TRO

4
1 RJCHARD A. HALL (SBN 135483) BOTTOfvlLINE LA "VYERS

2 985 Lincoln Way, Suite 206 Auburn, California 95603

3 Telephone: (530) 888-7100 Facsimile: (866) 305-1238

5 Attorneys for Plaintiffs

DANIEL MAJOR EDSTROM, an individual; 6 and TERI ANNE EDSTROM, an individual

IOMAY 2S AM 8d~8 " "l'll-'Y ELDOHAOO ljUh~ t·

SUPERIOR COUR i /--..".,

DEPUTY

SUPERIOR COURT OF CALIFORNIA COUNTY OF EL DORADO

IT IS HEREBY ORDERED, pursuant to Code of Civil Procedure section 527and 528,

that defendants shall appear on _ _,{ ..... Q""-_,_.P _I __ I_·--_·_I_O , at

20 q, 30 A- M., in department _q....:' , of the El Dorado County Superior Court, located at

7 8 9

10 DANIEL MAJOR EDSTROM, an )

individual; and TERI ANNE )

11 EDSTROM, an individual, )

) .

12 Plaintiffs, )

)

13 v. )

) 14 NDEX WEST, LLC, a Delaware limited)

liability company; etc. )

15 )

Defendants. )

16 17 18

19

10 () 31

CASE NO.

ORDER TO SHOW CAUSE RE PRELIMINARY INJUNCTION

DATE:

TIME:

DEPT:

21 3321 Cameron Park Drive, in Cameron Park, California, to show cause, if any there be, why this

22 Court should not enter a preliminary injunction, pending final ruling on the claims in the

23 complaint, enjoining defendants from further violations of the California Civil Code; continuing 24 the terms of this order; and, imposing such additional relief as may be appropriate.

25 IT IS FURTHER ORDERED that the moving party shall serve on the Court and on all

26 other parties all memoranda, affidavits, and other evidence on which plaintiffs intend to rely, at

27 the preliminary injunction, by no later than to ? L/. .- 10 . Any

28 opposition to the motion papers must be filed and served by no later than

ORDER TO SHOW CAUSE RE: PREUMINARY INJUNCTION

-1-

1 I ' Any reply must be filed and served by no

2 later than _&_:___-·--=O=-----_~ __ I_U_' ' Service of all papers shall be in a manner that

3 guarantees receipt of the documents by no later than forty-eight hours after they have been filed.

4 IT IS FURTHER ORDERED THAT this order be served upon all defendants forthwith.

5
6 DATED:
7
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26
27
28 COUNTY OFEL DORADO

ORDER TO SHOW CAUSE RE: PRELIMINARY INJUNCTION

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4

TEMPORARY RESTRAINING ORDER

I

10 Y25 Mi

1 ,RICHARD A. HALL (SBN 135483) BOTT01\/ILINE LA 'WYERS





SUPERIOR COURT OF CALIFORNIA COUNTY OF EL DORADO

7 8 9


individual; and TERI ANNE )


)

12 Plaintiffs, )

)

13 v. )


liability company; )

15 )

Defendants. )

PC 20100314

CASE NO. TEMPORARY RESTRAINING ORDER

DATE: May 25, 2010 TIME: 8:15

DEPT: 9

16

17

18 Plaintiffs, Daniel Major Edstrom and Teri Anne Edstrom, have filed a complaint seeking

19 injunctive, declaratory and other relief, and also filed an ex parte application for a temporary

20 restraining order (TRO), pursuant to Code of Civil Procedure section 527 and 528.This Court has 21 considered the submissions filed in support of the TRO, including the application for TRO, the

22 exhibits, memoranda, and declarations, and now being advised in the premises, finds that:

23

1.

There is good cause to believe that defendants have engaged, and are likely to continue to engage, in acts or practices that violate the Civil Code of California;

24 25

and that plaintiffs are, therefore, likely to prevail on the merits of this action.

26

2.

There is good cause to believe that plaintiffs will suffer immediate and continuing harm unless defendants are immediately restrained by an order of this Court.

27 28

3.

Plaintiffs' memorandum in support of their TRO application and the

-1-

1 2


3

accompanying declarations and exhibits demonstrate that it is likely that defendants have engaged in a concerted course of illegal activity in initiating foreclosure proceedings against plaintiffs' home, including scheduling a trustee sale at which plaintiffs' home will be put on the auction block, on May 26,2010, at 10 a.m.

In compliance with the California Rules of Court, counsel for plaintiff has submitted a certification evidencing the efforts to provide notice to defendant of the submission of plaintiff s TRO motion and copies of all pleadings and papers filed in the action to date.

Notice to all parties herein by this TRO has been given, pursuant to the certification provided by plaintiff.

The court finds, under its discretionary authority, that plaintiff does not have to give any security at this time to postpone the foreclosure sale.

This temporary restraining order is in the public interest.

4 5 6 7 8 9

10 11 12

4.

5.

6.

13

14

7.

15 THEREFORE, THE COURT HEREBY ORDERS as follows:

16 (1) All defendants and their agents, assigns, employees, officers, attorneys, and

17 representatives are enjoined and restrained from engaging in or performing any act

18 to deprive plaintiff of ownership or possession of the real property located at 2690

19 Brown Bear Court, Cool, California 95614 (hereafter, "the property"), including

20 but not limited to instituting, prosecuting or maintaining foreclosure or sale

21 proceedings on the property, from recording any deeds or mortgages regarding the

(2)

property or from otherwise taking any steps whatsoever to deprive plaintiff of ownership in the property, and in particular from proceeding with the sale of the property scheduled for May 26, 2010, at 10 a.m.

This temporary restraining order shall be binding upon the parties to this action and all other persons or entities who receive actual notice of this order by personal service or other acceptable means of service.

Plaintiff shall forthwith serve a copy of this order upon all defendants, together

22 23 24 25 26 27 28

(3)

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1

(5)

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3

4 5 6 7 8

9
10
11 DATED:
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25
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28 with all other documentation filed with

court this action.

(4)

This temporary restraining order is entered this 25th day of May 2010, at ..A"i. .' "2._(").

__ «-0_,:.-,,;:;,;::;=--/ d .m., Pacific Standard Time.

Because all defendants were informed prior to this TRO that a TRO was being sought, this Court, under Hewlett v. Squaw Valley Ski Corp. (1997) 54 Cal.App.4th 499,534, has discretion to extend the duration of this TRO beyond the statutorily required 15-22 day period (Code Civ. Proc. Section 527(d)(1), and

I 7

c~~

JUDGE OF THE SUPERIOR COURT COUNTY OF EL DORADO


4

DATED: May 24,2010.

DfJ CD. SUPERIOR CT.

1 RICHARD A HALL (SBN 135483) BOTTOMLINE LA WYERS

2 985 Lincoln Way, Suite 206

Auburn, California 95603




fiLED

7 SUPERIOR COURT OF CALIFORNIA

8 COUNTY OF EL DORADO

9

) ) ) ) ) ) ) ) 14 NDEX WEST, LLC, a Delaware limited)

liability company; etc., )

) )

10 DANIEL MAJOR EDSTROM, an individual; and TERI ANNE

11 EDSTROM, an individual,

12

13

15

16 17

Plaintiffs,

v.

Defendants.

CASE NO.

20100314

SUPPLEMENTAL MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF PLAINTIFFS' EX PARTE APPLICATION FOR TEMPORARY RESTRAINING ORDER AND ORDER TO SHOW CAUSE RE PRELIMINARY

INJUNCTION

DATE: May 25,2010

TIME: 8:15

DEPT: 9

BY FAX

18 Mortgage Lenders Network filed for bankruptcy protection with the United States

19 Bankruptcy Court, on February 5, 2007, and consequently, therefore, had no authority to assign 20 any interest if any it had, after that date. In the instant case, Mortgage Lenders Network, through

21 its nominee, is purporting to transfer interest through two assignments in 2009. Because

Mortgage Lenders Network had filed for bankruptcy by that date, it was not authorized to transfer any interest it may have at after the time it filed for bankruptcy, in 2007. Therefore, any

22

23 24

25 26 27

28

assignments after that date are invalid.

BOTTOMLINE LAWYERS

RICHARD A. HALL

SUPP MPA ISO PLFS' EXPARTE APP FOR TRO AND OSC RE PRELIM INJUNCTION -1-

4

1 RICHARD A. HALL (SBN 135483)

BOTTOIVILINE LAWYERS 2 985 Lincoln Way, Suite 206 Auburn, California 95603




7 8 9

SUPERIOR COURT OF CALIFORNIA COmITY OF EL DORADO

10 DANIEL MAJOR EDSTROM, an individual; and TERI ANNE

11 EDSTROM, an individual,

) ) ) ) ) ) ) ) 14 NDEX WEST, LLC, a Delaware limited)


) )

12

Plaintiffs,

13

v.

15

Defendants.

16 17

CASE NO.

PC 2010031

18 Plaintiffs request the Court take judicial notice of the Voluntary Petition, filed with the

19 United States Bankruptcy Court, District of Delaware, on February 5, 2007. Attached hereto is a 20 true and correct copy of the "Voluntary Petition," on the website for ECMIECF, with a printout 21 of the first page of the case history. Plaintiffs also request the Court take judicial notice of the 22 action filed in San Francisco County Superior Court, titled Federal Hone Loan Bank of San

REQUEST FOR JUDICIAL NOTICE IN SUPPORT OF PLAINTIFFS' EX PARTE APPLICATION FOR TEMPORARY RESTRAINING ORDER AND ORDER TO SHOW CAUSE RE PRELIMINARY INJUNCTION

DATE: May 25, 2010

TIME: 8:15

DEPT: 9

BY FAX

23 Francisco, Credit Suisse Securities USA LLC (Case No. CGC-l 0-497840).

24 DATED: May 24, 2010. 25

BOTTOMLINE LA WYERS

26

27 28

RICHARD A. HALL

RJN ISO PLFS' EXPARTE APP FOR TRO AND OSC RE PRELIM INJUNCTION -1-

1ft

III

I a

RJNl

07-10146-P1W Mortgage Lenders Network USA, Inc.

Case type: bk Chapter: 11 Asset: Yes Vol: v Judge: Peter J. Walsh

Date filed: 02/05/2007 Date oflast filing: 05/24/2010 Plan confirmed: 02/03/2009

History

Doc.

No. Dates Description

Filed & Entered:

02/05/2007

Docket Text Case Assigned

1

Filed & Entered:

02/05/2007

Docket Text Voluntary Petition (Chapter 11)

2

Filed & Entered: 02/05/2007

Terminated: 02/28/2007

Docket Text Application to Employ/Retain (BF)

3

Filed & Entered: 02/0512007


Docket Text Application to EmploylRetain (BF)

4

Filed & Entered: 02/0512007


Docket Text Application to Employ/Retain (BF)

5

Filed & Entered:

02/0512007

Docket Text Notice of Appearance(B)

6

Filed & Entered:

02/05/2007

Docket Text Notice of Appearance(B)

7

Filed & Entered:

02/05/2007

Docket Text Certificate of Service

8



Docket Text Motion to Authorize (B)

9


Terminated: 0311412007

Docket Text Motion to Authorize (B)

10

Filed & Entered:

02/05/2007

(Official Form I) (10/06)

United States Bankruptcy Court I Vohmtary Petition
District of Delaware
Name of Debtor (if individual, enter Last, First, Middle) Name of Joint Debtor (Spouse) (Last, First, Middle)
Mortgage Lenders Network USA, Inc, I
All Other Names used by the Debtor in the last 8 years All Other Names used by the Joint Debtor in the last 8 years
(include married, maiden, and trade names): (include married, maiden, and trade names):
See attached Schedule I
Last four digits of Soc. Sec./CompJete ErN or other Tax 1.0. No. (if more Last four digits of Soc. Sec.lCompletc BIN or other Tax 1,D, No. (if more
than one, state all): than one, state all):
06-1467394
Street Address of Debtor (No, & Street, City, and State): Street Address of Joint Debtor (No. & Street, City, and State):
Middlesex Corporate Center ZIP CODE:
213 Court Street, 11 th Floor 06457 I I
Middletown, CT ZIP CODE:
County of Residence or the Principal Place of Business: County of Residence or the Principal Place of Business:
Middlesex County
Mailing Address of Debtor (if different from street address): Mailing Address of Joint Debtor (if different from street address):
I ZIP CODE: I
I ZIP CODE: I
Location of Principal Assets of Business Debtor (if different from street address above): I
ZIP CODE: I

Type of Debtor Nature of Business Chapter of Bankruptcy Code Under Which
(Form of Organization) (Check one box.) the Petition is Filed (Check ollie box)
(Check one box) 0 Health Care Business
0 Individual (include Joint Debtors) 0 Single Assets Real Estate as defined in I J OChapter7 0 Chapter 15 Petition for
See Exhibit 0 on page 2 of this form. U.S.C § 101 (5lB) o Chapter 9 Recognition of a Foreign
lEI Corporation (includes LLC and LLP) 0 Railroad 00 Chapter ! ! Main Proceeding
0 Partnership 0 Stockbroker OChapter 12 0 Chapter 15 Petition for
0 Other (If debtor is not one of the above 0 Commodity Broker DChapter 13 Recognition of a Foreign
entities, check this box and state type of entity 0 Clearing Bank Nonmain Proceeding
below.) lEI Other
Nature of Debts
(Check one Box)
Tax-Exempt Entity o Debts are primarily consumer (jg Debts are primarily
(Check box, if applicable.) debts, defined in 11 U's.c. business debts.
§ 101 (8) as .incurred by an
0 Debtor is a tax-exempt organization individual primarily for a
under Title 26 of the United States personal, family, or house-
Code (the Internal Revenue Code). hold purpose."
Filing Fee (Check one box) Chapter 11 Debtors
lEI Full Filing Fee attached Check one box:
o Debtor is a small business debtor as defined in 11 U.S.C § 101(510)
0 Filing Fee to be paid in installments (applicable to individuals only) Must (jg Debtor is not a small business debtor as defined in 11 USC. § JO] (51 D)
attach signed application for the court's consideration certifying that the debtor Check if:
is unable to pay fee except in installments. Rule 1006(b). See Official Form o Debtor's aggregate noncontingent liquidatedtexcluding debts owed to insiders
3A.
or affiliates) are less than $2 million.
0 Filing Fee waiver requested (Applicable to chapter 7 individuals only). Must ---------------------------------------------------------------------------------------------
attach signed application for the court's consideration, See Official Form 3B, Check all applicable boxes:
0 A plan is being filed with this petition.
0 Acceptances of the plan were solicited prepetition from one or more classes of
creditors, in accordance with J J U.S.C. § 1 126(b).
Statistical! A dminlstratlve Information This Space is For Court Use Only
(jg Debtor estimates that funds will be available for distribution to unsecured creditors.
0 Debtor estimates that, after any exempt property is excluded and administrative
expenses paid, there will be no funds available for distribution to unsecured creditors.
Estimated Number of Creditors
I· 50, 100- 200- 1,000- 5,001- 10,00]- 25,00]- 50,001- Over
49 99 199 999 5,000 10,000 25,000 50,000 100,000 100,000
0 0 0 0 0 rgJ 0 0 0 0
Estimated Assets
0$0 to o $lO;OOO to o $lOO,OOO to o $] million to IZl More than $100 million
$10,000 $100,000 $1 million $100 million
Estimated Debts
o $Oto 0$50,000 to 0$100,000 to 0$1 million to [8l More than $100 million
$50,000 $100,000 $1 million $ tOO million · ,
Voluntary Petition Name of Debtons):
(This page must be completed and filed in every case) Mortgage Lenders Network USA, Inc.
All Prior Bankruptcy Cases Filed by Within Last 8 Years (If more than two, attached additional sheet)
Location Case Number: Date Filed:
Where Filed:
Location Case Number: Date Filed:
Where Filed:
Pending Bankruptcy Case Filed by any Spouse, Partner or Affiliate of this Debtor (If more than one, attached additional sheet)
Name of Debtor: Case Number: Date Filed
District: Relationship: Judge:
Exhibit A ExhibitB
(To be completed if debtor is required to file periodic report (e.g., forms 10K (To be completed if debtor is an individual
and lOQ) with the Securities and Exchange Commission pursuant to Section 13 whose debts are primarily consumer debts.)
or 15(d) of the Securities Exchange Act of 1934 and is requesting relief under I, the attorney for the petitioner named ill the foregoing petition, declare that
chapter 1 I.) I have informed the petitioner that [he or she] may proceed under chapter 7,
11,12, or 13 of title 11, United States Code, and have explained the relief
0 Exhibit A is attached and made a part of this petition. available under each such chapter. I further certify that I delivered to the
debtor the notice required by 11 U.s.C.§ 342(b).
X
Signature of Attorney for Debtor(s) Date
Exhibit C
Does the debtor own or have possession of any property that poses or is alleged to pose a threat of imminent and identifiable harm to public health or safety?
o Yes, and Exhibit C is attached and made a part of this petition.
[gJ No
ExhibitD
(To be completed by every individual debtor. If ajoint petition is filed, each spouse must complete and attach a separate Exhibit D.)
0 Exhibit D completed and signed by debtor is attached and made a part of this petition.
If this is a joint petition:
0 Exhibit D also completed and signed by the joint debtor is attached and made a part of this petition.
Information Regarding the Debtor - Venue
(Check any applicable box)
[EJ Debtor has been domiciled or has had a residence, principal place of business, or principal assets in this District for 180 days
immediately preceding the date of this petition or for a longer part of such 180 days than in any other District.
0 There is a bankruptcy case concerning debtor's affiliate, general partner, or partnership pending in this District.
0 Debtor is a debtor in a foreign proceeding and has its principal place of business or principal assets in the United States in this
District, or has no principal place of business or assets in the United States but is a defendant in an action or proceeding [in a federal
or state court] in this District, or the interests of the parties will be served in regard to the relief sought in this District.
Statement by a Debtor Who Resides as a Tenant of Residential Property
Check all applicable boxes.
0 Landlord has a judgment against the debtor for possession of debtor's residence. (If box checked, complete the following.)
(N arne of landlord that obtained judgment)
(Address of landlord)
0 Debtor claims that under applicable non bankruptcy law, there are circumstances under which the debtor would be permitted to cure
the entire monetary default that gave rise to the judgment for possession, after the judgment for possession was entered, and
0 Debtor has included in this petition the deposit with the court of any rent that would become due during the 30-day period after the
filing of the petition. (Official Form 1) (10/06)

Form Bl Pase 2

(OiTIclll1 Form 1) (1!11Il5) Form!!!, PageS
VoIUlltary PeUUon Name ofDeb!or{s):
(firl< PfIIle (1IlUf lie UJmp/eluf <!lIdflltd In ""e1)' (XIJe) Mortgage lenders Network USA, me.
51 :na11.l.m
Signature(e) @mlllJt~r(g) (fudbidllalfJowt) Slgtlamll of II Fo;t!liD 'Reprmll.i3tivo
I declare unde;' pe~a!ty of !l('rJury !hii~ the infollllatlon provIded in !Jlis peliti()B is r dwlal1llll1tllll'jm1a!tyofpttjwylhllttlll:dnfonnatiOil provi<;!oo itllhl~ pet!lloois !l'l!ennd
tree atld correct, QOl'tCCI,lI!!lt i 11m !1m iOl'eim ~p!'tSentltlve of!l deblOl' in!! foreign pn:x:eediog, lW~ twal
rTf petitiOner Is an jlldiv!<JlIill w!wse dclllS are prlmBrlly consumer debts and Ms am ;rolboriud It! lilo ihlJ; petlllOll.
cl10sw 10 file under cllttplCf7) hun u\VIUe lhallmay proceed lladerdlapl¢r7, I), (Cheek only one 1m)
12 or IJ of titlo II. Vnlled Stilies (l;x!a, vllderstallli!he mllefall3il.!lb1e Ill!000oocll
such cllnpter,1IIId ohoose to p10ceed I!!ldCl' el!apter1. 0
(If 110 CItOl1ley represents me and 110 IT.lIlkruptcype\iliOil prepareuii?1s lllejle!i!illlll hequcsllellerlo acrotd;mcf! wllfll':luIp!e< IS oflll1\\ 1 ! , United Stales Ccdl'l.
111.ve. obtailled and read ll1e nollce l'tqIlired by II U.S.Co § 342(1)}. Q:lI.lfiwClljll~ of!IlctI~l1Il1enlS reqllir~ by 1 t U.S.C. § l:iIS ohiUe Jim
:o,Ullehed.
I request rel[efinaccordDl!~ewltllll!~tlr.li'(\'lfOrI!Ul> 11.1J!lileti S!Jl!!:$ CO\l~, 0
sp~lficd in Ihl~ pelition. PWSIJ\1I1t10 U U.s.C. f 1511,1 ri:l)l!eS!!eliefilUoom~~ with the
clmplt:rofliilt: H ~p~ficdl!l this p!ll!llcn. It =tllleci ropyofll1c
X ordln" ~ling I'COOgIlltion of the f07elglllllilin p~cd!!1g Is al~cd.
SlgmIrurc or Debtor
X
X (Slgnawm OU1mif!ll R:presrn!alive)
Signature of JOInt Debtor
(Printed Name ofPorei811 Representative)
Thlep!l¢ne Number (Ifllot represented by attorney)
Dale
Dale
Signature Qf Attorney Si~ture of Non.Attoro!!y :Pelinori Preparer
PACHOLSKI sr ANG ZIEHL YOUNG JONES K declare under pCW!!ty of ptrJ1IIY that: {I} I am :II baoknlplcy petition plCparer as
~~<UMJYru.r defined in II U.S.e.ll HO, (Z) I 1'1q'~ thls docemen I for romperJ5atlOil 0IJI1l have
provided !he debtor with a copy 01' t!Us documem and We notices and infomlQlloll
rcquimlllllder 11 U.S.C. §§ 110(11), 1 Jll(Il). at1d 342{b}; uti. (3) !fmles Ill' guidelines
have been promulgated I'tm,uomt 10 11 U.S.c, § 110(11) SenIDj: a maxlmom fell for
~; . r); vi.s~es (Bar No. 2436) $ervic~ chalgeable by ball'lU\lplCY petition plepnrers. i IulV8 given Ute debtor nctlce of
/ lua Illl!l:imlllll IIlllOWlt before plqlarl~g any document for filing for a debtor or
919 North Market Street, 17th Floor accepting all)' fe~ fa"om !he. dt:blor, as Keqllirel:l in tbat S~CI:iOll. Officlol FOml 193 b
P.O. Box 8705 aUncbed...
Wilmington, DE 19S99·8705 (Courier 19801) ,
Telephone: (302) 652-4100 Prinled Name and tiue. ihll)'. Of~PlClI Petilioll. fupuer
. Facsimile; (302) 652-4400
.;>..l s: [0:1 Socia! Secunty Number (If!ho b1lllkruplC,Y petillO!! prepare!" is not an iudi vidua~
, :;!.!lie the Socia.! S«;\lIi!ynumber of tha off!=; principal ~usibl~ person or
Date I'llrtner pC !he tJaJllwpll;y petition proparer) (Required byll1J.S.C. § 110)
Signature IlfDeblor (CorporaHontPartnershlp)
I declare under penalty of perjury that !he infOfmation provitledln !his petilion is Address
. true and correct, and Ihallitave been :Ulthoriz;e~ 10 file !h!$l'erition on behalfof!b~
debtor.
The debtor requests relief In eccordance with !he chapter oftlile 11, United State.<
Code, specified In !his ~Ii!lon. / ~ .
--== - 2~ . Date
""SlgnaUirc ol')j.;{th~dividIl31 Slgnarure oCllw.bul'lC}' Pelilioll fuparerQfOfficer, principal, responsible person. or
Mitchell L. Hef(erni!ll partner whose socral steUricy Ilurober b provided above. .
Printed Name of Apthoriud Indivjdual Names and Social Se.ourlty numbers arall other il1t!ividtmls who prepared or assisted In
Presid~nt end Chief EXecmi:.!e Qffi~r prcparlnglhls document unless the Imnbuptcy petition preparer is oo'! BO incllvidual.
L Zle of Allthoriz.ed tndividual If more lhall One person prepared !his document, attacb ~Od1t.1onal sheets coofO!l11lng to
,;{ LJ 0 .1::- thespproprlit6 official form for each pC4S00.
DB!~ 1 7 It ballkwplcjl pelilrol!prepanrr'~!ailure!~ comply Willi/lie provisi~rl$ o/Iille II and Ille
federal Rules riTBauklllplr:y Procedure way resuli {"./iues 01" (lIIprlwmtJm arborll J)
U.S.C. §11G: 18U,s.C. §156, SCHEDULE I

All Other Names used by the Debtor in the last 8 years YOU WOULD APPROVE (Service Mark)

IN EVERYOl\TE'S BEST INTEREST (Service Mark) AMERIFUND (DfBl A)

LENDERS NETWORK (DIBI A)

FAMILY CREDIT CONNECTION (D/BfA)

RJN2

15 16

GOODIN, MACBRlDE,SQUERl, DAY & LAMPREY, LLP ROBERT A. GOODIN, State Bar No. 061302 rgoodin@goodinmacbride.com

FRANCINE T. RADFORD, State Bar No. 168269 fradford@goodimnacbride.com

ANNE H. HARTMAN, State Bar No. 184556

ahartman@goodinmacbride.com 505 Sansome Street, Suite 900

San Francisco, California 94111

Telephone: (415) 392-7900

Facsimile: (415) 398-4321

GRAIS & ELLSWORTH LLP

DAVID 1. GRAIS (pro hac application submitted herewith) KATHRYN C. ELLSWORTH (pro hac app. submitted herewith) OWEN L. CYRULNIK (pro hac application submitted herewith) 70 East 55th Street

New York, New York 10022

Telephone: (212) 755-0100

Facsimile: (212) 755-0052

2 3 4 5 6 7 8 9

10 11

Attorneys for Plaintiff

12 Federal Home Loan Bank of San Francisco

13

F I L E.

