mortgages, for some time before the

Government National Mortgage Asaociation GNMA), also called Ginoie Mae, guaranteed the

first

mortgage pass-through securities

that

pass

the

principal and

interest

payments

on

mortgages

through

to

investors.

2.7 Ginnie Mae

was

soon followed

by

Plaintiff Freddie Mac as

part

of a federsl scheme

to

promote homeownership

by

fostering a secondary marl


23/63

1 2.11

Growth

in the pass-through market inevitably led to innovations especially

as

originators

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sought a broader MBS investor base. In response, Fannie Mae issued the first

collaterali7.ed

mortgage

obligations (CMO) in 1983. Amore complicated twist on pass-tbroughs, CMOs redirect

the

cash

flows

of

rusts

to create securities

with

several different payment features.

2.12

The

central goal

with CMOs

was to address prepayment

risk the main

obstacle to

expanding the demand for pass-throughs. Prepayment risk for MBS investors is the unexpected

return of principal stemming from

consumers who

refinance the mortgages that bsck the

securities

2.13

It was calculated

that homeowners would

be more likely to refinance mortgages

when

inlerest

rates

are fillling. As this traoslates into prepayment ofMBS principal, investors were often

forced

to reinvest the retnmed principal at a lower

return.

2.14 Thus,

CM

Os

were

created to accommodate the preference

of

investors to lower

prepayment

risk with classes ofsecurities that offer principal repayment at varying speeds. The

different bond classes associated with CMOs are also called tranches (a French

word

meaning

slice).

14

2.15

Some CMOs can include

50

or more tranches

and

can also be subordinate

to

other

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tranches. In the event loans in the underlying securitization pool defaul4 investors in the

subordinate tranche would have to absorb the loss first.

2.16 As

part

of he Tax Reform Act of 1986, Congress created the Real Estate Mortgage

Investment

Conduit REMIC) to facilitate

the

issuance of M

Os.

Almost

all CM

Os are cumntly

issued in the form ofREMICs. In addition to varying maturities, REM Cs can be

issned

with

different risk characteristics.

2.17

REMIC

investors, in exchange for a higher coupon paymen4 can choose to take on greater

credit risk. Along with a simplif\ed

tax

treatmen4

these

changes made the REMIC strueture

an

indispensable

feature of

ho MBS market. Plaintiff Freddie Mac, and his sister, Fannie Mae

are

the

largest issuers

of

this typo

of

security.

B

Federal Takeover

of

Plaintiff Freddie Mac.

2.18 On September 6, 2008, the director

of

he Federal Housing Finance Agency

(FHFA)

placed two

of

he

United

States' Goveromont-Spousored Enterprises (OSEs), PlaintiffFederal

Home Loan

Mortgage Corporation ( Freddie Mac ),

and

Federal National Mortgage Association

(''Fannie

Mae ),

into a conservatorship run by

the

FHFA as a result

of

heir active participation

in

DEFENDANT'S MOTION TO QUASH SERVICE

OF

SUMMONS

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the "subprime mortgage crisis" involving

Bank of America Countrywide

Bank

and

other national

banks.

2.19

At a September

8, 2008 press

conference,

former United

States Treasury Secretary

Henry

Paulson

stated

''that

conservatorship

was

the

only

form

in

which

I would commit taxpayer money

to

the

GSEs.

He

further said that "I attribute the need

for

today's aetion primarily

to

the

inherent

conflict

and

lawed

business

model embedded in the

GSE structwe,

and

to

the ongoing housing

correction."

2.20

At

a subsequent

news

conference,

Ben

Bernanke,

former

Federal Reserve Bank

Chainnan

stated:

"I strongly endorse both the decision

by FHF

A Director

Loclthort to

place Fannie Mae

and

Freddie Mac

into

conservatorshjp

and

the actions

taken

by Treasury Secretary Paulson to ensure

the financial soundness

o

hose

two companies.

2.21 The

combined losses Plaintiff Freddie

Mac

and

Fannie

Mae

ofUS$14.9 billion

and market

concerns

about

their

ability

to

raise capital

and

debt,

threatened to

disrupt the

U.S.

housing

financial market.

2.22 n an effort

t

bsil out Plaintiff Freddie

Mac

and Fannie Mae, the

U.S.

Treasury

Department committed to invest as much as US$200 bi111on in preferred stock and

extend

credit

through 2009 to keep

Plaintiff Freddie

Mac

and

Fannie Mae

solvent

and

operating.

