Escolar Documentos
Profissional Documentos
Cultura Documentos
Jeffrey Brown )
Plaintiff, )
v. )
)
HSBC Mortgage Corp. (USA), )
Debra Bassett, )
) AMENDED COMPLAINT
Bierman, Geesing, and Ward, LLC,
)
)
Jared Slater, and )
MERS (Mortgage Electronic ) Request for Jury Demand
Registration System) )
DOEs 1- 50 being parties to be named ) Request for Injunctive Relief
later )
CIVIL CASE NO: 1:10cv1427
Defendants
AMENDED COMPLAINT
COMES NOW, Plaintiff Jeffrey Brown, Pro Se, [for the present time] and files his
first Amended Complaint against Defendants. Plaintiff wishes to remind this Court
that pursuant to order dated 01/24/2011 Plaintiff has obtained a default judgment
against defendants HSBC and Bassett ; such rights under that default judgment
are not waived nor any rights extended with this Amended Complaint. Plaintiff
NATURE OF ACTION
This case arises out of Defendants’ egregious and ongoing and far reaching
1. This Court has jurisdiction over the subject matter of this action pursuant
to Article III § 2, U.S. Constitution, 42 U.S.C. §§ 1983, 1985 and 1986 (failure
under the 1st, 4th, 5th, 6th, 8th and 14th Amendments. This action involves
and federal law, procedure and practice by state and federal officials and
officers of this Court. Further, Plaintiff brings this action under the Real
Act 15 U.S.C. § 1692, Fair Debt and Collection Practices Act. Plaintiff also
2. This action is brought within the time constraints of 42 U.S.C. § 1983 and
4. Venue is proper under of 28 U.S.C. § 1391 because the parties are either
PARTIES
the nominal lender and originator of the loan. HSBC was, at all material
times hereto, a foreign corporation which was doing business in the State of
provisions of the Federal Truth in Lending Act 15 U.S.C. §1602(f) and the Fair
Debt and Collection Practices Act 15 U.S.C. §1692a and is a “creditor and
collector” as defined.
its last known principal place of business at 1818 Library Street, Suite 300,
which was engaged in the business of, inter alia, acting as an alleged
“nominee” for various mortgage lenders and their servicing agents for
10. Upon information and belief, Jared Slater is employed with Equity Trustee,
11. Plaintiff is ignorant of the true names and capacities of Defendants sued
herein as DOEs 1- 50, inclusive, and therefore brings suit against these
FACTUAL ALLEGATIONS
12. In late 2009, Plaintiff and his wife performed a routine audit of their
various personal documents and discovered that they had never received a
complete alleged loan package after closing with HSBC, in 2008. More
specifically, a copy of the original loan application, a copy of the Note itself,
missing. In fact, all that Plaintiff received at the so-called “closing” table
was a six-page copy of the alleged Note and a five-page copy of the Deed of
13. In 2010, Plaintiff requested all documents related to the alleged loan
documents – in violation of RESPA, TILA and U.S.C. Title 18, Part I, Chapter
25, § 472, 473, 474, 474A, and 475 – and instead, only sent a copy of the
alleged adjustable rate note. HSBC failed to provide any other closing
documentation.
14. Plaintiff noticed that the “Note” received was different from the copy
Plaintiff followed up the call with a letter to Ms. Teymourian requesting the
16. On January 29, 2010, Plaintiff went to the Fairfax County Land Records to
obtain a true and certified copy of the Deed of Trust. (See Exhibit D). Such
document was 19 pages long and in no way resembled the five page Deed
she was not sure if the original documents existed, but that she would
18. On February 17, 2010, Plaintiff actually went to an HSBC Bank in Virginia
documents. (See Exhibit E). This document did not match the “official
copy” as sent to Plaintiff via FedEx on January 27, 2010. Further, Plaintiff
disputes that this so called “original” was not an original at all, as signing of
the document was done in blue ink. The document as provided had a black
signature.
19. As a result of this visit Plaintiff realized that HSBC was not the holder of
the original note as all it could produce for Plaintiff’s viewing was a
Deed of Trust.
20. On February 17, 2010, Plaintiff Noticed HSBC, Debra Bassett (Trustee),
21. On February 24, 2010, in response to the QWR, Plaintiff received a letter
In truth, Plaintiff received from HSBC only the edited version of the alleged
Note, and at closing was given an incomplete version of the Deed of Trust.
23. Additionally, neither Debra Bassett, Trustee, nor MERS responded to the
25. On May 17, 2010, Plaintiff received a loan default notice. (See Exhibit J).
26. On May 20, 2010, Plaintiff posted multiple Notices in the Fairfax Times.
27. In a letter dated June 3, 2010, HSBC stated that Plaintiff was in default.
(See Exhibit L). In response, Plaintiff sent another request for debt
validation. This was directed to HSBC officer and Director, Stephen Tich.