Superior CoUrt of cshforrua Countv of San Francisco

MAR 1 5 7010

CASE MANAGEMENT CONFERENCE SET AUG '\ 3 Z010 . goo AM

U11'AlITMENT212

14

IN THE SUPERIOR COURT OF THE STATE OF CALIFORNIA IN AND FOR THE CITY AND COUNTY OF SAN FRANCISCO

FEDERAL HOME LOAN BANK OF SAN

17 FRANCISCO,

18 Plaintiff,

19 v.

20 CREDIT SUISSE SECURITIES (USA) LLC, FIKJA CREDIT SUISSE FIRST BOSTON

21 LLC;

CREDIT SUISSE FIRST BOSTON

22 MORTGAGE SECURITIES CORP.; DEUTSCHE BANK SECURITIES, INC.;

23 DEUTSCHE ALT-A SECURITIES. INC.; J.P. MORGAN SECURITIES, INC., FIKJA

24 BEAR STEARNS & CO., INC.; STRUCTURED ASSET MORTGAGE

25 INVESTMENTS II, INC.;

THE BEAR STEARNS COMPANIES, LLC,

26 FIKJA THE BEAR STEARNS COMPANIES, INC.;

27 RBS SECURITIES, INC., FIKJA GREENWICH CAPITAL MARKETS, INC.;

28 RBS ACCEPTANCE INC. FIKJA

CSg

CGC·10.497840

No.

COMPLAINT FOR RESCISSION AND DAMAGES FOR:

(1) VIOLATIONS OF §§ 25401 AND 25501 OF THE CALIFORNIA CORPORATE SECURITIES ACT;

(2) VIOLATIONS OF §§ 11 AND 15 OF THE SECURITIES ACT OF 1933;

(3) VIOLATIONS OF §§ 12(a)(2) AND 15 OF THE SECURITIES ACT OF 1933;

(4) VIOLATIONS OF §§ 1572 AND 1710 OF THE CALIFORNIA CIVIL CODE (NEGLIGENT MISREPRESENTATION); and

COMPLAINT

20

.. ~

(

GREENWICH CAPITAL ACCEPTANCE, INC.;

2 MORGAN STANLEY & CO.

INCORPORATED;

3 UBS SECURITIES, LLC;

MORTGAGE ASSET SECURITIZATION

4 TRANSACTIONS, INC.;

BANC OF AMERICA SECURITIES LLC;

5 BANC OF AMERICA FUNDING CORPORATION;

6 BANC OF AMERICA MORTGAGE SECURITIES, INC.;

7 COUNTRYWIDE SECURITIES CORPORATION;

8 eWALT, INC.; COUNTRYWIDE FINANCIAL

9 CORPORATION; AND, DOES I-50,

(5) RESCISSION OF CONTRACTS UNDER § 1689 ET SEQ. OF THE CALIFORNIA CIVIL CODE

10 11 12

13 Plaintiff, FEDERAL HOME LOAN BANK OF SAN FRANCISCO (referred to in

Defendants.

14 this complaint as the Bank), alleges, based upon its continuing investigation, including the

15 continuing investigation of its counsel, that the following allegations and other factual contentions

16 have evidentiary support or, where specifically identified as being pled "on information and

17 belief," are likely to have evidentiary support after a reasonable opportunity for further

18 investigation or discovery.

19 NATURE OF THIS ACTION

1.

This is an action for rescission and damages as a result of the violation by the

21 Defendants of the California Corporate Securities Act, the federal Securities Act of 1933, the

22 California Civil Code, and the common law. As alleged in detail below, the Defendants sold or

23 issued to the Bank: 98 certificates in 80 securitization trusts backed by residential mortgage loans.

24 The Bank paid more than $13.7 billion for those certificates. When they offered and then sold

25 these certificates to the Bank, the Defendants made numerous statements to the Bank about the

26 certificates and the credit quality of the mortgage loans that backed them. On information and

27 belief, many of those statements were untrue. Moreover, on information and belief, the

28 Defendants omitted to state many material facts that were necessary in order to make their

-2-

COMPLAINT

3 4 5 6 7 8 9

10

2

COMPLAINT

statements not misleading. For example, the Defendants made untrue statements, or omitted important information, about such material facts as the percentage of equity that borrowers had in ,I their homes, the number of borrowers who actually lived in the houses that secured their loans,

the credit scores of the borrowers, and the business practices of the lenders that made the loans.

The Bank reasonably and justifiably relied on these untrue statements and omissions of important

information in deciding to purchase the certificates. The certificates are "securities" within the

meaning of the California Corporate Securities Act and the Securities Act of 1933. Under those Acts, the California Civil Code, and the common law, the Bank is entitled to rescind its purchase

of the certificates or to be paid damages for its losses on the certificates.

11 Defendants Credit Suisse Securities (USA) LLC (which sold to the Bank certificates in 10

2.

Eight securities dealers sold these certificates to the Bank. Those dealers are

12 securitization trusts, which are referred to in this complaint as Securitizations Nos. 1 through 10),

13 Deutsche Bank Securities, Inc. (21 securitizations, Nos. 11 through 31), Bear Steams & Co. Inc.

14 (lO securitizations, Nos. 32 through 41), Greenwich Capita! Markets, Inc. (three securitizations,

15 Nos. 42 through 44), Morgan Stanley & Co. Inc. (three securitizations, Nos. 45 through 47), UBS

16 Securities, LLC (12 securitizations, Nos. 48 through 59), Bane of America Securities LLC (15

17 securitizations, Nos. 60 through 74), and Countrywide Securities Corporation (sixsecuritizations,

18 Nos. 75 through 80). The other Defendants named in this complaint are liable to the Bank

19 because they were the issuers of some of those certificates or because they controlled one of those

20 issuers.

22

21 PARTIES

3.

Plaintiff is a bank created by the Federal Home Loan Bank Act. The headquarters

23 of the Bank are in the City and County of San Francisco. Under its Organization Certificate, the

24 Bank is to operate in Federal Home Loan Bank District 11, which comprises the States of

25 Arizona, California, and Nevada. The Bank does operate in each of those three States.

26

4.

Defendant Credit Suisse Securities (USA) LLC (formerly known as Credit Suisse

27 First Boston LLC and referred to as Credit Suisse) is a limited liability company organized under

28 the laws of Delaware. Credit Suisse sold the Bank 10 of the certificates.

-3-

5. Defendant Credit Suisse First Boston Mortgage Securities Corp. (referred to as

2 CSFB Mortgage Securities) is a corporation organized under the laws of Delaware. CSFB

3 Mortgage Securities was the issuer of five of the certificates that Credit Suisse sold to the Bank.

4 5 6 7 8 9

10 11 12 13 14 15 16 17 18 19 20

6.

Defendant Deutsche Bank Securities, Inc. (referred to as Deutsche) is a

corporation organized under the laws of Delaware. Deutsche sold the Bank 21 of the certificates.

7. Defendant Deutsche Alt-A Securities, Inc. (referred to as Deutsche Alt-A) is a

corporation organized under the laws of Delaware. Deutsche Alt-A was the issuer of five of the certificates that Deutsche sold to the Bank.

8. Defendant J.P. Morgan Securities, Inc. (formerly known as Bear, Steams & Co.

Inc. and referred to as Bear Stearns) is a corporation organized under the laws of Delaware. Bear Stearns sold the Bank 10 of the certificates.

9.

Defendant Structured Asset Mortgage Investments Il, Inc. (referred to as SAMI II)

is a corporation organized under the laws of Delaware. SAMI II was the issuer of six of the certificates that Bear Steams sold to the Bank.

10. Defendant The Bear Steams Companies, LLC (formerly known as and referred to

as The Bear Stearns Companies, Inc.) is a limited liability company organized under the laws of Delaware. The Bear Steams Companies, Inc. controls or controlled SAMI Il. Under Section 15 of the Securities Act of 1933, 15 U.S.C. §770, The Bear Steams Companies, Inc. therefore is liable to the Bank jointly and severally with, and to the same extent as, SAMI U.

11.

Defendant RBS Securities, Inc. (formerly known as Greenwich Capital Markets,

21 Inc. and referred to as Greenwich Capital) is a corporation organized under the laws of

22 Delaware. Greenwich Capital sold the Bank three of the certificates.

23 12. Defendant RBS Acceptance, Inc. (formerly known as Greenwich Capital

24 Acceptance, Inc. and referred to as Greenwich Capital Acceptance) is a corporation organized

25 under the laws of Delaware. Greenwich Capital Acceptance was the issuer of one of the

26 certificates that Greenwich Capital sold to the Bank.

27

28

-4-

COMPLAINT

4

COMPLAINT

13. Defendant Morgan Stanley & Co. Incorporated (referred to as Morgan Stanley) is

2 a corporation organized under the laws of Delaware. Morgan Stanley sold the Bank three of the

3 certificates.

14.

Defendant UBS Securities, LLC (referred to as URS) is a limited liability company

5 organized under the laws of Delaware. UBS sold the Bank 12 of the certificates.

6

15.

Defendant Mortgage Asset Securitization Transactions, Inc. (referred to as MAST)

7 is a corporation organized under the laws of Delaware. MAST was the issuer of six of the

8 certificates that UBS sold to the Bank.

9

16.

Defendant Bane of America Securities LLC (referred to as Bane of America) is a

10 limited liability company organized under the laws of Delaware. Bane of America sold the Bank

11 15 of the certificates.

12

17.

Defendant Bane of America Funding Corporation (referred to as Bane of America

13 Funding) is a corporation organized under the laws of Delaware. Bane of America Funding was

14 the issuer of seven of the certificates that Bane of America sold to the Bank.

15

18.

Defendant Bane of America Mortgage Securities, Inc. (referred to as Bane of

16 America Mortgage Securities) is a corporation organized under the laws of Delaware. Bane of

17 America Mortgage Securities was the issuer of seven of the certificates that Bane of America sold

18 to the Bank.

19

19.

Defendant Countrywide Securities Corporation (referred to as Countrywide) is a

20 corporation organized under the laws of California. Countrywide sold the Bank six of the

21 certificates.

22

20.

Defendant CW ALT, Inc. (referred to as CW AL T) is a corporation organized

23 under the laws of Delaware. CW AL T was the issuer of three of the certificates that Credit Suisse

l

24 sold to the Bank, 15 of the certificates that Deutsche sold to the Bank, one of the certificates that

25 Bear Stearns sold to the Bank, two of the certificates that Greenwich Capital Markets sold to the

26 Bank, three of the certificates that Morgan Stanley sold to the Bank, six of the certificates that

27 UBS sold to the Bank, one of the certificates that Bane of America sold to the Bank, and five of

28 the certificates that Countrywide sold to the Bank.

-5-

5

~ (\ I

Defendant Countrywide Financial Corporation is a corporation organized under I

21.

2 the laws of Delaware. Countrywide Financial Corporation controls or controlled CW AL T. Under 3 Section 15 of the Securities Act Countrywide Financial Corporation therefore is liable to the

4 Bank jointly and severally with, and to the same extent as, CW ALT.

22.

Plaintiff is ignorant of the true names and capacities of Defendants sued herein as

6 Does 1-50, inclusive, and therefore sues these Defendants by such fictitious names. Plaintiff will 7 amend this complaint to allege the true names and capacities of these Defendants when

8 ascertained. Plaintiff is informed and believes that each of the fictitiously named Defendants 9 is responsible in some manner for the occurrences alleged herein and proximately caused

10 Plaintiff's damages.

11 JURISDICTION AND VENUE

12

23.

This Court has subject-matter jurisdiction of this action. The Superior Court is a

13 court of general jurisdiction. The Bank seeks rescission under Sections 25401 and 25501 of the

14 California Corporate Securities Act, damages for negligent misrepresentation, and rescission of 15 its contracts to purchase the certificates, all of which relief this Court has jurisdiction to grant.

16 Under Section 22(a) of the Securities Act of 1933, 15 U .S.c. § 77v(a), this Court also has

17 jurisdiction over the Bank's causes of action for violation of Sections 11, 12(a)(2), and 15 of that

18 Act, 15 U.S.C. § 771.

19

24.

Under Section 22(a) of the Securities Act of 1933, "no case arising under this title

20 and brought in any State court of competent jurisdiction shall be removed to any court of the

21 United States." Because its activities are not localized in one state, the Bank is not a citizen of any

22 state under 28 U.s.C. § 1332(c), so the Federal courts have no jurisdiction of this action under 28 23 U.S.C. § 1332(a). This action is not removable to Federal court.

24

25.

This Court has personal jurisdiction over Credit Suisse, Deutsche, Bear Steams,

25 Greenwich Capital, Morgan Stanley, UBS, Bane of America, Countrywide, and CW ALT because

26 each of them is registered to do business in California. This Court has personal jurisdiction over

27 all of the Defendants because they offered and sold the certificates to the Bank "in California" 28 within the meaning of Section 25008 of the California Corporate Securities Act.

-6-

COMPLAINT

6

COMPLAINT

26. Venue is proper in this County because the Defendants offered and sold the

2 certificates to the Bank in this County, and because the violations of law alleged in this

3 complaint, including the making of materially untrue or misleading statements, occurred in this

4 County.

5 SECURITIZATION OF MORTGAGE LOANS

27.

The securities that the Defendants sold the Bank are so-called asset-backed

7 securities, or ABS, created in a process known as securitization. Securitization begins with loans

8 (for example, loans secured by mortgages on residential properties, credit card loans, etc.) on

9 which the borrowers are to make payments, usually monthly. The entity that makes the loans is

10 known as the originator of the loans. The process by which the originator decides whether to

11 make particular loans is known as the underwriting of loans. In the loan underwriting process,

12 the originator applies various criteria to try to ensure that the loan will be repaid. Until the loans

13 are securitized, the borrowers on the loans make their loan payments to the originator.

14 Collectively, the payments on the loans are known as the cash flow from the loans.

15

28.

In a securitization, a large number of loans, usually of a similar type, are grouped

16 into a collateral pool. The originator of those loans sells them (and, with them, the right to

17 receive the cash flow from them) to a trust. The trust pays the originator cash for the loans. The

18 trust raises the cash to pay for the loans by selling bonds, usually called certificates, to investors

19 such as the Bank. Each certificate entitles its holder to an agreed part of the cash flow from the

20 loans in the collateral pool,

29.

Thus, schematically, there are six steps in a securitization.

21 22 23

1. 2. 3. 4.

Investors pay money to the trust.

The trust issues certificates to the investors. The trust pays money to the originator.

The originator sells to the trust the loans in the collateral pool, including the right to receive the cash flow from those loans.

The trust collects cash flow from payments on the loans in the collateral pool.

The trust pays each certificateholder its agreed part of the cash flow that the trust receives from payments on loans in the collateral pool.

24 25

5.

26 27 28

6.

-7-

10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

1 2

30.

A few other aspects of securitization are significant to the allegations of this

>I<

3 complaint. Each securitization has a. sponsor, the prime mover of the securitization. Sometimes

4 the sponsor is the originator or an affiliate. In originator-sponsored securitizations, the collateral

5 pool usually contains loans made by the originator that is sponsoring the securitization. Other

6 times, the sponsor may be an investment bank, which purchases loans from one or more

7 originators, aggregates them into a collateral pool, sells them to a trust, and securitizes them. The

8 sponsor arranges for title to the loans to be transferred to an entity known as the depositor, which

9 then transfers title to the loans to the trust

31.

The obligor of the certificates in a securitization is the trust that purchases the

loans in the collateral pool. Because a trust has no assets other than the loans that it purchased, it may not be able to satisfy the liabilities of an issuer of securities (the certificates). The law therefore treats the depositor as the issuer of an asset-backed certificate.

32. Securities dealers, like the eight that sold the certificates to the Bank, playa

critical role in the process of securitization. They underwrite the sale of the certificates, that is, they purchase the certificates from the trust and then sell them to investors. Equally important, securities underwriters provide to potential investors the information that they need to decide whether to purchase certificates.

33. Because the cash flow from the loans in the collateral pool of a securitization is the

source of funds to pay the holders of the certificates issued by the trust, the credit quality of those certificates is dependent upon the credit quality of the loans in the collateral pool. The most important information about the credit quality of those loans is contained in the files that the originator develops while making the loans, the so-called loan files. For residential mortgage loans, each loan file normally contains the information in such important documents as the borrower's application for the loan, credit reports on the borrower, and an appraisal of the property that will secure the loan.

-8-

COl\1PLAINT

(

34. Collateral pools usually include thousands of loans. Instead of potential investors

2 reviewing thousands of loan files, the securities firms that win underwrite the sale of the

3 certificates in a securitization are responsible for gathering, verifying, and presenting to potential

4 investors the information about the credit quality of the loans that will be deposited into the trust.

S As will be alleged in detail below, the information that the Defendants presented to the Bank

6 about the credit quality of the loans in the collateral pools of the 80 trusts contained many

7 statements that were material to the credit quality of those loans, but, on information and belief,

8 were untrue or misleading. Moreover, on information and belief, the Defendants were negligent

9 in making those untrue or misleading statements to the Bank.

10 TOLLING OF THE STATUTE OF LIMITATIONS

11

The Bank is a member ofthe proposed classes in Luther v. Countrywide Financial

35.

12 Corporation, Superior Court for the State of California County of Los Angeles No. BC 380698,

13 filed on November 11, 2007, New Jersey Carpenters Health Fund v. Residential Capital LLC,

14 United States District Court for the Southern District of New York No. 08-ev-8781, filed on

15 September 22, 2008, and New Jersey Carpenters Health Fund v. Bear Stearns Mortgage Funding

16 Trust 2006-ARl, United States District Court for the Southern District of New York No.Dd-cv-

17 08093, filed on August 20,2008, the pendency of which actions has tolled the running of the

18 statute of limitations on causes of action alleged in this complaint.

19 THE SALES OF THE CERTIFICATES

20

36.

The Defendants sold to the Bank 98 certificates in Securitizations Nos. 1 through

21 80. Details of each trust and each certificate are stated in Item 36 of Schedules 1 through 80 of

22 this complaint, which correspond to Securitizations Nos. 1 through 80. The Bank incorporates

23 into this paragraph 36, and alleges as though fully set forth in this paragraph, the contents of Item

24 36 of the schedules.

25 MATERIAL UNTRUE OR MISLEADING STATEMENTS

26 ABOUT THE CERTIFICATES

27

In connection with their offers and sales of the certificates to the Bank, each of the

37.

28 eleven dealers sent numerous documents to the Bank at its office in San Francisco County. In

-9-

COMPLAINT

16 on the same property has an LTV of 90%. LTV is one of the most important measures of the risk

17 of a mortgage loan, and the LTV s of the mortgage loans in the collateral pool of a securitization

18 are likewise one of the most important measures of the risk of certificates sold in that

19 securitization. LTV predicts the likelihood of default (the lower the LTV, the less likely that a

20 decline in the value of the property will wipe out the owner's equity, and thereby give the owner

21 an incentive to stop making mortgage payments and abandon the property). LTV also predicts the

22 severity of loss in the event of default (the lower the LTV, the greater the "cushion," so the

23 24

25 26 27 28

2 3 4 5 6 7

COMPLAINT

each case, these. documents included a term sheet, the. p~ospectus SllpPle~ent for ~he certificates I that was filed WIth the SEC, drafts of some of the statistical tables to be included in the prospectus supplement, and a computer model of the financial structure of the securitization. In each of these documents, each dealer made statements of material fact about the certificate that it offered and sold to the Bank.l A true copy of the prospectus supplement for each securitization is available from the Securities Exchange Commission website?

38.

On information and belief, many of the statements of material fact that each dealer

8 made in these documents were untrue or misleading. These untrue or misleading statements

9 included the following.

10 A.

11

Untrue or Misleading Statements about the Loan-to-Value Ratios (LTVs) and Combined Loan-to-Value Ratios (CLTVs) of the Mortgage Loans in the Collateral Pools of these Securttizations

12

The materiality ofLTVs and CLTVs

13

39.

The loan-to-value ratio of a mortgage loan, or LTV, is the ratio of the amount of

14 the mortgage loan to the value of the mortgaged property when the loan is made. For example, a

15 loan of $300,000 secured by property valued at $500,000 has an LTV of 60%; a loan of $450,000

I Three of the certificates that the Bank purchased were certificates in re-securitizations of existing certificates of mortgage-backed securities. In connection with the sale of those three certificates, the dealers sent to the Bank a private placement memorandum for the re-securitization and prospectus supplements filed with the SEC for the underlying securitizations. Details of the re-securitizations are included in their respective schedules.

2 A uniform resource locator for each prospectus supplement is included in Item 36 of each schedule.

-10-

3

The denominator in LTV (value of the mortgaged property) is determined by

greater the likelihood that the proceeds of foreclosure

2 mortgage loan).

cover the unpaid balance of the

40.

4 either an appraisal or by the purchase price of the property. In a refinancing or home-equity loan,

5 there is no purchase price to use as the denominator. For a purchase, the agreed price may be

6 higher than the value of the property, and an appraisal should ensure that the LTV is calculated

7 using the actual value as the denominator. Sometimes in a purchase, the denominator is the lower

8 of the purchase price or the appraised value.

9

41.

Thus, an accurate appraisal is essential to an accurate LTV. In particular, a too-

10 high appraisal will understate, sometimes greatly, the risk of a loan. To return to the example

11 above, if the property whose actual value is $500,000 is appraised instead at $550,000, then the

12 LTV of the $300,000 loan falls from 60% to 54.5%, and the LTV of the $450,000 loan falls from

13 90% to 81.8%. In either case, the LTV based on the incorrect appraisal understates the risk of the

14 loan. It is also important to note that, the higher the correct LTV, the more the risk is understated

15 by an incorrect appraisal of any given magnitude. In the example above, there is little difference

16 in the risk of a loan with an LTV of 60% and one with an LTV of 54.5%; both are safe loans with

17 large equity cushions. But there is a very large difference in the risk of a loan with an LTV of

18 90% and one with an LTV'of 81.8%. In the latter case, there is an equity cushion of 18.2% of the

19 value of the property, in the former, only 10%, just over half as much. Thus, an appraisal that

20 overvalues a property by just 10% produces an overstatement of more than 80% in the

21 homeowner's equity.

22

L TV is an important measure of the risk of a mortgage loan, and the LTV s of the

42.

23 mortgage loans in the collateral pool of a securitization are likewise an important measure of the

24 risk of certificates sold in that securitization. LTV helps to predict both the likelihood of default

25 and the severity of loss in case of default. A reasonable investor considers LTV important to the

26 decision whether to purchase a certificate in a securitization of mortgage loans. Even small

27 differences in the weighted average LTV of the mortgage loans in the collateral pool of a

28 securitization have a significant effect on the risk of each certificate sold in that securitization,

-11-

CO.MPLAINT

4

Residential properties can secure more than one mortgage loan, a senior (or first)

and thus, are important to the decision of a reasonable investor whether to purchase any such

2 certificate.

3 '"

43.

5 and one or more junior mortgage loans. The combined loan-to-value ratio (CLTV) is the ratio of

6 the total outstanding principal balance of all loans (mortgages or home equity lines of credit) that

7 the property secures to the appraised value of mortgaged property. To return to the example in

8 paragraph 39, if a property valued at $500,000 secures a first mortgage loan of $300,000 and a

9 second mortgage loan of$50,000, then it has a CLTVof70%. If the first mortgage loan on the

10 same property is $450,000 and the second is $50,000, then the CLTV is 100%.

11

44.

Like LTV, CL TV is an important measure of the risk of a mortgage loan, and the

12 CL TV s of the mortgage loans in the collateral pool of a securitization are likewise an important

13 measure of the risk of certificates sold in that securitization. CL TV helps to predict the likelihood

14 of default of a mortgage loan. A reasonable investor considers CLTV important to the decision

15 whether to purchase a certificate in a securitization of mortgage loans. Even small differences in

16 the weighted average CL TV of the mortgage loans in the collateral pool of a securitization have a

17 significant effect on the risk of each certificate sold in that securitization, and thus, are important

18 to the decision of a reasonable investor whether to purchase any such certificate.

19

2.

Untrue or misleading statements about the LTVs and CLTVs of the mortgage loans in the collateral pools of these seeuritizations

20

21

45.

In the prospectus supplement and other documents they sent to the Bank, the

22 Defendants made statements about the LTVs and CLTVs of the mortgage loans in the collateral

23 pools of these securitizations. Some of these statements were in so-called collateral stratification

24 tables. Those tables divided the mortgage loans into several categories of LTV and CL TV and

25 presented quantitative information about the loans in each category. All of the statements in each

26 prospectus supplement about the LTV s and CL TV s of the mortgage loans in the collateral pools

27 of Securitization Nos. 1 through 80 are incorporated herein by reference.

28

COMPLAINT

!
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
28 460 On information and belief, these statements were materially untrue or misleading

because (i) the stated LTV sand CLTV s of a significant number of those mortgage loans were lower than the actual LTV s or CLTV s; (ii) the Defendants omitted to state that the appraisals of a significant number of the properties that secured the mortgage loans in the collateral pools were biased upward, so that stated LTV s and CL TV s based on those appraisals were lower than the true LTVs and CLTVs of those mortgage loans; or (iii) the stated CLTVs did not reflect second mortgages on a significant number of the properties that secured the mortgage loans in the collateral pools.

47. Since the dates of Securitizations Nos. 1 through 80, loans in the collateral pools

of each securitization have been foreclosed upon. In nearly all of the pools, the properties that secured those foreclosed loans were sold for much less than the value ascribed to those same properties in the LTV and CL TV data reported in the prospectus supplements and other documents that the Defendants sent to the Bank The large difference cannot be explained by the declines in house prices in the areas in which those properties were located, even after taking account of the fact that properties in foreclosure sometimes sell for less than their fair market value. Analysis of data in an industry-standard database of securitized mortgage loans shows, for almost all of Securitizations Nos. 1 through 80, that the differences between the values ascribed to these properties and the prices at which the properties were sold in foreclosure are significantly greater than the declines in house prices in the same geographical areas over the same periods (that is, between the making of each mortgage loan and the corresponding foreclosure sale). This unexplained difference is evidence that the values ascribed to those properties, and to all properties in the collateral pools, in the LTV and CLTV data reported in the prospectus supplements and other documents thatthe Defendants sent to the Bank were too highthe resulting LTV s and CL TV s were too low, and thus that the statements in the prospectus supplements and other documents sent to the Bank about the LTV s and CL TV s were untrue or misleading. The results of this analysis for nearly all of Securitizations Nos. 1 through 80 are stated in Item 47 of Schedules 1 through 80 of this complaint. The Bank incorporates into this

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COMPLAINT

5 6 7 8 9

10 11 12 13

14

15 16 17

18 19

20 21

22 23 24 25 26 27 28

3

CO:MPLAINT

paragraph 47, and alleges as though fully set forth in this paragraph, the contents of Item 47 of the

2 schedules.