2.23

Reportedly, Plaintiff FreddieMac and Fannie Mae have outstanding

more than US$5

trillion inmortgage-backed securities (MBS)

and

debt-where the debt portion alone is US$1.6

trillion.

2.24

The conservatorsbip action has been

described

as

one

of he most sweeping

government

interventions

in private

financial markets in decades,"

and one that

"could

turn

into

the

biggest

nd

costliest government bailout ever

o

private companies.

2.25 On July

30, 2008, President George W. Bush

signed into law

the Housing

and Economic

Recovery Act

(HERA) of2008,

Pub.L.

110-289, 122 Stat 2654,

which

enabled expanded

regulatory authority over Plaintiff Freddie Mac and

Fannie

Mae by the newly established FHFA.

6

This new law also

gave

the

U.S.

Treasury

the

authority

to

advance funds

for

the

purpose of

stabilizing Plaintiff Freddie

Mac and Fannie Mae,

limited only

by the

amount

of

debt that

the

entire federal govemment is permitted

by

law to commit to.

2.27

The

HERA

was designed primarily

to

address the

subprime

mortgage crisis. To ensure

Plaintiff Freddie

Mac and

Fannie Mae obtain the desired solvency, the

law

further

raised the U.S.


OF

SUMMONS

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Treasury's debt ceiling

by

US 800

billion,

to

a total ofUS$10.7 trillion, in anticipation

of the

potential

need for the

Treasury

to

have the flexibility to support Plaintiff Freddie

Mac and

Fannie

Mae, or the

Federal

Home Loan Banks.

8

Many

commercial

banks

own

preferred

shares

issued

by

Plaintiff Freddie

Mac

and Fannie

Mae. These shares

have

bad

their dividends

suspended,

end

are

junior

to the senior

preferred

stock

issued to the Treasury in the

restructuring of

Plaintiff Freddie

Mac and

Fannie

Mae. The market

value of he

preferred

shares

plunged after

the restructuring

announcement and suspension

of

dividends.

Banks

were

required

to

write

down the

value

of

Plaintiff Freddie Mac and Fannie Mae

prefened stock held in their portfolios, thus compounding capitalttation concerns for certain

U.S.

banks. Gateway Bank, e.g., agreed to be bought out

by

Hampton Roads Banksbares, Inc. to make

up

for

a

writedown

ofUS 40 million on

its stock

in Plaintiff FreddieMac

and

FannieMae which

put

it below regulatory requirements

to

be

considered adequately capitalized.

2.29

ecause

of

he

change

in

management control of

PlaintiffFreddie

Mae

and Fannie

Mae,

the

parties in the credit default swap (CDS) market contracts have defined the action of placing

Plaintiff Freddie Mac end Fannie Mae

into

conservatorship to be equivalent to bankruptcy.

2.30 In CDS parlance,

this is termed a "credit evenf' that triggers

the

settling

of

outstanding

contracts

for the

derivatives,

which are used to

hedge or speculate

on

the potential risk that

a

company will default on its

bonds.

This "credit event" also means that some owners ofCDSs

that

were

hedging against

the

risk ofa bond default may be worse off, since the value of he bonds

may

be

higher than when they

purchased the

swap.

2.31 On August I0, 2011, the

Federal

Housing

Finance

Agency asked

investors for ideas on

renting

homes

owned

by

Plaintiff Freddie

Mac and

Fannie Mae and the Federal Housing

Administration as an alternative

to

evicting the occupants,

among

other

things.

1

C.

Plalnllff

Freddie

Mae'1

Role n the

Creation of

the Mortgage Eleetronle

Registration

Syltem1 (MERS)

To Cirenmvent the State Land Registry.

2.32

As mortgage-backed securities

grew in record

volume during the 1980s, itbecame self

evident

to the MBS

market participants

that

a similar mechanism or

SPV

was

needed

for the

mortgages placed into

these

securities.

26

1

U.S. Government May

Renl

FOTflC/osedHomu

To

Ease HowIng Slump, by.

News

Hub.

htto:tlwww.ponscreen.com y/6 l 4mP/US-0Pvemment-May-Rent-Foreclosed-Homes-To-Ease:Housjng-Slumo-News.

27 HY b_...

PopScreen"

is the

world's

first

Video

Prediction

Engine (VPE), http://www.popscreen.com/abmrt. See

aho:

GtwemmenJ may rent out foreclosedproperties, "The Sun News, published on

August

8, 2011.

