Lamelson Case Deposition of Jeff Stenman

Deposition of Jeff Stenman
Lemelson v Northwest Trustees Services, Inc., et al.
IN THE SUPERIOR COURT OF THE STATE OF WASHINGTON FOR THE COUNTY OF KING _______________________________________________________ JASON LEMELSON, a single man, ) ) Plaintiff, ) ) v. ) No. 13-2-27480-9 SEA ) NORTHWEST TRUSTEES SERVICES, ) INC., a Washington ) Corporation; and ROUTH, ) CRABTREE, OLSEN, P.S., a ) Washington Professional ) Services Corporation, ) ) Defendants. ) _______________________________________________________ Deposition Upon Oral Examination of JEFF STENMAN ________________________________________________________ Taken at 239 North Olympic Avenue Arlington, Washington
DATE:
FRIDAY, SEPTEMBER 13, 2013 Emily K. Niles CCR, RMR, CRR, CCR #2794
REPORTED BY:
Starkovich Reporting Services
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A P P E A R A N C E S For the Plaintiff: STAFNE LAW FIRM SCOTT ERIK STAFNE JOSHUA B. TRUMBULL 239 North Olympic Arlington, Washington 98223 360.403.8700 scott@stafnelawfirm.com ROUTH CRABTREE OLSEN, P.S. SAKAE SAKAI 13555 SE 36th Street Suite 300 Bellingham, Washington 98006 425.247.2025 ssakai@rcolegal.com JASON LEMELSON MICHAEL FASSETT
For the Defendants:

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Also Present:
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I N D E X EXAMINATION BY: MR. MR. MR. MR. MR. STAFNE SAKAI STAFNE SAKAI STAFNE PAGE 5 91 93 96 97
INSTRUCTED NOT TO ANSWER PAGE 71 LINE 6
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E X H I B I T S Exh. 1 Exh. 2 RCW 61.24.030(7) Complaint for Declaratory Relief, Injunctive Relief, violation of the Washington Consumer Protection Act; and Negligence InterestFirst Adjustable Rate Note Deed of Trust Notice of CR 30(b)(6) Deposition of Northwest Trustees Services, Inc. 12/13/06 Letter Corporate Assignment of Deed of Trust Appointment of Successor Trustee Validation of Debt Notice Facsimile Declaration of Ownership Notice of Trustee's Sale Foreclosure Loss Mitigation Notice of Default 5 5
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ARLINGTON, WASHINGTON; FRIDAY, SEPTEMBER 13, 2013 9:37 A.M. --o0o-(EXHIBITS 1 THROUGH 11 MARKED.) Thereupon-JEFF STENMAN, was called as a witness, and having been first duly sworn, was examined and testified as follows: EXAMINATION BY MR. STAFNE: Q. A. Q. Please state your name. Jeff Stenman. Really? I had -- you're involved in other cases It's a pleasure to meet you, sir.
and I've never met you.
Mr. Stenman, have you ever had your deposition taken before? A. Q. Yes. And so you know kind of the rules that we can't So if I ask a question and you
both speak at once.
interrupt me, that shouldn't happen? A. Q. Yes. And I will try to ask my questions slowly and
articulately so that you will be able to give your best answer. A. Okay.
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Q.
And, you know, no matter how hard I might try,
sometimes I ask stupid questions or questions that aren't understandable. So if you don't understand my question,
will you make sure to tell me? A. Q. Yes. Now, how many other occasions have you had your
deposition taken before? A. that area. Q. Have any of them related to lawsuits like this I don't know. Maybe five or ten. Somewhere in
involving foreclosure, nonjudicial foreclosure issues? A. Q. A. Q. A. Q. Yes. Have all of them involved such issues? Yes. Do you ever act as a trustee? Personally, no. Do you act on behalf of someone as a trustee? And
by that I mean where you actually make the decision as the judicial substitute with regard to the institution of a nonjudicial foreclosure? MR. SAKAI: I'm going to make an objection that
your question's outside the scope of your 30(b)(6) notice. Jeff, you can answer as you can. THE WITNESS: mean by "judicial."
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I'm not sure I understand what you
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MR. STAFNE: your objection.
Well, let's start by responding to
And I want to encourage you to make objections. Obviously they're very helpful because they allow me to make sure that we get a record created. BY MR. STAFNE: Q. A. Q. You did receive a copy of the 30(b)(6) notice -Yes. -- did you not? And what was your understanding of what you're here to testify about? A. Q. is. Well, that's kind of a broad question. Let me see if I can find the notice. Ah, here it
It's Exhibit 5.
And if you could go through those
exhibits and look at Exhibit 5. Do you see it there? A. Q. A. Yes. And what is it? It says it is a "Deposition of Northwest Trustee
Services, Inc.," notice of deposition. Q. A. Q. A. Q. And what type of deposition? CR 30(b)(6). Do you understand what CR 30(b)(6) means? Yes, I think I do. And what is your understanding?
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A.
Well, I don't know the definition of a 30(b)(6),
but I know what a deposition is and I know how to answer questions with respect to the information that you're asking. Q. Well, I have asked Northwest Trustee Services to
provide the person who can best testify about certain topics. A. Q. A. Q. Okay. And you understand that? Yes. And could you be so kind as to read for the record
A, B, C, and D, which are those topics which you've been identified as the person who can best testify with regard to? A. "The person who can best testify about Northwest"
-- "NWTS' procedure following Klem versus Washington Mutual, 176 Wn.2d 771(2013) for performing its role as a neutral judicial substitute during the nonjudicial foreclosure process contemplated under DTA." Q. Now, let me ask you, since you seem to have
some -- and we'll get into this more, but some problem understanding judicial substitute or judicial officer, do you recognize the term "neutral judicial substitute" as a phrase used in Klem? A. I don't recollect the term, but I understand my
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duty under Klem. Q. What is your duty under Klem? MR. SAKAI: I'm going to make an objection. Your
question calls for a legal conclusion. MR. STAFNE: Okay. And, again, I really
appreciate your objection. BY MR. STAFNE: Q. But you have to answer. MR. SAKAI: BY MR. STAFNE: Q. A. Yes. If I understand the Klem case as it applies to Answer as you can, Jeff.
what I do -Q. A. And what do you do? I have to have an -- I have to be independent of
the beneficiary when I make certain decisions. Q. A. not. Q. And can you be more specific about the types of And what decisions are those? In most cases it's whether to proceed to sale or
decisions that relate to that? A. Well, there's all different types of issues that
you run into prior to a foreclosure sale, and I don't think I want to speculate. Q. What do you mean by "speculate"?
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A. Q. A. Q. A. Q.
Try to figure out what those are. Okay. Well --
It's situation by situation. Sure. It's whatever you're presented with. And I asked you earlier whether or not, when you
perform your functions at Northwest Trustee Services, you're acting as the judicial substitute who makes those decisions with regard to the performance and the initiation of a nonjudicial foreclosure. Is that what you do? MR. SAKAI: I'm going to make an objection. Your
question's calling for a legal conclusion in regard to whether my client is a judicial substitute. Jeff, you can just answer as you can. MR. STAFNE: Mr. Sakai, let me say, again, I
appreciate your objections, but I'm sure you're aware that the only appropriate objections are those going to form and those going to privilege. So if you want to make an
objection, rather than make it in a way that kind of is longer than just going to form, I'm going to have to ask you not to. Okay? MR. SAKAI: MR. STAFNE: BY MR. STAFNE:
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I respect that. All right.
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Q. A.
Go ahead, please, Mr. Stenman. I think I -- if I understand the question, I have
to follow a specific process under the statute when I process a foreclosure, and I do that. Q. Okay. Great.
Now, when you say you follow a process, where can I find that process? A. Q. processes? A. RCW 61.24. Q. So does Northwest Trustee have any rules of Well, my process is completely predicated on RCW 61.24. Do you follow any Northwest Trustee Services'
procedure for you to follow as a nonjudicial -- or excuse me, as a judicial substitute in making decisions pursuant to RCW Chapter 61.24? A. Well, 61.24 is a process. My process is set up.
There aren't -- there aren't really decision points within the process itself. Q. When you say "there aren't really decision
points," what do you mean? A. Well, it's a collection of documents. And you do
it in a certain order and you issue notices in a certain order and you follow up those notices with activities that are required under the statute, like proper notice and
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publication, recording, and those things we follow.
It's
not more -- it's more or less not a procedure but a process that's set up within my system. foreclosure. It processes the My -- the people that When I have a
It's a set of events.
process the foreclosure follow the events.
notice that I need to create, there's a way of creating the notice, but I don't know that there's decision-making, a lot of decision-making involved. Q. Let me ask you this then: When you act as a
judicial substitute, would it be fair to say that you do not consider your role as making fact-finding decisions? A. Can you give me an example of what you mean by a
fact-finding decision? Q. Well, we'll get into it more a little bit, but
RCW 61.24 requires you to have proof that before initiating a foreclosure that the beneficiary is the owner of the promissory note? A. Q. Yes. So do you have facts -- when you make that
determination, how do you make that determination? A. Well, it's in the statute. That's a beneficiary's
declaration.
I use the beneficiary's declaration that tells
me who the actual holder of the note is. Q. So would it be fair to say that you do not do any
fact finding; you just rely on the beneficiary's

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declaration? A. Q. A. rely on. Q. A. Q. A. It tells you you can rely on the beneficiary -Beneficiary -- sorry. -- the beneficiary's declaration as proof? The beneficiary's declaration as proof of the Yes. And why is that? Because that's what the statute tells me I can
actual holder of the note in order to issue a notice of trustee sale. Q. So then is it fair to say that if someone gives
you a beneficiary's declaration, you will go ahead and start the sale? A. Q. Yes. So in your performance of your duties as a
trustee, judicial substitute, you don't feel that you have the authority to make fact-finding decisions? And do you understand the term "fact-finding"? A. Q. I think so, yes. All right. Well, then do you feel you have the authority as a trustee to find facts? A. I don't know that the term that you're using
applies in this situation of what -- that you're giving me.