48.

On information and belief, by these untrue and misleading statements, the

4 Defendants materially understated the risk of every certificate that any of them sold to the Bank.

B.

Untrue or Misleading Statements about the Occupancy Status of the Properties That Secured the Mortgage Loans in the Collateral Pools of these Securirizations

1. The materiality of occupancy status

49. Residential real estate is usually divided into primary residences, second homes,

and investment properties. Mortgages on primary residences are less risky than mortgages on

second homes and investment properties.

50. Occupancy status (that is, whether the property that secures a mortgage is to be the

primary residence of the borrower, a second home, or an investment property) is an important

measure of the risk of a mortgage loan, and the percentage of loans in the collateral pool of a securitization that are secured by mortgages on primary residences rather than on second homes or investment properties is an important measure of the risk of certificates sold in that securitization. Other things being equal, the higher the percentage of loans secured by primary residences, the lower the risk of the certificates. A reasonable investor considers occupancy status important to the decision whether to purchase a certificate in a securitization of mortgage loans.

Differences in the percentage of the mortgage loans in the collateral pool of a securitization that

are secured by mortgages on primary residences have a significant effect on the risk of each certificate sold in that securitization and thus are important to the decision of a reasonable

investor whether to purchase any such certificate.

51. Because they are less risky than other mortgage loans, mortgage loans on primary

residences usually have more favorable tenus, including lower interest rates, than mortgage loans

on second homes and investment properties. Applicants for loans on second homes and investment properties therefore have an incentive to state that the property will be their primary

residence even when it will not.

-14-

2 3

55.

Investors in mortgage-backed securities, including the Bank, rely extensively on

2.

Untrue or misleading statements about the occupancy status of the properties that secured the mortgage loans in the collateral pools of these securitizations

52.

In the prospectus supplements and other documents that they sent to the Bank, the

4 . Defendants made statements about the occupancy status of the properties that secured the

5 mortgage loans in the collateral pool of this securitization. Some of these statements were in so-

6 called collateral stratification tables. Those tables divided the mortgage loans into several

7 categories of occupancy status and presented quantitative information about the loans in each

8 category. All of the statements in the prospectus supplement and other documents about the

9 occupancy status of the mortgage loans in the collateral pool of this securitization are

10 incorporated herein by reference.

11

53.

On information and belief, these statements were materially untrue or misleading

12 because (i) the stated number of mortgage loans that were secured by primary residences was

13 higher than the actual number of loans in that category; (ii) the stated number of mortgage loans

14 that were secured by second homes was lower than the actual number of loans in that category;

15 (iii) the stated number of mortgage loans that were secured by investment properties was lower

16 than the actual number of loans in that category; or (iv) the Defendants omitted to state that the

17 occupancy status of a significant number of the properties that secured the mortgage loans in the

18 collateral pool was misstated because of fraud.

19

54.


20 Defendants materially understated the risk of every certificate that any of them sold to the Bank.

C.

Failure to Disclose the Substantial Deterioration of LTV and Credit Score as Predictors of the Performance of Mortgage Loans Securitized by the Defendant Dealers

21 22

23

24 certain characteristics of the mortgage loans in the collateral pool of a securitization to predict the

25 performance of those loans and thereby to determine the risk both of those loans and of the

26 certificates sold in that securitization. Reasonable investors consider information about these

27 characteristics important to the decision whether to purchase a certificate in a securitization of

28

-15-

COMPLAINT

3

In the prospectus supplements and other documents they sent to the Bank, the

mortgage loans, Among the most important of these characteristics are LTV, described above,

2 and the credit score of the borrower.

56.

4 Defendants made statements about the LTV s and credit scores of the mortgage loans in the

5 collateral pools of each of Securitizations Nos. 1 through 80. All of those statements are

6 incorporated herein by reference.

7

57.

During the time before each of Securitizations Nos. 1 through 80, the power of

8 LTV and credit score to predict the performance of otherwise similar mortgage loans deteriorated,

9 even after taking account of declines in house prices and other macroeconomic factors. Put

10 somewhat differently, loans that were very similar in these characteristics performed worse if the

11 loans were made in 2007 than if they were made in 2006, worse if made in 2006 than if made in

12 2005, etc.

13

On information and belief, an statements that the Defendants made about the

58.

14 LTV s and credit scores of the mortgage loans in the collateral pools of these securitizations were

15 misleading because the Defendants omitted to state that, in the time before these securitizations,

16 loans that they or their affiliates securitized were nearly constant in reported weighted-average

17 LTV and weighted-average credit score, yet performed worse if the loans were made in 2007 than

18 if they were made in 2006, worse if made in 2006 than if made in 2005, etc.

19

59.

On information and belief, by these misleading statements, the Defendants

20 materially understated the risk of every certificate that any of them offered and sold to the Bank.

21 D.

22

Untrue or Misleading Statements about the Underwriting Guidelines of the Originators of the Mortgage Loans in the Collateral Pools of these Securitizations

1.

The materiality of underwriting guidelines and the extent of compliance with them

23 24

60.

Most or all originators of mortgage loans had written guidelines by which they

25 evaluated applications for loans. An originator's guidelines, and the extent to which the originator

26 complies with them, are important indicators of the risk of mortgage loans made by that

27 originator and of certificates sold in a securitization in which mortgage loans made by that

28 originator are a substantial part of the collateral pool. A reasonable investor considers the

~16-

COMPLAINT

(

underwriting guidelines of each originator of OJ. substantial part of the mortgage loans in the

2 collateral pool of a securitization, and the extent to which the originator complied with its

3 guidelines, important to the decision whether to purchase a certificate in that securitization.

4 Differences in those guidelines or in the extent to which an originator complied with them have a

5 significant effect on the risk of each certificate sold in that securitization and thus are important to

6 the decision of a reasonable investor whether to purchase any such certificate.

7 8 9

10

2.

Untrue or mlsleading statements by the Defendants about the underwriting guidelines of the originators of the mortgage loans in the collateral pools of these seeuritizations and about the extent of their compliance with-these guidelines

61.

In the prospectus supplements, the Defendants made statements about the

11 underwriting guidelines of the originators of the mortgage loans in the collateral pools of

12 Securitizations Nos. 1 through 80. Those statements are described in Item 61 of Schedules I

13 through 80 of this complaint. The Bank incorporates into this paragraph 61, and alleges as though

14 fully set forth in this paragraph, the contents of Item 61 of the schedules.

15

On information and belief, these statements were materially untrue or misleading

62.

16 because the Defendants omitted to state that (a) the originators were making frequent, and

17 increasingly frequent, exceptions to those underwriting guidelines; (b) the originators were

18 making frequent, and increasingly frequent, exceptions to those underwriting guidelines when no

19 compensating factor was present; and ( c) the originators were failing frequently, and increasingly

20 frequently, to follow quality-assurance practices intended to detect and prevent fraud.

21


63.

22 Defendants materially understated the risk of every certificate that any of them offered and sold to

23 the Bank.

24

25 26 27 28

-17-

COMPLAINT

2 3

)

FIRST CAUSE OF ACTION

UNTRUE OR MISLEADING STATEMENTS IN THE SALE OF SECURITIES (Cal. Corporations Code §§ 25401, 255(1)

Against Defendant:

4

Credit Suisse

Deutsche

Bear Stearns

Greenwich Capital

Morgan Stanley

VBS

Bane of America

In connection with Securitizations:

The Bank hereby incorporates by reference, as though fully set forth, paragraphs 1

Securitizations Nos. :I. tbrough 5, and 7 through 10

64.

through 63. 65.

Securitizations Nos, 11 through 16, and 18 through 31

15

16 17 18 19

20

21

22 23 24 25 26

27 28

Secnrlrizatlons Nos. 32 through 35, 40, and 41

Seeuritizarions Nos. 42 and 44

Securinzations Nos. 45 through 47

Seeuritizations Nos. 48 through 51, and 53 through 59

Securrtizations Nos. 60 through 70

Securitizatiens Nos. 75 through 80

In doing the acts alleged, the Defendants named above violated Sections 25401

documents.

discovered earlier the untrue and misleading statements in the prospectus supplements and other

securitizations referred to above.

and 25501 of the California Corporations Code in the sale to the Bank of the certificates in the

66.

This action is brought wi thin two years after the discovery of the untrue and

5 6 7 8 9

10 11 12 13 14

misleading statements in the prospectus supplements and other documents that the Defendants sent to the Bank, and within five years of the Bank's purchase of these certificates, or within any applicable period as tolled by the pendency of the class actions referred to above or others. Despite having exercised reasonable diligence, the Bank did not and could not reasonably have

67.

Under Cal. Corp. Code §§ 2540] and 25501, the Bank is entitled to recover the

consideration that it paid for each of these certificates, plus interest at the legal rate from the date of purchase to the date on which it recovers the purchase price, minus the amount of income it has received on the certificate. Pursuant to § 25501, the Bank will tender each certificate before entry of judgment.

-18-

COMPLAINT

)

2 3

f
SECOND CAUSE OF ACTION
UNTRUE OR MISLEADING STATEMENTS
IN REGISTRATION STATEMENTS
(Section 11 of the Securities Act of 1933)
Against Defendant: In connection with Securitizations:
Credit Suisse Securitizations Nos. 7 threuzh 10
Deutsche Seeuritizarlons Nos. 18 throuzh 31
Bear Stearns Securitizations Nos. 40 and 41
SAMIH Securitization No. 40
Greenwich Capital Securitization No. 44
Morgan Stanley Seeuritizations Nos. 45 through 47
UDS Securitizations Nos. 54 threuzh 59
Countrywide Securitizations Nos. 76 throuah 80
CWALT Securitizations Nos. 7, 9, 10, 18 through 31,
41,44 through 47,54 through 59, 76
through 80
68. The Bank hereby incorporates by reference, as though fully set forth, paragraphs 1
through 67.
69. In doing the acts alleged, the Defendants named above violated Section 11 of the
Securities Act of 1933 in the sale to the Bank of the certificates in the securitizations referred to
above.
70. The certificates in these securitizations were issued pursuant or traceable to
registration statements. Details of each registration statement and each certificate are stated in
Item 36 of Schedules 1 through 80.
71. SAM! II and CW AL T are depositors of the securitizations listed above and
therefore are the issuers of the certificates in those securitizations. Credit Suisse, Deutsche, Bear
Steams, Greenwich Capital, Morgan Stanley, UBS and Countrywide acted as underwriters of the
certificates listed above.
72. This action is brought within one year after the discovery of the untrue and
misleading statements in the registration statements, as amended by the prospectus supplements,
and within three years of these certificates having been sold to the public, or within any
applicable period as tolled by the pendency of the class actions referred to above or others.
-19-
COMPLAINT 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

)

2 3 4 5 6 7 8 9

10 11 12 13

t
Despite having exercised reasonable diligence, the Bank did not and could not reasonably have I
discovered earlier the untrue and misleading statements in the prospectus supplements.
73. The prospectus supplements contained untrue statements of material fact and
omitted to state material facts necessary in order to make the statements, in the light of the
circumstances under which they were made, not misleading. These untrue and misleading
statements included all of the untrue and misleading statements described in paragraphs 37
through 63.
74. The Bank expressly excludes from this cause of action any allegation that could be
construed as alleging fraud or intentional or reckless conduct. This cause of action is based solely
on claims of strict liability or negligence under the Securities Act of 1933.
75. Based upon the truth of the statements made in the prospectus supplements, the
Bank purchased these certificates.
76. The Bank did not know when it purchased these certificates that the statements in
the prospectus supplements were untrue or misleading.
77. The Bank has suffered a loss on each of these certificates.
78. The Bank is entitled to recover damages as described in 15 U.S.C. § 77k(e).
THIRD CAUSE OF ACTION
UNTRUE OR MISLEADING STATEMENTS IN THE SALE OF SECURITIES
(Section 12(a)(2) of the Securities Act of 1933)
Credit Suisse Securitizations Nos. 7 throuzh 10
Deutsche Seeuritizations Nos. 18 throuzh 31
Bear Stearns Securitizations Nos. 40 and 41
SAMIH Securitization No. 40
Greenwich Capital Securitization No, 44
Morgan Stanley Securitizations Nos, 45 through 47
UBS Securitizations Nos. 54 through 59
Countrywide Securitizations Nos. 76 through 80
CWALT Securitizations Nos. 7,9,10,18 through 31,
41,44 through 47, 54 through 59, 76
throuzh 80
through 78.
-20Q
COMPLAINT 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

2 3 4 5 6 7 8 9

10

)

80. In doing the acts alleged, the Defendants named above violated Section 12(a)(2) of

the Securities Act of 1933 in the sale to the Bank of the certificates in the securitizations referred to above.

810 This action is brought within one year after the discovery of the untrue and

misleading statements in the prospectus supplements, and within three years of these certificates having been sold to the public, or within any applicable period as tolled by the pendency of the class actions referred to above or others. Despite having exercised reasonable diligence, the Bank did not and could not reasonably have discovered earlier the untrue and misleading statements in the prospectus supplements.

82.

SAMI II and CW AL T are depositors of the securitizations listed above and

11 therefore are the issuers of the certificates in. those securitizations. In connection with the offer

12 and sale of these certificates to the Bank, the issuers also made all of the statements of material

13 fact about these certificates that were in the prospectus supplement and other documents that the

14 dealers sent to the Bank.

15

83.

The Bank expressly excludes from this cause of action any allegation that could be

16 construed as alleging fraud or intentional or reckless conduct. This cause of action is based solely

17 on claims of strict liability or negligence under the Securities Act of l 933.

18

84.

The Defendants named above, for their own financial gain, solicited the Bank to

19 purchase these certificates, and sold the certificates to the Bank, by means of the prospectus

20 supplements.

21

85.

Based upon the truth of the statements made in the prospectus supplements, the

22 Bank purchased these certificates.

23

86.

The prospectus supplements contained untrue statements of material fact and

24 omitted to state material facts necessary in order to make the statements, in the light of the

25 circumstances under which they were made, not misleading.

26

87.

The Bank did not know when it purchased these certificates that the statements in

27 the prospectus supplements were untrue or misleading.

28 88. The Bank has suffered a loss on each of these certificates.

-21-

COMPLAINT

7 8 9

10 11

«

890 The Bank is entitled to recover the consideration that it paid for each of these

2 certificates, plus interest at the legal rate from the date of purchase to the date on which it

3 recovers the purchase price, minus the amount of income it has received on each certificate. The

4 Bank win tender each certificate before entry of judgment.

5 FOURTH CAUSE OF ACTION

LIABILITY OF CONTROLLING PERSON

6 (Section 15 of the Securities Act of 1933)

Against Defendant:


The Bear Stearns Companies, Inc ..

Securitization No. 40

Countrywide Financial Corporation

Securitizations Nos. 7~ 9, 10, 18 through 31, 41.44 through 47, 54 through 59, 76 through 80

90.

The Bank hereby incorporates by reference, as though fully set forth, paragraphs 1

12 through 89.

13

91.

The Defendants named above are liable because, in doing the acts alleged, persons

14 they controlled violated Sections 11 and 12(a)(2) of the Securities Act of 1933 in the sale to the

15 Bank of the certificates in the securitizations referred to above.

16

92.

The Bear Stearns Companies, Inc. by or through stock ownership, agency, or

17 otherwise, controlled SAMI II within the meaning of Section 15 of the Securities Act of 1933.

18

93.

Countrywide Financial Corporation by or through stock ownership, agency, or

19 otherwise, controlled CWALT within the meaning of Section 15 of the Securities Act of 1933.

20

94.

In doing the acts alleged, each controlled person named in paragraphs 92 through

21 93 is liable under Sections 11 and 12(a)(2) of the Securities Act of 1933 for the reasons alleged in

22 paragraphs 1 through 89.

23

95.

Each Defendant named above is therefore jointly and severally liable with and to

24 the same extent as the person it controlled.

25 26 27 28

-22-

COMPLAINT

)

2 3 4 5 6 7 8 9

10 11 12

... I
FIFTH CAUSE OF ACTION I
NEGLIGENT MISP.EPRESENTATION
(Cal. Civil Code §§ 1572 et seq. and 1709 et seq., and Common Law)
Credit Suisse Securitizations Nos. 1 throuah 10
CSFB Mortaaze Securities Securitizations Nos. 1 throuzh 3, 5. and 6
Deutsche Securitizations Nos. 11 throuzh 31
Deutsche Alt-A Seeuritizations Nos. 12 throuzh 16
Bear Steams Securitizations Nos. 32 through 41
SAM! II Securttizations Nos. 32, 33, 35, 37, 39, and
40
Greenwich Capital Securitizations Nos. 42 throuzh 44
Greenwich Capital Acceptance Securitization No. 42
Morgan Stanley Seeuritizations Nos. 4S throuzh 47
UBS Securitizations Nos. 48 throuzh 59
MAST Securlnzations Nos. 48 throuzh 53
Bane of America Securitizations Nos. 60 throuzh 74
Bane of America Funding Securitizations Nos. 60 through 63,68,71,
and 73
Bane of America Mortgage Securities Securltizatiens Nos. 64 through 67,69,70,
and 72
Countrywide Securitizations Nos. 75 through 80
CWALT Securttizatiens Nos. 7, 9,10,17 through
31,41,43 through 47, 54 through 59, 74,
and 76 through 80
through 95.
97. As alleged above, the Defendants named above made untrue or misleading
representations regarding the LTV s and CL TV s of the mortgage loans in the collateral pools of
these securitizations, the occupancy status of properties that secured the mortgage loans in these
securitizations, underwriting guidelines of the originators, and related matters.
98. In making the representations referred to above, the Defendants intended to induce
the Bank to rely on those representations in making its decision to purchase these certificates in
these securitizations, The Defendants expected that the Bank would rely on those representations
in deciding whether to purchase these certificates.
99. When the Defendants made these representations, they had no reasonable ground
for believing them to be true. Upon information and belief, the Defendants had access to the files
on the mortgage loans in the collateral pools for these securitizations, and, had the Defendants
-23-
COMPLAINT 13 14 15 16 17 18

19

20 21 22 23 24 25 26 27 28

)

inspected those files, they would have learned that the information they gave the Bank contained

2 untrue or misleading statements. In addition, upon information and belief, the Defendants hired

3 lone or more "due-diligence contractors" to ascertain whether the mortgage loans in the collateral

4 pools complied with the representations and warranties made about those loans, and these

5 contractors reported to the Defendants that a material number of the loans in thecollateral pools

6 were materially different from the descriptions of those loans in the prospectus supplements.

7 Thus, on information and belief, the Defendants had access to information that either did make

8 the Defendants aware, or would or could have made them aware had they heeded that

9 information, that the representations they made to the Bank contained materially untrue or

10 misleading statements about the mortgage loans in the collateral pools.

11

100. The Bank reasonably and justifiably relied on the representations described above

12 in analyzing and deciding to purchase these certificates. Had the Defendants not made these false

13 and misleading representations, the Bank would not have purchased these certificates.

14

101. When it purchased these certificates, the Bank did not know about the untrue and

15 misleading statements alleged herein.

16

102. As a direct and proximate result of the negligent misrepresentations by the

17 Defendants, the Bank was damaged in an amount to be proved at trial.

18 SIXTH CAUSE OF ACTION

19

RESCISSION OF CONTRACT

20 21 22 23

(California Civil Code §§ 1689 and 1710, and Common Law)

Against Defendant:


Credit Suisse

Seeuritizations Nos. 1 through 10

Deutsche

Seeuritizations Nos. 11 through 31

24 25

Bear Stearns

Securitizations Nos. 32 through 41

Greenwich Capital


Morgan Stanley

Securitizatinns Nos. 45 through 47

UBS


26 27 28

Bane of America

Secnritizations Nos. 60 through 74

Countrywide


-24-

COMPLAINT


2 through 102.

3 104. The Bank purchased each certificate pursuant to a contract in writing between the

4 Bank and the dealer from which it purchased that certificate. Each contract stated the

5 consideration that the Bank paid each dealer for each certificate.

6

105. In making each contract to purchase the certificates, the Bank relied on the truth of

7 the statements that the Defendants named above made in the prospectus supplements. Because

8 those statements were untrue or misleading, the Bank was mistaken about its basic assumptions

9 underlying its purchase of each certificate, and this mistake had a material adverse effect on the

10 agreed-upon exchange represented by the Bank's purchase of each certificate. Because the

11 Defendants named above were responsible to provide accurate information in the prospectus

12 supplements, the Bank did not assume, nor does it bear, the risk of the fundamental mistake

13 underlying its decision to purchase these certificates.

14

106. The Defendants named above obtained the consent of the Bank to the contracts to

I 5 purchase the certificates by means of their assertion, as facts, of that which was not true, when

16 those Defendants had no reasonable ground for believing those assertions to be true.

17 107. Pursuant to Cal. Civil Code. § 1689 et seq., the Bank is entitled to rescind, and

18 does hereby demand the rescission of, each contract for the sale and purchase of these certificates.

19 The Bank offers to restore all benefits that it has received under those contracts and is entitled to

20 recover all consideration that it paid under them.

21 PRAYER FOR RELIEF

22 WHEREFORE, the Bank respectfully demands judgment as follows:

23 On the first cause of action, the consideration that the Bank paid for each certificate with

24 interest thereon, less the amount of any income that the Bank has received thereon, upon the

25 Bank's tender of each certificate;

26 On the second cause of action, damages in an amount to be determined at trial;

27 28

-25-

COMPLAINT

On the third cause of action, the consideration. that the Bank paid for each certificate



4 On the fourth cause of action, the consideration that the Bank paid for each certificate

5 with interest thereon, less the amount of any income that the Bank has received thereon, upon the


7 On the fifth cause of action, damages in an amount to be determined at trial;

8 On the sixth cause of action, the consideration that the Bank paid for each certificate with



11 All together with the costs of this action, the reasonable fees of the Bank's attorneys in

12 this action, and such other and further relief as the Court may deem just.

13 JURy DEMAND

14 THE BANK DEMANDS TRIAL BY JURY OF ALL ISSUES SO TRlABLE.

15 Dated: March 15,2010

16

17

18

19

GOODIN, MACBRIDE, SQVER!, DA Y & LAMPREY, LLP

GRAIS01-1 LLP

By I 12

Rob~rt A. Goodin Attorneys for Plaintiff

Federal Home Loan Bank of San Francisco

20 21

3428/001!Xl17443.vl

22

23 24 25

26

27

28

-26-

COMPLAINT

4

1 RICHARD A. HALL (SBN 135483) BOTTOMLINE LAWYERS


3 Telephone: (530) 888-71

Facsimile: (866) 305-1238



7

8 9

10


individual; and TERl ANNE )


)

13 Plaintiffs, )

)

14 v. )


liability company; )

16 )

Defendants. )

a DORADU CO, SUPERIOR CI

fiLED MAY 2 4 20m

SUPERIOR COURT OF CALIFORNIA

COUNTY OF ELDORADO

17 18

19 INTRODUCTION

PC

0100314,

CASE NO, MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF PLAINTIFFS' EX PARTE REQUEST FOR TEMPORARY RESTRAINING ORDER AND ORDER TO SHOW CAUSE RE PRELIMINARY INJUNCTION

DATE: May 25, 2010 TIME: 8:15

DEPT: 9

BY FAX

20 Plaintiffs request this Court halt the game being played by defendant NDEx West and its

21 accomplices, all of whom are rushing to sell plaintiffs' home before anyone discovers their

22 wrongdoing. Plaintiffs have been before this Court, once, in a separate action, filed in December 23 2009. The basis for the temporary restraining order, in the instant case, is the exact basis for that

24 which formed this Honorable Court's granting the temporary restraining order in December

25 2009. At that time, plaintiffs stipulated, upon request of defendant America's Servicing

26 Company, to continue the hearing on the preliminary injunction, and during the continuance and

27 prior to the hearing, defendant America's Servicing Company removed the action. From the time 28 America's Servicing Company removed the action, the lawsuit, in the United States

MPA ISO PLFS' EX PARTE APP FOR TRO AND PRELIM INJUNCTION

-1-

e

I

1 District Court for the Eastern District of California, lay dormant; that is, the defendants have

2 done nothing, including remedying the flaws regarding the faulty trustee substitution and faulty

3 assignments of deeds of trust, both of which, again, as stated above, form the basis for the instant 4 ex parte request for temporary restraining order. As stated above, from the time of removal, in or 5 about early January, none of the defendants in the prior action have taken any action with respect 6 to the removed action. All causes of action in the removed action have been dismissed except for 7 the cause of action for violation of the Fair Debt Collection Practices Act. None of the state

8 causes of action alleged in this lawsuit are currently pending in the removed action, therefore. 9 ("Declaration of Richard A. Han in Support of Plaintiffs' Ex Parte Application for Temporary

10 Restraining Order and Order To Show Cause Re Preliminary Injunction" [hereafter, "Hall 11 decl."], filed concurrently herewith, ~~15-21.)

12 Aiming to get things done-and fast-defendants scheduled the current foreclosure sale to

13 occur only 23 days after the most recent notice of trustee's sale was recorded, on May 3,2010. 14 Defendants scheduled the foreclosure with very little notice, putting plaintiffs' home on the

15 auction block with only one day left before this Court will consider this ex parte application. The 16 sale is scheduled to proceed tomorrow, May 26, 2010, at 10 a.m. The facts supporting this

17 Court's halting the sale are short, simple, clear and to the point. They follow.

18 PERTINENT FACTS

19 On September 5, 2005, plaintiffs executed a deed of trust on their property, located at

20 2690 Brown Bear Court, Cool, California 95614, which secured a refinance loan in the amount 21 $500,000. (Hall decl., ~2 & exh. 1, thereto, "Deed of Trust," executed by Daniel Major Edstrom 22 and Teri Anne Edstrom.) The parties to the trust deed were designated as follows: Borrower- 23 Daniel Major Edstrom and Teri Anne Edstrom, husband and wife; Lender - Mortgage Lenders 24 Network USA, Inc.; and Trustee - Mitchell L. Heffernan. The trust deed was subsequently

25 recorded, with the E1 Dorado County Recorder's Office, on September 14,2005. (Ibid.)