28. In response to Exhibit M, HSBC sent another copy of the alleged Note.
(See Exhibit N). With this response on June 25, 2010, HSBC claimed that it
shipped the loan file “which contained the original signed loan documents”
to the McLean branch. However, as stated above, Plaintiff alleges that the
file viewed at the Mclean branch was not the original signed note.
Therefore, by its own admission, HSBC has admitted that it does not have
the original signed note as it was not able to produce the wet ink signature
for viewing. In essence, HSBC cannot verify Plaintiff’s obligation on the note
29. Plaintiff created a “good faith” account wherein he placed his monthly
payments for the duration of this controversy. On June 12, 2010 Plaintiff
Exhibit O). Such move was precipitated by a fear that HSBC would empty
30. After several attempts to validate any debt with HSBC, Plaintiff sent
Contract Novation under which the “alleged debt is now void, this matter is
31. In addition to not being able to validate the debt by providing the original
note, Plaintiff also alleges that at the time of closing, Plaintiff thought that
obligation. However, the real transaction was that Plaintiff signed a note
that was converted into a “BOND” and then sold to various investors
unbeknownst to Plaintiff.[5] The Plaintiff was not a part of the “Bond” deal,
32. In essence, the real transaction was as follows: Wells Fargo Asset
(hereinafter “PSA”) filed before the SEC as Exhibit 4.1 of the 8K report, the
securitization partners admit that Plaintiff’s loan was sold to various parties.
[6]
33. As per the securitization documents filed, the “True Sale” occurred from
Brothers Special Financing Inc. and Lehman Brothers Inc. The Trustee,
“HSBC Bank USA, National Association” in this case was not involved in sale
34. Further, the Trust that allegedly “owns” Plaintiff’s note and purportedly
forms the basis by which a foreclosure was attempted has been dissolved.
Therefore the trust is no more, and as such, HSBC Bank USA, National
2008-AR2 Trust. The triggering event that caused the trust to dissolve is the
Credit Default Swaps, AIG Bail out and insurance proceeds. See also f.n.2.
35. Moreover, neither the “original’ note that Plaintiff allegedly saw on
January 17, 2010, nor any other version or copy of the Plaintiff’s note
title included.
38. The nominal lender HSBC Mortgage Corporation sold Plaintiff’s loan for
cash to Wells Fargo Bank NA, who sold it to Wells Asset Securities, who in
the secured party on Plaintiff’s note that has directed Equity Trustees to
39. In this fraudulent and faulty letter Bierman & Geesing falsely refers to
HSBC as the secured party. Had they been in possession of the Deed of
Trust, they would have noted that the beneficiary of the Deed is MERS. (See
Exhibit D). Further, Bierman & Geesing states that Plaintiff’s Note is
sale by either Bierman & Geesing or Equity Trustees, Plaintiff checked the
41. As of October 12, 2010, two days prior to the attempted sale of Plaintiff’s
S- a certified copy of Land Records showing NO Activity for the past two
years.)
18, 2010, nor did they bother to notify the Plaintiff of their fraudulent
43. Upon information and belief HSBC never “loaned” any money at all.
used that deposit to pay the seller, and continued to use Plaintiff’s good
name and credit for its own profit and criminal enterprise.
application now has a CUSIP number attached to it. Such number strongly
purchase a bond, and such bond was then used to obtain a loan from the
45. If such allegations prove true, then any remaining loan is actually with the
government, not HSBC.
to an instrument.
47. All the listed Defendants were involved in a joint venture in furtherance of
score, and other information without disclosing these facts to the Plaintiff.
While Plaintiff thought he was getting a simple loan, his information was
joint venture for their own profit much before Plaintiff even applied for the
loan.
48. The Joint Venture formed by all the known and unknown Defendants
to evade paying taxes. Among other illegalities, Plaintiff’s note was not
COUNT I
CIVIL FRAUD
(Bierman, Geesing & Ward and Slater)
50. Plaintiff alleges that Bierman & Geesing and Slater knowingly made false
representations of material fact with the intent to mislead Plaintiff, and that
51. As referenced above, Defendant Bierman & Geesing sent Plaintiff a letter
communication Bierman & Geesing falsely states that HSBC is the secured
MERS not HSBC as Bierman & Geesing states in that letter. (See Exhibit D).
52. Bierman & Geesing also fraudulently prepared the substitution of trustee
53. Further, Defendants have referenced §§ 55-59.1 (B) of the Virginia Code.
At the top of the correspondence it states that they are a “debt collector”
while at the bottom they declare themselves “Attorneys for the Secured
Party.”