28 DEFENDANT'S MOTION TO QUASH SERVICE OF SUMMONS

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I 2.33

In October 1993, Plaintiff Freddie Mac co-founded en electronic mortgage registration

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system that became known

as

MERS and a corporation that became

known

as Mortgage

Electrnnic Registration Systems,

Inc.,

or

MERS, Inc.

in October

1995.

Electronic Data System

(EDS)

was

awarded a contract

to

develop and service the

MERS

technology systems, and

M RS

was

officially launched in April 1997. See

Bain

v.

Metropolitan

Mortgage Gr P,

Inc., 175

Wn.2d 83, 285 P.3d 34 (2012), citing In re Agard 444 B.R. 231, 247 (Bankr.E.D.N.Y.2011); In

re

MERSCORP,

lnc. v. Romaine, 8 N.Y.3d 90, 96 n. 2, 861N.E.2d81, 828 N.Y.S.2d 266 (2006);

Phyllis

K.

Slesinger Daniel McLaughlin,

Mortgage Electronic Registration System,

31 Idaho

L.Rev. 805, 807 (1995); Christopher L. Peterson, Foreclosure,

Subprime Mortgage

Lending, and

the Mortgage Electronic Registration

System,

78 U.

Cin.

L.Rev.

1359,

1361 (2010),

and

Defendant's Exhibit 1 attached hereto.

2.34

The

underlying problem Plaintiff Freddie Mac and its co-founders sought to curb or

circumveot

was

the fact that

a

mortgage loen transferred

into

en MBS had to

become

bankruptcy

remote

from

the originating lender in

the

event the originating lender collapsed, such

as

happened

to

Countrywide

ank

in 2007 and many others during the financial crisis of2008.

2.35 Thus, MBS investors demanded some

kind

o protection to ensure that the lender's

own

creditors could not avoid or ''rollback the transfer of the loans

into

the

MBS

as fraudulent

conveyances and suck them

back

into

the

lender's bankruptcy

estate.

2.36 The easiest

way

to create

such protection was

to

simply convey the loan for consideration

through three or four entities before it

roached

the

MBS. However,

each of these conveyances

had

to be recorded with tho relevant recorder or land registry.

2.37 With each loan requiring three or four assignments, end hundreds

of

mortgage loans going

into each

MBS,

the result

was that

recorders were flooded with assignments, and investment

banks

found

themselves choking on paperwork and recorders' fees.

2.38 Plaintiff Freddie Mac

and

its co-founders used MERS in an endesvor to ix

this

problem

by requiring

all members ofMERS to change their standard loan documents to name M RS as

the

nominal

beneficiary or mortgagee

of

record. This enabled loaders

and

investors

to

transfer

mortgages without recording assignments in local recorders' offices and in

turn

avoid having to

pay recording fees.

2.39 Plaintiff Freddie Mac's MERS became immediately problematic for State land registries,

since all intermediate transfers between

points

are

tracked

only on the

MERS system, and

tho

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entity

who

holds

the loan at

the end

merely records the reconveyance

as

an agent for

MERSCORP

Holdings,

Inc.

2.40 Plaintiff Freddie Mac's MERS presented an additional problem forthe States' Uniform

Commercial

Code

UCC) because neither the owner

of

he original Note or the original Note

was

tracked

by

MERS.

2.41 f

a

borrower defaults, and in an effort

to

citcumvent the

UCC

problem, Plaintiff Freddie

Mac

and its co-founders

authoriz.ed MERS,

through the use of individuals known as robo-

signers,

to

record an assignment ofthe Note on

behalf

of Mortgage Electronic Registration

Systems, Inc. to the

real

party in interest, i.e., an investmentbank such as ReconTrust Company,

NA

in its

capacity as

Trustee for a

bank

or

MBS,

in order

to

initiate

a

nonjudicial

foreclosure.

242

The

problems associated

with

Plaintiff Freddie Mac's nonjudicial foreclosure of

Defendant's mortgage

is

highlighted by the February

10,

2011 Decision of he

U.S. Bllllkruptcy

Court

in In re Agard Case No. 8-10-77338-reg, (Eastem District of

New

York), reported in In re

Agard

B.R.

231, 247 Bankr.E.D.N.

Y.2011

); the Complsint filed by the Stste of Washington

against ReconTrust

Company,

N.A.

in August

2011

and

the

Consent Decree

and

Injunction filed

against ReconTruston August 20,

2012.