26 On December 19, 2008, a default notice was issued, and thereafter recorded on December

27 23,2008. (Hall decl., ~3, & exh. 2, thereto, "Notice of Default and election To Sell Under Deed 28 of Trust," recorded on December 23, 2008.)


-2-

1 Defendant Ndex West, LLC asserts it is the "duly appointed trustee," authorized to

2 conduct the subject foreclosure proceedings, under a "Substitution of Trustee," executed by

3 "Wens Fargo Bank, N.A., as attorney in fact for U.S. National Bank Association, as Trustee," in 4 which NDEx West, LLC was substituted for Mitchell L. Heffernan. (Hall decl., 414 & exh. 3,

5 thereto, "Substitution of Trustee," signed January 26,2009 and recorded February 5, 2009.)

6 Likewise, "U.S. National Bank, as Trustee," purportedly executed the trustee substitution under 7 an assignment of deed of trust from the original lender, Mortgage Lenders Network. In this

8 regard, two assignments of deed of trust are on record with the El Dorado County Recorder. The 9 first one is dated February 6, 2009-one day after the trustee substitution had been recorded-in

10 which MERS, as nominee for Mortgage Lenders, purportedly transferred all rights and title in the 11 note and deed of trust to "U.S. Bank National Association as Trustee by Residential Funding

12 Company, LLC FKA Residential Funding Corporation Attorney in Fact." (Hall decl., ~5 & exh. 13 4, thereto, "Assignment of Deed of Trust," signed February 6,2009, and recorded February 12, 14 2009.)

15 Before the second assignment of deed of trust was executed, on July 7,2009, a notice of

16 trustee's sale was issued by ND Ex West, purportedly the duly appointed trustee, under the trustee 17 substitution that had been recorded on February 5, 2009. (Hall decl., ~6 & exh. 5, thereto,

18 "Notice of Trustee's Sale," executed March 24,2009 and recorded March 30, 2009.) The second 19 assignment of deed of trust, recorded thereafter on July 15,2009, was executed by MERS, as

20 nominee for Mortgage Lenders Network, and purportedly assigned all rights and interests to the 21 note and deed of trust to "U.S. Bank National Association, as Trustee." (Hall decl., ~7 & exh. ~, 22 thereto, "Assignment of Deed of Trust," executed July 7,2009, and recorded July 15,2009.) No 23 rescission of the first assignment of deed of trust has been recorded with the El Dorado County 24 Recorder's Office. (Hall decl., ~ll.)

25 According to the records of defendant NDEx West, dated November 2,2009, the subject 26 property was sold on August 7, 2009. (Hall decl., ~8 & exh. 7, thereto, printout and facsimile of 27 printout from Priorityposting website, dated November 2,2009.) But, no Trustee's Deed of Sale 28 has ever been recorded. (Hall decl., ~9.) Defendant NDEx West, thereafter, issued a second


-3-

1 trustee's sale notice, on November 17,2009, scheduling the sale for December 16,2009. (Hall

2 decl., ~10 & exh. 8, thereto, "Notice of Trustee's Sale," dated November 17,2009, and recorded 3 on December 1, 2009.) Despite this Court's entering the TRO, on December 15,2009, halting 4 the sale, NDEX West proceeded with sale of plaintiffs' property. (Hall decl., ~12.) Thereafter,

5 they reversed the sale. (Hall decl., ~13.) Most recently, on April 27, 2010, NDEX West issued yet

6 a third trustee's sale notice, scheduling the sale for its current date, May 26,2010. (Hall decl.,

7 ,10 & exh. 9, thereto, "Notice of Trustee's Sale," dated April 27, 2010, and recorded on May 3, 8 2010.) Below follows a chronology of pertinent events.

9 CHRONOLOGY OF EVENTS

10 11 12

·13 14

15 16 17 18 19 20 21 22 23 24 25 26 27 28

Deed of Trust Executed Recorded Identifies "Mortgage Lenders
September 7, September Network USA, Inc.," the
2005 14,2005 "Lender"; Mitchell L.
Heffernan, the "Trustee"; and
MERS, "the beneficiary,
solely as nominee for Lender
and Lender's successors and
assigns."
Notice of Default issued by Executed Recorded Identifies NDEx West, LLC,
NDEX West, LLC December December as the "original Trustee, duly
19,2008 23,2008 appointed Substituted
Trustee, or acting as Agent
for the Trustee or Beneficiary
under a Deed of Trust dated
09/07/2005."
Substitution of Trustee by US Executed Recorded Signed by "Wells Fargo Bank
Bank National Association, January 26, February 5, NA, attorney in fact for US
substituting NDEX West, 2009 2009 Bank National Association,
LLC for Mitchell L. as Trustee."
Heffernan
Assignment of Deed of Trust Executed Recorded Signed by "Mortgage
from Mortgage Lenders February 6, February 12, Electronic Registration
Network to "US Bank 2009 2009 Systems, Inc., as Nominee for
National Association as Mortgage Lenders Network
Trustee by Residential USA, Inc."
Funding Company, LLC
FKA Residential Funding
Corporation Attorney in
Fact"
Notice of Trustee's Sale Executed Recorded Issued byNDEX West, LLC
March 24, March 30, as duly appointed trustee.
2009 2010 MPA ISO PLFS' EX PARTE APP FOR TRO AND PRELIM INJUNCTION

-4-

1 2

Assignment of Deed of Trust Executed Recorded Signed by "Mortgage
from Mortgage Lenders July 7,2009 July 15,2009 Electronic Registration
Network to "US Bank Systems, Inc. as Nominee for
National Association, as Mortgage Lenders Network
Trustee" USA, Inc."
PROPERTY SOLD ON AUGUST 7, 2009.
Notice of Trustee's Sale Executed Recorded Signed by NDEX West, LLC,
March 24, March 30, as duly appointed trustee.
2009 2009
November December 3, as duly appointed trustee.
17,2009 2009
EL DORADO COUNTY COURT ENTERS TRO ON DECEMBER 15, 2009.
PROPERTY SOLD ON DECEMBER 16, 2009.
SALE REVERSED ON SOME UNKNOWN DATE.
April 27, May 3, 2010 as duly appointed trustee.
2010 3

4 5

6

7 8 9

10 11 12 13

14 SUMMARY OF ARGUMENT

15 Plaintiffs seek a temporary restraining order halting the sale of their home. Preliminarily,

16 the trustee with power of sale and legal authority to conduct the foreclosure proceedings is

17 Mitchell L. Heffernan, the original trustee, and not NDex West. That is, assuming only for the 18 purposes of this request for relief that the two assignments of deeds of trust, identified above,

19 were otherwise valid in all other respects, nevertheless neither one ofthem was executed prior to

20 the purported trustee substitution. Therefore, for the trustee substitution to be valid, it would have 21 had to have been executed by the "beneficiary." And the beneficiary at the time of execution of

22 the trustee substitution was not "US Bank National Association, as Trustee," as is clear from the

23 attempted assignments to US Bank National Association, on February 6, 2009 and July 7, 2009, 24 both of which were after the January 26,2009 trustee substitution. Therefore, the notice of

25 trustee sale is no good.

26 Secondly, the declaration required under Civil Code section 2923.5, which must

27 accompany the notice of default, in this case, and which must be provided prior to any non-

28 judicial foreclosure proceeding, was not in conformity with California law. Therefore, the notice

MPA ISO PLFS' EX PARTE APP FOR TROAND PRELIM INJUNCTION

-5-

of default is, too, null and void, as a matter of law.

2 Furthermore, uncertainty exists as to the true owner of the note and deed of trust, based

3 on the records of the El Dorado County Recorder's Office. That is, one assignment, executed on 4 February 6,2009, signed by MERS, as nominee for Mortgage Lenders Network, purports to

5 assign an title and interest to "U.S. Bank National Association as Trustee by Residential Funding 6 Company, LLC FKA, Residential Funding Corporation, Attorney in Fact." (See Hall decl., ,5 & 7 exh. 4, thereto.) Yet, a second assignment, signed July 7, 2009, also by MERS, as nominee for

8 Mortgage Lenders Network, purports to assign all title and interest to "U.S. Bank National

9 Association, as Trustee." (See Hall decl., ,7 & exh. 6, thereto.) If the first assignment is valid 10 (which it is not), then the second assignment is invalid, because Mortgage Lenders Network

11 would have had nothing to assign, on July 7, 2009, having assigned all of its rights and title and 12 interest to "U.S. Bank National Association as Trustee by Residential Funding Company, LLC 13 FKA, Residential Funding Corporation, Attorney in Fact."

14 Furthermore, the default notice identifies another stranger to the mortgage transaction,

15 "America's Servicing Company," and the trustee substitution, as stated above, still another

16 stranger to the loan transaction, "Wells Fargo Bank, N.A." Based on these facts, uncertainty

17 exists as to who, if anyone of the above, owns plaintiffs mortgage and note. From the looks of 18 things, apparently neither MERS nor US Bank National Association are clear about the role, if 19 any, US Bank National Association has in the subject mortgage.

20 LEGAL STANDARDS

21 Code of Civil Procedure section 527(a) authorizes issuance of injunctions before trial "if

22 sufficient grounds exist therefor." Code of Civil Procedure section 526( a)(2) lists the traditional 23 consideration of "irreparable harm" that will be suffered if injunctive relief is not granted. The 24 avowed purpose of a preliminary injunction is to preserve the status quo pending a trial on the 25 merits. (Continental Baking Company v. Katz (1968) 68 Ca1.2d 512, 528.) Plaintiffs will suffer 26 irreparable harm in a way which cannot be later repaired if a temporary restraining order and

27 preliminary injunction are not issued. (People ex rei. Gow v. Mitchell Brothers' Santa Ana

28 Theater (1981) 118 Cal.App.3d 863,870-871.)


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14 15


1 In the instant case, a bona fide dispute exists as to enforceability of the trust deed, because

2 the foreclosure sale is scheduled to proceed on Wednesday, May 26,2010, at 10 a.m.,

3 notwithstanding substantial, prejudicial irregularities in the foreclosure proceedings have

4 occurred. tBaypoint Mortgage v. Crest Premium Real Estate Investments Retirement Trust

5 (1985) 168 Cal.App.3d 818, 827.) Substantial evidence of prejudicial procedural irregularity

6 exists in the instant case that undeniably overcomes the common law presumption that "the

7 foreclosure sale [if allowed to proceed] was conducted regularly and fairly." (Brown v. Busch

8 (1957) 152 Cal.App.2d 200, 204; see also Stevens v. Plumas Eureka Annex Min. Co. (1935) 2 9 CaL2d 493, 497; 6 Angels, Inc. v. Stuart-Wright Mortgage, Inc. (2001) 85 Cal.App.4th 1279,

10 1284.) The Court is requested to enter the temporary restraining order to prevent the foreclosure 11 proceeding from taking place tomorrow, December 16,2009.

12 ARGUMENT

13 I.

PLAINTIFFS ARE ABLE TO SHOW A REASONABLE PROBABILITY OF SUCCESS ON THE MERITS BECAUSE SUBSTANTIAL EVIDENCE OF SUBSTANTIAL, PREJUDICIAL PROCEDURAL IRREGULARITIES EXIST IN THE FORECLOSURE PROCEEDINGS.

16 It is reasonably probable that plaintiffs will prevail on the merits (San Francisco

17 Newspaper Printing Co., Inc. v. Sup. Ct. (Miller) (1985) 170 Cal.App.3d 438,442), because

18 substantial, prejudicial procedural irregularities in the foreclosure proceedings have occurred,

19 which are explained below. Foreclosure sales are governed by a comprehensive statutory scheme.

20 (Moeller v. Lien (1994) 25 CaLApp. 4th 822, 830.) This schema, which is found in Civil Code 21 sections 2923, et seq., through 2924k, evidences a legislative intent that a sale that is properly 22 conducted "constitutes a final adjudication of the rights of the borrower and lender." (Moeller v. 23 Lien, supra, 25 Cal. App. 4th at p. 831.) And because as a general rule, there is a common law 24 rebuttable presumption that a foreclosure sale has been conducted regularly and fairly" (4 Miller

25 & Starr, Cal. Real Estate (3d ed. 2000) § 10:211, p. 647, fn. omitted; Brown v. Busch (1957) 152

26 Cal. App. 2d 200, 204), a successful challenge to the sale requires evidence of a failure to comply 27 with the procedural requirements for the foreclosure sale that caused prejudice to the person

28 attacking the sale." (4 Miller & Starr, supra, § 10:210, at p. 640.) Whether there is sufficient

-7-

1 evidence to overcome this presumption is generally a question of fact. (Wolfe v. Lipsy (1985) 163 2 CaLApp. 3d 633,639, disapproved on another ground in Draeger v. Friedman, Sloan & Ross

3 (1991) 54 CaL3d 26, 36.) Where substantial evidence of a prejudicial procedural irregularity

4 exists, the presumption must not prevail. (Stevens v. Plumas Eureka Annex Min. Co. (1935) 2 Cal

5 2d 493,497.)

6 Based on the above, the Court's failing to enter the temporary restraining order at this

7 juncture will result in substantial prejudice to plaintiffs because they will be required to not only

8 overcome the common law presumption of regularity in the proceedings, but they will also have 9 to expend additional time, money and efforts to set aside any unlawful foreclosure (if the sale

10 proceeds) and possible unlawful detainer action that may be filed.

11

The Trustee Substitution Under Which the Trustee Is Operating is Nun and Void, Because It Was Not Executed and Acknowledged By Either the Beneficiary Under the Trust Deed or Any of the Beneficiary's Successors-inInterest,

A.

12 13

14 Civil Code section 2934a.(a)(l) governs trustee substitutions:

15 "The trustee under a trust deed upon real property ... may be substituted by the recording in the county in which the property is

16 located of a substitution executed and acknowledged by: (A) all of the beneficiaries under the trust deed, or their successors in

17 interest, ...

18 In the instant case, the trustee substitution was executed on January 26, 2009, and recorded on

19 February 5, 2009. The substitution, although recorded prior to the trustee's sale notice, was

20 nevertheless not signed by the beneficiary or any of the beneficiary's successors' in interest.

21 According to the face of the document, the trustee substitution was signed by Wells Fargo Bank, 22 N.A., as the attorney in fact for U.S. Bank National Association, as Trustee. However, no

23 assignment of deed of trust (from Mortgage Lenders Network or its successors-in-interest),

24 transferring all rights and title from Mortgage Lenders Network to U.S. Bank National

25 Association, as Trustee, had been executed or recorded prior to execution and recordation of the

26 trustee substitution. Therefore, the trustee substitution, purportedly signed by "U.S. Bank

27 National Association, as Trustee," was not executed and acknowledged by the beneficiary or its 28 successors in interest, pursuant to section 28934a(a)(1), of the Civil Code, and it the trustee


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1 substitution is therefore nun and void as a matter of law. And, if the trustee substitution is null 2 and void as a matter of law, then any notice of trustee's sale issued by NDEx West, thereafter, is 3 also null and void; as would any sale that would be conducted pursuant to any trustee's sale

4 notice.

5 For the beneficiary (whoever that might be) to claim the benefits of conducting a non-

6 judicial foreclosure, including proceeding with a trustee other than that which is identified in the

7 deed of trust, the beneficiary must bring itself within the spirit of the statute allowing the

8 beneficiary to proceed with a trustee other than that named in the original deed of trust, pursuant 9 to a valid trustee substitution, or in other words the beneficiary must show that it is entitled to

10 conduct the non-judicial foreclosure proceedings through a successor trustee under a legitimate 11 trustee substitution. Again, the burden is upon the beneficiary to show that it is entitled to pursue 12 the non-judicial foreclosure (otherwise provided for under a power of sale) using a substituted

13 trustee under a legitimate trustee substitution. These rules necessarily mean that a beneficiary

14 who has designated a trustee to conduct the foreclosure proceedings must establish that right by 15 evidence, by facts. That has not been done, and the foreclosure sale must be enjoined therefore.

16 17

B.

The Notice of Default Was Not in Compliance With the Law Because The Declaration Attached to the Notice Is Void As a Matter of Law.

18 In July 2008 the California Legislature passed Civil Code section 2923.5 to help

19 borrowers facing foreclosure by requiring lenders, mortgagees, services and trustees make

20 contact with the borrower, prior to commencing foreclosure proceedings, to assess the borrower's

21 financial situation and explore options to avoid foreclosure. The newly enacted 2923.5 was

22 inserted and became part of the strict statutory scheme governing foreclosure proceedings in this

23 state. The law became effective on September 8, 2008. It requires, among other things, that

24 before lenders on loans secured by owner-occupied residential mortgages may file a notice of 25 default to begin the foreclosure process, the lender must contact the borrower in order to assess 26 the borrower's financial situation and to explore options for the borrower to avoid foreclosure."

27 The law requires that contact with the borrower must be achieved in person or by

28 telephone, and the lender must advise the borrower during the contact that he or she is entitled to


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II

16 17


1 request a subsequent meeting with the lender within 14 days.

lender must also provide the

2 borrower with the toll-free number made available by the U.S. Department of Housing and Urban 3 Development to find a HUD-certified counseling agency. In the event contact with the borrower

4 is not made, Section 2923.5 provides a laundry list of due diligence requirements. They include: 5 1) sending a letter by first class mail that includes the toll-free HUD number, 2) after the letter is 6 sent, phoning at least three times at different hours on different days, and 3) if the borrower does

7 not respond within two weeks after the telephone call requirements have been satisfied, sending a

8 certified letter, return receipt requested.

9 Most importantly, before commencing foreclosure proceedings, the lender is required,

10 under section 2923 .5(b), where the notice of default has not yet been filed, to submit a

11 "declaration" with its notice of default stating that the lender either has contacted the borrower or

12 tried with due diligence to contact the borrower as required under the section.

13 As will be discussed below, the defendants have not abided by the strict statutory scheme

14 governing foreclosure proceedings, including the newly enacted Civil Code section 2923.5, and 15 must therefore not be allowed to proceed with the foreclosure scheduled for December 16, 2009.

1.

The "declaration" required under Civil Code section 2923.5 is not under penalty of perjury.

18 Code of Civil Procedure section 2015.5 governs declarations in California. It states, in

19 pertinent part, the following:

20 " Whenever, under any law of this state ... any matter is required or permitted to be supported, evidenced, established, or proved by

21 the ... declaration ... in writing of the person making the same ... , such matter may with like force and effect be supported,

22 evidenced, established or proved by the ... declaration... in writing of such person which recites that it is ... declared by him or her to

23 be true under penalty of perjury, is subscribed by him or her, and ... if executed at any place, within or without this state, states the

24 date of execution and that it is so ... declared under the laws of the State of California. The ... declaration may be in substantially the

25 following form: ... [i]f executed at any place, within or without this state: "I ... declare under penalty of perjury under the laws of the

26 State of California that the foregoing is true and correct": _________ (Date and Place) (Signature)"

27 28

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9 10


1 Civil Code section 2923.5 is clear that the notice of default must have a "declaration" attached to

2 it. The "Notice of Default Declaration," attached to the default notice, is not under penalty of

3 perjury. The whole point of permitting a declaration under penalty a/perjury, in lieu of a sworn 4 statement, is to help ensure that declarations contain a truthful factual representation and are

5 made in good faith. (Ancora-Citronelle Corp. v. Green (1974) 41 Cal.App.3d 146, 148.)

6 "The oath or declaration must be in such form that criminal sanctions of perjury might apply where material facts so declared

7 to be true, are in fact not true or are not known to be true."

8 (Id. at p. 150; see Pen. Code, § 118.)

2.

The "declaration" required under Civil Code section 2923.5 is insufficient in form and substance.

11 The "declaration" in the instant case must be sufficient in form and substance to prove the

12 fact that the requirements under Civil Code section 2923.5 have been adhered to. In that regard,

13 the "declaration" attached to the default notice states the following, in pertinent part:

14 "The undersigned mortgagee, beneficiary, or their authorized agent

(collectively, the "Beneficiary") represents and declare that the

15 requirements of CA Civil Code 2923.5 have been met.

16 Mr. John Kennerty purportedly signed the "declaration" for America's Servicing

17 Company. Yet, he does not know, according to the above, if the "undersigned" is the mortgagee. 18 He does not know if the "undersigned" is the beneficiary. He does not know if the "undersigned" 19 is the authorized agent of the mortgagee. He does not know if the "undersigned" is the authorized 20 agent of the beneficiary. Furthermore, even though he does not know if the "undersigned" is the 21 mortgagee, beneficiary or an authorized agent for either one of them, he nevertheless is going to 22 call the "undersigned" the "Beneficiary" and going to state that the "Beneficiary" represents and 23 declares that Civil Code section 2923.5 has been met, as follows:

24 "One of the below necessary requirements was met by the Beneficiary. "

25 26 27

1

" • The Beneficiary has made contact with the borrower pursuant to CA Civil Code 2923.5(g)(2). Contact with the borrower was made in person or by telephone to assess the borrower's financial situation and explore options for the borrower to avoid foreclosure.

28

2

" 8 Due Diligence to contact the borrower was exercised pursuant to CA Civil Code 2923.5(g)(2) by the Beneficiary.

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1


3

" • The borrower has surrendered the property as evidenced by either a letter confirming the surrender or delivery of the keys to the property to the mortgagee, Trustee, beneficiary, or authorized agent pursuant to CA Civil Code 2923.5(h)(1).

2

3

4

" ~ The borrower has contracted with an organization, person, or entity whose primary business is advising people who have decided to leave their homes on how to extend the foreclosure process and avoid their contractual obligations to mortgagees or beneficiaries pursuant to pursuant to CA Civil Code 2923.5(h)(2);

" • The borrower has filed for bankruptcy ... pursuant to CA Civil Code 2923.5(h)(3)."

4 5 6 7

5

8 Kennerty does not know if item 1 occurred. Kennerty does not know if item 2 occurred.

9 Kennerty does not know if item 3 occurred. Kennerty does not know if item 4 occurred. Kennerty

10 does not know if item 5 occurred. If Kinnerty does not know whether items 1, 2, 3, 4, or 5

11 occurred, then how can he state that anyone of them occurred? Moreover, if he does not even

12 know who the "Beneficiary" is, how is he able to "declare" that the "Beneficiary" made contact,

13 or that the "Beneficiary" made due diligence?

14 The bottomline is that the "Notice of Default Declaration" is a sham and a violation of the

15 declaration that is required under Civil Code section 2923.5. Moreover, the so-called

16 "declaration" is insufficient in form, and no facts based on personal knowledge are therein stated.

17 The affiant (John Kennerty) nowhere states that he himself ever made contact with the borrower

18 nor otherwise states he, in fact, has knowledge or familiarity of the requirements under Civil

19 Code section 2923.5 regarding the laundry list of actions that must be had in making contact with

20 a borrower. The fact is that the "declaration" is nothing more than a jumble of legal conclusions;

21 that is, predicated on a statement, each of which is then followed by "pursuant to CA Civil Code

22 2923 [subsection]," or "pursuant to CA Civil Code 2923.5 subsection]."

23 The "declaration" is insufficient in form, and no facts based on personal knowledge are therein 24 stated. Preliminarily, the affiant (John Kennerty) nowhere states that he himself ever made

25 contact with the borrower nor otherwise state he, in fact, has knowledge or familiarity of the

26 requirements under Civil Code section 2923.5 regarding the manner laundry list of actions that 27 must be had in making contact with a borrower. The fact is that the "declaration" is nothing more 28 than a jumble of legal conclusions; that is, predicated by a statement, each of which is then

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1 followed by "pursuant to CA Civil Code 2923 [subsection]," or "pursuant to CA Civil Code 2 2923.5 subsection]."

3 No facts are stated in the declaration. The declaration omits any statement of the

4 requirements of section 2923.5. The "declaration" is simply the declarant's conclusion of what

5 presumably occurred. It is not based on any factual evidence. The opinion is expressed in the

6 declaration that "one of the below necessary requirements was met by the Beneficiary." That, of 7 course, is a statement only of the conclusion of the declarant. Again, that is not a statement that 8 the contact that must be made with the borrower was actually made in accordance with the

9 requirements of Civil Code section 2923.5, upon which this Court could draw a conclusion or 10 make an order allowing the foreclosure sale to proceed.

11 Without any statements as to the declarant's knowledge or familiarity with the pertinent

12 Code section or subsections or any statement as to the basis upon which the declarant attests the

13 actions required under Civil Code section 2923.5 actually occurred, pursuant to that section, this

14 Court cannot conclude that the requirements under Civil Code section 2923.5 have been met. The 15 opinion of the declarant, as expressed in the affidavit, mayor may not be correct, but without any 16 facts stated in the declaration upon which the opinion of the declarant is expressed, nothing of

17 substance has been presented to show compliance with the strict schema of Civil Code section

18 2923.5, and nothing therefore exists for this Court to allow the foreclosure sale to proceed.

19 That a declaration or affidavit which sets forth only conclusions or opinions of the affiant

20 is insufficient, is sustained by a long list of cases. The rule as to the sufficiency of affidavits is

21 clearly stated in 2 C.J., page 350, as follows:

22 "Facts should be stated positively and with legal definiteness and certainty .... The statement in an affidavit of mere matters of

23 opinion, or of legal conclusions is not sufficient. The facts on which such conclusions are based should be set forth so that the

24 court may draw its own inferences. Thus, where a remedy is given by statute in certain specified cases, an affidavit is not sufficient

25 which merely alleges that the case is one of those mentioned in the statute, without stating the facts from which such conclusions may

26 be drawn."

27 Likewise, in 1 California Jurisprudence, page 670, the rule is set forth as follows:

28 "An affidavit which merely repeats the language or substance of the statute is not ordinarily sufficient. The statute cannot go into


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1 2

c.