Trustees is not a singular incident. (See Exhibit U). Bierman & Geesing has
58. Because of the deceptive practice of the Bierman & Geesing law firm, the
COUNT II
CIVIL FRAUD
(HSBC Mortgage Corporation (USA) ,MERS, & Debra Bassett,
60. Plaintiff alleges that HSBC directly and through its joint venture and/or
representations of material fact with the intent to mislead Plaintiff and that
truth she only sent a copy of the alleged “original note” and
Further, what she claims is the “original note” was not the
See Exhibit E.
file. In truth, Plaintiff only received the note from her and not
was sent to the local branch of HSBC. And S. Cox further states
only a four page copy of the alleged note which clearly was a
61. Defendants have used their superior knowledge of the Federal Reserve
62. Plaintiff alleges that nominal lenders, and HSBC, deceived borrowers,
63. Plaintiff also believes, based on attached affidavits and other testimony
that the alleged Note, Application, etc. were all fraudulently monetized
64. Because of the fraudulent nature of the Action, Plaintiff is led to believe
65. Absent any proof or presentment of original wet ink signature promissory
66. Further, even as HSBC knows or should know that the Wells Fargo
foreclose under its false authority. [10] A trigger even followed as a result of
TERMINATED.
f) Since Trust has been dissolved and HSBC Bank USA, National
COUNT III
FAILURE TO PROVIDE PROOF OF STANDING TO FORECLOSE (Defendants
HSBC, MERS , Beirman & Geesing, and Slater )
68. Around January 2010, February 17, 2010 and March 10, 2010, the Plaintiff
requested that HSBC provide clarification as to who owned and held the
subject Promissory Note and the Security Deed (“Deed of Trust” or “DOT”).
Such clarification would require that the purported holder of the Note
produce the original Promissory Note, with the Plaintiff’s original signatures
and proof of the chain of title. Such information was not provided.
70. Despite knowing full well that Plaintiff’s note has been sold multiple times
and the trust allegedly holding Plaintiff’s note had terminated, Defendants
71. Since HSBC has sold the note; they cannot foreclose as they are not the
holder or the holder in due course. HSBS had already sold what they had
some time, and admitted under sworn statement on S-3 Registration Form,
72. HSBC has been unable to provide evidence that validates the debt. It is
undisputed that the named lender on the loan documents has been paid in
full, plus a fee for standing in for the undisclosed lender, and that the note
73. Upon information and belief, the mortgage note has been paid in whole or
lender in exchange for certain unrecorded rights to the revenues arising out
of the loan documents. To the extent that Defendants have been paid on
constitute a fraud upon the court and a violation of the rights of Plaintiff to
74. Plaintiff alleges that Defendants, and each of them, have represented to
Plaintiff and to third parties that they were the owner of the Trust Deed and
75. Plaintiff’s reliance was justified based upon the position and false
representations of Defendants.
76. Plaintiff alleges that Defendants, and each of them, knew at the time they
made these representations to Plaintiff that they were untrue and were
attempting to foreclose on Plaintiff’s Trust Deed and Note that they had no
right to do so.
77. All the listed Defendants acted in a joint venture or an agency relationship
COUNT IV
CIVIL RICO
HSBC Mortgage Corp. (USA),
MERS, Debra Bassett, Bierman, Geesing, and Ward, LLC, and Jared
Slater.
79. By Virginia Code 8.1A-103, Plaintiff now brings forward various UCC
violations pertaining to mail fraud, bank fraud, securities fraud, and RICO.
83. The Defendants scheme to defraud violates mail and wire fraud statutes
reference to the Deed of Trust which they apparently have never seen
84. In addition, the Hobbs Act applies wherein Defendants are using “color of
law” conspire to extort property from Plaintiff knowing full well that there is
no Note and, and thus no obligation. Plaintiff has indeed lost substantial
continue their assault and attempt to extort what is not theirs to begin with.
attorneys’ fees.
Defendants have sold the unregistered security, because the note is not a
rather UCC Article 4 does because it has been deposited in a bank. But
eventually after it has gone into an SPV, and been securitized, UCC Article 8
87. The subject conspiracy has existed from date of Plaintiff’s application to
90. As a direct and proximate result of the actions of the Defendants Plaintiff
COUNT V
92. Plaintiff alleges that all Defendants involved, in a joint and concerted
93. In accordance with 15 U.S.C. § 1601, et seq. (“TILA”) and 12 CFR § 226
(“Reg. Z”) the closed-end real estate transactions at issue were made with a
“creditor;” incurred a “finance charge;” were payable in more than four (4)
and Reg. Z.
94. Transactions that fall under the purview of TILA and Reg. Z must make
95. To date, Defendant HSBC and others have failed to properly provide
Plaintiff with some or all of the pre-disclosures as required by TILA and Reg.
HSBC has actively provided false information so that Plaintiff would remain
96. Defendants failed to include and disclose certain charges in the finance
Plaintiff incident to the extension of credit to the Plaintiff and were required
amount financed which is different from the sum listed on the original Note.
97. By calculating the annual percentage rate (“APR”) based upon improperly
with the right to rescind the transaction, and Plaintiff, through this public
99. As mortgage lenders, Defendants are subject to the provisions of the Real
100. In violation of 12 USC sec. 2607 and in connection with the mortgage loan
performed.