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Q. A.
Well, let's take -If I have to determine the actual holder of the The statute I
note, I rely on the beneficiary's declaration.
states that I can rely on the beneficiary's declaration. don't know that I would need to go farther than beneficiary's declaration. Q.
Well, let's take like the situation in Klem where
someone asked for an extension and the judicial substitute just said no because they had a contract with the purported beneficiary. Is that a type of situation where you would see it's necessary to do some fact finding? A. If I was -- if there was a request to postpone or
stay the sale, I would consult with the beneficiary. Depends on the facts, but my decision on whether it's postponed or not is mine. Q. A. Q. finder? A. Yes. I review my file -- I'd review all of the Right. Yes. So as a trustee, you do view yourself as a fact But it's based on the facts, right?
information within my file in order to make that decision, yes. Q. And then in making your decisions, it's incumbent
upon you, is it not, to apply the law to the facts as you

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have them before you? A. I would review my file completely, yes. I review
my file completely before I made a decision, yes. Q. A. And now we're talking about legal decision? Well, if it's a legal decision, then I may also
consult counsel, outside counsel. Q. A. And which counsel would you consult? Well, I'd either consult inside counsel or I would If it's outside counsel, it would
consult outside counsel.
be probably Routh Crabtree Olsen. Q. A. attorneys. Q. A. Services. Q. And so far as you know, they have no relationship And do they also work for Routh Crabtree Olsen? No. They're employees of Northwest Trustee And your inside counsel, who is that? Steve Hicklin and Chuck Katz, and they're staff
with Northwest's -- or RCO? A. Q. They're employees of Northwest Trustee. Well, the reason I asked you is I'm involved in
another case involving a group called McCarthy Holthus and Quality Loan Servicing. Are you familiar with that? MR. SAKAI: I'm going to object. These questions
are outside the scope of your 30(b)(6) notice.

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MR. STAFNE:
Actually, it says the person who can
best testify about Northwest Trustee's fact-finding and legal decision-making processes for determining proof of ownership of the note. MR. SAKAI: What does that have to do with the
case against McCarthy and Holthus? MR. STAFNE: Well, they have attorneys that they
have working in-house at Quality Loan Servicing and they come from McCarthy Holthus, which also owns them, and in this case, as you know, RCO actually owns, or at least its owners own Northwest Trustee. BY MR. STAFNE: Q. So I'm just trying to determine if you know
whether these counsel that act as inside counsel also have any relationship to RCO? MR. SAKAI: I just want to note our objection. I believe you're
I'm not here to engage you in argument.
incorrect, but I just want to note the objection. Jeff, all I'm saying is I believe the question is outside the scope of your notice. I want you to answer as
you can based on personal knowledge. THE WITNESS: So which question am I answering?
Do I know about the McCarthy and Holthus -BY MR. STAFNE: Q. No. That was just an example to kind of help you
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out. A. Q. Okay. Do you know either way whether the two in-house
counsel, Northwest Trustee Services, have any relationship with RCO? A. I'm not sure I understand what you mean by They're employees of Northwest Trustee. Yes, they could talk to RCO. Do I They
"relationship."
Could they talk to RCO? know that they do?
Do I know whether they consult?
may occasionally consult. Q. A. And why do you say that? I don't know. I think the reason I say that is
because, like any attorney, they may consult with another attorney. I'm not saying that it may be on a specific case,
but it's -- if you knew another attorney in town and you decided that you would talk to them about something because they may have knowledge about it, then maybe that's something that you would do. I don't know that you've explained what you mean by "relationship." Q. you. So we're talking about Northwest Trustee's procedures, and I think you've indicated that the only procedure you rely on when you're making the decisions for
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So it's a hard question to answer. Thank
Well, I think you've done a very good job.
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Northwest Trustee Services when they're acting as a trustee with regard to nonjudicial procedures or the institution of nonjudicial foreclosures is that you follow the statute; is that correct? A. Q. A. Q. Yes. And do you find that an easy thing to do? Yes. So you aren't given any procedures to follow by So I take it
Northwest Trustee other than the statute.
borrowers like Mr. Lemelson don't have access to any procedures as well? A. I don't have any written procedures in place that
I would -- like a manual. Q. And so all of you folks -- are you the only person
who performs this kind of function at RCO? A. Q. What do you mean "perform"? Which function?
Access the judicial substitute, making
fact-finding and legal decisions relating to nonjudicial foreclosures. MR. SAKAI: I'm going to make an objection.
First, the scope of your 30(b)(6) notice is not whether Jeff Stenman works at RCO. So, Jeff, you can answer as you can. MR. STAFNE: MR. SAKAI: Oh, thank you. I thought you might have misspoken,
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but I just wanted to correct you on that. MR. STAFNE: Would you read my question back and
insert "Northwest Trustee Services" where I said "RCO," please. (Record read by reporter.) THE WITNESS: So I have a foreclosure team manager
that most likely that's where the issue would come to first. They would go to their direct report, which would be Alan Burton, my director of operations for Bellevue. And then he would come to me. And then I would
decide whether or not I'd need to consult with counsel. BY MR. STAFNE: Q. And you would determine whether you wanted to
consult with in-house counsel or outside counsel? A. Q. Yes. Now, do you see any problem at all in consulting
with outside counsel if that counsel claims to represent the beneficiary in the nonjudicial foreclosure proceeding you're working on? MR. SAKAI: Objection. Form of the question.
Calls for a legal conclusion. THE WITNESS: specific case -BY MR. STAFNE: Q. No. I'm just talking generally.
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Well, if we're talking about this
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A.
Well, I don't know that they do represent the I think I
beneficiary in the nonjudicial foreclosure. represent the beneficiary, Northwest Trustee. Q. A. Q. A. Q.
When you say you represent the beneficiary -Yes. -- what do you mean? In the nonjudicial foreclosure. So as you state on your notices, you view the
purported beneficiary as your client? A. Q. Yes, I do. So I take it following Klem there were no changes
in the procedures that RCO and a person like you working -excuse me. MR. STAFNE: BY MR. STAFNE: Q. Just so I understand, Northwest Trustee made no I could see that objection coming.
changes to its procedures because it didn't have any following Klem? A. Northwest Trustee, whenever there's an issue,
we've always had an escalation procedure in place well before Klem. Klem. Q. So the answer is you didn't change any There was no need to make a change due to
procedures -A. No.

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Q.
-- because you felt you were operating in an
unbiased way by performing a nonjudicial foreclosure on behalf of your client, the purported beneficiary; is that correct? A. Q. Yes. So let's move on to No. C, where you are in --
you're identified and are here as the person able to best testify about Northwest Trustee's fact-finding and legal decision-making processes for determining proof of ownership of the note under RCW 61.24.030(7). You say you rely on the beneficiary's declaration? A. Q. Yes. Let me find that here. It appears to be Exhibit 11. Exhibit 11? A. Q. [Witness complies.] Would you read the declaration aloud, please, so Could you go to
it's there for the record? A. perjury"? Q. A. Yes. Okay. "Under penalty of perjury, the undersigned hereby represents and declares as follows: "I am employed as Document Control Officer for
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Do you want me to start with "Under penalty of
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Select Portfolio Servicing, Inc.
I am duly authorized to
make the decision [verbatim] on behalf of HSBC Bank, USA, N.A. as Trustee on behalf of the holders of Deutsch Bank Alt-A Securities, 1) Mortgage Loan" -- I think that's Part 1, "Mortgage Loan," "Mortgage Pass Through Certificates, Series 2007-AR2. Hereby known as beneficiary.
HSBC US -- HSBC Bank USA, N.A. as Trustee on behalf of the holders of Deutsche Bank Alt-A Securities, Mortgage Loan Trust, Mortgage Pass Through Certificates, comma, Series 2007-AR2 is the actual holder of the promissory note evidencing the above-referenced loan. Q. A. I think 3? "The Note has not been assigned or transferred to Three, Beneficiary.
any other person or entity. "Four, beneficiary understands that the trustee foreclosing the deed of trust securing the above-referenced loan will rely upon this Declaration before issuing the notice of trustee's sale." And then it's, "HSBC Bank USA, N.A., as Trustee on behalf of the holders of Deutsche Bank Alt-A Securities Mortgage Loan Trust, Pass Through Certificates, Series 2007-AR2," dated March 6th, 2013, by -- there's a signature, and underneath the signature it says "Tina Martin, Document Control Officer." Q. Who is Tina Martin?
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A. Q. A.
I don't know. Who does she work for? If I go by the declaration, she works for Select
Portfolio Servicing, Inc. Q. Is Select Portfolio Servicing, Inc., the
beneficiary? A. Q. No. Why did you decide that it was an appropriate
declaration if it's not signed by the beneficiary? A. Because the person executing the document made a
statement that they were authored to make that declaration. Q. And so let me ask you this: You understand that
as a judicial officer you have the responsibility to determine if there's sufficient proof to move onward to initiate a foreclosure against Mr. Lemelson; is that correct? MR. SAKAI: form of the question. MR. STAFNE: THE WITNESS: I'm going to make an objection to the It calls for a legal conclusion. Thank you. I have to have the evidence in front
of me that allows me to take the next step in the process. BY MR. STAFNE: Q. A. Q. And do you consider this that evidence? Under the statute, yes. Did you provide -- I'm going to ask some
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questions, and they -- I'm just going to ask about your knowledge. You know, I know you're not an attorney. So I'm
just going to ask you as the layperson that you are to tell me your opinion. Obviously, since you're not an attorney,
I'm not asking you for your legal conclusion. Are you familiar with the concept of due process? MR. SAKAI: Objection. This question's outside
the scope of the 30(b)(6) notice and also calls for a legal conclusion. Jeff, you can answer if you can. THE WITNESS: No, because I -- I don't know what
the legal definition of due process is. BY MR. STAFNE: Q. I want you to assume that legal due process
includes notifying an adverse party of any issues that are going to come before the legal decision-maker. Was Mr. Lemelson notified that you were going to make a decision based on this declaration? A. I don't believe it's part of a notice. So, no, I
don't believe we -- he would have received anything. Q. Was he ever offered an opportunity prior to the
time you began, initiated the foreclosure under this particular statutory provision, to challenge this declaration?
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A. Q.
Specifically the declaration? Was he ever given notice to say, I don't agree
that this is adequate proof? A. Q. Specific to the declaration, no. Three, did you memorialize in any written format
your finding that this was an adequate declaration pursuant to RCW 61.24.030(7)(a) to meet the criteria of providing proof of ownership by the beneficiary? A. Q. Not that I'm aware of. So did you attempt to provide any sort of record
that a superior court judge could review regarding your decision to accept this declaration as adequate? A. Q. No. Now, are there circumstances that you're aware of
where you cannot use this declaration as a basis for providing proof of ownership? A. Q. A. Q. there. That I cannot use the declaration? Right. Not that I'm aware of. I'm going to hand you what is marked as Exhibit 1 Let me find it here. Do you recognize Exhibit 1? A. Q. A. It's an excerpt from the statute. And what's it an excerpt of? RCW 61.24.030(7).
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Q. A. Q. A.
And that's what we've been talking about, correct? Yes. Would you read the (7)(a) into the record, please. "That, for residential real property, before the
notice of trustee's sale is recorded, transmitted, or served, the trustee shall have proof that the beneficiary is the owner of any promissory note or other obligation secured by the deed of trust. A declaration by the beneficiary made
under the penalty of perjury stating that the beneficiary is the actual holder of the promissory note or other obligation secured by the deed of trust shall be sufficient proof as required under this subsection." Q. Now, going back to -- I think it's Exhibit 11, the
Declaration of Ownership. A. Q. [Witness complies.] I think you've already agreed with me that this is
not signed by the beneficiary? MR. SAKAI: legal conclusion. BY MR. STAFNE: Q. Select Portfolio says they aren't on behalf of the Objection. The question calls for a
beneficiary, does it not? A. It doesn't say anywhere on here that they are not
the beneficiary. Q. What about -Page: 26
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A.
It's stating who is the beneficiary, but it's not
stating that -Q. A. Q. A. specific. They are not? Yeah. Well, tell me -I'm just making sure that your statement's very It doesn't say Select Portfolio Servicing is not
the beneficiary. Q. Yeah, Mr. Lemelson never had the opportunity
because you never gave it to him to point that out to you before, right? A. He was never given the beneficiary declaration,
that's correct. Q. Okay. And so he never was given an opportunity to say to you that, Hey, this doesn't say beneficiary on it. doesn't meet the language of the law, correct? MR. SAKAI: legal conclusion. MR. STAFNE: MR. SAKAI: BY MR. STAFNE: Q. A. Go ahead and please answer the question. Could you repeat the question? MR. STAFNE: I can have the court reporter do it.
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So it
Objection.
The question calls for a
Thank you. And it's also been asked and answered.
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(Record read by reporter.) THE WITNESS: He was never given the opportunity
because he was never given the declaration. BY MR. STAFNE: Q. Now, it says here that -- does this declaration
provide information to you as a fact finder sufficient to determine who is the beneficiary of Mr. Lemelson's loan? And, if so, please read it to me where it provides that information or proof. A. Well, there's statements within the declaration
that state that the beneficiary is the actual holder of the note. Q. Well, doesn't No. 1 say HSBC Bank -- and I'm not I just did. But doesn't it
going to say the USA or N.A.
say HSBC is trustee on behalf of the holders of Deutsche Bank Alt-A Securities Mortgage Loan Trust, Pass Through Certificate, Series 2007-AR2, hereby known as beneficiary? Isn't that what it says? A. Q. Yes. So are you saying that "Hereby known as
beneficiary" was sufficient for you as the fact finder to determine that they were the beneficiary? MR. SAKAI: MR. STAFNE: Objection. Asked and answered.
I didn't ask that before but, again,
I appreciate your objection.