The Power of Sale! Can Only Vest In a Person Entitled to Money Payments, and Based on the Facts Stated Above, Uncertainty Exists as to the Current Holder of the Note and Deed of Trust.

3

details, but is compelled to content itself with a statement of the ultimate facts which must be made to appear, leaving the details to be supplied by the affidavit, from the circumstances of the particular case .... The ultimate facts of the statute must be proved, so to speak, by the affidavit, by showing the probatory facts upon which the ultimate fact depends. These ultimate facts are conclusions drawn from the existence of other facts, to disclose which, it is the special office of the affiant."

4 5

6 Thus, the declaration in the instant case must disclose the facts necessary to give this Court the

7 basis to allow the foreclosure sale of plaintiffs' home to proceed Based on the above, therefore, 8 because the "declaration" merely follows the language of the statute, it proves nothing.

9 Therefore, the faulty declaration constitutes and is another substantial and prejudicial irregularity lOin the foreclosure proceedings. Without the required declaration having been attached to the

11 notice of default, the notice is null and void as a matter of law.

12 Civil Code section 2923.5 mandates a "declaration!' Here, the declaration attached to the

13 default notice lacks any indicia of reliability or credibility, for the reasons stated above.

14 15

16 In California, California Civil Code § 2932.5 governs the power of sale under an assigned

17 mortgage, and provides that the power of sale can only vest in a person entitled to money

18 payments:

19 "Where a power to sell real property is given to a mortgagee, or other encumbrancer, in an instrument intended to secure the

20 payment of money, the power is part of the security and vests in any person who by assignment becomes entitled to payment of the

21 money secured by the instrument. The power of sale may be exercised by the assignee if the assignment is duly acknowledged

22 and recorded."

23 As stated elsewhere in this brief, uncertainty exists a to who has the power of sale at the current 24 time to conduct the foreclosure proceedings, under Civil Code section 2932.5, because two

25 conflicting assignments of deeds of trust are currently on record with the El Dorado County

26 27 28

'As also more fully explained in the complaint accompanying this temporary restraining order request, of which the Court is requested to take judicial notice, no power of sale exists under the circumstances of this case, because plaintiff effectively rescinded the contract he entered with Mortgage Lenders Network.


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1 Recorder's Office. The need to verify that the promissory note secured by a deed of trust or

2 mortgage has been assigned is sometimes overlooked. The California Forms and Practices

3 Manual.contains the following on this subject.

4 "Although the ownership of a promissory note cannot be ascertained from examination of the records of county recorders of

5 the right of a transferee of a note to enforce the mortgage or deed of trust securing that note, it is usually evidenced by an assignment

6 of the mortgagee's or beneficiary's interest. Such assignment is often recorded in the county where the real property is located. But,

7 to assume that the record assignee of the security, is also owner of the promissory note it secures is to make the unwarranted

8 assumption that: a. The note was properly endorsed and b. The note was delivered to and is in possession of the assignee of

9 record."

10 Additionally, a promissory note is personal property and the deed of trust securing a note is a 11 mere incident of the debt it secures, with no separable ascertainable market value. (California

12 Civ. Code §§ 657, 663; Kirby v. Palos Verdes Escrow Co., 183 Cal.App, 3d 57, 62.) Any

13 transfers of the notice and mortgage fundamentally flow back to the note: "The assignment of a

14 mortgage without a transfer of the Indebtedness confers no right, since debt and security are

15 inseparable and the mortgage alone is not a subject of transfer." (Hyde v. Mangan (1891) 88 Cal. 16 319; Johnson v. Razy (1919) 181 Cal 342; Bowman v. Sears (1923) 63 Cal App 235; Treat v.

17 Burns (1932) 216 Cal 216.)

18 "A mortgagee's purported assignment of the mortgage without an assignment of the debt

19 which is secured is a legal nullity." (Kelley v. Upshaw (1952) 39 Ca1.2d 179.) "A trust deed has

20 no assignable quality independent of the debt; it may not be assigned or transferred apart from 21 the debt; and an attempt to assign the trust deed without a transfer of the debt is without effect." 22 (Domaradv. Fisher & Burke, Inc. (1969) 270 Cal. App. 2d 543.) The promissory note is a

23 negotiable instrument and transferring a deed of trust by itself does not allow enforcement of the

24 instrument unless the promissory note is properly negotiated. Where an instrument has been 25 transferred, enforceability is determined based upon possession. Moreover, California Comm,

26 Code § 3301 limits a negotiable instrument's enforcement to the following:

27 "Person entitled. to enforce" an Instrument means (a) the holder of the instrument, (b) a nonholder in possession of the instrument

28 who has the rights of a holder, or ( c) a person not in possession of the instrument who is entitled to enforce the instrument pursuant to


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1


2 3

Section 3309 or subdivision (d) of Section 3418. A person may be a person entitled to enforce the instrument even though the person is not the owner of the instrument or is in wrongful possession of the instrument."

4 As demonstrated elsewhere in this brief as well as in the complaint, uncertainty exists as to the

5 current holder of the note and deed of trust. 2 The fact is whoever the true beneficiary is, currently

6 is unknown to plaintiffs and this Court. Without knowing the true identity of the current holders 7 of the note and deed of trust, allowing this foreclosure sale to proceed could in all likelihood

8 result in a wrongful foreclosure of plaintiffs' home, under this separate ground.

9 By virtue of the method and manner defendants are attempting to carry out this

10 foreclosure sale, the foreclosure of the subject property is void ab initio as a matter oflaw.

11 III. 12

PLAINTIFFS HAVE SHOWN SUBSTANTIAL, PREJUDICIAL IRREGULARITIES IN THE PROCEEDINGS THAT WARRANTS A TRO AT THIS TIME.

13 Clearly, under the facts of this case, as discussed above, substantial, egregious and

14 prejudicial irregularities in the proceedings have occurred and will result in substantial prejudice 15 to plaintiffs if the Court refuses to enter the restraining order. Plaintiffs, therefore, request the

16 Court enter the restraining order, at this time, and a subsequent preliminary injunction.

17 IV. 18

PLAINTIFFS WILL SUFFER IRREPARABLE HARM IF INJUNCTIVE RELIEF IS NOT GRANTED, BECAUSE THEY WILL LOSE THEIR HOME, WHICH IS ALSO THEIR FAMILY RESIDENCE.

19 Plaintiffs will suffer irreparable injury, because losing one's home through foreclosure is

20 an irreparable injury. Real property is usually deemed "unique," because the injury or loss cannot 21 be compensated in damages and injunctive relief is therefore readily granted. Civ. Code

22 §3387-damages presumed inadequate on breach of agreement to convey real property. Without 23 the court's intervention, irreparable harm is imminent, as well, because plaintiffs will be subject

24 to "financial double jeopardy." That is, plaintiff can lose their home, yet still be liable on the

25 promissory note if the parties attempting to foreclose are not the proper parties. As stated above,

26 27 28

2For example, as more fully explained in the complaint accompanying this temporary restraining order request, of which the Court is requested to take judicial notice, because the depositor did not comply with the Pooling & Servicing Agreement, the assignments of deeds of trust are invalid.

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1 plaintiffs' home is unique, and if it is sold to a bona fide purchaser, plaintiffs would be unable to

2 purchase the exact same home anywhere else. In addition, if defendants' foreclosure sale is

3 permitted to happen, the Edstrom family would be forced to move from their home, and they

4 would be further subjected to the irreparable harm of public humiliation and loss of reputation in 5 the community in which they live.

6 V. 7

8

THE BALANCE OF HARDSHIPS CLEARLY POINTS IN PLAINTIFFS' DIRECTION BECAUSE THE HARDSHIP PLAINTIFFS WILL FACE WITH THE LOSS OF THEIR HOME FAR OUTWEIGHS ANY HARDSHIP POSED BY POSTPONING THE FORECLOSURE SALE.

9 For plaintiffs to lose their house would present a far greater hardship than postponing the

10 foreclosure sale to allow for an additional hearing and further briefing. Because the balance of

11 hardship so clearly points in plaintiffs' direction, plaintiffs are allowed to make a lesser showing 12 on the merits. Moreover, here, plaintiffs have shown a reasonable probability of success on the 13 merits because they have shown substantial defects in the foreclosure proceedings. The status

14 quo is that plaintiffs have control of their home, while defendants purportedly possess a security 15 interest in it. If a temporary restraining order is granted, it will do nothing more than preserve this

16 status quo, pending resolution ofthe case. Defendants' position will not change and neither will 17 that of plaintiffs. However, if defendants are allowed to proceed with the foreclosure sale,

18 plaintiffs will be displaced and lose their home. Therefore, in light of the lopsided balance of 19 hardship in this case and the human suffering facing plaintiffs, a temporary restraining order is 20 warranted.

21 VI. 22

THE IRREPARABLE HARM PLAINTIFFS WILL SUFFER IF THEIR RESIDENCE IS SOLD THROUGH FORECLOSURE FAR OUTWEIGHS ANY HARM TO DEFENDANTS.

23 If the foreclosure sale is permitted to happen and plaintiffs ultimately succeed on the

24 merits of their claims, plaintiffs will have suffered irreparable harm. However, if plaintiffs do not 25 succeed on their claims, defendants will be free to continue with their foreclosure sale of

26 plaintiffs' residence and will have ultimately lost nothing in affording plaintiffs the opportunity 27 to have their claims adjudicated.

28 VII. PUBLIC INTEREST FACTORS ARGUABLY WEIGH IN FAVOR OF INJUNCTIVE RELIEF IN THIS CASE.


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12


1 Arguably, public interest factors weigh in favor of injunctive relief in this case. That is, to

2 allow the foreclosure sale of plaintiffs' home without first determining the validity of the trustee 3 substitution and assignments of deed of trust will be a gross injustice and violation of all notions 4 of public policy with regard to a borrower's rights to avoid foreclosure. To allow the foreclosure 5 to proceed without the Court's first determining the validity of these documents will wreak more

6 uncertainties and injustices in which these same defendants are involved as co-conspirators with

7 one another.

8 Furthermore, to allow the foreclosure proceeding to take place without the Court's first

9 determining the validity of the assignments and trustee substitution will only serve to undermine 10 the thrust of the statute and the strict legislative schema required for non-judicial foreclosures.

11 VIII. THE COURT HAS DISCRETION TO WAIVE THE BOND REQUIREMENT AT THIS TIME.

13 While a preliminary injunction will not be issued without security, under Code of Civil

14 Procedure section 529, or without a cash deposit in lieu of bond, under Code of Civil Procedure

15 section 995.710, the Court has discretion to waive the bond requirement. No realistic harm to the 16 defendants exists from a temporary restraint of the foreclosure proceedings. That is, if the

17 defendants' position is correct that the documents recorded on the subject property are valid, then 18 the foreclosure sale will proceed. Should the non-judicial foreclosure be temporary halted, the

19 defendants are still free to counterclaim against plaintiffs for relief by judicial foreclosure. Thus, 20 defendants' interests are adequately secured by both the deed on the property, if the trustee

21 substitution and assignments of deeds of trust are valid, and any future counterclaim that seeks to

22 establish the validity of those documents. Therefore, no bond should be required at this time.

23 CONCLUSION

24 Based on the facts and authorities stated above, plaintiffs request the Court find that

25 plaintiffs' allegations on the merits are sufficient to grant the temporary restraining order, at this 26 time, and order therefore, that all defendants and their agents, assigns, employees, officers,

27 attorneys, and representatives be enjoined and restrained from engaging in or performing any act 28 to deprive plaintiffs of ownership or possession of the real property located at 2690 Brown Bear

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1 Court, Cool, California, including but not limited to instituting, prosecuting or maintaining

2 foreclosure or sale proceedings on the property, from recording any deeds or mortgages regarding 3 the property or from otherwise taking any steps whatsoever to deprive plaintiffs of ownership in

4 the property, and in particular from proceeding with the sale of the property scheduled for May

5 26,2010, at 10 a.m.
6 DATED: May 24,2010.
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28 BOTTOMLINE LAWYERS

By:

RICHARD A. HALL Attorneys for Plaintiffs


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4

fiLED

7 SUPERlOR COURT OF CALIFORNIA

8 COUNTY OF EL DORADO

9

"1 RICHARD A. HALL (SBN 135483) BOTTOMLINE LA WYERS

2 985 Lincoln Way, Suite 206

Auburn, California 95603



DANIEL MAJOR EDSTROM, an individual; 6 and TERI Al\lNE EDSTROM, an individual


individual; and TERl ANNE )


)

12 Plaintiffs, )

)

13 v. )



15 )

Defendants. )

16 17

19

18 I, Richard A. Hall, declare:

L

I am an attorney licensed to practice before all courts in California, and full

CASE NO. p'ei' 20 1 o 0 314 DECLARA TION OF RlCHARD A. HALL IN SUPPORT OF PLAINTIFFS' EX PARTE APPLICATION FOR TEMPORARY RESTRAINING ORDER AND ORDER TO SHOW CAUSE RE PRELIMINARY INJUNCTION

DATE: May 25,2010

TIME: 8:15

DEPT: 9

BY FAX

20 attorney of record for plaintiff in this action. I make this declaration in support of plaintiffs' ex 21 parte application for temporary restraining order and order to show cause re preliminary

22 injunction. I have personal knowledge of the matters stated in this declaration, except for those 23 stated on information and belief, and as to those matters, I believe they are true and if called as a 24 witness to testify to the truth of the matters stated herein, will competently do so.

25 26

27 28

2. Attached hereto, marked exhibit 1, is a true and correct copy of the "Deed of

Trust,"executed by plaintiffs, on the property known as 2690 Brown Bear Court, Cool, California 95614, which copy I received direct from Placer Title Company, in Rocklin, California.

3. Attached hereto, marked exhibit 2, is a true and correct copy of "Notice of Default

DECL. OF R.A. HALL ISO PLFS' EXPARTE APP FOR IRO AND OSC RE PRELIM INJUNCTION -1-

and Election To Sell Under Deed Trust," issued December 19,2008, and recorded December 2 23,2008, which I received direct from Placer Title Company, in Rocklin, California.

3 4. Attached hereto, marked exhibit 3, is a true and correct copy of "Substitution of

4 Trustee," executed January 26,2009, and recorded on February 5, 2009, in which NDEx West 5 was purportedly substituted for Mitchell L. Heffernan, which copy I received direct from Placer 6 Title Company, in Rocklin, California.

7 5. Attached hereto, marked exhibit 4, is a true and correct copy of "Assignment of

8 Deed of Trust," executed on February 2009, by MERS, as nominee for Mortgage Lenders

9 Network transferring all interests in the note and deed of trust to U.S. Bank National Association 10 as Trustee by Residential Funding Company, LLC FKA Residential Funding Corporation,

11 Attorney in Fact," which copy I received direct from Placer Title Company, in Rocklin,

12 California.

13 6. Attached hereto, marked exhibit 5, is a true and correct copy of "Notice of

14 Trustee's Sale," executed March 24,2009 and recorded March 30,2009.

15 7. Attached hereto, marked exhibit 6, is a true and correct copy of "Assignment of 16 Deed of Trust," executed on July 7,2009 and recorded July 15, 2009, and signed by MERS, as 17 nominee for Mortgage Lenders Network, purportedly assigning all rights and interests to the note 18 and deed oftrust to "U.S. Bank National Association, as Trustee."

19 8. On November 2, 2009, I checked the website for Priorityl'osting, which is

20 identified on the notice of trustee's sale, as the party that maintains sale information on behalf of 21 defendant NDEx West. According to the posting that day, on November 2,2009, the subject

22 property had been sold on August 7,2009. Attached hereto, collectively marked exhibit 7, is a 23 true and correct copy of a printout, and facsimile of printout, from the Priorityposting website, 24 which I printed out on November 2,2009.

25 9. I obtained direct from Placer Title Company, in Rocklin, California, all records

26 that have been recorded with the El Dorado County Recorder's Office, from the time of

27 recordation of the subject deed oftrust, in or about September 14,2005, to the present time. No 28 trustee's deeds of sale have ever been recorded.

DECL. OF R.A. HALL ISO PLFS' EXPARTE APP FOR TRO AND OSC RE PRELIM INJUNCTION -2-

4

14.

Attached hereto, marked exhibit 9, is a true and correct copy of the "Notice of

10.

Attached hereto, marked exhibit 8, is a true and correct copy of the "Notice of

2 Trustee's Sale," dated November 17,2009 and recorded on December 1,2009, scheduling the 3 sale date of the subject property for December 16,2009.

11.

As stated above, I obtained direct from Placer Title Company, in Rocklin,

5 California, all records that have been recorded with the El Dorado County Recorder's Office,

6 from the time of recordation of the subject deed oftrust, in or about September 14,2005, to the

7 present time; and no rescission of the first assignment of deed of trust has been recorded with the 8 El Dorado County Recorder's Office.

9

12.

On December 16,2009, I learned from my assistant, Carol 1. Sidhu, that

10 plaintiffs' property had been sold at foreclosure on December 16, 2009.

11

13.

On December 16,2009, I also learned from Ms. Sidhu that she learned that the

12 sale of plaintiffs' home was being reversed, as a result of the temporary restraining order entered 13 by this Court on December 15, 2009.

14

15 Trustee's Sale," dated Apri127, 2010, recorded on May 3, 2010, scheduling the sale for May 26, 16 2010.

17

15.

On December 15, 2010, this Court entered a temporary restraining order in the

18 action filed, on December 14, 2010, against some of the same defendants that are defendants in 19 this action.

20

16.

The Court entered the temporary restraining order and set the matter for a

21 preliminary hearing.

22

17.

While the matter was pending, defendant America's Servicing Company

23 requested a continuance of the preliminary hearing.

24

18.

Plaintiffs stipulated to a continuance, and while the matter was pending,

25 America's Servicing Company removed the action to federal court.

26

19.

From the time America's Servicing Company removed the action, the lawsuit, in

27 the United States District Court for the Eastern District of California, lay dormant; that is, the 28 defendants have done nothing, including remedying the flaws regarding the faulty trustee


5


1 substitution and faulty assignments of deeds of trust, both of which, again, for the basis for 2 instant ex parte request for temporary restraining order.

3 20. All causes of action in the removed action have been dismissed except for the

4 cause of action for violation of the Fair Debt Collection Practices Act.

21.

None of the state causes of action alleged in this lawsuit are currently pending in

6 the removed action.

7 I declare under penalty of perjury under the laws of California that the foregoing is true

8 and correct and that this declaration is executed on May 24,2010, at Auburn, California.

9

10 11 12

13

RICHARD A. HALL

14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

Exhibit 1

Branch :P06,User :4007

Comment:

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-----.---- _. -- - -- ._--

40400211349 --:

PN'I 3..).133~

Recording Requested By:

MORTGAGE lENDERS ~ETWORK USA, INC.

Return To:

MORTGAGE lENDERS NETWORK USA, INC. 213 COURT ST. MIDDLETOWN, CT D6451

11111111111111111111111111111111111 11111111111111

El Dorado I County Recorder

William Schultz Co Recorder Office DOC- 2005-0077328-00

Acet 2-FIOELITY NATL TITLE co Wed"escay, 5EP 14, 2005 14:30:00

Ttl Pd $72,00 NbrR0000775348

LJP/Cl/1-22

Prepared By:

MORTGAGE LENDERS NETWORK USA, INC. 213 CDurt St. ~Iddi'town CT 06451

----------[Sp2ce Above This Llne For Recording D"lal--~-------

DEED OF TRUST

MOON 1002510-4040021649-3

DEFINlTIONS

Words used in multiple sections of !his document are defined below and oilier words are defined in Sections 3, 11. 13, 18. 20 and 21. Certain rules regarding the usage of words used in this document are also provided in Section 16.

(A) "Security Instrument" means this document, which is dated September .,. 21Hl5 together with all Riders 10 !his document

(B) "Borrower" is

DANIEL MAJOR EDSTROM AND

TERI ANNE EDSTROM , HUSBAND AND WIFE

Borrower's address is 2690 8ROWN BEAR COURT ,COOL, CA 95614

. Borrower is !he trustor under !his Security Instrument. (C) "Lender" is MORTGAGE lENDERS NETWORK USA, INC.

Lender is a eorporat i on or assee i at ion organized and existing under the laws of . De! aware

CALIFORNIA-Single Family-Fllllnie Mae/Freddie Mac UNIFORM INSTRUMENT WITH PlIERS Form 3005 1/01

• -SAleA) (0207) ®

rage 1 0115

VIA? MORTGAGE FORMS· 1600,521-7291

EL DORADO,CA Document: DOT 2005.77328

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Comment:

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~--------------- --_ ---.

j".

lender's address is 213 Court St. M H:hl hiltllW!I CT 06457

(I)) "Trustee" is 1.4 i tche l l L. Heffernal1

(E) "MERS" is Mortgage Electronic Registration Systems, Inc. MERS is a separate corporation that is acting solely as a nominee for Lender and Lender's successors and assigns. MERS is tile beneficiary under tbis Security Instrument. MERS is organized and existing under the laws of Delaware, and has an address and telephone number of P.O. Box 2026, Flint, MI 48501-2026, tel. (888) 679-MERS.

(F) "Note" means the promissory note signed by Borrower and dated September 1, 2005

The Note states that Borrower owes Lender f i va ih.milred Tlu.!I.IS311d and No/1011 -------

-----------=-------=~---------------------------------- Dollirrs

- (U.s. $ 500, DOll. (HI ) plus interest. Borrower has promised to pay this debt in regular Periodic

Payments and to pay-the debt in full not later than October - 1, 21135

(G) "Property" means the property that is described below under the heading "Transfer of Rights in the Property."

(M) "Loan" means the debt evidenced by the Note. plus interest, any prepayment charges and late charges due under the Note, and all sums due under this Security Instrument, plus interest

0) "Riders" means all Riders 10 this Security Instrument that are executed by Borrower. The following Riders are to be executed by Borrower [check box as applicable]:

[iJ -Adjustable Rate Rider

o Balloon Rider

o VA Rider

D Condominium Rider

[i] Planned Unit Development Rider D Biweekly Payment Rider

D Second Home Rider D 1-4 Family Rider o Olher(s) [specify]

(.I) II Applicable Law" means all controlling applicable federal, state and local statutes, regulations, ordinances and adminisnative rules and orders (that have !he effect of law) as well as all applicable final, non-appealable judicial opinions.

(K) "Community Association Dues, Fees, and Assessments" means all dues, fees, assessments and other charges -that are . imposed on Borrower or the Property by a condominium association, homeowners association or similar organization.

(L) "Electronic Funds Transfer" means any transfer of funds, other than a transaction originated by check, draft, or similar paper instrument, which is initiated through an electronic terminal. telephonic instrument, computeror magnetic tape so as to order, lnsnuct, or authorize a financial institution to debit or credit an account, Such term includes, but is not limited to, point-of-sale transfers. automated teller machine transactions. transfers initiated by telephone, wire transfers, and automated clearinghouse transfers.

(M) "Escrow Items" means those items that are described in Section 3.

(N) "Miscellaneous Proceeds" means any compensation, settlement, award of damages, or proceeds paid by any third party (other than insurance proceeds paid under the coverages described in Section 5) for: (i) damage to, or destruction of, the Property; (ii) condemnation or other taking of all or any part of the Property; (iii) conveyance in lieu of condemnation; or (iv) misrepresentations of, or omissions as to, the value and/or condition of the Property.

(0) "Mortgage Insurance" means insurance protecting Lender against the nonpayment of, or default on. the Loan.

(P) "Periodic Payment" means the regularly scheduled amount due for (i) principal and interest under the

Note, plus eli) any amounts under Section 3 of this Security Instrument -

.. -6A(eA) (0207) ®

Inlllal&:.P:l.:::ll

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Form 3005 1101


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Comment

(Q) "RESPA" means the Real Estate Settlement Procedures Act (12 U.S.C. Section 2601 et seq.) and its implementing regulation. Regulation X (24 C.P.R, Part 3500), as they might be amended from time 1.0 time, or MY additional or successor legislation or regulation that governs the smile subject matter. As used in this Security Instrument, "RESPA" refers 1.0 all requirements and restrictions !hat are imposed in regan! to a "federally related mortgage loan" even if the Loan does not qualify as a "federally related mortgage loan" under RESPA.

(R) .. Successor in Interest of Burrower" means any party that has taken title 10 the Property, whether or not that party has assumed Borrower's obligations under the Note ancljor this Security Instrument

TRANSFER OF RIGIITS IN THE PROPERTY

The beneficiary of this Security Instrument is MERS (solely as nominee for Lender and Lender's successors and assigns) and the successors and assigns of MERS. This Security Instrument secures 10 Lender: 0) the repayment of the Loan, and all renewals. extensions and modifications of the Note: and (ii) !he performance of Borrower's covenants and agreements under this Security Instrument and the Note. For this purpose, Borrower irrevocably grants and. conveys to Trustee,

in trust, with power of sale, the following described property located in the

COUNTY of n. [HUIADO

[Type of Recording Jurisdiction]

SEE ATTACHED SCHEDULE A

[Nome of Recording Jurisdiction]

which currently has the address of [Street]

!Cil.y], California 95614 [Zip Code]

Parcel ID Number:

2690 BROWN BEAR COURT COOL

("Property Address"):

TOGETHER WITH all the improvements now or hereafter erected on lhe property. and all easements, appurtenances. and fixtures now or hereafter a part of fhe property. All replacements and additions shall also be covered by this Security Instrument All of the foregoing is referred to in !his Security Instrument as the "Property," Borrower understands and agrees that l\1ERS holds only legal title to the interests granted by Borrower in this Security Instrument, bur, if necessary to comply with law or custom, MERS (as nominee for Lender and Lender's successors and assigns) has the right: 10 exercise any or all of those interests, including, but 110t limited to, the right to foreclose and sell the Property; and 10 take any action required of Lender including, but not limited 10, releasing and canceling this Security Instrument

BORROWER COVENANTS that Borrower is lawfully seised of the estate hereby conveyed and has the right 10 grant and convey the Property and that the Property is unencumbered, except for encumbrances

• ·GAleA) (0207) ®

l'ag.30115

Farm 3005 1101

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of record. Borrower warrants and will defend generally the title to the Property against all claims and

demands, subject to any encumbrances of record. .