Plaintiff in an amount equal to three (3) times the amount of charges paid
103. On or before the date of settlement, Plaintiff was not provided with, and
days after the URLA was received or prepared. Thus, Plaintiff was
104. Because Plaintiff was not provided with necessary RESPA pre-disclosures,
the aforementioned charges are fees, kickbacks, or other things of value in
Plaintiff’s Qualified Written Request within the appropriate time period and
Equifax, and Trans Union, under the Federal Fair Credit Reporting Act. 65.
the lowering of their FICO scores. (Plaintiff has already filed a report with the
107. The negative information included but was not limited to an excessive
amount of debt into which Plaintiff was tricked and deceived into signing,
and that Plaintiff owed the debt to HSBC, an entity that did not verify or
108. Notwithstanding the above, Plaintiff has paid each and every payment on
time from the time of the loan closing through the time Plaintiff disputed the
validity of the debt but received no validation of the debt allegedly owed to
HSBC. As stated, Plaintiff has continued to make payment into an escrow
amount to be proven at the time of trial for all violations of the Fair Credit
110. Plaintiff is entitled to recover damages from Defendants for negligent non-
compliance with the Fair Credit Reporting Act pursuant to 15 USC sec.
1681(o).
Defendants for their willful noncompliance with the Fair Credit Reporting Act
trial.
oppression, malice, fraud, and with disregard for harm to Plaintiff. Plaintiff
114. WHEREFORE, Plaintiff demands judgment against Defendants for all actual
reasonable attorneys’ fees, witness fees, court costs, and other litigation
costs incurred by Plaintiff and any other relief deemed appropriate by this
Honorable Court.
COUNT VI
SLANDER OF TITLE
(HSBC, MERS and Bierman & Geesing)
116. The negotiable instruments for Plaintiff’s loan are not enforceable because
“pooled” with other similar debt obligations and then securitized, the newly
PSA. The pooling servicer must service the note in a manner that complies
with the PSA, which constitutes “another record” that the original note is
117. The purpose of MERS was to help in the securitization process. Basically,
mortgage bonds. MERS was essentially the operating table where the
118. However, legally MERS didn’t hold any mortgage note: The true owner of
the mortgage notes should have been the REMIC’s. But the REMIC’s didn’t
own the note either, because of a fluke of the ratings agencies: The REMIC’s
somewhere between the REMIC’s and the MERS, the chain of title was
broken.[12]
the Property and such cloud on his title makes it impossible for Plaintiff to
sell the Property with a clean title until the Court determines the Deed of
Trust and related filings against the Property are no longer valid and orders
them removed.
120. Upon information and belief, Defendant Bierman & Geesing has filed false
(See Exhibit “T”) As such, Defendant Bierman & Geesing has slandered title
with a clean title until the Court determines the DOT and related filings
121. Plaintiff’s note contains MERS on the DOT, as such there is an immediate
and fatal flaw in title, making the mortgage unenforceable. When the
instrument, apart from the promissory note giving rise to the debt has no
[15]
interest and fees paid to date on the same, plus punitive damages and
COUNT VII
UNJUST ENRICHMENT
DEFENDANTS HSBC Mortgage Corp. (USA), MERS, and Bierman &
Geesing
125. Defendants had an implied contract with the Plaintiff to ensure that
obtain credit on Plaintiff’ behalf, and to not charge any fees which were not
related to the settlement of the loan and without full disclosure to Plaintiff.
126. Defendants cannot, in good conscience and equity, retain the benefits
kickbacks, profits (including but not limited to from resale of mortgages and
notes using Plaintiff’s identity, credit score and reputation without consent,
gains and YSP (Yield Spread Premium) fee unrelated to the settlement
127. Defendants have been unjustly enriched at the expense of the Plaintiff,
equity.
128. Defendants have also been additionally enriched through the receipt of
PAYMENT from third parties including but not limited to investors, insurers,
other borrowers, the United States Department of the Treasury, the United
States Federal Reserve, and Federal bail- out from the tax payer money.
when they sold the toxic assets to Maiden Lane I, II & III[16] after AIG Bailout
and fraudulently foreclosing the people’s homes including the Plaintiff when
they knew the Defendants are not the owners of these properties.
Defendants do not own the loan, yet continue to attempt collection and/or
130. WHEREFORE Plaintiff thus demands restitution from the Defendants in the
132. All listed Defendants acted together in a combined and concerted effort to
in violation of law.
133. Upon information and belief, Defendants had an understanding that the
(“SPE”)3.
unlawful means, and to commit one or more overt acts in furtherance of the
conspiracy to defraud the Plaintiff.
137. In connection with the application for and consummation of the subject
damages.