A complete and correctcopy of each document is

attached hereto

as

Exhibits 1, 2 and 3, respectively.

2.43

On

Februacy

10, 2011, the U.S. Bankruptcy Court for the Eastern District of

New

Yotk

considered a motion

for

relief

from

the bllllkruptcy

stay

brought

by U.S. Bank as

the

trustee

ofa

securiti7.ation trust.

2.44 U.S. Bank claimed the right to foreclose on the debtor's mortgage in part because of

purported assignmaot of the mortgage

from

MERS.

The

court

found

itself constrained by the

Rooker-Feldman

doctrine

to give

effect

to

a prior state-court judgment of foreclosure, but

went

on

to

consider several

arguments MERS

advanced about

its legal statos

aud authority,

noting

that it

had

held

off on deciding

dozens

of additional cases until those matters

were

clarified.

2.45 The

court

found

that

MERS

bad no power aa

an

agent

to

assign

the

mortgage under its

rules,

its

membership

agreement,

or the

tellllS

of

the mortgage itself. The court

also found

that

MERS bad no power as the mortgagee ofrecord to assign the mortgage: MERS's position that it

can be

both the mortgagee and

an

agent of the mortgagee is absurd,

at

best.

2.46 The court observed further that MERS audits partners/members, which include Plaintiff

Freddie Mac, made the decision

to

create and operate under a business model that

waa

designed in

DEFENDANT S

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large part

to

avoid

the

requirements of he traditional mortgage recording process, and the

fact

that

because MERS may

be involved with

50

of

all

residential

mortgagea in

the country,

was

insufficient reason for the Court

to tum

a blind

eye to the fact that

the

MERS process

does not

comply with

law.

The

Court

further stared that:

The Court finds that the record of his case

is

insufficient to prove that an agency

relationship exists under the laws of the state ofNew York between

MERS

and its

members. According to

MERS, the principaUagent

relatiowihip among itself and its

members

is

created by the MERS rules ofmembership

and

tenns

and

conditions,

as well as

the Mortgage itself.

However,

none of he

documents

expressly creates

an agency

relatiowihip

or even mentions the word agency. MERS would have

this

Court cobble together

the

documents

and draw

inferences from the

words

contained in those documents. For example,

MERS

argues that its agent status can

be found in the Mortgage which states

that MERS

is a nominee

and

a

mortgagee o record.

However,

the

fa.ct

fuat MERS s named nominee n the

Mortgage

is not dispositive

of

he

existence

of

an agency relatiowihip

and

does

not,

in and of itself, give

MERS

any authority to act.

MERS

also

relies

on

its

rules

ofmembership

as evidence

of the agency

relationshlp.

However,

the rules lack

any

specific mention of an agency

relationship, and do not bestow upon MERS any authority to

ct

Rather, the rules

are ambiguous as to MERS's authority to take offirmative actions with respect to

mortgages registered on its system.

n

addition to casting itself

as

nominee/agent, MERS seems to

argne

that its role

as

mortgagee ofrecord gives it the rights of a mortgagee in its own right ... The

provisions ofSection 1921 relate solely to

the

discharge ofmortgages and the

Court

will

not apply

that

definition beyond

the

provisions of hat section

in

order to

find

that MERS

is a

mortgagee

with

full

authority

to

perform the duties of

mortgagee

in

its

own

right Aside

from the

inappropriate reliance upon the

statutory definition of mortgagee, MERS's position

that

it can be

both

the

mortgagee and an ageot of the mortgagee is absurd, at best

Adding to this absurdiry, it is notsble in this case that the AssignmentofMortgage

was

by

MERS,

as

nominee for

First Franklin, the origioal lender. By the Movant's

and MERS's own admission at the time

the

assignment

was

effectuated, First

Franklin no longer held any interest in the Note. Both

the

Movant and

MERS

have

represented to the Court that subsequent to the origioation of he loan, the Note

was

assigned, through

the MERS

tracking

system,

from

First Franklin

to

Aurora,

and

then from Aurora to

U.S. Bank.

Accordingly, at the time that

MERS, as nominee

of

First Franklin,

assigned the

interest in the Mortgage

to U.S.

Baok,

U.S.

Bank

allegediy already held the Note and it

was atU.S.

Bank's

direction,

not First

Franklin's, that the Mortgage was assigned to U.S.

Bank.

Said anolher wsy, when

MERS

assigned the Mortgage

to

U.S.

Bank on

First Franklin's behall; it took its

direction

from U.S.