THIS SECURITY INSTRUMENT combines uniform covenants for national use and non-uniform covenants with limited variations by jurisdiction !.O constimte a uniform security instrument covering real property.

UNIFORM COVENANTS. Borrower and Lender covenant and agree as follows:

1. Payment of Principal, Interest, Escrow Items, Prepayment Charges, and Late Charges.

Borrower shall pay when due the principal of, and interest on, the debt evidenced by ine Note and any prepayment charges and late charges due under me Note. Borrower shall also pay funds for Escrow Items pursuant to Section 3. Payments due under the Note and this Security Instrument shall be marie in U.S. currency. However, if any check or other instrument received by Lender as payment under the Note or this Security Instrument is remrned to Lender unpaid, Lender may require that any or all subsequent payments due under the Note and this Security Instrument be made in one or more of the following forms, as selected by Lender: (a) cash; (b) money order, (c) certified check, bank check, treasurer's check or cashier's check, provided any such check is drawn upon an institution whose deposits are insured by :a federal agency, Instrumentality, or entity; or (d) Electronic Funds Transfer.

Payments are deemed received by Lender when received at the location designated in the Note or at such other location as may be designated by Lender in accordance with the notice provisions in Section 15. Lender may rerum any payment or partial payment if the payment or partial payments are insufficient to bring me Loan CWTenL Lender may accept any payment or partial payment insufficient to bring the Loan current, without waiver of any rights hereunder or prejudice to its rights !.O refuse such payment or partial payments in the future, but Lender is not obligated to apply such payments at the time such payments are accepted. If each Periodic Payment is applied as of its scheduled due date, then Lender need not pay interest on unapplied funds. Lender may hold such unapplied funds until Borrower makes payment to bring the Loan current, If Borrower does not do so within a reasonable period of. time, Lender shall either apply such funds or return !hem to Borrower. If not applied earlier, such funds will be applied to the outstanding principal balance under the Note immediately prior to foreclosure. No offset or claim which Borrower might have now or in the future against Lender shall relieve Borrower from making payments due under the Note and this Security Instrument or performing the covenants and agreements secured by this Security Instrument,

2. Application of Payments or Proceeds. Except as otherwise described in this Section 2, all payments accepted and applied by Lender shall be applied in the following order of priority: (a) interest due under the Note; (b) principal due under the Note; (c) amounts due under Section 3. Such payments shall be applied to each Periodic Payment in the order in which it became due. Any remaining amounts shall be applied first to late charges, second to any other amounts due under this Security Instrument, and then to reduce the principal balance of the Note.

If Lender receives a payment from Borrower for a delinquent Periodic Payment which includes a sufficient amount 10 pay any late charge due, the payment may be applied to the delinquent payment and the late charge. If more than one Periodic Payment is outstanding, Lender may apply any payment received from Borrower to the repayment of the Periodic Payments if, and to the extent that, each payment can be paid in full To !he extent that any excess exists after the payment is applied to the full payment of one or more Periodic Payments, such excess may be applied to any late charges due. Voluntary prepayments shall be applied first to any prepayment charges and then as described in the Note.

Any application of payments, insurance proceeds, or Miscellaneous Proceeds toprincipal due under the Note shall not extend or postpone the due date, or change the amount, of the Periodic Payments.

3. Funds for Escrow Items. Borrower shall pay !.O Lender on the day Periodic Payments are due under the Note. until the Note is/aid in full,a sum (the "Funds") to provide for payment of amounts due for: (a) taxes and assessments an other items which can attain priority over this Security Instrument as a lien or encumbrance on the Property; (b) leasehold payments or ground rents on the Property, if any; (c) premiums for any and all insurance required by Lender under Section 5; and (d) Mortgage Insurance premiums. if any, or lilly sums payable by Borrower to Lender in lieu of the payment of Mortgage Insurance premiums in accordance with the provisions ofSecti.on 10. These items are called "Escrow Items." AI origination or at any time during the term of the Loan, Lender may require that Community Association

- Dues. Fees, and Assessments, if any. be escrowed by Borrower, and such dues, fees and assessments shall .. - be an Escrow Item. Borrower shall promptly furnish 10 Lender all notices of amounts to be paid under !his Section. Borrower shall pay Lender the Funds for Escrow Items unless Lender waives Borrower's obligation to pay the Funds for any or all Escrow Items. Lender may waive Borrower's obligation to

pay to Lender Funds for any or all Escrow Items at any time. Any such waiver may only be

.-6A(CA) (0201) ®

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Form 3005 1/!l1


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Comment:

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~.

in writing. In the event of such waiver, Borrower shall pay directly, when and where payable, !he amounts due for any Escrow Items for which payment of Funds has been waived by Lender and, if Lender requires, shall furnish to Lender receipts evidencing such payment within such time period as Lender may require. Borrower's obligation to make such payments and to provide receipts shall for all purposes be deemed to be a covenant and agreement contained in this Security Instrument, as the phrase "covenant and agreement" is used in Section 9. If Borrower is obligated to pay Escrow Items directly, pursuant to a waiver, and Borrower fails to pay !he amount due for an Escrow Item, Lender may exercise its rights under Section 9 and pay such amount and Borrower shall then be obligated under Section 9 to repay to Lender any such amount Lender may revoke the waiver as to any or all Escrow Items at any time by a notice given in accordance with Section 15 and, upon such revocation, Borrower shall pay to Lender all Funds. and in such amounts, !hat are then required under this Section 3.

Lender may, at any time, collect and hold Funds in an amount (a) sufficient to penni! Lender In apply me Funds at the time specified under RESPA, and (b) not to exceed the maximum amount a lender can require under RESP A. Lender shall estimate the amount of Funds due on the basis of current data and reasonable estimates of expenditures of future Escrow Items or otherwise in accordance with Applicable Law.

The Funds shall be held in an institution whose deposits are insured by a federal agency, instrumentality. or entity (including Lender, if Lender is an institution whose deposits are so insured) or in any Federal Home Loan Bank. Lender shall apply the Funds 10 pay the Escrow Items no later man the time specified under RESPA. Lender shall not charge Borrower for holding and applying me Funds, annually analyzing the escrow account, or verifying the Escrow Items, unless Lender pays Borrower interest on me Funds and Applicable Law permits Lender to make such a charge. Unless an agreement is made in writing or Applicable Law requires interest to be paid 011 the Funds. Lender shall not be required to pay Borrower any interest or earnings on the Funds. Borrower and Lender can agree in writing, however, that interest shall be paid 011 the Funds. Lender shall give to Borrower. without charge, an annual accounting of the Funds as required by

RESPA. .

If there is a surplus of Funds held in escrow, as defined under RESPA, Lender shall account to Borrower for the excess funds in accordance with RESP A. If there is a shortage of Funds held in escrow, as defined under RESPA, Lender shall notify Borrower as required by RESPA, and Borrower shall pay 10 Lender the amount necessary to make up the shortage in accordance with RESPA, but in no more than 12 monthly payments. If there is a deficiency of Funds held in escrow, as defined under RESPA, Lender shall notify Borrower as required by RESPA, and Borrower shall pay to Lender the amount necessary to make up the deficiency in accordance with RESPA, but in no more than 12 monthly payments.

Upon payment in full of all sums secured by this Security Instrument, Lender shall promptly refund to Borrower any Funds held by Lender.

4. Charges; Liens. Borrower shall pay all taxes, assessments, charges, fines, and impositions attributable to the Property which can attain priority over this Security Instrument, leasehold payments or ground rents on ihe Property, if any, and Community Association Dues, Fees, and Assessments, if any. To the extent that these items are Escrow Items, Borrower shall pay them in the manner provided in Section 3.

Borrower shall promptly discharge any lien which has priority over mis Security Instrument unless Borrower: (a) agrees in writing to the payment of the obligation secured by the lien in a manner acceptable to Lender. but only so long as Borrower is performing such agreement; (b) contests the lien in good faith by, or defends against enforcement of the lien in, legal proceedings which in Lender's opinion operate to prevent the enforcement of the lien while those proceedings are pending, but only until such proceedings are concluded; or (c) secures from the holder of the lien an agreement satisfactory to Lender subordinating the lien to this Security Instrument. If Lender determines !hat any part of the Property is subject to a lien which can attain priority over this Security Instrument, Lender may give Borrower a notice identifying the lien. Within 10

G-SA(CA) (0207) ®

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Comment:

days of the dale on which that notice is given, Borrower shall satisfy the lien or take one or more of the actions set forth above in this Section 4.

Lender may require Borrower 10 pay II one-time charge for II real estate tax verification and/or reporting service used by Lender in connection with this Loan.

S. Property Insurence, Borrower shall keep the improvements now existing or hereafter erected on the Property insured against loss by fire, hazards included within the term "extended coverage," and any other hazards including, but not limited 10, earthquakes and floods, for which Lender requires insurance. This insurance shall be maintained in the amounts (including deductible levels) and for the periods that Lender requires. What Lender requires pursuant to the preceding sentences can change during the term of the Loan. The insurance carrier providing the insurance shall be chosen by Borrower subject to Lender's right to disapprove Borrower's choice, which right shall not be exercised unreasonably. Lender may require Borrower W pay, in connection with this Loan, either: (a) a one-time charge for flood zone determination, certification and tracking services; or (b) a one-time charge for flood zone determination and certification services and subsequent charges each lime remappings or similar changes occur which reasonably might affect such determination or certification. Borrower shall also be responsible for the payment of any fees imposed by the Federal Emergency Management Agency in connection with the review of any flood zone

determination resulting from an objection by Borrower. .

If Borrower fails to maintain any of the coverages described above, Lender may obtain insurance coverage, at lender's option and Borrower's expense. Lender is under no obligation to purchase any particular type or amount of coverage. Therefore, such coverage shall cover Lender, but might or might not protect Borrower, Borrower's equity in the Property, or the contents of the Property. against any risk, hazard or liability and might provide greater or lesser coverage than was previously in effect, Borrower acknowledges that the cost of the insurance coverage so obtained might significantly exceed the cost of insurance that Borrower could nave obtained. Any amounts disbursed by Lender under this Section 5 shall become additional debt of Borrower secured by this Security Instrument, These amounts shall bear interest at the Note rate from the date of disbursement and shall be payable, with such interest, upon notice from Lender to Borrower requesting payment.

All insurance policies required by Lender and renewals of such policies shall be subject to Lender's right to disapprove such policies, shall include Ii standard mortgage clause, and shall name Lender !IS mortgagee and/or as an additional loss payee and Borrower further agrees to generally assign rights to insurance proceeds to the holder of the Note up to the amount of the outstanding loan balance. Lender shall have ihe right to hold the policies and renewal certificates, If Lender requires, Borrower shall promptly give to Lender all receipts of paid premiums and renewal notices. If Borrower obtains any form of insurance coverage, not otherwise required by Lender, for damage to, or destruction of, the Property, such policy shall include a standard mortgage clause and shall name Lender as mortgagee and/or as an additional loss payee and Borrower further agrees 10 generally assign rights to insurance proceeds to the holder of the Note up to the amount of the outstanding loan balance.

In the event of loss. Borrower shall give prompt notice W the insurance carrier and Lender. Lender may make proof of loss if not made promptly by Borrower. Unless Lender and Borrower otherwise agree in writing, any insurance proceeds, whether or not the underlying insurance was required by Lender, shall be applied to restoration or repair of the Property, if the restoration or repair is economically feasible and Lender's security is not lessened. During such repair and restoration period, Lender shall have the right 10 hold such insurance proceeds until Lender has had an opportunity to inspect such Property to ensure the work

. has been completed to Lender's satisfaction, provided that such inspection shall be undertaken promptly.

Lender may disburse proceeds for the repairs and restoration in II Single payment or in a series of progress payments as the work is completed. Unless an agreement is made in writing or Applicable Law requires interest to be paid on such insurance proceeds, Lender shall not be required 10 pay Borrower any interest or earnings on such proceeds. Fees for publicadjusters, or other third parties, retained by Borrower shall not be paid out of the insurance proceeds and shall be the sole obligation of Borrower. If the restoration or repair is not economically feasible or Lender's security would be lessened, the insurance proceeds shall be applied. to the sums secured by this. Security Instrument, whether or not then due, with

0.;6A(01\) (0207)

Form 300S 1/01

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Comment:

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4040021649

the excess, ff aay, paid to Borrower. Such insurance proceeds shall be applied in the order provided for in Section 2.

If Borrower abandons the Property, Lender may file, negotiate and settle any available insurance claim and related matters. If Borrower does not respond within 30 days to a notice from Lender that the insurance carrier has offered to settle a claim, then Lender may negotiate and settle the claim. The 30-day period will begin when the notice is given. In either event, or if Lender acquires the Property under Section 22 or otherwise, Borrower hereby assigns to Lender (a) Borrower's rights to any insurance proceeds in an amount not to exceed the amounts unpaid under the Note or this Security Instrument, and (b) any other of Borrower's rights (other than the right to any refund of unearned premiums paid by Borrower) under all insurance policies covering the Property, insofar as such rights are applicable to the coverage of the Property. Lender may use the insurance proceeds either to repair or restore the Property or to pay amounts unpaid under the Note or this Security Instrument, whether or not then due.

6. Occupancy. Borrower shall occupy, establish, and use the Property as Borrower's principal residence within 60 days after the execution of this Security Instrument and shall continue 10 occupy the Property as Borrower's principal residence for at least one year after the date of occupancy, unless Lender otherwise agrees in writing. which consent shall not be unreasonably withheld, or unless extenuating circumstances exist which are beyond Borrower's control.

7. Preservation, Maintenance and Protection of' the Property; Inspections, Borrower shall not destroy. damage or impair the Property, a110w the Property 10 deteriorate or commit waste on the Property. Whether or not Borrower is residing in the Property, Borrower shall maintain the Property in order 10 prevent the Property from deteriorating or decreasing in value due to its condition. Unless it is determined pursuant to Section 5 that repair or restoration is not economically feasible, Borrower shall promptly repair the Property if damaged .10 avoid further deterioration or damage. If insurance or condemnation proceeds are paid in connection with damage to, or the taking of, the Property. Borrower shall be responsible for repairing or restoring the Property only if Lender has released proceeds for such purposes. Lender may disburse proceeds for the repairs and restoration in a Single payment or in a series of progress payments as the work is completed. If the insurance or condemnation proceeds are not sufficient to repair or restore the Property. Borrower is not relieved of Borrower's obligation for the completion of such repair or restoration.

Lender or its agent may make reasonable entries upon and inspections of the Property. If it has reasonable cause, Lender may inspect the interior of the improvements on the Property. Lender shall give Borrower notice at the time of or prior 10 such an interior inspection specifying such reasonable cause.

8. Borrower's Loan Application. Borrower shall be in default if, during the Loan application process, Borrower or any persons or entities acting at the direction of Borrower or with Borrower's knowledge or consent gave materially false, misleading, or inaccurate information or statements to Lender (or failed to provide Lender with material information) in connection with the Loan. Material representations include, but are not limited 10, representations concerning Borrower's occupancy of the Property as Borrower's principal residence.

9, Protection. of Lender's Interest in the Property and Rigbts Under this Security Instrument. If (a) Borrower fails to perform !he covenants and agreements contained in this Security Instrument, (b) there is a legal proceeding that might significantly affect Lender's interest in the Property and/or rights under this Security Instrument (such as a proceeding in bankruptcy, probate. for condemnation or forfeiture, for enforcement of a lien which may attain priority over this Security Insuument or to enforce laws or regulations), or (c) Borrower has abandoned the Property, then Lender may do and pay for whatever is reasonable or appropriate to protect Lender's interest in the Property and rights under this 'Security Instrument, including protecting and/or assessing the value of the Property, and securing and/or repairing the Property. Lender's actions can include, but are not limited to: (a) paying any sums secured by a lien which has priority over this Security Instrument; (b) appearing in court; and (c) paying reasonable

.-SACCA) (0207) ®

Inltlal"~~

Form 3005 1/01

Page 7 0115


Page 7 of22

Printed on 12/10/2009 11:23:42 AM


Comment:

Station Id :NNAU

077328

attorneys' fees to protect its interest in the Property and/or rights under this Security Instrument, including its secured position in it bankruptcy proceeding. Securing the Property includes, but is not limited to, entering the Property to make repairs, change locks, replace or board up doors and windows, drain water from pipes, eliminate building or other code violations or dangerous conditions, and have utilities turned on or off. Although Lender may take action under this Section 9, Lender does not have to do so and is not under any duty or obligation to do so. It is agreed that Lender incurs no liability for not taking any or all actions authorized under this Section 9.

Any amounts disbursed by Lender under this Section 9 shall become additional debt of Borrower secured by this Security Instrument These amounts shall bear interest at the Note rate from the date of disbursement and shall be payable, with such interest, upon notice from Lender to Borrower requesting

paymW~is Security Instrument is on a leasehold, Borrower shall comply with all the provisions of the lease. If Borrower acquires fee title to me Property, !he leasehold and the fee title shall not merge unless Lender agrees 10 the merger in writing.

10. Mortgage Insurance, If Lender required Mortgage Insurance as a condition of making the Loan,

, Borrower shall pay the premiums required to maintain the Mortgage Insurance in effect If, for any reason, the Mortgage Insurance coverage required by Lender ceases to be available from the mortgage insurer that previously provided such insurance and Borrower was required to make separately designated payments toward the premiums for Mortgage Insurance, Borrower shall pay the premiums required !D obtain coverage substantially equivalent to the Mortgage Insurance previously in effect. at a cost substantially equivalent to the cost to Borrower of the Mortgage Insurance previously in effect, from an alternate mortgage insurer selected by Lender. If substantially equivalent Mortgage Insurance coverage is not available, Borrower shall continue to pay to Lender the amount of the separately designated payments that were due when me insurance coverage ceased to be in effect Lender will accept, use and retain these payments as a non-refundable loss reserve ill lieu of Mortgage Insurance. Such loss reserve shall be non-refundable, notwithstanding the fact that me Loan is ultimately paid in full, and Lender shall not be required to pay Borrower any interest or earnings on such loss reserve. Lender can no longer require loss reserve payments if Mortgage Insurance coverage (in the amount and for the period that Lender requires) provided by an insurer selected by Lender again becomes available, is obtained, and Lender requires separately designated payments toward the premiums for Mortgage Insurance. If Lender required Mortgage Insurance as a condition of making the Loan and Borrower was required !D make separately designated payments toward the· premiums for Mortgage Insurance, Borrower shall pay the premiums required to maintain Mortgage Insurance in effect, or to provide a non-refundable loss reserve, until Lender's requirement for Mortgage Insurance ends in accordance with any written agreement between Borrower and Lender providing for such termination or until termination is required by Applicable Law. Nothing in this Section 10 affects Borrower's obligation to pay interest at the rate provided in the Note.

Mortgage Insurance reimburses Lender (or any entity that purchases the Note) for certain losses it may

incur if Borrower does not repay me Loan as agreed. Borrower is not a party !D the Mortgage Insurance. .

Mortgage insurers evaluate their total risk on all such insurance in force from rime [0 time, and may enter into agreements with other parties that share or modify their risk, or reduce losses. These agreements are on terms and conditions that are satisfactory to the mortgage insurer and the oilier party (or parties) to these agreements. These agreements may require the mortgage insurer to make payments using any source of funds that the mortgage insurer may have available (which may include funds obtained from Mortgage Insurance

premiums). .

As a result of these agreements. Lender, any purchaser of the Note, anomer insurer, any reinsurer, any other entity, or any affiliate of any of the foregoing, may receive (directly or indirectly) amounts that derive from (or might be characterized as) a portion of Borrower's payments for Mortgage Insurance, in exchange for sharing or modifying the mortgage insurer's risk, or reducing losses, If such agreement provides that an affiliate of Lender takes a share of the insurer's risk in exchange for a share of the premiums paid to the insurer, the arrangement is often termed "captive reinsurance." Further:

(3) Any such agreements will not affect tbe amounts that Borrower bas agreed to pay for Mortgage Insurance, or any other terms of the Loan. Such agreements wlll not increase the amount Borrower will owe for Mortgage Insurance, and they will not entitle Borrower to any refund.

(b) Any such agreements will not affect the rights Borrower bas - if allY - with respect to the Mortgage Insurance under the Homeowners Protection Act of 1998 or any other law. These rights may include the right to receive certain disclosuresj to request and obtain cancellation of the Mortgage

.. -GAleA) (0207) ®

Inlllal&jt..1Z-

Form SOilS 1/01

Page 8 of 15


Page 8 of22

Printed on 1211 0/2009 11 :23:43 AM


Comment:

Station Id :NNAU

077328

Insurance, to have the Mortgage Insurance terminated automatically, and/or to receive a refund of allY Mortgage Insurance premiums that were unearned lit the time of such cancelilltion Of termination.

11. Assignment of Miscellaneous Proceeds; Forfeiture, All Miscellaneous Proceeds are hereby

assigned to and shall be paid to Lender. .

If the Property is damaged, such Miscellaneous Proceeds shall be applied to restoration or repair of the Property, if the restoration or repair is economically feasible and Lender's security is not lessened. During such repair and restoration period, Lender shall have the right to hold such Miscellaneous Proceeds until Lender has had an opportunity to inspect such Property to ensure the work has been completed to lender's satisfaction, provided that such inspection shall be undertaken promptly. Lender may pay for the repairs and restoration in a single disbursement or in a series of progress payments as the work is completed. Unless an agreement is made in writing or Applicable Law requires interest to be paid on such Miscellaneous Proceeds, Lender shall not be required to pay Borrower any interest or earnings on such Miscellaneous Proceeds. If the restoration or repair is not economically feasible or Lender's security would be lessened, the Miscellaneous Proceeds shall be applied to the sums secured by this Security Instrument, whether or not then due, with the excess, if any, paid to Borrower. Such Miscellaneous Proceeds shall be applied in the order provided for in Section 2.

In the even! of a total laking, destruction, or .loss in value of the Property, the Miscellaneous Proceeds shall be applied to me sums secured by this Security Instrument. whether or not then due, with the excess, if any, paid to Borrower.

III the event of a partial taking, destruction, or loss in value of the Property in which the fair market value of the Property immediately before the partial taking, destruction, or loss in value is equal to or greater than the amount of the sums secured by this Security Instrument immediately before the partial taking, destruction, or loss in value, unless Borrower and Lender otherwise agree in writing, the sums secured by this Security Instrument shall be reduced by the amount of the Miscellaneous Proceeds multiplied by. the following fraction: (a) the total amount of the sums secured immediately before the partial laking, destruction, or loss in value divided by (b) the fair market value of the Property immediately before the partial taking,

destruction, or loss in value. Any balance shall be paid to Borrower. .

In the event of a partial taking, destruction, or Joss in value of the Property in which the fair market value of the Property immediately before the partial laking. destruction, or loss in value is less than !.he amount of the sums secured immediately before the partial taking, destruction, or loss in value, unless Borrower and Lender otherwise agree in writing, the Miscellaneous Proceeds shall be applied to the sums secured by this Security Instrument whether or not the sums are then due.

If the Property is abandoned by Borrower. or if, after notice by Lender to Borrower that me Opposing Party (as defined in the next sentence) offers to make an award to settle a claim for damages, Borrower falls 10 respond to Lender within 30 days after the date the notice is given, Lender is authorized to collect and apply the Miscellaneous Proceeds either to restoration or repair of the Property or to the sums secured by this Security Instrument, whether or not then due. "Opposing Party" means the third party that owes Borrower Miscellaneous Proceeds or the party against whom Borrower has a right of action in regard to Miscellaneous Proceeds.

Borrower shall be in default if any action or proceeding, whether civil or criminal, is begun that. in Lender's judgment, could result in forfeiture of the Property or other material impairment of Lender's interest in the Property or rights under this Security Instrument. Borrower can cure such a default and, if acceleration has occurred, reinstate as provided in Section 19, by causing the action or proceeding to be dismissed with a ruling that, in Lender's judgment, precludes forfeiture of the Property or other material impairment of Lender's interest in the Property or rights under this Security Instrument. The proceeds of any award or claim for damages that are attributable to the impairment of Lender's interest in the Property are hereby assigned and shall be paid to Lender.

All Miscellaneous Proceeds that are not applied to restoration or repair of the Property shall be applied

in the order provided for in Section 2. .

12. Borrower Not Released; Forbearance By Lender Not II Waiver. Extension of the time for payment or modification of amortization of !he sums secured by this Security Instrument granted by Lender to Borrower or any Successor in Interest of Borrower shall not operate to release the liability of Borrower or any Successors in Interest of Borrower. Lender shall not be required to commence proceedings against any Successor in Interest of Borrower or to refuse to extend lime for payment or otherwise modify amortization of the sums secured by this Security Instrument by reason of any demand made by the original Borrower or

~.6A(CA) (0207)

'nn'al.:.9f .:LS

Page 9 0115

Form 3005 1/01


Page 9 of22

Printed on 12110/200911:23:43 AM


COIT'.JTIent:

Station Id :NNAU

077328

any Successors in Interest of Borrower. Any forbearance by Lender in exercising any right or remedy including, without limitation, Lender's acceptance of payments from third persons, entities or Successors in Interest of Borrower or in amounts less than the amount then due, shall not be a waiver of or preclude the exercise of any right or remedy.

13. Joint and Several LiabilitY; Co-signers; Successors aild AssigllS Bound. BO!TOwer covenants and agrees that Borrower's obligations and liability shall be joint and several. However, any Borrower who co-signs nns Security Instrument but does not execute the Note (a "co-signer"): (a) is co-signing this Security Instrument only 10 mortgage, grant and convey the co-signer's interest in the Property under the terms of this Security Instrument; (b) is not personally obligated to pay the sums secured by this Security Instrument; and (c) agrees that Lender and any other Borrower can agree 10 extend, modify, forbear or make any accommodations with regard 1.0 the terms of this Security Instrument or the Note without the co-signer's consent

Subject 10 the provisions of Section 18, any Successor in Interest of Borrower who assumes Borrower's obligations under this Security Instrument in writing, and is approved by Lender, shall obtain all of Borrower's rights and benefits under this Security Instrument Borrower shall not be released from Borrower's obligations and liability under this Security Instrument unless Lender agrees to such release in writing. The covenants and agreements of this Security Instrument shrill bind (except as provided in Section 20) and benefit the successors and assigns of Lender .