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BY MR. STAFNE: Q. A. Q. Go ahead. Yes. I don't understand how you can do that. Can you
explain your thinking? A. As far as I know, the statute doesn't provide a
specific form of beneficiary declaration. Q. But this doesn't say he's the beneficiary; it says
hereby known as the beneficiary? A. Well, I guess I can't make a legal conclusion on
the language. Q. But you would agree -- are you familiar with the
definition of beneficiary under the Washington Deed of Trust Act? A. The beneficiary -- the Deed of Trust Act tells me
what I can rely on as a document to understand who the beneficiary is. It tells me I can rely on a declaration.
That's what I rely on. Q. Are you saying that if somebody comes in -- if I
give you a declaration, say, I, Scott Stafne, hereby beneficiary am the holder of a note, you can rely on it and go forward? MR. SAKAI: legal conclusion. MR. STAFNE: I, again, thank you.
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Objection.
The question calls for a
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BY MR. STAFNE: Q. A. Q. A. yes. Q. And why does the reason -- penalty of perjury Go ahead and answer, sir. Yes, I guess I could. Okay. As long as you do it under the penalty of perjury,
matter so much? A. Because I would want that reliance to go back to
them if it was ever challenged. Q. So is the purpose of this document more or less a
CYA, cover your ass, so that you can go against whoever claims to be the beneficiary if they're not telling the truth and get your money back from them? A. anywhere. that. Q. Well, it says Beneficiary understands that the I don't think that's written in the statute I don't know that I can make a conclusion like
trustee foreclosing the deed of trust securing the above loan will rely on this declaration before issuing the notice of trustee sales. A. Q. That is in the statute. So does Northwest Trustee rely on that for
purposes of being able to go against anyone who claims to be a beneficiary? If you know, and you may not know that.
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MR. SAKAI:
I'm going to make an objection because
that's outside the scope of your 30(b)(6) notice as well. MR. STAFNE: disagree. BY MR. STAFNE: Q. A. Q. Please answer. I really don't know. Now, so as I read this, it looks like the actual Do you read it And thank you for your objection. I
holder of the promissory note is a trust. that way? A. entity. Q. A. No, I don't.
I look at the entire statement as an
You know, I just don't understand what you mean. I look at it as exactly as it's stated. If it was
Joe Smith and that was all that was listed, that would be who I would think was the beneficiary. Q. A. But read me -I think the entire thing is the beneficiary. You're asking me to
Maybe the beneficiary -- I don't know.
make a decision -- I think I would just look at the whole line as the beneficiary. Q. A. Q. A. Well, do you see No. 2? Yes. Would you read that? I think 2 starts with "HSBC Bank USA N.A., as
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Trustee on behalf of the holders of Deutsche Bank Alt-A Securities Mortgage Loan Trust, Pass Through Certificates, comma, Series 2007-AR2 is the actual holder of the promissory note evidencing the above-referenced loan." Q. And when you say "I think," is that how you made I mean, would that
your decision in deciding to foreclose?
have been a part -- if you had written a memorandum, would you have said I think that No. 2 actually begins with HSBC? A. No. When I'm referred the foreclosure, they tell
me the name of the beneficiary in their referral document. When I get the beneficiary's declaration, I make sure it matches. Q. A. Q. Is this the referral document? No. What does the referral document say? MR. SAKAI: I'm going to make an objection that's
clearly outside the scope of the 30(b)(6) notice. MR. STAFNE: I disagree. So unless you're going
to instruct him not to answer -MR. SAKAI: You can answer as you can. It's still
outside the scope of the 30(b)(6) notice. MR. STAFNE: MR. SAKAI: I disagree. Jeff -- if you'd let me finish,
Scott -- you can answer as you can based on personal knowledge.

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THE WITNESS:
The referral -- there's a referral
instruction sheet that tells me who the current beneficiary is in a foreclosure. BY MR. STAFNE: Q. A. Q. And do you -Who to foreclose in the name of. And do you utilize that to -- along with this
document in determining whether to initiate foreclosure pursuant to 61.24.010? A. Whether to, no. I think what we do is we make
sure that the beneficiary declaration matches the name that they gave us. Q. So would it be fair to say that, other than
looking at this beneficiary declaration, Northwest Trustee Services did not look at any of the previous chain of title evidence relating to Mr. Lemelson's -- the documents evidencing Mr. Lemelson's obligations secured under the deed of trust at the time the original loan was made? A. No. Part of what we do is review title prior to
issuing the notice of trustees' sale. Q. Okay. And I take it you'll be able to discuss
with me that pursuant to the next subject of this 30(b)(6) deposition notice? A. Q. Where are we on that? Yes.
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Is it an exhibit?
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
A. Q. A. Q. A.
Sorry, I got out of order here. Me too. Seven again? I think it was 11. Eleven, sorry. That's the beni dec. I thought you were looking
at the -Q. A. Q. A. Q. Oh, you're right. Exhibit 5. Yes. So we left off at C. Right. When that has to do with how you -- well, We're looking at --
read Exhibit C. A. "The person who can best testify about NWTS'
fact-finding and legal decision-making process for determining proof of ownership of the note under RCW 61.24.030(7)." Q. And you've previously said you rely pretty much
only on this; is that correct? A. Q. Yes. So when you do your chain of title analysis, why
do you do it at all? A. Because the County record wanted to match. So
that when we go to report our appointment, the entity is of record in the County record and the property records. So
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that that entity is showing also when they appoint us. Q. So it's more crossing your T's and dotting your
I's so that you can do a good job for your client that will hold up? A. I don't know if I agree with that
characterization. Q. A. How would you characterize it? Well, I think the reason that we want to make sure
that there is an assignment in the name that we're foreclosing is that so, if the public record's reviewed, it looks correct to the public that the last assignment shows the current beneficiary and the current beneficiary appointing the trustee. Q. stable? A. Q. Correct. Now, did you look at the obligations secured by So it's an effort to make the public record
the deed of trust at the time or prior to the time you initiated these nonforeclosure proceedings? A. Q. A. Q. Are you asking me did we review the note? Yes. I don't know. Is that something that you generally do according
to the procedures at Northwest Trustee Services? A. Generally, yes.

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Q.
But it's not required or you would have known that
you had done that? A. It wasn't I myself that reviewed it. Would I hope
that a staff member reviewed the note upon receipt of a copy of the note? Q. Yes, I hope they would.
Would there be any memorandum that a court could
look at in order to verify that someone had done that? A. There might be an internal e-mail or something to
that effect to check the note. Q. And when you say "note," the deed of trust defines
beneficiary as the holder of an instrument or document evidencing the obligations secured by the deed of trust. Are you using "note" synonymously with the language of the statute referring to instrument or document evidencing the allegation secured by the deed of trust? A. Q. Yes. Now, did you make any attempt to determine whether Well, the document that's labeled a note
Mr. -- excuse me.
Mr. Lemelson signed was a negotiable instrument under Article 3? A. Q. A. Q. A. No. Do you know what a negotiable instrument is? No. Do you know -Well, I think I know what a negotiable instrument
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is.
I'm not sure I understood -- or I don't believe I've
ever reviewed Article 3. Q. Are you capable of applying the law relate -- as
we sit here today, do you feel you're capable acting as a neutral judicial substitute of applying the law related to Article 3 to the documents evidencing the obligations that Mr. Lemelson secured with a deed of trust to MERS? MR. SAKAI: I'm going to make an objection.
That's clearly outside the scope of the 30(b)(6) notice. But, Jeff, you can answer. THE WITNESS: "MERS." BY MR. STAFNE: Q. Are you aware that Mr. Lemelson's deed of trust I was following you until you said
named MERS as the beneficiary? A. Q. A. Yes. Then what don't you follow? I don't -- what we were talking about as the note.
I don't believe MERS is listed on the note. Q. No, but could you read my question back. (Record read by reporter.) BY MR. STAFNE: Q. it out. good.
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Let me rephrase that, and thank you for pointing See, that's a good example of a question that's not
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So all I want to know is when you look at the note, it's labeled note, but under the deed of trust it's a document or instrument evidencing the obligations Mr. Lemelson owed to Webster Bank, which was the original bank. Are you capable of determining as a matter of law
whether it is a negotiable instrument under UCC Article 3? MR. SAKAI: I want to make an objection. That's
outside the scope of the 30(b)(6) notice whether my client can make a determination as to something as a negotiable instrument. MR. STAFNE: BY MR. STAFNE: Q. A. know. Q. Well, if you don't know what Article 3 says, how Please answer. I don't know. To be honest with you, I don't Thank you for your objection.
could you apply Article 3 to Mr. Lemelson's notes? MR. SAKAI: Objection. My client already answered
that question previously. MR. STAFNE: appears that -BY MR. STAFNE: Q. I'm asking what's the basis for your not knowing. So how would No. He said he doesn't know, but it
You said you don't know what Article 2 says.
you be able to determine as a matter of law that Article 3