Bank, not First Franklin, to provide documentation of an


11



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assignment from an entity that no longer bad any rights to the Note or the

Mortgage. The

documentation

provided to

the Court in this

case (and

the Court

has

no

reason to believe that

any

further documentation

exists),

is stunningly

inconsistent

with

what

the

parties

define as the

fucts of

his

case.

However, even

ifMERS

bad assigned

the

Mortgage acting on behalf

of

he entity

which held the Note at

the

time

of he

assignment, this Court finds that MERS did

not have authority,

as 'nominee or

agent,

to

assign

the

Mortgage

absent

showing

that it

was

given specific written

directions

by its principal.

This Court finds that MERS's theory

that

it can set

as

a common agent for

undisclosed principals

is not support

by

the

law The relationship between

MERS

and

its lenders and its distortion of its alleged nominee

status

was appropriately

described by

the

Supreme Court of

Kansas as follows: ''The

parties

appear

to

have

defined

the

word

[nominee)

in much the same wsy

that

the blind men

of

Indian

legend described an elephant-their description depended on which part they

were

touching

at

any given time.

Landmark

Nat / Bankv.

Kesler,

216 P.3d 158, 166-67

(Kan. 2010).

2.48

In addition

to

Plaintiff Freddie

Mac, the

following organizations are current

MERSCORP

Holdings shareholders: I) American Land Title Association; (2) Bank ofAmerica National

Association; (3) CCO Mortgage Corporation;

(4)

CitiMortgage,

Inc.;

(S) CoreLogic, Inc.;

(6)

CRE

Finance o u n c i ~ (7) EverBank; (8) Fannie

Mae;

(9) First American Title

Insurance

Corporation;

(10)

Guaranty Bank;

(11)

Housing Residential, Ltd.;

(12)

HSBC Finance Corporation; (13)

MGIC

Investor Services Corporation;

(14)

Morserv, Inc.; (15) Mortgage Bankers Association;

(16)

PM

Mortgage Insurance Company; (17) Residential Funding Company, LLC; ( 8) Stewsrt Title

Guaranty Company; (19) SunTrust Mortgage, Inc.; (20) Wells Fargo Bank, N.A.; and (21) WMC

Mortgage Corporation. https:l/www.mersinc.org/about-us/shareholders. [Last visited on April 19,

2015.)

2.49 In August 2011,

the

State

of

Washington suedReconTrustCompany, N.A.

in

State of

Washington

King

County Superior

Court.

The case is

State o Washington v. Recon .lrust Co.

N.A.

case number 11-2-26867-5, filed on August

S,

2011.

2.50 In

the

lawsuit, Washington State Attorney General Rob McKenna accused ReconTrust

Co.,

a subsidiary

of

BankofAmerica N

A.,

and

which also sets as

a foreclosure

trustee,

of

conducting illegal nonjudicial foreclosures on thousands

of

homeowners

and

putting up

roadblocks to saving residents' homes and violating its obligation to be a neutral

third

party acting

in the best

interest oflenders

and

borrowers.

DEFENDANT'S MOTION

TO

QUASH SERVICE

OF

SUMMONS

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30/63

I 2.51

Rather than act in

good faith

to borrowers, ReconTrust would only halt a

home

sale

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beneficiary approved it, failed to

identify

the ownera

ofloans and conducted

foreclosure

sales in

private locations instead of public spaces, the suit alleged.

2.52 McKenna

also

accused

ReconTrust

of

providing confusing information about how

borrowers defaulted and

how to

rectify default, and using documents that were rife with errors or

improperly notariz ed

2.53 R.econTrust's illegal practices

make

it difficult, i not impossible, for borrowers

who

might

have

a shot

at

saving their homes

to

stop those foreclosures, McKenna said in a

statemenL

ReconTrost's claim that

the company

doesn't have

to

follow Washingtoo

law and

procedures

because it

is

a national

bank

is

wrong,''

said

McKenna.

2.54 The former Attorney General further accused ReconTrust, which

haa

issued nearly I 0,000

foreclosures notices since 2008, of stonewalling his office's investigation into its foreclosure

practices and ignoring

warnings

that it

was

in violation

of

Washington's Deed

of

Trust Act

(DTA), RCW 61.24 et

seq.

2.55 According to the State's complaint, because courts in Washington cannot get involved in

noajudicial foreclosure proceedings, the

OTA

and a neutral Trustee are the

only

protectiona

for

homeowners n foreclosures.