.14. Loan Charges. Lender may charge Borrower fees for services performed in connection with Borrower's default, for the purpose of protecting Lender's interest in the Property and rights under this Security Instrument, including. but not limited to, attorneys' fees, property inspection and valuation fees. In regard to any other fees, the absence of express authority in this Security Instrument to charge a specific fee to Borrower shall not be construed as a prohibition on me charging of such fee. Lender may not charge fees that are expressly prohibited by this Security Instrument or by Applicable Law.

If the Loan is subject to a law which sets maximum loan charges, and that law is finally interpreted so !hat the interest or oilier loan charges collected or to be collected in connection with the Loan exceed the permitted limits, then: (a) any such loan charge shall be reduced by the amount necessary to reduce the charge to the permitted limit; and (b) any sums already collected from Borrower which exceeded permitted limits will be refunded to BO!TOwer. Lender may choose to make this refund by reducing the principal owed under the Note or by making a direct payment to Bo!TOW6f'. If a refund reduces principal, the reduction will be treated as a partial prepayment without any prepayment charge (whether or not a prepayment charge is provided for under the Note). Borrower's acceptance of any such refund made by direct payment to Borrower will constitute a waiver of any right of action Borrower might have arising out of such overcharge.

15. Notices. All notices given by Borrower or Lender in connection with this Security Instrument must be in. writing. Any notice to Borrower in connection with this Security Instrument shall be deemed to have been given. 10 Borrower when mailed by first class mail or when actually delivered 10 Borrower's notice address if sent by other means. Notice 10 any one Borrower shall constitute notice to all Borrowers unless Applicable Law expressly requires otherwise. The notice address shall be the Property Address unless Borrower has designated a substitute notice address by notice to Lender. Borrower shall promptly notify Lender of Borrower's change of address. If Lender specifies a procedure for reporting Borrower's change of address, then Borrower shall only report a change of address through that specified procedure. There may be only one designated notice address under this Security .Instrument at anyone rime. Any notice. 1.0. Lender shall. be given by delivering it or by mailing it by first class mail to Lender's address stated herein unless Lender has designated another address by notice to Borrower. Any notice in connection with this Security Instrument shall not be deemed to have been given 10 Lender until actually received by Lender. If any notice required by this Security Instrument is also required under Applicable Law, the Applicable Law requirement will satisfy the corresponding requirement under this Security Instrument,

16. Governing Law; Severability; Rules of Construction. This Security Instrument shall be governed by federal law and the law of ·the jurisdiction in which the Property is located. All rights and obligations contained in this Security Instrument are subject 1.0 any requirements and limitations of Applicable Law. Applicable Law might explicitly or implicitly allow the parties to agree by contract or it might be silent, but such silence shall not be construed as a prohibition against agreement by contract, In the event that any provision or clause of this Security Instrument or the Note conflicts with Applicable Law, such conflict

• -SA(CA) (0207) 41)

Pags 10 of 15

Inftlal.:J1[Jez. .....

Form 3005 1101


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Comment:

Station Id :NNAU

41W1Il21649

017328

shall no! affect other provisions of this Security Instrument or the Note which can be given effect without the

conflicting provision. .

As used in this Security Instrument: (8) words of the masculine gender shall mean and include corresponding neuter words or words of the feminine gender; (b) words in the singular shall mean and include the plum! and vice versa; and (c) the word "may" gives sole discretion without any obligation to take any action,

17. Borrower's Copy. Borrower shall be given one copy of the Note and of this Security Instrument, Ill. Transfer of the Property or a Beneficial Interest in Borrower. As used in this Section 18, "Interest in the Property" means any legal or beneficial interest in the Property, including, but not limited to, those beneficial interests transferred in a bond for deed, contract for deed, installment sales contract or escrow agreement, the intent of which is the transfer of title by Borrower at a future date to a purchaser.

If all or any part of the Property or any Interest in the Property is sold or transferred (Of if Borrower is not a natural person and :a beneficial interest in Borrower is sold or transferred) without Lender's prior written consent, Lender may require immediate payment in full of all sums secured by this Security Instrument However. this option shall not be exercised by Lender if such exercise is prohibited by Applicable Law.

If Lender exercises this option, Lender shall give Borrower notice of acceleration. The notice shall provide a period of not less than 30 days from the date the notice is given in accordance with Section 15 within which Borrower must pay all sums secured by this Security Instrument. If Borrower fails to pay these sums prior to the expiration of this period. Lender may invoke any remedies permitted by this Security Instrument without further notice or demand on Borrower.

19. Borrower's Right to Reinstate After Acceleration. If Borrower meets certain conditions, Borrower shall have the right to have enforcement of this Security Instrument discontinued at any time prior to the earliest of: (a) five days before sale of the Property pursuant !O any power of sale contained in this Security Instrument; (b) such other period as Applicable Law might specify for the termination of Borrower's right to reinstate; or (c) entry of a judgment enforcing this Security Instrument Those conditions are that Borrower: (a) pays Lender all sums which then would be due under this Security Instrument and the Note as if no acceleration had occurred; (b) cures any default of any other covenants or agreements; (c) pays all expenses incurred in enforcing this Security Instrument, including, but not limited to, reasonable attorneys' fees, property inspection and valuation fees, and other fees incurred for the purpose of protecting Lender's interest in the Property and rights under this Security Instrument; and (d) takes such action as Lender may reasonably require !O assure that Lender's interest in the Property and rights under this Security Instrument, and Borrower's obligation to pay the sums secured by this Security Instrument, shall continue unchanged. Lender may require that Borrower pay such reinstatement sums and expenses in one or more of the following forms, as Selected by Lender: (a) cash; (b) money order; (c) certified check, bank check, treasurer's check or cashier's check, provided any such check is drawn upon an institution whose deposits are insured by a federal agency, instrumentality or entity; or (d) Electronic Funds Transfer. Upon reinstatement by Borrower. this Security Instrument and obligations secured hereby shall remain fully effective as if no acceleration had occurred. However. this right to reinstate shall not apply in the case of acceleration under Section 18.

20. Sale or Note; Change of Loan Servlcer] Notice of Grievance. The Note or a partial interest in the Note (together with this Security Instrument) can be sold one or more times without prior notice 10 Borrower. A sale might result in a change in tne entity (known as the "Loan Servicer") that collects Periodic Payments due under the Note and this Security Instrument and performs oilier mortgage loan servicing obligations under the Note, this Security Instrument, and Applicable Law. There also might be one or more changes of the Loan Servicer unrelated 10 a sale of the Note. If there is a change of the Loan Servicer, Borrower will be given written notice of the change which will state the name and address of the new Loan Servicer, the address !O which payments should be made and any other information RESPA

.. -6A(OA) (0207) ®

In It 1.1.:2£J._t._.,

Form 3005 1/01

Pag.l10115


Page II of22

Printed on 1211 0/2009 11 :23 :44 AM


Comment:

Station Id :NNAU

---------- - _ .. -

077328

requires in connection with a notice of transfer of servicing. If the Note is sold and thereafter the Loan is serviced by a Loan Servicer other than !he purchaser of the Note. the mortgage loan servicing obligations 10 Borrower will remain with the Loan Servicer or be transferred 10 a successor Loan Servicer and are not assumed by the Note purchaser unless otherwise provided by the Note purchaser.

Neither Borrower nor Lender may commence, join, or be joined 10 any judicial action (as either an individual litiganr or the member of a class) that arises from the other party's actions pursuant 10 this Security Insnument or !hill alleges that the other party has breached any provision of, or any duty owed by reason of. this Security Instrument, until such Borrower or Lender has notified the other party (with such notice given in compliance with the requirements of Section 15) of such alleged breach and afforded the other party hereto a reasonable period after the giving of such notice 10 take corrective action. If Applicable Law provides a time period which must elapse before certain action can be taken, that lime period will be deemed 10 be reasonable for purposes of this paragraph. The notice of acceleration and opportunity 10 cure given to Borrower pursuant to Section 22 and the notice of acceleration given 10 Borrower pursuant 10 Section 18 shall be deemed to satisfy the notice and opportunity to take corrective action provisions of this Section 20.

21. Hazardous Substances. As used in this Section 21: (a) "Hazardous Substances" are those substances defined as toxic or hazardous substances, pollutants, or wastes by Environmental Law and the following substances: gasoline, kerosene, other flammable or toxic petroleum products, toxic pesticides and herbicides, volatile solvents, materials containing asbestos or formaldehyde, and radioactive materials; (b) "Environmental Law" means federal laws and laws of the jurisdiction where the Property is located that relate 10 health. safety or environmental protection; (c) "Environmental Cleanup" includes any response action, remedial action. or removal action, as defined in Environmental Law; and (d) an "Environmental Condition" means a condition that can cause, contribute 10, or otherwise trigger an Environmental Cleanup.

Borrower shall not cause or permit the presence, use, disposal, storage, or release of any Hazardous Substances, or threaten to release any Hazardous Substances, on or in !he Property. Borrower shall not do, nor allow anyone else to do, anything affecting the Property (a) that is in violation of any Environmental Law. (1;) which creates an Environmental Condition. or (c) which, due 10 the presence, use, or release of a Hazardous Substance, creates a condition that adversely affects the value of the Property. The preceding two sentences shall not apply to the presence, use, or storage on the Property of small quantities of Hazardous Substances that are generally recognized 10 be appropriate to normal residential uses and to maintenance of the Property (including, but not limited 10, hazardous substances in consumer products).

Borrower shall promptly give Lender written notice of (a) any investigation, claim, demand, lawsuit or other action by any governmental or regulatory agency or private party involving the Property and any Hazardous Substance or Environmental Law of which Borrower has actual knowledge, (b) any Environmental Condition. including but not limited 10, any spilling, leaking, discharge, release or threat .of release of any Hazardous Substance. and (c) any condition caused by the presence, use or release of a

. Hazardous Substance which adversely affects the value of the Property. If Borrower learns, or is notified by any governmental or regulatory authority, or any private party, that any removal or other remediation of any Hazardous Substance affecting !he Property is necessary, Borrower shall promptly take all necessary remedial . actions in accordance with Environmental Law. Nothing herein shall create any obligation on Lender for an Environmental Cleanup.

O.;6A(CA) (0207)

Inlllal.:.EQ_~

Pag.120115

Form 3005 1/01


Page 12 of22

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Comment:

Station Id :NNAU

NON-UNIFORM COVENANTS. Borrower and Lender further covenant and agree as follows:

22. Acceleration; Remedies. Lender shall give notice to Borrower prior to acceleration following Borrower's breach of any covenant or agreement in this Security Instrument (but not prior to acceleration under Section 18 unless Applicable Law provides otherwise). The notice sllal! specify: (a) the default; (0) the action required to cure the default; (c) iii date, not less than 30 days from the date the notice is given to Borrower, by which the default must be cured; and (d) that failure to cure the default 011 or before the date specified in the notice may result in acceleration of the sums secured by this Security Instrument and sale of the Property. Tile notice shall further inform Borrower of the right to reinstate after acceleration ami the right to bring II court action to assert the lion-existence or a default or any other defense of Borrower to acceleration and sale. U the default is not cured on or before tbe date specified in the notice, Lemler at its option may require immediate payment in full of all sums secured by this Security Instrument without further demand and may invoke the power of sale and any other remedies permitted by Applicable Law. Lender shall be entitled to collect all expenses incnrred iii pursl.lilig the remedies provided in this Section 22, including, hilt not limited to, reasonable attorneys' fees and costs <if title evidence.

If' Lender invokes the power of sale, Lender shall execute or cause Trustee to execute a written notice of the occurrence of an event of default and of Lender's election to cause the Property to be sold. Trustee shail cause tbis notice to be recorded in each county in which any part of the Property is located. Lender or Trustee shan mail copies of the notice I!S prescribed by Applicable Law to Borrower am! to the other persons prescribed by Applicable Law. Trustee shall give public notice of sale to the persons and iii the manner prescribed by Applicable Law. After the time required by Applicable Law, Trustee, without demand 0111 Borrower, shall sell the Property at public auction to the higbest bidder at the time ami place and uader the terms designated in the notice of sale in one or more parcels and in any order Trustee determines. Trustee may postpone sale of aU or any parcel of the Property by public announcement at the time and place or any previously scheduled sale. Lender or its designee 1111l.y purchase the Property at any sale.

Trustee shall deliver to the purchaser Trustee's deed conveying the Property without lilly covenant or warranty, expressed or implied. The recitals in the Trustee's deed sball be prima facie evidence or the truth of the statements made therein. Trustee shall apply the proceeds of the sale in the following order: (II) to all expenses of the sale, inctudlng, but not limited to, reasonable Trustee's and attorneys' fees; (I» to all sums secured by this Security Instrument; and! (e) any excess to the person or persons legally entitled to it.

23. Reconveyance. Upon payment of all sums secured by this Security Instrument, Lender shall request Trustee 10 reconvey me Property and shall surrender this Security Instrument and all notes evidencing debt secured by this Security Instrument to Trustee. Trustee shall reconvey the Property without warranty to the person or persons legally entitled 10 it. Lender may charge such person or persons a reasonable fee for reconveying the Property, but only if the fee is paid to a third party (such as the Trustee) for services rendered and the charging of the fee is permitted under Applicable Law. If the fee charged does not exceed the fee set by Applicable Law, the fee is conclusively presumed to be reasonable.

24. Substitute Trustee. Lender, at its option, may from time to time appoint a successor trustee to any Trustee appointed hereunder by an instrument executed and acknowledged by Lender and recorded in the office of the Recorder of the county in which the Property is located. The instrument shall contain the name of the original Lender, Trustee and Borrower, the book and page where this Security Instrument is recorded and the name and address of the successor trustee. Without conveyance of the Property, the successor trustee shall succeed to all the title, powers and duties conferred upon the Trustee herein and by Applicable Law. This procedure for substitution of trustee shall govern to the exclusion of all other provisions for substitution.

25. Statement of Obligation Fee. Lender may collect a fee not to exceed the maximum amount permitted by Applicable Law for furnishing the statement of obligation as provided by Section 2943 of the

Civil Code of California. .

_.!lA(CA) (0207)

I"I!I.I'~~

Pag. 130115

Form 30 OS 1/01

EL DOR..ADO,CA Document: DOT 2005.77328

Page 13 of22

Printed on 12/10/2009 11:23:45 AM


Comment:

077328

BY SIGNING BELOW, Borrower accepts and agrees 10 the terms and covenants contained in this Security Instrument and in any Rider executed by Borrower and recorded wah it .

Witnesses:

____________ (Seal)

-Borrower

____ ~ (Seal)

-Borrower

____________ (Seal)

-Borrower

• -6A(CA) (02071 '"


Page 14 of22

JMA,r~~~~)

TEIU ANNE EDSTROM -Borrower

____________ (S~)

-Borrower

___________ (sea!)

.. Borrower

____________ CSeal)

-Borrower

Page 140115

Fa rm 31105 1/01

Station Id :NNAU

Printed on 12/1012009 11:23:45 AM


Comment:

Station Id :N1'!AU

State of ClIliforni.ll

County of S~

On September 1, 2005

DANIEL MAJOR EDSTROM TER! ANNE EDSTROM

} ss.

before me, La.u...rc- ~a...rt(L l' personally appeared

(or proved to me on the basis of satisfactory evidence) to be the pers~hose name,(s))s!~SUbscribed 10 the within instrument and acknowl goo to me that helsh or, exechred the same in 6is/her eir authorized ~acity,(ies). and Jh,_at by hiS/ho~~i~na~ on the ~ent the perso@ or the enu . upon behalf of which ~~led, execm; Instrument.

, pers6nafiy kllown tt5 me -

WITNESS my hand and official seal.

... SA(CAI (0207) ®

InHlalt:.2f.j_t

Page 160116

Form 3005 1{01


Page 15 of22

Printed on 12/10/2009 11:23:46 AM


Comment:

Station Id :NNAU

ADJUSTABLE RATE RIDER

(LIBOR Six·Month Index (As Publisbed In The Wall Street Iournah • Rate Caps)

THIS ADJUSTABLE RATE RIDER is made this 7th day ot September 2005.

and is incorporated into and shall be deemed to amend and supplement the Mortgage, Deed of Trust, or Security Deed (the "Security Instrument") 01 the same date gillen by the undersigned ("Borrower") to secure Borrower's Adjustable Hate Note (the "NOla") to MORTGAGE lENDERS NETWORK USA, INC.

("Lender") of the same date and covering the property described In the Security Instrument and located at:

2690 BROWN BEAR COURT ,tOOL, CA 95614

[Property Address]

THE NOTE CONTAiNS PROVISIONS ALLOWING FOR CHANGES IN THE INTEREST RATE AND THE MONTHLY PAVMENT. THE NOTE LIMITS THE AMOUNT BORROWER'S INTEREST RATE CAN CHANGE AT ANY ONE TIME AND THE MAXIMUM RATE BORROWER MUST PAY.

ADDITIONAL COVENANTS. In addition to the covenants and agreements made in the Security Instrument, Borrower and Lender further covenant and agree as follows:

A. INTEREST RATE AND MONTHLY PAYMENT CHANGES .

The Note provides for an initial interest rate of 7. 21l1Hl'k. The Note provides

10r changes In the interest rate and the monthly payments, as follows:

4. INTEREST RATE AND MONTH!.. Y PAYMENT CHANGES

(A) Change Dates

The interest rate I will pay may change on the first day of October "1, 21107 t

and on tnat day every 6th month thereafter. Each date on which my Interest

rate could change is called a "Change Date."

(B) Tile Index

Beginning with the first Change Date, my interest rate will be based on an Index. The "Index" is the average of Interbank offered rates for six month U.S. dollar-denominated deposits in the London market ("UBOR"), as published in The Wall Street Journal. The most recent Index: figure available as of the first business day of the month immediately preceding the month in which the Change Date occurs Is called the "Current Index:

If the Index is no longer available, the Note Holder will choose a new Index that is based upon comparable information. The Note Holder will give me notice of this choice.

(C) Calculation of Changes

Before each Change Date, the Note Holder will calculate my new interest rate by

adding Six percentage points

( 6. DIlOIlIl "/0) to the Current lndex. The Note Holder will then round the result of

MUlTISTATE ADJUSTABLE RATE RIDER· LIBOR SIX-MONTH INDEX (AS PUBLISHED IN THE WALL STREET JOURNAL) ~ Single Family - Fannie Mae unirerm Instrument

.-B38R (0402) Form 3138 1fO:;~ .

rB~~~2~~?~~: SOlult~!t:~I,S~nf.£ , fmlll~liml

MIN- 1002810-4040021649-3


Page 16 of22

Printed on 12/10/2009 11:23:46 AM


Comment:

Station Id :NNAU

1 '

4il41)0216i19

this addition to the nearest one-eighth of one percentage point (0.125%), Subject to the limits stated in Section 4(0) below, this rounded amount will be my new interest fate until the next Change Date. ,

The Note Holder will then determine the amount of the monthly payment that would be sufficient 10 repay the unpaid principal that I am expected to owe at the Change Date in lull on the Maturity Dale at my new interest rate in substantially equal payments, The result 01 this calculation will be the new amount of my monthly payment.

(D) Limits on Interest Rate Changes

The interest rate i am required to pay at the first Change Date will not be greater than

10.2DIlD ,% or less than ., .2IHHI 'Yo. Thereafter, my interest rate will

never be lncreasedor decreased on any Single Change Date by more than

Dna percentage points

( 1.0000 'Yo) from the rate of interest I have been paying for the preceding

Ii months. My interest rate will never be greater than 13.2000 '" %.

eE) Effective Date of Changes

My new interest rate will become effective on each Change Date. I will pay the amount of my new monthly payment beginning on the first monthly payment date alter the Change Date until the amount 01 my monthly payment changes agam.

(F) NoUce of Changes

the Note Holder will deliver or mail tome a notice of any changes in my interest rate and the amount of my monthly payment before the effective dale 01 any change. The notice will include information required by law to be gillen 10 me and also the title and telephone number of a person who will answer any question I may have regarding the notice.

B. TRANSFER OF THE PROPERTY OR A BENEFICIAL INTEREST IN BORROWER Uniform Covenant 18 of the Security Instrument Is amended to read as follows:

Transfer of the Property or a Beneficial Interest In Borrower. As used In this Section 18, "Interest In the Property" means any legal or benetlclal interest in the Property, including, but not limited to, those beneficial interests transferred in a bond for deed, contract for deed, installment sales contract or escrow agreement, the intent of which is the transfer of title by Borrower at a future date to a purchaser.

If all or any Rart of the Property or any Interest in the Property is sold or transferred (or if Borrower is not a natural person and a beneficial interest in Borrower is sold or transferred) without Lender's prior written consent, Lender mar. require immediate payment in lull of all sums secured by this Security mstrurnen , However, this option shall not be exercised by Lender if such exercise is prohibited by Applicable law. Lender also shall not exercise this option If: (a) Borrower causes to be submitted to Lender information required by lender to evaluate the intended transferee as if a new loan were being made to the transferee; and (b) Lender reasonably determines that Lender's security will not be impaired by the loan assumption and that the risk of a breach of any covenant or agreement in this Security Instrument is acceptable to Lender.

To the extent permitted by Applicable Law, Lender may charge a reasonable fee as a condition to Lender's consent to the loan assumption. Lender also may require the "transferee to sign an assumption agreemen that is acceptable to Lender and that obligates the transferee to keep all the promises and agreements made in the Note and in this Security Instrument. Borrower will conunue to be obligated under the Note and this Security Instrument unless Lender releases Borrower in writing.

"My interest rate 111111 never be lass than 7.2% 0. 'jC

Initials:O C 0

~~838R (0402) Page 2 of 3 --- Form 31381/01


Page 17 of22

Printed on 12/10/2009 11:23:47 AM


Comment:

Station Id :NNAU

077328

4D401l21649

If Lender exercises the option to require immediate payment in full, Lender shall give Borrower notice 01 acceleration. The notice shall provide a period of not less Ulan 30 days from the date the notice is given in accordance with Section 15 within which Borrower must pay all sums secured by this Security Instrument. If Borrower fails to pay these sums prior to the expiration of this period. Lender may invoke any remedies permitted by this Security Instrument without further notice or demand on Borrower.

BY SIGNING BELOW, Borrower accepts and agrees to the terms and covenants contained in this Adjustable Rate Rider.

&! t?ll~ ~ (Seal) ;:hru,' Qaae &!o~eal)

!JANIEI. MAJOR EDSTROM -Borrower reR! ANNE EDSTROM -Borrower

____________ (Seal) -Borrower

____________ (89al) -Borrower

___________ (Seal) -sorrower


____________ (8eal) -Borrower


~.838R (0402)

Page 3 of3

Form 3138 1/01


Page 18 of22

Printed on 12/10/2009 11:23:47 AM


Comment:

Station Id :NNAU

4040021649

PLANNED UNIT DEVELOPMENT RIDER

THIS PLANNED UNIT DEVELOPMENT RIDER is made this 7t1l day of

September 2005 , and is incorporated into and shall be deemed to amend and supplement the Mortgage, Deed of Trust, or Security Deed (the "Security Instrument") of the same date. given by the undersigned (the "Borrower") 10 secure Borrower's Note to

MORTGAGE lENDERS NETWORK USA, INC.

(the "Lender") of the same dale and covering the Property described in the Security Instrument and located at:

2690 BROWN BEAR COURT ,COOL, CA 95614

{property Address]

The Property includes, but is not limited to, a parcel of land improved with a dwelling, together with other such parcels and certain common areas and faciiities. as described in the covenants, conditions

and restrictions in the declaratiDns Df AUBURN LAKE TRAILS

(the "Declaration"). The" Property is a part 01 a planned unit development known as AUBURN LAKE TRAILS

[Name of Planned Unit Development]

(the "PUD"). The Property also includes Borrower's interest in the homeowners association or equivalententity owning or managing the common areas and facilities of the PUD (the "Owners Association") and the uses, benefits and proceeds of Borrower's interest.

PUC COVENANTS. in addition to the covenants and aareernents made In the Security Instrument. Borrower and Lender further covenant and agree as follows:

A, PUC Obligations. Borrower shall perform all of Borrower's obligations under the PUD's Constituent Documents. The ·Constituent Documents" are the (i) Declaration; (ii) articles of Incorporation, trust instrument or any equivalent document which creates the Owners Association; and (iii) any by-laws or other rules or regulations of the Owners Association. Borrower shalf promptly pay, when due, aU dues and assessments imposed

pursuant 10 the Constituent Documents. .

MULTISTATE PUC RIDER - Single Family· Fannie Mae/Freddie Mac UNIFORM INSTRUMENT

Form 3150 '1/01

N1N- 1002610-4040021649-3 (2. L-1('

Page 1 of 3 Initials: crb-J-C

VMP Mortgage Solutions, Inc. (800)521-7291 "---'=--

~.7R (0411)

IIII~II ~llllrllllllllllllllllill


Page 19 of22

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Comment:

Station Id :NNAU

404(H!21649

077328

B. Property insurance. So iong as the Owners Association maintains, with a generally accepted insurance carrier, a "master" or "blanket" policy insuring the Property which is satisfactory to Lender and which provides insurance coverage in the amounts (including deductibie levels), for the periods, and against loss by fire, hazards included within the term "extended coverage: and any other hazards, including, but not limited to, earthquakes and floods, for which lender requires insurance, then: (i) Lender waives the provision in Section 3 lor the Periodic Payment to Lender 01 the yearly premium tnstauments tor property insurance on the Property; and (ii) Borrower's obligation under Section 5 to maintain property Insurance coverage on the Property is deemed satisfied to the extent ina! the required coverage is provided by the Owners Association policy.

. What Lender requires as a condition of this waiver can change during the term of the

loan.

Borrower shall give Lender prompt notice of any lapse in required property insurance coverage provided by the master Of blanket policy.