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applies? A. I would say that I don't know what Article 3 says,
so I wouldn't be able to apply it, yeah. Q. The reason it was important is because your very
uncertainty makes me wonder if sometimes when you don't know what the law is and you're deciding to proceed forward with the foreclosure, you might be inclined just to assume that your client is giving you the information to move forward? A. Absent a challenge, I would think that I could
move forward. Q. Sure. But RC -- excuse me. Northwest Trustee So how
provides no process for the borrower to challenge.
would the borrower be able to challenge when he doesn't know about the declaration and he is not told that he -- is not notified that there's a procedure by which he can challenge? A. Q. I don't have an answer to that. Well, I assume you don't know any more about
Article 9 than you do about Article 3 because it's more complex? A. Q. You'd be correct. And so you don't know if Mr. Lemelson's -- the
obligations that secured Mr. Lemelson's notes actually constitute as security interest under Article 9? MR. SAKAI: Objection. These questions are
outside the scope of the 30(b)(6) notice.

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THE WITNESS: BY MR. STAFNE: Q.
No.
And so for you, these issues are not relevant in
determining who the beneficiary is? A. I wouldn't look outside the statute to question
whether or not they were the actual holder of the note if I had a beneficiary's declaration and there was no challenge. Q. rights"? A. Q. Yes. What are servicing rights? MR. SAKAI: I'm going to make an objection. Now, are you aware of something called "servicing
Servicing rights are not part of the 30(b)(6) deposition, scope of the 30(b)(6). would appreciate -MR. STAFNE: Counsel, I appreciate your objection, If we could just keep it on track, I
but -- and it's in our complaint. We claim that when you split the note -MR. SAKAI: I understand your complaint. I just
wanted you to keep it on track with the 30(b)(6) notice, is what the rules of the civil procedure require. MR. STAFNE: What I'm talking about is what is
considered in his analysis prior to going forward that he has sufficient proof to begin a foreclosure. BY MR. STAFNE:
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Q.
Now, the question of proof would involve Article 3 It would also involve the
and would involve Article 9.
question of whether we have a holder of the obligations, and basically what I want to know from you is, do you understand that when servicing rights are sold, they are sold as an obligation under the note but not as any other part of the note? A. Q. A. No, I'm not aware of that. So what do you understand? I guess I've heard the term servicing rights, but
I've never seen a document that would explain what the servicing rights are. Q. And in this case, you're kind of accepting from
the servicer rather than the beneficiary the statement that you can go ahead with the foreclosure, the nonjudicial foreclosure, correct? A. I am accepting that they are saying that they have
the authority from the beneficiary to make that statement, yes. Q. HSBC? A. Well, I represent the beneficiary. SPS is the And these are your clients, SPS, right? It's not
servicer of the loan. Q. You don't have with you a copy of your notice of
foreclosure, do you?
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A. Q.
I did not bring any documents, no. If I were to tell you that the notice of
foreclosure identifies SPS as Northwest Trustee Services' client and Mr. Lemelson is the borrower, would you dispute that? A. And I will get that document for you, but.... I think what you're doing is you're asking me to If you want to call SPS who referred
step outside of 61.24.
the loan to me for the foreclosure as my client outside of 61.24, yes, I would agree with that. Q. A. Okay. So they're your client?
They're my client, but I rep -- I also represent
HSBC Bank because they're the beneficiary in the rest of that. Q. And you use, if you've got a problem, RCO as your
outside counsel? A. Q. Yes. So let me ask you this: Doesn't it appear to you
that you've got RCO, Northwest Trustee Services, SPS, and HSBC all working together against the borrower, Mr. Lemelson? MR. SAKAI: I'm going to make an objection that's
outside the scope of the 30(b)(6) notice. MR. STAFNE: BY MR. STAFNE: Q. Go ahead and answer, sir.
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Okay.
Thank you.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
A. Q. against"? A.
I don't agree with the term "working against." And what don't you agree with the term "working
Well, under the statute I have to be impartial to I have to work on the benefit of both
both parties.
parties, the beneficiary and the grantors. Q. But your client is, you say, not only SPS, the So is Mr. Lemelson in
servicer, but also the beneficiary. the same position as your client? A.
Well, he deserves a fair process.
He deserves
that I do the process correctly. Q. And the way you view the process is you get this
document from these people who are your clients and you go ahead and do the nonjudicial foreclosure, correct, under -A. Q. Yes. That's what the statute tells me to do, yes.
Let's get back to that statute. You know, unfortunately I had someone who was new
prepare these things and so I'm not as familiar with the exhibits as I like to be, but why don't we go back to Exhibit 1, which has the statute. Do you remember Exhibit 1? A. Q. A. part?
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Yes. Would you read Subsection B of RCW 61.24.030(7)? Unless the trustee has violated -- is that the
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Q. A.
Mm-hmm. "Unless the trustee has violated his or her duty
under RCW 61.24.010(4), the trustee is entitled to rely on the beneficiary's declaration as evidence of proof required under this subsection." Q. that? A. Well, if I read 61.24.010(4), the trustee or Now, what's your understanding of the meaning of
successor trustee has a duty of good faith to the borrower or beneficiary and grantors. Q. So do you read it as saying that you cannot rely
on the declaration if you violate any duty of good faith toward Mr. Lemelson? MR. SAKAI: Objection to the form of the question.
Calls for a legal conclusion. THE WITNESS: suggest that. BY MR. STAFNE: Q. And do you have any -- is that what you do? I The basic reading of it would
mean, you say you follow the statute.
That's your procedure
when you say a basic reading of the statute suggests that, it doesn't give me much indication that that's what you do. Is that what you do when you're acting as a trustee for Northwest Trustee Services? A. Yes.
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Q. means.
And tell me how you understand what good faith
MR. SAKAI:
Objection.
That's not within the
scope of the 30(b)(6) notice. MR. STAFNE: Counsel, would you take a look at
both C and D and tell me how it's not? MR. SAKAI: Jeff, you can answer as you can.
We're going to disagree. MR. STAFNE: I mean, let me just point out, at
some point attorneys go off base where they make objections that are continuous and problematic and interfere with the deposition, and I suggest you've reached that point. suggest it's apparent from the deposition notices that you've reached that point. So what I want you to do is kind And I
of explain to me so I can take it to the court and say, he kept saying that it had nothing to do with it. The statute states that I'm asking him about the statute. So I don't see how your objection's appropriate. MR. SAKAI: I respect your position. I just feel
when you're going off tangent, off -- what I believe is off the 30(b)(6) notice, then I'm going to make that objection. MR. STAFNE: MR. SAKAI: Sure. And I still want my client to answer
the question, but if it's not within the 30(b)(6) notice, we didn't have a chance to prepare the answer to that question,
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but I still want my client to answer the question. want to note the objection on the record. MR. STAFNE: No, I appreciate that.
I just
What I don't
get is how you can make an objection when it's a part of the statutory language. MR. SAKAI: MR. STAFNE: THE WITNESS: I'll withdraw my objection. All right. Thank you.
I think I meet my duty of good faith
by following the process that's laid out under the statute for giving the appropriate notice, posting the property, publishing the notice of sale, making sure that I follow the process. BY MR. STAFNE: Q. You don't think the very fact that you represent
the people that are bringing the for -- nonjudicial foreclosure against Mr. Lemelson violates your duty under RCW 61.24.010(4); is that correct? A. I have to be able to have confidence in the If there's no reason for
documents that they provide to me.
me to make an observation that there's something wrong with the document, I don't know why I would have to go beyond that. Q. If you're a judge and you have two people before
you, and let's say you're really a judge and there are two people arguing about something, how are you going to make
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your decision who to believe? A. Q. I think it's always based on the facts. And how do you determine the facts when there's
contradictory evidence presented? A. I guess you're making a statement that I don't Where was there contradictory evidence
agree with.
presented to me? Q. That's the point. Mr. Lemelson never had any If he had, what
ability to present contradictory evidence. would you have done? A.
I would have escalated it and looked into it and I
would have asked the beneficiary to answer the question, and then I would have made a decision and maybe consulted outside or inside counsel to determine whether or not we had an issue. Q. Well, would you ever have said, Mr. Lemelson,
please come here and, Beneficiary, please come here and look at them and determine based on credibility who was telling the truth? A. I think I'm making the assumption that
Mr. Lemelson was engaged by the servicer of his loan well before it ever got to me in the form of a foreclosure and that Mr. Lemelson was given statutory notice that gave him many opportunities to contact or to contest the debt. Mr. Lemelson never contacted us.
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I'm happy to assume that all of these attempts to give him notice, he must have read a notice and made a decision not to respond. Q. Did you provide him with a form where he could
come and challenge who the beneficiary was? A. The notices that we provide provide that If he doesn't recognize an entity, he has the I can't
information.
ability to contact us and ask who that entity is.
put myself in Mr. Lemelson's shoes and think that he isn't reading what he's being sent. Q. Could we see those for a second? MR. SAKAI: Jeff, do you need a break while he
goes through the exhibits? MR. STAFNE: Yeah, why don't we take a break.
(RECESS TAKEN.) (EXHIBITS 12 THROUGH 14 MARKED.) (Record read by reporter.) BY MR. STAFNE: Q. Tell me what kind of notices you're talking about
that have advised him that he has an opportunity to present evidence regarding his belief that -- as to who the beneficiary actually is? A. I don't think the notice specifically states that,
but the notice of default identifies the parties. Q. Identifies what parties?
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A.
It identifies the beneficiary and it identifies
the servicer of his loan and it also invites him to dispute the debt if he doesn't agree with it. Q. You said it identifies both the beneficiary and
the servicer? A. Q. client? A. Q. A. Q. You mean does it say "My client is"? Yes. I don't think it says "My client is." Handing you a copy of Exhibit 14. Do you recognize that document? A. Q. A. Yes. Can you tell me what it is? It's the notice of default. MR. SAKAI: Can we go off the record for a second. Yes. And does it identify Northwest Trustee Services'
(Discussion off the record.) MR. STAFNE: BY MR. STAFNE: Q. This notice doesn't contain all the pages that are Back on the record.
in it, and I thank your counsel for pointing that out to me. My main concern, however, is the last page. Would you go to the last page? A. You don't have the last page in here.
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Q.
You're absolutely right. Is this the last page of that document?
A. Q.
Yes. So let's put Exhibit 14 together so it represents
a total document. MR. STAFNE: And, Sakai, why don't you look at it
and make sure that it's -- and I hope you don't mind me addressing you as Sakai? MR. SAKAI: it. Yeah, we're good. BY MR. STAFNE: Q. is? A. It does say -- it does have "Client: Select So does it identify who Northwest Trustee's client No, that's fine. Don't worry about
Portfolio Servicing, Inc." in the footer. Q. And it doesn't say anything about HSBC, the actual
beneficiary being your client, does it? A. No. It's a foot -- it's a footer notation that It's just who sent us the It's
merges from our client table. referral.
It's not meant to identify the beneficiary.
just how it's sent out. Q. A. Q. You do send that out to Mr. Lemelson? Yes, we do. So you expect that he will see that you have a
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client? A. Q. I expect him to read the entire notice. And that would include seeing that he is the
borrower and your client is SPC, or SPS, whatever it is, correct? A. Q. provide? A. Q. It might be, yes. I'm going to hand you what is -- do you know if He would see that footer, yes. Now, is that footer on other documents you
the notice of trustee sale is likely to have the same identification? A. Q. A. Q. The footer? Yeah. I think it probably does, yes. And would it also be true for the foreclosure loss
mitigation statement that would have been provided to Mr. Lemelson? And I'll give you a copy of it. It's been
marked as Exhibit 13, I think. I'm going to let -- I think -- and I'm not sure because the documents are not together very well, and I apologize, but does this -- this exhibit is Exhibit 13. Does it generally go out to borrowers? A. Q. Yes. And there's a second page on it, and I'm not sure
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whether that is the -- actually -A. Q. A. That's the last page of the NOD. Okay. Or the notice of default, sorry. MR. TRUMBULL: Yeah, I don't know. I think that
we just got it copied off. This may be -MR. STAFNE: MR. SAKAI:
I think this is in order.
Is that still the NOD though? Should we take another break? You
want to just make sure -MR. STAFNE: BY MR. STAFNE: Q. So in any event, I mean, and, actually, there's No, let me just go on. It's easier.
really no dispute that your client is the servicer through, you believe, the purported beneficiary? A. Yes. You mean the servicer of the loan, yes.
They would send us the foreclosure. Q. And are you aware that the servicer has bought a
portion of Mr. Lemelson's obligations that were originally secured by the deed of trust? A. Q. Am I aware -- could you repeat that again, please. The servicer has bought the stream of payments
obligation out of the obligations that Mr. Lemelson originally gave Webster Bank when the loan was made? A. I don't think I understand that, but, no, I'm not.
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Q. A. Q. all? A. Q.
Does that make any difference to you? I'm not sure what that means, what you just said. You don't know if it has any legal significance at
No. So if someone had brought that up to you, said,
look, they're not the beneficiary because there's more than one holder of the obligations now and you cannot stretch the security to secure multiple parties, how would you have resolved that? A. I don't think I would try to. I think I I don't
understand the theory that you're purporting.
undertake any type of review to determine whether that's actually taking place. Q. So would you just go through with a nonjudicial
foreclosure if they gave you the documents? A. Q. Yes. Do you know how under the UCC you secured the
stream of payments from Mr. Lemelson's notes? A. Q. No. If I were to tell you it would be secured by a
separate document other than the deed of trust securing what's known as a payment intangible, would you have any reason to disagree with me? A. I don't think so.
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Q.
We'll take a little break after I just make sure
that I've gone through these, and then maybe we can get you out of here early. Have you seen Mr. Lemelson's complaint for -against RCO and Northwest Trustee Services? A. When it was first served, I did. I hadn't So I wouldn't
reviewed it completely before the deposition.
be able to cite anything within it, without reading it. Q. I don't expect you to. Do you remember the part where you said that he sold -- that the loan was from Webster Bank and that the loan, whatever that means, got sold to American Home Household -- do you remember the name of that company? MR. LEMELSON: MR. FASSETT: BY MR. STAFNE: Q. A. Q. industry. A. Q. A. Q. A. American Home Mortgage Servicing? I remember reference to it in the complaint, yes. And you're a pretty much -- long time in this So you know that they went bankrupt, right? American Home? Yes. Yes. And you also know Webster Bank went bankrupt? I wasn't -- I might have. I don't know how long
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I don't. American Home Mortgage Servicing.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
ago that was. another. Q. parties? A.
I might have been aware of it at one point or
Do you know how Mr. Lemelson's loan got to other
The only knowledge I might have about that would
be by looking at the note and knowing that there was an endorsement in the note. Q. A. transfers? Q. A. Q. And so that -So I knew that there was a transfer. How many
I don't know how many transfers there were. And would you have had any way of finding out? I don't know. Have you ever asked MERS to identify transfers in
the performance of your role as trustee? A. Q. A. Q. A. Q. A. Q. A. Q. A. MERS? Yes. Have I ever asked MERS directly? Yes. No. Are you familiar with MERS? Yes. What is MERS? It's a registry. And what's its purpose? To track -- I believe it's to track ben -Page: 55
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transfers of servicing or beneficial interests between servicers and beneficiaries. Q. And that's what you would do under 61.24.030(a) if You could go
you could not rely on the beneficiary, right?
through the tracking of the sales of the beneficial and legal interests? A. The only access that I have to MERS information is
the current -- it will only give me the current beneficiary and servicer. Q. So it wouldn't give me the history.
Aren't you a vice president of MERS for purposes
of signing documents? A. I was under several tri-party agreements. I'm
currently not engaged in any execution under MERS. Q. But you do know that -- isn't Northwest -- strike Sometimes I think too fast.
all of that.
Isn't is true that Northwest Trustee Services is a member of MERS? A. Q. I don't know. I don't know.
You do know that if you wanted to get information
to track a loan you could go to MERS? A. I think you'd have to have a certain level of
membership to get some of the history, but some of the specific information I think you're asking for, I don't know if that's available to Northwest Trustee. available to the servicer.
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It might only be
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
Q.
And the reason you don't know is because you've
never tried? A. Well, I know the access we currently have doesn't That's -- that part of
provide us with any kind of history. the system, we don't have access to.
I know we have access to looking up the MIN number and determining who the current beneficiary or servicer is because they identify them. Q. A. Why -But I don't know -- I think you have to have a
different access level to get the servicing transfer history. Q. A. Why -And any time we ever needed to get that, which I
don't know that it's been very many times, it would have been through the servicer themselves. Q. Well, why if you're serving as a judge wouldn't
you want access to that? A. I don't know how to answer that question.
Absent -- I think absent a dispute, what am I trying to determine? Q. Exhibit 1? A. Q. Well, would you read again the first sentence of Here it is. Which section do you want me to read? Just Section A, first sentence.
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A.
"That, for residential real property, before the
notice of trustee's sale is recorded, transmitted, or served, the trustee shall have proof that the beneficiary is the owner of any promissory note or other obligation secured by the deed of trust." Q. Wouldn't that be a way of obtaining proof as to
who owned the obligation to the deed of trust? A. The proof is in the rest of the paragraph, the
declaration. Q. Well, except, just so you know, we claim that
Northwest Trustee cannot rely on the beneficiary declaration because they have violated the section printed below which is RCW 61.010 -- or 61.24.010 -- or parens 4, which says you have a duty of good faith to the borrower, and our claim is that by having clients that are all adverse to the borrower, you're not acting in good faith. couldn't rely on this declaration. So it's our claim that you So please bear with me
for a moment and assume that you can't rely on that declaration. A. Then did you have any other proof? So fundamentally I don't know why I can't.
Okay.
Why can't I? Q. A. But I'm just asking -I understand your argument, but I guess that's for If --
somebody else to decide whether that has merit. Q.
Well, theoretically somebody could have brought