Homeowners

facing foreclosure

are captive

t

ReconTrust'

s trustee

services, the complaint

said.

2.56 The complaint further alleged that ReconTrust failed

to

comply with one essential

requirement

of

he

deed

of trust

statute

reqniring a

trustee to

keep a physical

office

in

Washington

State so

that residents

at risk

oflosing their homes can

make

a

last-mim1te

payment, seek

information or request that a foreclosure sale be postponed.

2.57

On September 2,

2011,

ReconTrust removed the Complaint to the U.S. District Court,

Western

District

of

Washington.

On

August 20, 2012, the

U.S.

District

Court

entered

an

Injunction and

Conaent Decree against

ReconTrost

and

ordering this benking entity

to pay to

the

State

$1,090,000 for costs and attorney fees and for possible enforcement

of he

Consent Decree.

2.58

Defendant's legal title

to

ownership

and

continued

unfettered

possession

of

the real

property located

at

3912 NE

57 '

Avenue,

Vancouver, Washington

98661,

is inextricably

intertwined

in

the business

model

Plaintiff Freddie

Mac

and its coconspirators intentionally

created and operates

as part

of

a

scheme

that

was

designed from the outset

to

intentionally

avoid


O

SUMMONS

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the

requirements

of

he traditional

mortgage

recording process,

the UCC

regarding negotiable

instruments,

this

State's Deed of Trust

Act,

and the

unlawful

detainer statutes, RCW

59.12

et

seq.

2.59

n Bain

v.

Metropolitan

Mortgage Group

Inc.

175

Wn.2d 83, 285

P.3d

34

(2012),

the

Court unanimously

held

that

under

the Washington Deeds

of

Trust

ct

WDTA),

chapter

61.24

RCW, the

beneficiary

in

a nonjudicial foreclosure

action

must

be

the

actual

bolder of the

promissory note.

2.60 With

regards

to MERS, the

Court rejected

the

claim

made by MERS

that it could

be

a

beneficiary of a Note in a Deed of Trust i f t

never

held

the

Note:

''The plaintiffs

argue

that our interpretation of he

deed

of

rust

act should be

guided by

these

UCC

definitions,

and thus

a beneficiary

must

either actually

possess the

promissory note

or

be

the payee.

E.g., Selkowitz

Opening

Br. at 14. We

agree.

This

aecords

with

the

way

the

term holder

is used

across

the

deed of trust

act and

the

Washington

UCC.

By

contrast,

MERS's approach would require

us

to

give

bolder a different

meaning

in differeot related statutes

and

construe the deed

of trust act to mean

that

a

deed

of trust

may

secure itselfor

that

the note follows the

security inatnnnent. Washington's deed of rust act contemplates that

the

security

inatnnnent

will follow

the

note, not the other way around MERS isnot a holder''

under

the plain language of the

statute.

2.61

The

Supreme

Court

in Bain

also rejected MERS's

agency

claims:

But oss

also

observed

that

[w]e have repeatedly held that a prerequisite of an

agency

is control of

the

agent

by the

principal.

Id. at 402, 463

P.2d

159

(emphasis

added) (citing McCarty

v

King

County

Med. Serv.

Corp.

26 Wash.2d 660, 175

P.2d

653

(1946)).

While

we

have

no

reason

to

doubt

that

the

lenders

and

their

assigns

control

MERS,

agency requires a specific principal that is accountable for

the

acts of its

agent.

But

MERS

offers

no

authority

for

the implicit proposition

that

the lender's

nomination o M RS as noll inee

rises to

an gency relationship with

successor

notebolders. (Footnote

omitted.)

MERS fails

to

identify the entities that control and

are

aecountable for its actions. It has not established that it

is

an agent for a lawful

prineipal.

We will not allow waiver of statutory protections lightly. MERS did not become a

beneficiary by conttact or under agency principals .

We

answer the first certified question No, based

on

the plain language of

the

statute. MERS is an ineligible 'beneficiary' within

the

terms of

he

Washington

Deed ofTrust Act, if it never

held

the promissory

note

or other debt inatnnnent

secured

by

the

deed

of trust.

27 2.62

The

Supreme

Court

further

held

that

a

homeowner could

state a cause of action

under

28 DEFENDANT'S MOTION T QUASH SERVICE OF SUMMONS

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Washington's Consumer Protection

Act

against

Mortgage

Electronic Registration Systems,

Inc., i

MERS acts as an unlawful beneficiary under

the

terms of Washington's Deed of Trust Act:

Bain contends

that

MERS violated

the

CPA when it acted as a beneficiary ... .