In the event of a dlstrlbutlon of property insurance proceeds in lieu 01 restoration or repair following a loss to the Property, or to common areas and facilities of 1M PUD, any proceeds payable to Borrower are hereby assigned and shall be paid to Lender. lender shall apply the proceeds to the sums secured by the Security Instrument, whether or not then due, with the excess, if any, paid to Borrower.

C. Public liability Insurance. Borrower shall take such actions as may be reasonable to lnsure that the Owners Association maintains a public liability insurance poncy acceptable in form, amount.and extent of coverage to Lender.

D. ccncarnnancn. The proceeds of. any award or claim for damages. direct or consequential, payable to Borrower in connecnon with any condernnatton or other taking of all or any part of the Property or the common areas and facilities of the PUD, or lor any conveyance in lieu 01 condemnation, are hereby assiqned andshall be paid to Lender. Such proceeds shall be applied by lender to the sums secured by the Security Instrument as provided in Section 11.

E, Lender's Prior Consent. Borrower snan not. except after notice to Lender and with Lender'S prior written consent, either partition or SUbdivide the Property or consent to: (I) the abandonment or terrnlnancn of the PUD, except for abandonment or termination required by law in the case of substantial destruction by fire or other casualty or in the case of a taking by condemnation or eminent domain; (ii) any amendment to any provtslcn of the "Constituent Documents" if the provision is for the express benefit of lender; (iii) termination of professional management and assumption of self-management of the Owners Association; or (lv) any action which would have the effect of rendering the' public liability insurance coverage maintained by the Owners ASSOCiation unacceptable to Lender.

F. Remedies. If Borrower does not pay PUD dues and assessments when due, then Lender may pay them. Any amounts disbursed by Lender under this paragraph F shall become additional debt of Borrower secured by the Security Instrument. Unless Borrower and lender agree 10 other terms of payment these amounts shall bear interest from the date of disbursement a! the Note rate and shall be payable, with Interest, upon notice from Lender to Borrower requesting payment.

. ct·7R(0411}

Page2of3

Initials: 1:f.::1_l_,

Form 3150 1/01


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Comment:

Station Id :NNAU

. ---_._----------

... --:;: , ... ~.

077328

e. • G

BY SIGNING BELOW, Borrower accepts and agrees to the terms and covenants contained in this PUD Rider.

____ -e-e-- (Seal)

-serrower

____________ (Se81) -Borrowar

____ -'-- (Seal)

-Borrower



__ ~ (Seal)

-Borrower

.-711 (0411)

® . -

Page 3 of 3

Form 3150 1/01


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Printed on 12/10/2009 11:23:49 AM


Comment:

Station Id :NNAU

077328

LEGAL DESCRIPTION

EXHIBIT "N'

THE LAND REFERRED ro HEREIN BELOW IS SITUATED IN THE UNINCORPORATED AREA, COUNTY OF EL DORADO, STATE OF CAUFORNIA AND IS DESCRIBED AS FOLLOWS:

lot 885, of Auburn Lake Trails Unit No.4, filed May 8, 1970, in Book E, of Maps,at page 61, E! Dorado County Records.

APN: 073-141-03-100


Page 22 of22

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Exhibit 2


.. ;. ,,~.

Recording requested by:

Land Amertca United Tille Company- CA

When Recorded Mail To:

NDEl( West, L.L.C.

15000 Surveyor Boulevard, Sulte 500 Addison, Texas 75001-9013

Imll~~~IIIM~~I~lm'IMllmllm~!~~lmIIIM~m~ml~~~

DFF200BOi34014711

Comment:

Station Id :NNAU

1111 fIIIII I ijJij 11111/111 11111111111 fill' III IIII!

fl Dorado, County Recorder

William Schultz Co Recorder Offiee DOC-2008-0060612_00

Check Number 51503

T~esday, DEC 23, 2008 10:24:32

T d Pd $17. 00 Nbr~0001139015

JLB1C1/1_3

Space above !hi' line for Recorder's use only

Trustee Sale No.: 20080134014711

Title Order No.: 20863960

IMPORTANT NOTICE

NOTICE OF DEFAULT AND ELECTION TO SELL UNDER DEED OF TRUST

IF YOUR PROPERTY IS IN FORECLOSURE BECAUSE YOU ARE BEHIND IN YOUR PAYMENTS IT MAYBE SOLD WITHOUT ANY COURT ACTION, and you may have the legal right to bring your account in good standing by paying all of your' past due payments plus permitted costs and -expenses within the time permitted by law for reinstatement of your account, which is normally five business days prior to the dale set for the sale of your property. No sale date may be set until

three months from the date this Notice of Default may be recorded (which date of recordation appears on this notice), .

This amount is $29,373.66 as of 1211912008 and will increase until your account becomes current. While your property is in foreclosure, you still must pay other obligations (such as insurance and taxes) required by your note and deed of trust or mortgage. If you fail \0 make future payments on the 'loan, pay taxes on the property, provide insurance on the property, Dr pay other obligations as required in the note and deed of trust or mortgage, the beneficiary or mortgagee may insist that you do so in order to reinstate your account in good standing. In addition, the beneficiary or mortgagee may require lIS a condition of reinstatement that you provide reliable written evidence that you paid ali senior liens. property taxes, and hazard insurance premiums.

Upon your written request, the beneficiary or mortgagee will give you a written itemization of the entire amount you must pay. You may not have to pay the entire unpaid portion of your account, even though full payment WilS demanded. but you must pay nl! amounts in default at the time payment is made. However. you and your beneficiary .or mortgagee may mutually agree in writing prior to the time the notice of sale is posted (which rnay not be earlier than the three month period stated above) to, among other things. {I) provide additicnal time in which to cure the default by transfer of the property or otherwise; or (2) establish II schedule of payments in order to cure your default; or both (I) and (2).

Following the expiration of the time period referred to in the first paragraph of this notice, unless the obligation being foreclosed upon or a separate written agreement between you and your creditor permits a longer period, you have only the legal right to stop the sale of your property by paying the entire amount demanded by your creditor.

FCUS_NoticeOlDcf,ull'1'I(091051200S1Vcr.24

EL DORADO,CA Document: NDF 2008.60612

Page J of1

Page 1 of3

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Comment:

Station Id :NNAU

ii·

0606120

• . f"" IMPORTANT N01iCE

NOTICE OF DEFAULT AND ELECTION TO SELL UNDER DEED OF TRUST

Trustee Sale No.: 2003013401411 i


To find out the amount you must pay, or to arrange for payment to stop the foreclosure, or if your property is in foreclosure for any .

other reason, contact:

AMERiCA'S SERVICING CaMP-ANY c/o NnE)!: West, LLC

15000 Surveyor Boulevard, Suite 5011 Addison, Texas 75001"9013 (866) 795-1 &52

If you have any questions, you should contact a lawyer or the governmental agency which may have insured your loan.

Notwithstanding the fact that your property is in foreclosure, you may offer your properly for sale provided the sale is concluded prior to the conclusion of the foreclosure.

REMEMBER, YOU MAY LOSE LEGAL RIGHTS IF YOU DO NOT TAKE PROMPT ACTION.

NOTICE IS HEREBY GIVEN rnA '1': NDEx West, LLC is the original Trustee, duly 'appointed Substituted Trustee, or acting as Agent for the Trustee or Beneficiary under a Deed of Trust dated 09107f2005, executed by DANIEL MAJOR EDSTROM AND TEll I ANNE EDSTROM, as Trustor, to secure obligations in favor of MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC. (MERS), as Beneficiary Recorded on 09/1412005 BS Instrument No. 200S-00i7318-00 of official records in the Office of the Recorder of EL DORADO County, California, as more fully described on said Deed of Trust. Including a Note(s)/ Unconditional Guaranty which hadra principal amount of SSOO,OOO.OO that the 'beneficial interest under said Deed of Trust and tho obligations secured thereby are presently held by the Beneficiary; that a breach of, and default in, the obligations for which said Deed of Trost is security has occurred in that the payment has not been made of:

THE INSTALLMENT OF PRINCIPAL AND INTEREST WHICH BECAME DUE ON 71if2001l AND ALL SUBSEQUENT INSTALLMENTS, TOGETHER WlTR LATE CHARGES AS SET FORTH IN SAID NOTE AND DEED OF TRUST, ADVANCES, ASSESSMENTS, FEES. AND/OR TRUSTEE FEES, iF ANY.

NOTHING IN THIS NOTICE SHALL BE CONSTRUED AS A WAIVER OF ANY FEES OWING TO THE BENEFICIARY UNDER THE DEED OF TRUST, PURSUANT TO rae TERMS OF THE LOAN DOCUMENTS.

That by reason thereof, the present beneficiary under such deed of trust, has executed and delivered to said agent, a written Declaration of Default and Demand for same, and has deposited with said agent such deed of trust and all documents evidencing obligations secured thereby, and has declared and does hereby declare all sums secured thereby .immediately due and payable .and has elected and does hereby elect to cause the trust property to be sold to satisfy the obligations secured thereby.

DATED: 12/19/2008

NDEx West, LLC as Agent for Beneficiary

AsurOIffi W. B1r~W1i " il ~ .eA1 -I)

FCUS _ No.;ceOfDcr.ulLrp.(09/051200B)V <1'-24

Page 2 on


Page 2 of3

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Comment:

Station Id :NNAU

NOTICE OF DEFAULT DECLARATION PURSUANT TO CAUFORNIA CIVIL CODE 2923.5

America' 5 Servicing Company 3476 Stateview Blvd

For! Mil~ SC 29715

Borrower: DANIEL M EDSTROM

Property Address: 2690 BROWN BEAR COU

COOL CA 95614

The undersigned mortgagee, beneficiary, or their authorized agent (collectively, the "Beneficiary") represent and declares that the requirements orCA Civil Code 2923.5 have been met. This Declaration is required for any residential owner occupied property in which the loan was criginated between January 1, 2003 and December 31, 2007, Non-owner occupi ed and vacant properties are exempt from the requirements ofCA Civil Code 2923.5.

One of the below necessary requirements was met by the Beneficiary;

The Beneficiary has made contact with the borrower pursuant to CA Civil Code 2923(a)(2). Contact with the borrower was made in person or by telephone to assess the borrower's financial situation and explore options for the borrower to avoid foreclosure.

Due Diligence to contact the borrower was exercised pursuant to CA Civil Code 2923.5(g)(2) by the Beneficiary.

The borrower has surrendered the properly as evidenced by either a letter confirming the surrender or delivery of the keys to tbe property to the mortgagee, Trustee, beneficiary, or authorized agent pursuant to CA Civil Code 2923.5(h)(I).

The borrower has contracted with an organization, person, or entity whose primary business is advising people who have decided to leave their homes on how to extend the foreclosure process and avoid their contractual obligations to mortgagees or beneficiaries pursuant to CA Civil Code 2923 .5 (h)(2) .

The borrower has filed for bankruptcy and the proceedings have rot been final ized . pursuant to CA Civil Code 2923.5(h)(3).

Dated, 12/18/2008


Page 3 of3

Printed on 12110/2009 11:23:51 AM

Exhibit 3


Comment:

Station Id :NNAU

*SUB200801340

. SUB20080134014711

frill ullin IIIIIII~ 111111111111111 111111111 II! II

El Dorado I CQunty Recorder .

William Schultz Co Recorder OHw; DOC- 2009-0004996-00

Cheek Number 55232

Thursday, FEB 05, 2009 13:51:51

TUPd $14. 00 Nbre0001141839

JLR/Cl/1-2


LA \vyERS TITLE COMPANY


NDEx West, L.LC.

15000 Surveyor Boulevard, Suite 5011. Addison, Teus 75001-9013

Space above !his line for Recorder's use only

Trustee Sale No.: 2008!11341l14711 Tille Order No.: 2(863961)

SUBSTITUTION OF TRUSTEE

WHEREAS, DANIEL MAJOR EDSTROM AND TERI ANNE EDSTROM was the original Trustor, MITCHELL L. HEFFERNAN was the original Trustee, and MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC. (MERS) was the original Beneficiary Recorded 011 09/1412005 as Instrument No. 2005-0077328-00 of official records in the Office of the Recorder of EL DORADO County, CalirofllUl, as more fully described on said Deed of Trust.; and WHEREAS, the undersigned is the present Beneficiary under said Deed of Trust, and WHEREAS, the undersigned desires to substitute II new Trustee under said Deed of Trust ill place and instead of said prior Trustee.

NOW, THEREFORE, the undersigned hereby substitutes, NDEx West, L.L.C., WHOSE ADDRESS IS: 15000 Surveyor Boulevard, Suite 500, Addison, Texas 750111-9013, as Trustee under said Deed of Trust.

"Whenever the context hereof so requires, the masculine gender includes the feminine and/or neuter, and the singular number includes the

plural. .

Wells Fargo Bank Na, attorney in fact for US BANK NATIONAL ASSOCIATION, AS TRUSTEE

DAlED:

01/26/2009

Stale of South Carolina }

County of York )

~'(,~

On 0112612009 before me, , Notary Public; personally appeared K!l.t1lI1 Abernethy who proved to me on the basis of satisfactory evidence to be the persorus) whose namefs) is/are subscribed to the within instrument and acknowledged to me that helshe/they executed the same in his/her/their authorized capacityfies), and thatby his/her/thelr signaturets) on the instrument the perscrus), or the entity upon behalf of which the personts) acted, executed the instrument.

(If signed and notarized in South Carolina):

SEE ATIACHED AFFIDAVIT

PENAL TV OF PERJURY under the laws of the State of South Carolina that the foregoing paragraph is true and correct.

My commission expires: _

OfFICIAL SEAL Nottl.ry Public

State of SoUll'! Carolln~ CARMEN Y PICKE I I

My Comml&alon c~p\IO~ Jan. i 4, 2016

FCUS_SubstituteOlTrusIee.rpt. 1212812007 - Ver-24

Page 1 Ml

EL DORADO,CA

Document: DOT SBT 2009.4996

Page I of2

Printed on 12/10/200911:23:51 AM


Comment:

Station Id :NNAU

,;;: ')}il;ex West, L.L.C

::? - ' 15000 Surveyor Boulevard, Suite fleD it 9 9 6 Addison, Texas 75001·9013

Telephone; (866) 795-1852

Telecopier: (972) 661-7800

t: , -:r

AFFIDAVIT

TRUSTEE'S SALE NUMBER: 20080134014711

I, Jeremy Briggs, the undersigned, a United States Citizen declare that:

I am an employee, over the age of eighteen years, of

NDEx West, L,L.C., and/or NDEX,

whose business address is:

15000 Surveyor Boulevard, Suite 500, Addison, Texas 75001-9013

In compliance with Section 29342(b) of the Civil Code of the State of California, Notice has been given to the prior trustee then of record, that NDEx West, L.L.C. has been substituted as trustee under the Deed of Trust described in the attached copy of Substitution of Trustee and a copy of said Substitution of Trustee has been mailed prior to the recording thereof, in the manner provided in Section 2924(b) of the Civil Code of the State of California to all persons to whom a copy of the Notice of Default would be required to be mailed by the provisions of said section.

NDEx West, L.L.C., and/o» NDEX

Janllary 29 2009

. Jeremy Briggs [Declerant) .

DATED

State of TEXAS } County of DALLAS }

On January 29, 2009 before me, Sandra Pitka Notary Public, personally appeared Jeremy Briggs personally known to me (or proved to me on the basis of satisfactory evidence) to be the personfs) whose namefs) is/are subscribed to within instrument and acknowledged to me that he/she/they executed the same in his/her/thelr authorized capacityfies), and that by his/her/their signature/s) on the instrument the person/s), or the entity upon behalf of which the perscn(s) acted, executed the instrument.

WITNESS my hand and official seal.

SANDRA PITKA Notary PUblic State of Texas

My Camm. Exp. 04-11-2012

My commission expires: ------1'-----------

I !1I11111111111111111111111111111l111111111l1111!1I11I~11111I1~II Illfl 11111 !IIIII~IIIIIIIIII

SBC200a0134014711

----- ----.-

02/05/2009.20090.00499-6 -.

EL DORADO,CA

Document: DOT SBT 2009.4996

Page 2 of2

Printed on 12/10/2009 11:23:52 AM

Exhibit 4


Comment:

Recording requested by; LAWYERS TITLE COMPANY

Wi miff; 111111111' iii' 1111" /111 11I11 I 111111 11

El Dorado I County Recorder

WilHam SchuHz Co Recorder Office DOC- 2009-0006093-00

Check Number 1994124259

Thursday, FEB 12, 2009 14'07'02

Ttl Pd ~H ,00 Nbr~000i149389

LJP/C:l./l-1


NDEx West, L.L.C.

15000 SII rveyor Boulevard, Suite 500 Addison, Tens 7500[·9013

IIIII~ ~I~ ~~ ~ml ~~III~ ~III~~ I~~ ~~I~IIII~!I~II~~I~~~ 00 I'~

ASSG200B0134014711

Space above this line for Recorder's use only

Trustee Sale No.; 20080134014711 Title Order No.: 20863960

ASSIGNMENT OF DEED OF TRUST

FOR VALUE RECEIVED, the undersigned hereby grants, assigns and transfers to US BANK NATIONAL ASSOCIATION AS TRUSTEE BY RESIDENTIAL FUNDING COMPANY. LLC FKA RESIDENTIAL FUNDING CORPORATION ATIORNEY IN FACT all beneficia! interest under that certain Deed of Trust dated 09/il7121l05, executed by DANIEL MAJOR EDSTROM AND TERI ANNE EDSTROM, as Trustor to MITCHELL L. HEFFERNAN, Trustee, and Recorded 011 09/1412005 as Instrument No. 1005·0077328-00 of Official Records in the County Recorder's office of EL DORADO County, California. Describing land therein: AS DESCIDBED IN

DEED OF TRIJST MENTIONED ABOVE. .

Together with the note or notes therein described or referred 10, the money due and to become due thereon with interest, and all rights accrued or to accrue under said Deed of Trust.

Dated

State of County of

Texas} Dallas}

Before me t Q Q~ nno... \Ll1Y\k:ti\ l ,the undersigned Notary Public, on this day personally appeared Stephen C. Porter, who is the Assistant Secretary of MORTGAGE ELECTRONIC REGISTRATION'SYSTEMS, INC. AS NOMINEE FOR MORTGAGE LENDERS NETWORK USA;' . [NC, a corporation, on behalf of said corporation, known to me to be the person whose name is subscribed lathe foregoing instrument and acknowledged to me that he/she executed the same for the purposes and consideration therein expressed.

fBOG~

Given under my hand .and seal of office this __ day of --:~_-~ 2009.

~1\)

My Commission Expires:

~~/,~ .

Printed arne of Notary Public

Page l ef !

CAASGNDOT.rpt - (OlI2SI08) J Ver-12

LEANNA KIMBALL NO\S1Y Public StateOnexas

E>P 0$.22-2012-

'My (;oltIm. •

02/12/2009,20090006093

Station ld :NNAU

EL DORADO,CA

Document: DOT ASN 2009.6093

Page 1 of 1

J

Printed on 12110/2009 11:23:53 AM

Exhibit 5


!4 Recording req!,"s!ed by:

LA WY£R§.,t!TU:


NDEx West, L.L.C

15000 Surveyor Boulevard, Suite 500 Addison, Texas 7seOI-90B

(866) 795-1852

I ml~11 ~1I111~11~~ ~ IIIIIII~ II~I ~I WIIIIII ~I ~~ I~II ~II ~Ii ~II!IIII m II~

NOTS20080134014711.

Comment:

Station Id :Nl'fAU

'1111 UIIlnil1U11II1111! II I Irlllll I Illnll IUril

El Doradol County Recorder

William Schultz Co Recorder Office DOC- 2009-0014351-00

Cheek Numbe~ 1994125232

Monday. MRR 30, 2009 14:31:17

Ttl Pd $t1.00 Nbr~0001160467

KMV/C1/1~1

Trustee Sale No.: 20080134014711


FRAN AfPMl No.:

Space above thi!:; line for Recorder's use only

NOTICE OF TRUSTEE'S SALE

YOU ARE IN DEFAULT UNDER A DEED OF TRUST. DATED !l9/07f2005. UNl.ESS YOU TAKE ACTION TO PROTECT YOUR PROPERTY, IT MAY BE SOLD AT A PUBLIC SALE. if YOU NEED AN EXPLANATION OF mE NATURE OF THE PROCEEDING AGAINST YOU, YOU SHOULD CONTACT A LAWVER.

NDEx West, LLC, as duly appointed Trustee under and pursuant to Deed of Trust Recorded on 09/14/2005 as Instrument No, 2005-0017328-00 of official records ill the office of me County Recorder of EL DORADO County, State ofCALlFORN1A.

EXECUTED BY: DANIEL MAJOR EDSTROM AND TERi ANNE EDSTROM~

WILL SELL AT PUBLIC AUCTION TO HlGHEST BIDDER FOR CASH, CASHIER'S CHECK/CASH EQUrvALENT or other form of payment authorized by 2924h(b), (payable at lime of sale in lawful money of the United States).

DATE Of SALE: 0411512009 TIME OF SALE: 10:00 AM

PLACE OF SALE: AT HIE MAIN ENTRANCE OF THE COUNTY COURTHOUSE, 495 MAIN ST., PLACERVILLE, CA.

STREET ADDRESS and other common designation, if any, of the real property described above is purported to be: 2690 BROWN BEAR COURT, COOL, CALIFORNiA 95614

APN#: 073-14J-1I3-100

The undersigned Trustee disclaims any liability for My incorrectness of the street address and other. common designation, if any, . shown herein. Said sale will be made, but without covenant or warranty, expressed or implied, regarding title, possession, or encumbrances, to pay the remaining principal sum of the 11010(.) secured by said Deed of Trust. with interest thereon, as provided in said notefs), advances, under the terms of said Deed of Trust, fees, charges and expenses of the Trustee and of the trusts created by said Deed of Trust. The total amount of the unpaid balance of the obligation secured. by the property to be sold and" reasonable estimated costs, expenses and advances at the time of the initial publication of the Notice or Sale is £524,658.118. The beneficiary under said Deed of Trust heretofore executed and delivered to the undersigned a written Declaration of Default and Demand for Sale, and a written Notice of Default and Election to Sell. The undersigned caused said Notice of Default and Election to Sell to be recorded in the county where the real property is located.

FOR TRUSTEE SALE lNFORMA TION PLEASE CALL:

PRIORITY POSTING & PUBLICATION 17501 IRVINE BLVD., SU1TE ONE TUSTIN, CA 92780

714-573-1965

www.priorityposting.com

NOE" West, L.L.C, MAY BE ACTING AS A DEBT COLLECTOR ATTEMPTlN(;. TO COLLECT A DEBT. . ANY INFORMATiON OBTAINED WILL BE USED FOR THAT PURPOSE.

. NDEl: West. L.L.C. as AUI=~~

--------,;:JP ... ~<-------_,=---- Dated: (l312412009

BY: Randy Middleton

03130Tz009:200900143Si- -

fCUS_NoliccOITrusl,cSBlc.rpt - Record - 0110912009 - Vcr-2U

EL DORADO,CA

Document: DOT SLE 2009.14351

Page 1 cr i

Page 1 of 1

Printed on 12/10/2009 11:23:55 AM

Exhibit 6

Brand :P06,User :4007

Comment:

Station Id :NNAU

.---._ .. -._----- ----- .


LAWYERS Tm-'_,E

When Recorded Mail To: . NDE! West, L.L.C:

15000 Surveyor Boulevard, Suite 500 Addison, Te1U!s 75001.9013

1111~lmlll~~lm~~II~II~III~~~II~~IOOI~I~I~m~~~11I1

ASSG2008013401471I

Illrllrlllllll'lnnmnnlllnlllrnllllII IJlnr--·--· .... -

ElDorado! County Recorder

William Sehult~ Co Recorder Office DOC- 2009-0035006-00

Check NumbQr 4127650

Wednesday, JUL 15, 2009 13:06:34

Ttl Pd .$12.00 Nbr-0001188307

LJP/C1/1-1

Space above this line for Recorder's use only

Trustee Sale No.: 2008()1340l4111 Title-Order No.: 20863960

. ASSIGNMENT OF DEED OF TRUST

FOR VALUE RECEIVED, the undersigned hereby grants, assigns and transfers to U S BANK NATIONAL ASSOCIATION;AS 'PjtUSTEE all beneficial interest under that-certain Deed of Trust dated 119/0712005, executed by DANIEL MAJOR EDSTROM AND TEID ANNE EDSTROM, as Trust or to MITCHELL L. HEFFERNAN, Trustee, and Recorded on O:Jf141200S as Instrument No. ;2005-0077328-00 of Official Records in the County Recorders office of EL DORADO County, California. Describing land therein: AS DESCRIBED IN DEED OF TRUST MENTIONED ABOVE.

Together with the note or notes therein described or referred to, the money due and to become due thereon with interest, and all rights accrued or to accrue under said Deed of Trust.

Dated

State of County of

MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC. AS NOMINEE FOR MORTGAGE LENDERS NETWORK USA, lNC.

Before me the undersigned Notary Public, on this day personally

appeared Davi ybold, 0 is the Assistant Secretary of MORTGAGE ELECTRONIC REGISTRA nON

SYSTEMS, INC. AS NOMINEE FOR MORTGAGE LENDERS NETWORK USA, INC., a corporation, on behalf of said corporation, known.to me to be the person whose name is subscribed to the foregoing instrument and acknowledged to me that he/she executed the same for the purposes and consideration therein expressed.

. . JUl 0 n009

Given under my hand and seal or office thls_d" o~~

SONIA CARDONA

Notary Public

Stalaof TeX8.S Printed Name.of Notary Public

CAASGNDOT.rpl- (01125108) I Veron

EL DORADO,CA

Document: DOT ASN 2009.35006

Page 1 of 1

Page 1 of!

Printed on 12/10/2009 11:23:54 AM

Exhibit 7

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1 RJCHARD A. HALL (SBN 135483) BOTTOfvlLINE LA "VYERS

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1 RJCHARD A. HALL (SBN 135483) BOTTOfvlLINE LA "VYERS

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