140. As trustee and the substitute trustee, Defendants Basset and Bierman &
Geesing and Slater had a fiduciary duty to Plaintiff to both disclose truthful
141. Bierman & Geesing, Basset and Slater failed to provide the information
Plaintiff requested, failed to verify the validity of the Plaintiff debt, yet
attempted foreclosure on behalf of a creditor that they knew did not own or
control Plaintiff’s debt.
142. As a direct and proximate result of the actions of the Defendants, Plaintiff
COUNT X
BREACH OF CONTRACT/BREACH OF DUTY OF GOOD FAITH AND FAIR
DEALING – HSBC Mortgage Corporation (USA), and BIERMAN & GEESING
Further, Plaintiff alleges that it has not defaulted on its obligations to pay on
the note and Deed of Trust as it has repeatedly asked for verification and
validation of its debt. Only the “LENDER” can appoint and the “LENDER” is
Plaintiff false information about the true owner of Plaintiff’s note, by not
it had not rights to foreclose, the listed Defendants routinely and regularly
breached their duties under the PSA (with Plaintiff being a third party
beneficiary), and breached their duty to Plaintiff of Good Faith and Fair
Dealing.
146. Defendants breached the PSA submitted for the 2006-G Trust that
included Plaintiff’s loan. Without such PSA, Plaintiff and other similarly
150. None of the listed Defendants are (i) the holder of Plaintiff’s note or Deed
151. By the very nature of the way Plaintiff’s Note was “pooled,” the Note lost
its individual identity under the express terms of the PSA. The revenue from
the Note was made part of a larger promise to pay, under which the
payments less than one note could be effectively applied to another note
level combined with the re-pooling at the SPV level, the note was converted
bailouts from the U.S. Treasury and Federal Reserve indicate that the listed
would offer sufficient facts for Plaintiff or this Court to establish who the
necessary parties to this action are, what are the Defendants’ legal
the property including but not limited to a claim for foreclosure on the
Promissory Note.
155. Defendants’ failure to meet the standing requirements renders its threat of
156. To have legal standing to foreclose, HSBC must allege that it is a holder in
due course of the Note and the mortgage, an allegation which Defendant
the trust. This mean that there must be proper endorsement from the
originating lender to the wholesale lender to the issuer, and finally
2.01.)
160. In order for the mortgage loan and Note to have been conveyed legally
into the Pool, the Note requires endorsement from all intervening parties
from the Originator HSBC to the Trustee, HSBC Bank USA, National
Association.
At some point therein, the loan was sold to Wells fargo Bank, N.A., the
sponsor listed on the [PSA]. Thereafter, that sponsor then sold the loan to
Wells Fargo Asset Securities Corporation then sold the loan to the Issuing
2008-AR2 Trust CIK#: 0001425053 then sold the loan to the Trustee HSBC
Bank USA National Association for the benefit of the Certificate Holders.
163. MERS is, simply stated and pursuant to its name, a registration system
identified. MERS did not lend any money to Plaintiff at anytime, nor did
Substitute Trustee” was MERS the holder of the Note, nor was MERS named
the Deed of Trust with any power to name and/or designate a substitute
trustee under and pursuant to the terms of the Deed of Trust, nor was MERS
ever vested with the powers of a substitute trustee under the terms of the
Deed of Trust.
165. Accordingly and pursuant to the allegations heretofore set forth, the cause
166. Plaintiff states that according to the Deed of Trust at paragraph 24,
ONLY THE LENDER has the authority to appoint a substitute trustee. The
“Lender at its option, may from time to time remove Trustee and
appoint a successor trustee to any trustee appointed
hereunder.........by applicable law”.
167. The appointment of the substitute trustee raises questions as such
appointment was not done as per “paragraph 24” of the Deed of Trust.
Neither Maria Vadney nor Michelle Laster have any authority to appoint the
trustee. ONLY the LENDER can exercise the option of appointing a substitute
trustee. Neither Ms. Vadney nor Ms. Laster, lent any money; therefore, it
does not fit the definition of a lender, so neither are authorized to execute
is NOT VALID and therefore, the acts of the substitute trustees including
168. Also, Plaintiff has sent the following documents to the named Defendants:
service.
169. After the passage of 20 days (in addition to 5 days, as the Rescission and
Demand Letter was sent by U.S. Mail) Defendant had not produced the
170. As Defendant HSVBC has failed to act in timely manner upon receipt of
the Rescission and Demand letter, it is noncompliant with federal law and
has given rise to a claim against itself.
lien and the liability. The statute and regulation specify that the
(d) (1) 1.
174. The statute and Regulation Z state that if creditor disputes the consumer’s
twenty days after receiving the rescission notice, before its deadline to
return the consumer’s money or property and record the termination of its
security interest (15 USC 1625(b)). Once the lender receives the notice, the
b. Since Plaintiff has legally rescinded the loan, the supposed mortgage
holder, HSBC must return any money, including that which may have
226.23(d)(2).
1640..