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it -MR. SAKAI: MR. STAFNE: THE WITNESS: Scott, just let Jeff finish. All right. I won't get into -- I'm not going to
try to pull something out of the air. If there was a dispute, if there was a request that -- or that the current noteholder was not the noteholder or didn't have the ability to -- didn't have standing, then I think it would be up to me to go back and do some more research and look into it, and I would most definitely do that. BY MR. STAFNE: Q. A. Q. A. And how would you do that? But absent a dispute, I don't think I need to. But how would you do that? Well, I would go back to the servicer and I would Please provide the proof. I
state, This is the dispute.
think now there's a higher standard beyond the beneficiary's declaration. I need to look into it. You need to react to
it, respond to it. Q. A. So you -And that I think I would do. I don't think
there's any reason I wouldn't. Q. And would you feel that's what the law obligates
you to do under those circumstances?

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A.
I think I would be responsible to make an
independent review of the situation and make a determination on whether or not I could proceed as trustee. Q. And do you feel there is procedures, that
Northwest Trustee has adequate procedures in place to notify borrowers like Mr. Lemelson that he has the right to bring such a challenge and that you will then make a determination beyond the declaration? A. I think my notices are sufficient, if that's what
you're asking me. Q. A. To advise him of that fact? I think he -- the 61.24 as cited within the
notice, I think that the notices have what are required by statute. He has a duty to bring the dispute and I have a
duty then to look into his dispute. Q. A. Okay. And you're saying otherwise --
I think my notices are sufficient, and I think
that answers the question. Q. And let's go over all those notices. There's the
Notice of Default, there's the Notice of Trustee Sale, there's the Notice of Foreclosure, and there is the Notice of Loss Mitigation. A. Have I missed any?
The -- I think you mean the LM -- the Loss
Mitigation Declaration? Q. Yes. Yes.