To

prevail

on a CPA action,

the plaintiff

must

show

"( ) unfair or deceptive act or

practice;

(2)

occurring in

trade or

commerce;

(3)

public interest impact; (

4)

injury

to

plaintiff in

his or ber

business

or

property;

(5)

causation."

Hangmao Ridge

Training Stables. Inc. v. Safeco Title Ins. Co.,

105

Wasb.2d

778, 780,

719 P.2d 531

1986).

MERS

does not dispute all the elements.

The attorney

general of his

state

maintains

a

consumer

protection division

and bas

considerable experience and expertise in

consumer

protection matters. As an lcus,

the

attorney general

contends that MERS

is

claiming to

be

the

beneficiary

when

it

knows or should know that under

Washington

law

it

must

bold

the note

to be

the

beneficiary"

and seems to suggest we bold that

claim is

per ee

deceptive and/or

unfair.

AG Br.

at

14. This

contention

finds

support inimloor

Billboard/Wash.

Inc.

v

Integra

Telecom

ofWash.

Inc. 162

Wash.2d

59,

170

P.3d

10

2007),

where

we

found

a telephone

company

had

committed

a deceptive

act

as a matter oflaw

by

listing a sun:harge "on a portion of he invoice that included state and federal tax

charges." d at

76, J70

P.3d

10.

Our attorney general

also

notes

that the

assignment

of the deed o trust that

MERS

uses purports

to

transfer its beneficial interest

on

behalf

of ts own

successors

and

assigns, not

on behalf

ofany

principal .... This undermines MERS's contention that

it acts only as an agent for a lender/principal and its successors and it "conceals the

identity ofwhichever loan holder

MERS

purports

to be

acting for

when

assigning

the deed of

trust." AG Br.

at

14. The

attorney

general

identifies

other

places where

MERS

purports

to be acting

as

the agent

for its

own

successors, not for

some

principal.

Id.

at

15

(citing

Doc.

l,

Ex. B). Many

other courts

have

found

it

deceptive

to

claim authority

when

no authority existed and to

conceal

the true

party

in a transaction.

While we are

1Jllwilling

to

ssy it is

per se deceptive, we agree that

characterizing

MERS as the beneficiary

has

the cspacity

to

deceive and

thus,

for the purposes of

answering

the

certified question, presumptively the first element is met.

MERS

contends that plaintiffs csnnot

show

a public

interest

impact becsuse, it

contends,

each

plaintiff is challenging "MERS's

role aa

the beneficiary under

Plaintifl's Deed of Trust in the context of the foreclosure proceedings on Plaintiff's

property."

Resp.

Br.

ofMERS

at

40

Solkowitz) emphasis

omitted).

But

there

is

considerable evidence that MERS is involved with an enormous number of

mortgages

in the

cowttry and our state), perhaps as

many

as half nationwide.

John

R.

Hooge &

Laurie Williams,

Mortgage

Electronic Registration Systems, Inc.: A

Survey

of

Cases

Discussing MERS'

Authority

to NORTON BANKR.L.

ADVISORY

NO. 8, at

21(Aug.2010).

lfin fact

the language

is unfair or

deceptive,

it would have a

broad impact.

This

element

is

also

presumptively

met.


15



33/63

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8

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10

As

amicus notes, '

1

MERS' concealment of

loan transfers also could

also

deprive

homeowners of other

rights,

such as the ability to take advantage

of

the

protections of he Truth in Lending Act and other actions that require the

homeowner to sue or negotiate with the actual holder

of

he promissory note. AG

Br.

at 11 (citing

15

U.S.C.

1635 1); Miguel v Country Funding

Corp 309 F.3d

1161, 1162-65 (9th Cir.2002)) ...

If the first

word in the third

question was

"may"

instead

of

"does,"

our

answer

would be yes. Instead, we answer the question with a qualified yes, depending

on whether

the

homeowner can produce evidence on each element required to

prove a CPA claim. The fact that MERS claims to be a beneficiary, when under a

plain reading of he

statute

it

was

not, presumptively meets

the

deception

element

ofa CPA action .. We answer the third question with a qualified yes; a CPA

action may be maintainable .... A true and correct

copy of

he Attorney

General

Ainicns Brief

is attached

hereto

as

Defendant's Exhibit

S

I l 2.63 The following is a screenshot ofClari< County Auditor's documents tracking the

12

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transactions associated with Defendant's property:

Auditor Document Search Results

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34/63

1

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4

SSIGNMENTOF DEED

OF

TRUST

J'os Value RceAvcd,.