175. Plaintiff requests the Honorable Court to order the Defendants to file
176. Also, Defendants HSBC and Bierman & Geesing are to take any necessary
or appropriate action to reflect the fact that the security interest was
Z-226.15(d)(2),226.23(d)(2).
177. Plaintiff also requests the honorable Court to compel HSBC to produce an
S3 registration statement which will indicate that Defendants are not the
178. Plaintiff has a claim in recoupment under § 3-305 of the UCC, which
Plaintiff will exercise at his option, if Defendant HSBC does not credit
Plaintiff’s account. The 1099-OID will identify who the principal is from,
which capital and interest were taken, and who the recipient or who the
payer of the funds are, and who is holding the account in escrow and
unadjusted.
179. WHEREFORE Plaintiff respectfully requests the Court to declare the DOT
currently encumbering the Property to be null and void and to order such
DOT and all related filings to be removed from the land records.
WHEREFORE, having set forth numerous legally sufficient causes of action against
d. All undisclosed profits and fees and all money paid at closing;
f. That the Court find that the transactions which are the subject of this
action are illegal and are deemed void;
k. For any other and further relief which is just and proper.
WHEREFORE, Plaintiff respectfully prays that this Court award relief for
any action which would result in Plaintiff being ousted from the disputed Property.
Promissory note and therefore are not entitled to enforce the same, and by further
virtue that HSBC is not the “Lender,” “Beneficiary,” nor party entitled to enforce
the terms of the pertinent Deed of Trust, no Defendants, nor anyone acting on
their behalves, has or had a right to issue a notice of default, accelerate the
balance due under the pertinent note and/or foreclose and/or commence and/or
Defendants are not stopped from commencing and/or pursuing any action to
further their unlawful claims to an interest in the property, Plaintiff could and
would thereby lose his home, a loss Plaintiff should not be permitted to suffer.
Even if any of the Defendants can, at some point, prove that they are acting
under claim of right and with rightful authority, any injuries each might suffer by
the court granting a restraining order and preliminary injunction against them
would be substantially less harmful than those which Plaintiff would suffer by the
prohibiting them from issuing a notice of default, accelerating the balance due
under the pertinent note and/or foreclosing and/or commencing and/or attempting
to foreclose.
By the actions above and allegations set forth herein, Plaintiff has a strong
likelihood of prevailing on the merits of this case. Plaintiff requests that this Court
Defendants from engaging in the wrongful conduct identified herein in the future.
RIGHT TO AMEND
Plaintiff hereby reserves the right to amend this lawsuit, including additional
JURY TRIAL
CERTIFICATE OF SERVICE
Below are the footnotes, but they did not copy exactly in the same
location:
[1] This entire notice was recorded in the public record of Jefferson County, WV as
the court in Virginia refused to accept the filing.
[2] Also in the public record of Jefferson County, WV.
[3] Plaintiff provided Defendants HSBC and Basset a second opportunity to cure
the defects in their response or non-responses by using a Notary to present the
notices. (See Exhibit I).
[4] Making a photocopy of the negotiable instrument and presenting it to Plaintiff
as evidence of the debt gives HSBC as much authority to collect on the debt as
one would have to purchase items from a store using a photocopy of a $100.00
bill.
[5] The creditor/Investor receives an instrument which is generically referred to as a Mortgage Backed
Asset Certificate/Bond (“Certificate/ Bond”). The Certificate/Bond incorporates terms by which the
promise to pay interest and principal is made by the issuing SPV and the manager for this in the present
case is HSBC Bank USA, National Association.
[6] The PSA, Exhibit 4.1 of the current 8K report filed before the SEC as per file #
333-143751-13 and Accession # 914121-8-213 dated March 06, 2008, by the
securitization partners is a public record available at www.sec.gov.
[7] At minimum, Plaintiff’s note should include the following endorsement to show
the proper chain of transfers: HSBS Mortgage Corporationà Wells Fargo Bank,
N.Aà Wells Fargo Asset Securities Corporationà Lehman Brothers Special
Financing Inc.à Lehman Brothers IncàDealersàAgentsà Investors. This can be
found on the www.sec.gov website at the Prospectus Supplement 424(b)5, SEC file
# 333-143751-13, Accession # 1193125-8-38785, filed on 02/26/2008 at 4:48PM
ET). This is also confirmed by examination of the securitization audit performed
and entered into evidence in the Eastern District Court of Virginia in Alexandria,
Case: 1:10cv1427.
[8] Under PSAs, for a mortgage note to validly transfer to a mortgage securitization trust, the note
must bear special endorsements evidencing each and every transfer of the note from the
originator of the loan to the securitization trustee. A note bearing a “blank” endorsement by the
originator, or by another entity further along in the chain of transfer, does not satisfy the
requirements of certain PSAs, and thus that the transfer of such a note into a trust is rendered void
by New York Estate, Powers and Trust Law § 7-2.4.