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A.
Well, I don't produce that. I attach it.
That's the
beneficiary's notice. Q. A. Q. A. Q. A. Right.
But those are the notices, yes. Did you view this suit as a dispute? Yes. And what have you done since then? Well, the foreclosure won't continue until it's
resolved, and I'll take my legal counsel's advice on whether or not it's resolved. Q. Would that be outside legal counsel? And that's
Routh Crabtree Olsen? A. Q. Currently it is, yes. All right. You've identified the complaint, and we talked briefly about it. So we've gone through Exhibit 2.
Now let's look at Exhibit 3. Do you recognize that document? A. Q. A. Q. one. What page is it missing? A. It's missing an allonge which has the note
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Yes. Should be this. It's missing a page. Then let's go with this one and I'll take this
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endorsements on it. Q. A. Q. A. There's only one endorsement, isn't there? Did we provide it? I don't know that you provided it. The one that I have in my file has an allonge
attached to it with endorsements. Q. A. Q. Is there more than one endorsement? Yes. Would that be something you would agree that you
should have provided to Mr. -A. I don't know. MR. SAKAI: I didn't provide them myself.
Scott, just to be respectful, you
know, just to let you know, in this deposition we're not -you never -MR. STAFNE: MR. SAKAI: No, I --- propounded discovery, and I'd be
happy to send you a copy of the document. I attached it to the motion to dismiss, but if you don't have it -MR. STAFNE: dismiss. MR. SAKAI: MR. STAFNE: I'll send it -- I'll e-mail it to you. No, well, I'd like to know now, Why don't you get the motion to
because my recollection is is it only has one endorsement. So we can see.

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BY MR. STAFNE: Q. All right. Let's take a look at -- and thank you That's helpful.
for pointing that out.
How much of a role did this document play in your analysis under 61.24.030(7)? A. And that's paren 7.
I don't know that it had -- I don't know that we I can't state that we reviewed it. I would --
reviewed it.
my direction to my staff is to review it. Q. Would you look to the first yellow highlight? And
I'm going to read the sentence before that.
It states, "I Lender or
understand that Lender may transfer this Note.
anyone who takes the Note by transfer" -- "this Note by transfer and who is entitled to receive payments under this note is called the 'Note Holder.'" A. Q. A. Q. Mm-hmm, yes. Have you seen that language before on notes? Yes. Is it your understanding that this definition of
noteholder is what controls as far as who's going to be the beneficiary? A. Q. Yes. Now, in this particular note, who's entitled to
receive the payments under the note? A. Q. Webster Bank, N.A. And then it says that the note may be transferred,
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and then it says "Lender or anyone who takes this Note by transfer and who is entitled to receive payments under this note is called the 'Note Holder.'" Okay, so once Webster Bank transferred, and now, who's entitled to receive the payments under the note? A. Q. Right now? Yeah. Today?
Well, I mean, when you undertook your
investigation pursuant to 61.24.070, who did you determine was entitled to receive the payments? A. Q. A. Q. HSBC, US -- that whole HSBC entity. The trust? Yes. And did you have any documents suggesting that
HSCP -- or HS -A. Q. BC. Whatever it is. -- that they were entitled to receive the payments on behalf of the trust? A. Q. A. Q. A. Other than the beneficiaries declaration? Yeah. I'm not sure I understand that. Let me try it again, because it's -I understand the concept of Webster Bank, N.A., I
being on the note and being able to receive the payments. would assume that when I was told HSBC was the beneficiary
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that they had the right to the payments. Q. A. Q. A. But you had no proof of that? No. And -Other than the beneficiary's declaration, I guess,
because that means they're the noteholder. Q. Except didn't we agree that the beneficiary
declaration was from Select Portfolio Servicing and they're not the beneficiary? A. I don't think we agreed that. I think the
beneficiary declaration states that HSBC's the actual holder and the party that executed it is claiming that they had the authority to execute it on behalf of HSBC. Q. A. Q. agent? A. Q. To me they're the servicer of the loan. So you've got the trustee who's claiming to have But they're not the beneficiary, right? Select Portfolio is not the beneficiary. Right. You're saying you believe they may be the
rights from the trust and the servicer who's claiming rights from the trustee; is that correct? A. trustee"? Q. A. To bring this foreclosure. No. The referral from Select Portfolio Servicing
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I don't -- what do you mean "rights from the
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identifies the name to foreclosing as HSBC.
I am making an
assumption that they have the right to refer it to foreclosure on behalf of HSBC. Q. So let's go look at that declaration again. See
if we can find it. Doesn't it actually say that HSBC is a beneficiary because it is a trustee of a trust? Is it your position
that HSBC as a trustee for somebody else is the actual beneficiary or that it's representing a beneficiary? you don't -A. I don't know. I think what I told you before was And if
I look at that entire paragraph as the identity of the beneficiary. Q. A. Q. A. Would you read that -I don't -- if HSBC Bank USA as trustee -Go ahead. I don't know -- I think if -- without that, it's So I guess that that's -- I don't
not a complete statement. understand the -Q. A. No, that's fine.
-- why it says it as trustee. I don't understand why it says that.
Q. A.
So you actually thought -I only look at it as one entity, and that's all I
look at it like.
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Q.
So you actually thought HSBC was going to get this
money and it was theirs? A. No. I thought H -- I thought the entire statement
was getting this money. Q. A. And who is -- when you say "entire" -I think I -- if you ever ask me to refer to the
beneficiary, I would read the entire thing and tell you. Q. I'm kind of, you know, getting a little old. So
you -- let me just see if I can get this right. The note says "Lender or anyone who takes this Note by transfer." Do you understand what the term "transfer" means? A. Q. To me it means -- transfer means possession. So are you saying -- in the UCC for Article 3 they
use the term "negotiation," for Article 9 they use the term "transfer," and Article 9 transfers are supposed to be written. So actually, let's go beyond that. "Lender or anyone who takes this note by transfer who is entitled to receive payments under this note." really kind of interested in who is entitled to receive payments under this note. Now, when I look at it -- and granted I'm looking at it as an attorney, but I want your opinion as the person who's being the judicial substitute here. Aren't the people I'm
that are really supposed to receive the money the people

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that own interest in the trust? A. Q. That makes sense. Yeah, it does.
Isn't --
So the trustee is purporting to act on their behalf; is that correct? A. Q. That's what it appears, yes. And did you have any evidence that the trustee in
purporting to act on their behalf had been given this power by the trust to do so? A. Q. No. And did you have any evidence that the servicer
who's now purporting to represent the trustee had any authority from the trust, the actual beneficiary, to bring this foreclosure? A. Q. A. No. Well --
Except for the beneficiary declaration? If I can say -- yes. Because the person executing
it is doing it under the penalty of perjury, I'm making an assumption that they have the authority. Q. And I understand that. So your role boils down to, you know, making sure that declaration is there? A. Q. Yes. What is your role, if any, as you see it, to
determining whether the declaration is adequate under this

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statute? A. Well, the statute doesn't give me a form. So I
guess that's open to interpretation, and my interpretation is, if I have a question about it, I would probably look to counsel to give me advice on whether it's acceptable, an acceptable form. I would have to identify that I think there's a problem with it for me to take it to counsel, though. Q. this? A. I don't believe that I visited this particular And you didn't see that there was a problem with
form with my counsel to see if it was -- if there was an issue with it. Q. Exhibit 4. I'm going to hand you what has been marked as Would you look at that document? And this might be part of it. A. Q. A. Q. Was this intended to be part of it? I don't know. I don't think this -Okay. Then I'll take it back.
All right. A. Q. A. Q. The Deed of Trust, yes. And are you familiar with the Deed of Trust? Yes. Are you familiar with them generally or
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Mr. Lemelson's, in particular Mr. Lemelson's? A. Q. Yes. Who does the -- that document define as the
beneficiary? A. Q. MERS. Does it do it in any capacity other than -- well,
let me -- it states on it that it's as nominee for -- which bank was that? A. It says nominee for Webster Bank, right?
It says "is a separate corporation that is acting
solely as nominee for Lender and Lender's successors and assigns." Q. And do you folks over at Northwest Trustee
Services treat MERS documents, MERS deeds of trusts any differently than you do others, three-party deeds of trusts? A. Q. No. Are you aware of the supreme court's decision in
Bain V. Metro Mortgage? A. Q. A. Q. I've heard of it. But you haven't read it? Not in any great -- not in great detail. Has your employer, Northwest Trustee Services,
provided you with any training regarding that decision? A. Outside counsel asked us to review our
appointments to make sure that our appointments were not by MERS, that they were by the beneficiary -Page: 70
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Q. A. Q. A. Q.
And --- after assignment. And outside counsel is RCO? Yes. How did they happen to give you such advice? MR. SAKAI: I'm going -- Jeff, don't answer that.
That's privileged information, Scott. MR. STAFNE: MR. SAKAI: MR. STAFNE: obligation. I respect -Outside counsel to -No, and I respect the privilege
Let me state here we'll be taking that up with
the court later, but I certainly respect it. BY MR. STAFNE: Q. And your counsel's instructed you not to answer,
and you should not answer. Let me ask you this: The beneficiary declaration,
the declaration of ownership, do you recall that? A. Q. A. Q. A. Q. A. Q. Yes. Did RCO draft that, so far as you know? No. Who drafted it? I don't know. You just get these? From the -- from Select Portfolio Servicing, Inc. And is this the form specific for Select Portfolio
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or is R -- is this a form that is used by all of Northwest Trustee clients now? A. Inc.'s. Q. notice. You've gone over Exhibit 5, which is the 30(b)(6) I'm going to hand you what has been marked It's specific to Select Portfolio Servicing,
Exhibit 6. Do you recognize that document? A. Q. I don't remember seeing this in our file. Could you look at it, and do you have any -- are
you able to identify what it is? A. I'd be guessing. I don't -- I don't know what CBC I don't know
Flood Services is. who it is. Q.
Maybe hazard insurance?
Can I see it for a moment? Okay. Does it indicate that American Home
Mortgage Servicing is -- bought Mr. Lemelson's loan? A. Q. A. Q. I don't know. What's the date of the letter? November 13th, 2006. All right. I'm going to hand you what's been marked as Exhibit 7 and ask you whether you recognize that document? A. Q. Yes. What is it?
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A. Q. A. Q. A. Q. A.
Corporate Assignment of Deed of Trust. And how do you happen to recognize it? It's in the count -- it's in the property records. And -It was provided to us with our title. When you say "with our title," what title? So when we order a title, a trustee sale guarantee
for the foreclosure, it tells us who's on title to the property. When this was recorded it would have been
updated, the title would have been updated to reflect that it's a record. Q. And would that come from a title company when you
say we ordered title? A. Q. A. Q. A. Yes. That's a title report? Yes. Who do you use for -I didn't look at this file. It could be -- I
don't know who it is. Q. A. Q. A. Do you have certain title companies you use? Yes. Which ones? Well, it could be Nextitle. It could be LPSD It
Default Title and Closing.
It could be Service Link.
could be one that was -- we were directed to use by our