1M Wldcnipod

boldor ofa

Deod ofTnill (herein

..

Assipor ') whoa: t.ddrea lsOO

S. W. 34TH AVENUE. SUIT& JOI

OCALA,n. 34414

doef pat.sell,

a11ip.

b'lll .trer

d

cmYOj

GDIO

BAro. X OF AMERICA, N.A., SUCCESSOR BY MERG8R TO BAC HOME LOANS

SERVJCINC,

lJ

PXA COUNTRYWIDE HOME LO.U.'S

SU.VICING, LP wlHM 9ddm& ii

400

lll'ATJONAL WAY, SIMJ

VALLEY

1

CA9 H 5

all

banoftcill

lalml5l lmdaVLI\ ca-t111D

Deed of I r8 t

described

btkiw

1oplblr

whh the

note{)

Jmd

obllpiiont

thmin

1nd

die

moaf)'

du

and

to

become due

'8\neou

WM Interest utcl

all ripl.I .ccrurcl

or 10 ICr.nMI imder s id Deed otTnJst.

5

2.65

A

true

and com:ct copy

of

this public record is attached hereto

as

Defendant's Exhibit 5.

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Both

the Supreme Court and the Attorney General

found

the language

used

in

the

aforementioned

Assignment

to

constitute a violation

of

he

CPA. he

Assignment also discloses the

filct

that

MERS

is

claiming to be the bolder

of

he

Note,

the mortgagee and the agent for the mortgagee.

Bain

citing In

re

Agard

444 B.R.

231,

247

Bankr.E.D.N.Y.2011

),

held that

an interpre1Blion of

the term beneficiary that has the deed

of

rust securing itself is untenable. MERS s position

that it

can

be both

the

mortgagee and an agent

of

the mortgagee is

absurd,

at best.

In re

Agard

444 B.R. 231, 247

E.D.N.Y.2011).

2.66

Bain

also

rejected the notion that a lender's nomination

of

MERS as a nominee rises to an

agency

relationsbip with successor noteholders. MERS intentionally avoids the agency question in

the above Assignment by presenting a history

of

the

''Original

Lender, to wit:

OriPI

Lender.

LANDMARK MORTGAGE COMPANY

"'4NcBy: . PAMELA S.OWllN AMA.u1EDWOMANASllERIBPAR.\TB

UTA

TE

Origiul

Trunco: l"IDEUTY NATIONAL

TITLE INSURANCE

Dat.e of Deed ofTrusc:

1V412DOS

Orii: ui Lo.ri

Amour.I: S2Dl.UD.OD

~ o r e

ir.i

Clsrk

Couf7.Wlt. on:

Jlll IHOJ.

book

NIA,

P9JO

NIA and

binrwnl

mn

4Gl2)1t

2.67

Plaintiff Freddie

Mac, who

is a co-founder of

MERS

and also a

member

of

MERS, is

actively perpetrating a fraud upon this Honorable Court. To establish it is the new legal owner

of

Defendant's property, Plaintiff does pot attach to its complaint a copy of he Trustee's Deed

Upon Sale issued

on

January 22,

2015, nor does

Plaintiff Freddie Mac claim in its Complaint that

it was an innocent purchaser

of

Defendant's

real

property.

As the

co-founder and co-creator

of

MERS and Its electronic registration system, Plaintiff's innocent

purchaser

claim would be

untenable, simply because Plaintiffnot

only

ratified the fraud

of

MERS and Bank

of

America,

as

part

ofMERS' membersbip agreement which Plaintiff helped

create,

Plaintiff

demanded

that

this fraud be undertaken by

all

ofMERS's members, including itself and its agents, Trustees,

successors

and assignees. A true and correct

copy of

he Trustee's Deed

on file

with the

County

Auditor is attached

hereto as

Defendant's Exhibit

6.

DEFENDANT'S MOTION

TO

QUASH SERVICE

OF

SUMMONS

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2.68 A legally,

cogniz.able

Trustee's

Deed

requires

that

the Trustee must have complied with

the Deed

of Trust

Act,

Chapter

61.24 RCW.

The

Bain

Court reiterated the law of

this

State

requiring Trustees

to be

obligated

to all of he

parties :

Critically

un

Documents

DECLARATION of Jody M. McCormick Filed by Defendants. DOCUMENT NO. 41