ARTICLE II, CONVEYANCE OF MORTGAGE LOANS; REPRESENTATIONS AND WARRANTIES
PSA Section 2.01 (b)(i) states:
“the original Mortgage Note bearing all intervening endorsements showing a complete chain of
endorsement from the originator to the last endorsee, endorsed "Pay to the order of _____________,
without recourse” and signed (which may be by facsimile signature) in the name of the last
endorsee by an authorized officer. To the extent that there is no room on the face of the Mortgage
Notes for endorsements, the endorsement may be contained on an allonge, unless state law does
not so allow and the Trustee is so advised in writing by the applicable Original Loan Seller or the
Depositor that state law does not so allow”
[9]Real Estate Mortgage Investment Conduits, or "REMICs," (sometimes also called Collateralized
mortgage obligations) are a type of special purpose vehicle used for the pooling of mortgage loans and
issuance of mortgage-backed securities. Such entities are defined under the United States Internal
Revenue Code (Tax Reform Act of 1986), and are the typical vehicle for the securitization of
residential mortgages.
Though REMICs provide relief from entity-level taxation, their allowable activities are limited to
holding a fixed pool of mortgages and distributing payments currently to investors. A REMIC has
some freedom to substitute qualified mortgages, declare bankruptcy, deal with foreclosures and
defaults, dispose of and substitute defunct mortgages, prevent defaults on regular interests, prepay
regular interests when the costs exceed the value of maintaining those interests, and undergo a qualified
liquidation, in which the REMIC has 90 days to sell its assets and distribute cash to its holders. All
other transactions are considered to be prohibited activities and are subject to a penalty tax of 100%, as
are all non-qualifying contributions.
[10] Maiden Lane III LLC (a Special Purpose Vehicle consolidated by the Federal Reserve Bank of
New York) (the "LLC") is a Delaware limited liability company that was formed on October 14, 2008
to acquire Asset-Backed Security Collateralized Debt Obligations ("ABS CDOs") from certain third-
party counterparties(Banks) of AIG Financial Products Corp. ("AIGFP"). In connection with the
acquisitions, the third-party counter parties (Banks) agreed to terminate their related credit
derivative contracts with AIGFP.
1 MBS means securities backed by specific mortgage loans and the payments on which are tied to
or derived from the cash flows produced from underlying mortgage loans.
2 CMO refers to series of securities created by dividing the cash flows from a pool of mortgage
loans among various serially maturing tranches of securities. Typically, CMOs receive the tax
classification applicable to real estate mortgage investment conduits (REMIC) under U.S. tax laws.
3 A SPE is a legal entity formed for a limited purpose; in securitization, it serves to hold legal rights
to the assets transferred from the originator. In the U.S., SPEs facilitate securitization by enabling
the use of “bankruptcy-remote structures” (a technique used for isolating assets or loans from the
bankruptcy risk of the company financing or selling the assets).
[11] The whole purpose of MBS’s was for different investors to have their different risk appetites
satiated with different bonds. Some bond customers wanted super-safe bonds with low returns;
some others wanted riskier bonds with therefore higher rates of return. Therefore, as everyone
knows, the loans were “bundled” into REMIC’s (Real-Estate Mortgage Investment Conduits, a
special vehicle designed to hold the loans for tax purposes), and then “sliced & diced”—split up
and put into tranches, according to their likelihood of default, their interest rates, and other
characteristics. This slicing and dicing created “senior tranches”, where the loans would likely be
paid in full. And it also created “junior tranches”, where the loans might well default. (A whole
range of tranches were created, of course, but for purposes of this discussion, we can ignore all
those countless other variations.) These various tranches were sold to different investors,
according to their risk appetite. That’s why some of the MBS bonds were rated as safe as Treasury
bonds, and others were rated by the ratings agencies as risky as junk bonds. When an MBS was
first created, all the mortgages were pristine—none had defaulted yet, because they were all
brand new loans. Statistically, some would default and some others would be paid back in full—but
which ones specifically would default? No one knew, of course. If I toss a coin 1,000 times,
statistically, 500 tosses the coin will land heads—but what will the result be of, say, the 723rd toss
specifically?
[12] The note homebuyer signs is the actual IOU. In order for the mortgage note to be sold or
transferred to someone else (and therefore turned into a Mortgage Backed Security), this document has
to be physically endorsed to the next person. All of these signatures on the note are called the “chain of
title”. Without a clear chain of title, the person who took out the mortgage no longer knows who to
pay. No assignment of the chain of transfer were recorded in the Fairfax County Land Records.