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clients or whoever's available within -- some of the counties are very small. So there's very few choices when It just
it comes to the title companies we can select.
depends on what's available to us and if we're under any kind of direct order from somebody else. Q. A. Q. Can I see that document? Yes. Would you have had in your possession at the time
you instituted the foreclosure an assignment by MERS signing its beneficial interests to some other entity? A. record. I think on this one the MERS assignment was of So it would have shown up on our title report. So
they would have -- we would have received a copy of that assignment so that we could look to see who that -- who the beneficiary of record is under the property records and know whether or not we need an assignment to the current beneficiary. Q. A. So you would have -I think it would have been of record. I'd have to
look again at it to see when it was -- when that assignment was recorded. Q. So you would have obtained the -- some sort of an
assignment from MERS of its rights under the deed of trust to another beneficiary? A. I'm not sure I follow you there.
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Q.
Well, here's the problem I've got is, I've looked
at the record, and one of the reasons Mr. Lemelson had to bring this lawsuit is because -- I mean, when you look at it, it's all screwed up. You got people going bankrupt, you
got this, that, so we're trying to figure out, you know, just exactly what happened. We know it starts out with MERS
as the beneficiary, and then we found this on the record and, you know, it mentions MERS, but we don't know how it went from American Home Servicing that went bankrupt to Bank of America or to Countrywide. Can you tell us -- do you have any idea? that. A. Look at
And here's -- another one I've got is Exhibit 8. Well, this is an Appointment to Successor Trustee.
This isn't an assignment. Q. Does it help figuring out who the beneficiary is
and how from MERS we get to another beneficiary that can appoint you guys? A. Q. Is this the same deed of trust? Let's see. If it's a Bellevue, it is. If it's
Woodinville, it's not. I believe it is, yeah. Southeast, Bellevue. A. trust? Q. So what -- okay. So it's referencing what deed of It says 6511 155th Avenue
It's referencing a different deed of trust. Let me see.

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THE WITNESS: MR. LEMELSON: property. THE WITNESS: mortgage. BY MR. STAFNE: Q. A.
You have a second mortgage? There was a second mortgage on the
That's probably for the second
This one's for the second mortgage? Well, I'm guessing, because I don't have title in
front of me, but when you appoint somebody as successor trustee, you recite the original deed of trust in that appointment so that the County knows what you're relating back to. Everything, all documents that we record, all
assignments that are recorded would always relate back to the original deed of trust so that they would know how to index it in the property record. Q. A. So I guess -I'm assuming -- again, I don't have title in front
of me -- that that's for a different deed of trust since it references the recording number for a different deed of trust. Q. And when we ask for discovery, we're going to be
able to get that information from you -A. Q. The appointment? Right. And anything that you've got showing how you put
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Our appointment?
Yes.
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together chain of title? A. Q. Yes. And do you recall whether there were some things
that you did get that were pertinent to chain of title? A. Well, I recall from my review that there was an
assignment already of record out of MERS to Bank of America, N.A., this full description, and that the assignment that we had after the referral was from -- was this assignment. Q. A. Q. A. Q. So -Which would connect the dots -Which would --- in the title record. Okay. MERS to Bank of America.
But Country -- wasn't MERS to Countrywide? Because Countrywide had this before and then it was acquired. You know the history of Countrywide -A. Q. Yes. -- and Bank of America? So is it your recollection as you think about it that actually it was from MERS to Countrywide? A. No, because it's -- this is the assignment. So I
think -- I don't want to try to guess, but MERS is a registry. There may have been other transfers. I don't
know, but they don't record assignments because it's

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registered under MERS. Q. A. Q. A. Q. A. Well, MERS knows what's going on? Exactly. But nobody else does, right? The servicer does. Well, yeah, even you don't know. The purpose of MERS is so that you don't have to
record assignments. Q. A. Q. Well, and -And I think you already know the answer to that. Well, yeah, but it also results in nobody knowing Because --
exactly where it went, right? A. Q.
That's your contention, yes. Is it true? Can you -- because if you can get us We can't
information where it went, we would be so happy.
peak, but we would feel that you had been a true and noble advocate of justice? A. It's out of the scope of what we're here for. I
think for my purposes I have to make sure that I've got a beneficiary's declaration and what I do is I try to make sure that the title record matches the beneficiary's declaration and that there is an unbroken chain within that, within the property record. Q. Okay. And the unbroken chain you're talking about It doesn't matter in
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is from MERS to the next person on?
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between? A. There was an assignment from MERS to
Bank of America, National Association, successor by merger to BAC Home Loans. Q. A. That's all you're looking -Dot, dot, dot to the current beneficiary. That's
what matters. Q. A. To you? If I see a MERS deed of trust, I wouldn't expect
to see anything other than a MERS assignment to another ben -- to a beneficiary. And then if the beneficiary isn't
the beneficiary that I'm foreclosing for, I would expect to see another assignment into my beneficiary from the current beneficiary. Q. A. Okay. Whether there's anything else there, I wouldn't
know about it, and it wouldn't matter under the -- for the foreclosure. Q. It wouldn't matter because MERS is a repository
and you don't need to know what goes on in MERS to do your job as the trustee, correct? A. Because what matters under my process is who's the An
holder of the note, who's the actual holder of the note. assignment technically isn't even required for me to do a foreclosure. I don't even really need an assignment to be
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appointed by the current beneficiary. Q. A. And is it -We do that to clear the property record so that it
makes sense when we're doing the foreclosure. Q. And is it also your contention that you really
don't need to know who the owner of the note is? A. I think in this instance I think the owner is
synonymous with the beneficiary. Q. A. documents. Q. When you say "owner is synonymous with the So -It does matter. That's why I identify them in the
beneficiary," what do you mean? A. Well, I was told to foreclose in the name of HSBC.
That's who identified as the beneficiary. Q. Well, but as we've already discussed, they're a
trustee for a trust that -A. Whenever I refer to HSBC, I'm referring to the
entire statement that we spoke about before. Q. Well, but the entire statement refers to HSBC as
trustee for a specific trust? A. Right. But you asked me how I look at it. I look at it
as if that's the beneficiary, inclusive of the trustee language.

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Q.
So my question to you then is:
Do you also
believe it is part of your obligation to determine that HSBC also is the owner of the note? A. Well, the statute tells me that the beneficiary So the beneficiary declaration
declaration resolves that.
is what I always look to to identify it. Q. But if the statute -- if you could not rely on the
declaration, would you attempt to determine who the owner of the note was? A. If there was an issue raised that disputed the
ownership of the note, I would think it would be my duty to try to find out if -- that the beneficiary declaration is accurate. Q. And when you looked at the note where it says that
the noteholder is the person who holds the note and is entitled to receive payments under the note, does that not also put you under notice that it's who is entitled to receive payments as a note owner is the person who you have to determine exists before going forward with the foreclosure under RCW 61.24? And you look confused and I Let me --
acknowledge the question is confusing. A.
I don't think I need to look beyond the
beneficiary declaration to identify who the actual holder of the note is and who the current beneficiary is. Q. Does it matter to you who the owner is? I mean,
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you've got a holder and does it matter to you whether the actual holder is the owner of the note? A. Not in the -- not for the process of the
foreclosure, no, because the foreclosure only points to the beneficiary, not the owner. Q. And you say that notwithstanding the language of If you
RCW 61.24.030(7)(a), the first sentence thereof. want a copy, it's right there. A. Q. Yes.
And are you aware that Northwest Trustee Services
takes the position that the legislature does not mean what it says when it uses the word "owner," that it only means holder? A. Well, I think that's muddled, but I think for my
purposes I have to look to what it's telling me to rely on as the beneficiary, and that's what I go by, the beneficiary's declaration. Q. And you go by -- if someone swears under perjury
that they're the beneficiary, you accept that statement? A. Q. Yes. And you further accept that when they say they're
the beneficiary, that means that they comply with the definition of RCW 61.24.005(2)? beneficiary -A. I'd have to see a copy of it.
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That's the definition of
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MR. STAFNE: board up there. be great. BY MR. STAFNE: Q.
Would you go upstairs, and there's a
If you can bring down the board, that would
We'll come back to that. Handing you a document. Have you seen -- what's
the number of the exhibit there? A. Q. Nine. Handing you Exhibit 9. Do you recognize that document? A. I think we have a copy of this in our file. I'm
not sure if we do, but I think we have a copy of the demand. It looks like a demand letter. Q. And do you see there where they state that if
Mr. Lemelson doesn't pay, they've hired an attorney to bring a nonjudicial foreclosure? A. Q. No. Could I see it? (Interruption.) MR. SAKAI: MR. STAFNE: Is that going to be an exhibit? This Exhibit 6, yeah. Oh, no, that's
not going to be an exhibit. BY MR. STAFNE: Q.
We'll get to it in a minute.
What role, if any, does RCO play in nonjudicial
foreclosures other than to advise Northwest Trustee if there

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are questions? A. Q. A. Q. In the nonjudicial foreclosure process? Sure. None. So if SBC -- and I apologize, I believe I forgot a Yes.
document somewhere that indicates that SBC said they were going to have their attorney bring a nonjudicial foreclosure. You don't know who they would be referring to
as the attorney? A. Q. No. Because the only one who would bring a nonjudicial
foreclosure would be Northwest Trustee Services or a trustee, correct? A. Right. Well, yes. I suppose an attorney can act
as a trustee. Q. Sure. We were talking about definition of beneficiary. That's here somewhere. Would you agree with me -- you don't have to, but I'll represent to you that it's true, that the definition of beneficiary under the act, which is stated at RCW 61.24.005(2) states, "The holder of an instrument or document evidencing the obligations secured by the deed of trust, excluding the person holding the same as security for a different obligation"?
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A. Q.
Yes. And so that's how when we talk -- that's what you
are saying that you accept when they say they're the beneficiary and swear to it under penalty of perjury that they have complied with that definition? A. Q. Yes. Okay. Are you aware that the last part of that definition, the language excluding persons holding the same as security for a different obligation, has never been interpreted by any of our courts? A. Q. A. Q. A. Q. No. You aren't aware of that? No. Does it come as somewhat of a shock to you? No. So you're aware that you've got an uncertain legal
definition which has not been filled in by the courts? A. Q. A. No, I wouldn't say that. You're not aware of that? No. I've never been told by in-house or outside
counsel that there's an issue with it, no. Q. But you understand that you're acting as a neutral
judicial substitute in trying to determine this, correct? A. Yes, I think so.