[13] A party cannot foreclose on a mortgage without having title, giving it standing to bring the
action. (See Kluge v. Fugazy, 145 AD2d 537, 538 (2nd Dept 1988 ), holding that a “foreclosure of a
mortgage may not be brought by one who has no title to it and absent transfer of the debt, the
assignment of the mortgage is a nullity”. Katz v. East-Ville Realty Co., 249 AD2d 243 (1st Dept
1998), holding that “[p]plaintiff’s attempt to foreclose upon a
mortgage in which he had no legal or equitable interest was without foundation in law or fact”
and Non-judicial sale is NOT an available election for a securitized loan
[14] In Carpenter v. Longan, the U.S. Supreme Court stated “The note and mortgage are
inseparable; the former as essential, the latter as an incident. An assignment of the note
carries the mortgage with it, while an assignment of the latter alone is a nullity.” Carpenter v.
Longan, 16 Wall. 271, 83 U.S. 271, 274, 21 L.Ed. 313 (1872). Assigning the mortgage
instrument was invalid as it held no beneficial interest in the mortgage instrument for two
reasons: 1) a security instrument, apart from the promissory note giving rise to the debt has no
value because there is no debt by which it secures payment; and 2) MERS had no beneficial
interest in the mortgage instrument that it could assign. An assignment of the note carries the
mortgage with it, while an assignment of the latter alone is a nullity.” The mortgage loan
becomes ineffectual when the note holder did not also hold the deed of trust.” Bellistri v.
Ocwen Loan Servicing, LLC, 284 S.W.3d 619, 623 (Mo. App. 2009)
[15] “The practical effect of splitting the deed of trust from the promissory note is to make it
impossible for the holder of the note to foreclose, without the agency relationship, the person
holding only the note lacks the power to foreclose in the event of default. The person holding
only the deed of trust will never experience default because only the holder of the note is
entitled to payment of the underlying obligation. The mortgage loan becomes ineffectual
when the note holder did not also hold the deed of trust.” Bellistri v. Ocwen Loan Servicing,
LLC, 284 S.W.3d 619, 623 (Mo. App. 2009). According to Restatement 3rd, when the note and
DOT are split, they can never be put back together again.
Courts around the country started to recognize that MERS had no ownership in the notes and
could not transfer an interest in a mortgage upon which foreclosure could be based. In
Landmark National Bank v. Kesler, the Kansas Supreme Court extensively analyzed the position
of MERS in relation to the, that it did not lend money, did not extend credit, is not owed any
money by the mortgage debtors, did not receive any payments from the borrower, suffered no
direct, ascertainable monetary loss as a consequence of the litigation and consequently, has
no constitutionally protected interest in the mortgage loan. Landmark National Bank v. Kesler,
216 P.3D 158 (Kansas, 2009).
In LaSalle Bank NA v. Lamy, the court denied a foreclosure action by an assignee of MERS on
the grounds that MERS itself had no ownership interest in the underlying note and mortgage.
LaSalle Bank NA v. Lamy, 824 N.Y.S.2d 769 (N.Y. Supp. 2006).
In the case In re Mitchell, the court found that MERS has no ownership interest in the
promissory note. The court found that though MERS attempts to make it appear as though it
is a beneficiary of the mortgage, it in fact is not a beneficiary. The Court stated “But it is
obvious from the MERS' "Terms and Conditions” that MERS is not a beneficiary as it has no
rights whatsoever to any payments, to any servicing rights, or to any of the properties secured
by the loans. In re Mitchell, Case No. BK-S-07-16226-LBR (Bankr.Nev., 2009),
[16] Maiden Lane III LLC (a Special Purpose Vehicle consolidated by the Federal Reserve Bank of
New York) (the "LLC") is a Delaware limited liability company that was formed on October 14, 2008
to acquire Asset-Backed Security Collateralized Debt Obligations ("ABS CDOs") from certain third-
party counterparties(Banks) of AIG Financial Products Corp. ("AIGFP"). In connection with the
acquisitions, the third-party counter parties (Banks) agreed to terminate their related credit
derivative contracts with AIGFP. Maiden Lane Transactions, Maiden Lane LLC, Maiden Lane II LLC,
Maiden Lane III LLC, Federal Reserve Statistical Release". Federal Reserve Bank of New York.
August 10, 2010. http://www.federalreserve.gov/releases/h41/Current/, "SIGTARP Report 10-003 -
Factors Affecting Efforts to Limit Payments
1 MBS means securities backed by specific mortgage loans and the payments on which are tied to
or derived from the cash flows produced from underlying mortgage loans.
2 CMO refers to series of securities created by dividing the cash flows from a pool of mortgage
loans among various serially maturing tranches of securities. Typically, CMOs receive the tax
classification applicable to real estate mortgage investment conduits (REMIC) under U.S. tax laws.
3 A SPE is a legal entity formed for a limited purpose; in securitization, it serves to hold legal rights
to the assets transferred from the originator. In the U.S., SPEs facilitate securitization by enabling
the use of “bankruptcy-remote structures” (a technique used for isolating assets or loans from the
bankruptcy risk of the company financing or selling the assets).
[17] Basically
credit default swap is like insurance (but it is not defined as
insurance, but rather unregulated securities by Federal Law), and there is nothing
preventing an investor from insuring on losses multiple times.