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Q.
Now, would it be fair to understand -- would it be Sometimes I really sound stupid.
fair to understand. Excuse me.
Would it be fair to say that the definition says there will be a single holder? there. A. I'm not going to try to interpret the statute And you can look up right
beyond the plain language. Q. A. Q. A. Q. But you would go with the plain language? Yes, and -- I would. And the word "holder" is singular? Yes. And it talks about the obligations. Well, it says
the holder of the instrument or document evidencing the obligations secured by the deed of trust. So you would
understand that as the note to Webster Bank secured by the deed of trust to Webster Bank, right? A. Q. Yes. Now, when you change the note and you take out the
right to the payments and you give it to someone else, do you believe that a change in the obligations affects the instrument or document in any way? A. Q. I don't know. Well, let me ask you a little further. Let's go
back to the note itself.
And it says that the noteholder is

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the person who's entitled to receive the proceeds under the original document, which would either -- which I assume would be the trustee -- excuse me, would be the trust. Would you agree with that? A. Q. I guess, yes. So do you have an opinion as to whether or not the
banks by selling off obligation to others after Mr. Lemelson has entered into an agreement regarding all the obligations with one person, one holder, whether the bank can sell off those obligations to a whole bunch of other people and then claim Mr. Lemelson has given security to all those people who have bought the obligations? A. Q. A. Q. A. I don't know. Does that seem fair to you? I don't know. Well, why don't you know if it's fair? I can tell you from my own experience when I
bought my home, I make the payments on it because it's the debt that I owe. If they wanted to transfer it to somebody
else and tell me to make the payments somewhere else, I'd make the payments somewhere else. Q. And that's because you're paying off the
promissory note? A. Q. Yes. Right, which -- good point. Good point.

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But at that point do you think the -- you'd be paying it because you're paying off the promissory note or because they got security on your house? problem. Here's the
If you're transferring this obligation, say, to
the servicer and the servicer is required to get the most money he can, then it's different than the people who are entitled to the obligations which are the beneficiaries of the trust who may want to settle for what they can get. And
then you get yourself in a situation where they're arguing among themselves and the borrower cannot avail himself of the policies of the DTA. One, when we have this type of
situation you can see where it caused litigation, can you not? A. the point. Q. A. Q. How long have you been with R -- with NTS? Sixteen years. Was there a time when there was less litigation No. I don't have an opinion on it, I guess, is
than there is now? A. Q. A. not. Q. Can you see how if this person controls the right It kind of comes and goes. But has there ever been a time like now? As a percentage of the total inventory, probably
to the payments but somebody else owns all the other

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obligations of the note, that -- and they've got different interests, how that could make facilitating cooperation toward a settlement difficult? A. Q. I don't know. And you just said that by having MERS in there,
you don't get into the title, the names of whatever parties it's gone through. You just are able to dot your I's and
cross your T's by looking for MERS in the beginning and MERS at some place just before they're getting ready to foreclose and then you can do your job based upon somebody telling you under penalty of perjury that they're the beneficiary and not even saying they're the owner of the note? A. What matters to me is who's the holder of the
note, who's the actual holder of the note so that I can identify the beneficiary. Q. A. Q. And that's because -The assignments are just for the property record. And the holder is what's important to you because
that's what you've been instructed, is that it's the holder that is the beneficiary? A. Q. Yes. And so you don't delve into who the owner is
because you rely on a beneficiary declaration like this certificate of ownership we have here in this case? A. The statute tells me to look to the beneficiary's
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declaration, so that's what I look to. Q. And in this case you're saying that the
beneficiary's declaration is then supplied to you by an employee of SPS, who I will indicate to you is the owner of the right to the payments and not necessarily the owner of the note, but I think I just made a speech and let me retract the speech but keep it on the record. And why don't we take a quick break and maybe we can get out of here in another five minutes. You want to take five minutes? MR. SAKAI: Yeah.
(RECESS TAKEN.) BY MR. STAFNE: Q. You know, I just have one last question, and I
thank you for your time. I think you said that one of the things you do when you get a referral is you go to the records and you make sure to dot your I's and cross your T's by making sure that the chain of title matches up? A. Well, I didn't say dot your I's and cross your
T's; you did. Q. A. No, you didn't. I did.
But what I said was that we look at the title and
look to see who the beneficiary of the record is and then we look at the name that we're foreclosing is and make sure
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that if it's not the same that we do an assignment from that into the current beneficiary. Q. And is it fair to say that for some of the people
you represent like beneficiaries and servicers, you actually have the power of attorney to make that match up yourself? And by "yourself" I mean Northwest Trustee Services. A. We did previously. We don't execute assignments
through power of attorney anymore. Q. A. And when did that stop? Probably over a year ago, I would think. Maybe two years now. Maybe
more than a year ago. Q. A. Q. A.
Do you know why it stopped? On the advice of counsel. And the counsel being? RCO. MR. STAFNE: Thank you. EXAMINATION No further questions.
BY MR. SAKAI: Q. So I have some follow-up questions. Jeff, is Northwest Trustee Services a judge? A. Q. No. So is there -- let's just say, you know,
Mr. Lemelson, for example, receives a notice of default and has a dispute with who the owner of the note is, or let's
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just say maybe the amount owed on the debt and he comes to Northwest Trustee Services and raises that issue. Is there
a process by which Northwest Trustee Services would address that issue? A. Q. A. Yes. Can you explain the process? It doesn't have to be correspondence, but let's That letter would be routed to an There's a group, an
just say it's a letter.
intake box called Debt Dispute Intake.
attorney and then staff that report to the attorney that review the dispute and determine whether or not it can be answered by the trustee or whether we need to go to a further step and contact the beneficiary and get a further explanation from the beneficiary. Then those responses It's
determine whether we proceed or the file goes on hold. actually -- there's three statuses, a hard hold where we
stop and we do nothing until the dispute's resolved; two, we proceed but we don't go to sale; and, three, we just proceed. And once that response is completed, it comes back The response is reviewed by me. I
down to me for review.
sign it, and then it goes back out to the borrower. Q. So you're saying that if there is a situation
where a borrower raised a claim that was -- that Northwest Trustee Services viewed as a legitimate issue, there would be a hard hold on the foreclosure and the foreclosure would
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stop? A. Q. Yes. In regards to RCW 61.24.030(7), the statute
relating to Northwest Trustee Services' obligation to obtain proof of ownership of the note, do you generally rely on the beneficiary declaration to satisfy that requirement? A. Q. Yes. And here's a statute. I don't remember which
exhibit number it was, but -MR. STAFNE: BY MR. SAKAI: Q. -- what is the language you're looking for in a It's Exhibit 1.
beneficiary declaration as to proof of ownership status? A. Made under the penalty of perjury stating that the
beneficiary is the actual holder of the promissory note. Q. So if that language is in a beneficiary
declaration, you feel that Northwest Trustee obligations under that provision under the deed of trust is satisfied? A. Yes. MR. SAKAI: No further questions. EXAMINATION BY MR. STAFNE: Q. I have just a couple. Have you ever been in a lawsuit? A. Me, myself?
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Q. A. Q. A. Q.
Yeah. Or the trustee company? No. No. Are you aware that when -- that most courts have You.
rules of procedure that -A. Q. A. Can I backtrack on that? Sure. I think I've been named as an individual in a
lawsuit through the business. Q. deal. A. Q. Personally, no. And you look like a nice guy, so you probably And I'm not worried about that. It's not a big
wouldn't be. So are you aware that courts, like if you're going to go for small claims court, if you're going to go before the United States Supreme Court, if you're going to arbitrate a dispute, that there's generally some place where you can get rules of procedures so you know how to make a complaint or make a challenge? A. I would get an attorney because I wouldn't know I'd want competent
and I would want someone to tell me. legal advice. Q.
Sure, but would you agree with me?

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A. Q.
Yes. All right. So you said there's a department called Debt
Dispute Intake.
Now, is that the name of it, or is it just
kind of what they do? A. It's an e-mail box, but there's people that their
specific job is to handle those, yes. Q. A. them. Q. Services? A. Q. A. Q. before? A. Q. A. RCO. And why was it at RCO? Because we didn't have in-house counsel for It is now, yes. And when did it become a department? I think we took it over less than 30 days ago. And when you say you took it over, where was it And that's not a department in Northwest Trustee Is that -They may have other duties, but that's one of
Northwest Trustee to refer those matters to. Q. So RCO was deciding issues raised by borrowers
when they were disputing? A. Q. Yes. Does Northwest Trustee Services act as a legal
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services company for RCO, if you know? A. before. Q. A. Q. A. Do you know what -Legal services company? I don't think so. I don't know if I've ever heard that statement
Do you know what a legal services company is? Not really. MR. STAFNE: You're lucky, I can't read any of my
notes.
Thank you.
It's been a pleasure. EXAMINATION
BY MR. SAKAI: Q. Can I have just one last question for the record.
I just want to clarify something. When Scott mentioned that RCO is deciding the issues, when does a debt dispute -- and you referred something to counsel in the past before Northwest Trustee Services had in-house counsel, did you mean that RCO would make the final decision or did you mean that RCO would advise you as to how to proceed and comply with the Deed of Trust Act? A. They would provide advice but it would be our
business decision on how to proceed. Q. So Northwest Trustee Services would make the final
call as to whether to continue the sale or continue or proceed?

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A.
Yes. MR. SAKAI: No further questions. EXAMINATION
BY MR. STAFNE: Q. Just one. When you say your business decision, what do you mean by that? A. Well, I'm a trustee. I'm a business. I'm an L --
I'm an Inc. Q. A. Q. Okay. And you work for --
I guess that's all I meant by that. No, it's important because when I look at your Web
site, you advertise that you represent mortgage lenders? A. As a trustee, correct. MR. STAFNE: Okay. Thank you.
No further questions. THE REPORTER: MR. STAFNE: Monday. THE REPORTER: MR. SAKAI: Are you ordering a copy? And you're ordering? Yes, we're ordering. Expedited on
Yeah, I'll take one.
(The deposition of JEFF STENMAN was concluded at 12:20 p.m.) ---o--Page: 97
1 2
A F F I D A V I T STATE OF WASHINGTON ) ) )
SS.
COUNTY OF
4 5
I have read my within deposition, taken

6
on FRIDAY, SEPTEMBER 13, 2013, and the same is true and

7
correct, save and except for changes and/or corrections,

8
if any, as indicated by me on the "CORRECTIONS" flyleaf

9
page hereof.
10 11 12 13 14 15 16
_____________________________________ JEFF STENMAN
SUBSCRIBED AND SWORN to before me

17
this ________ day of _______________, 2013.

18 19 20 21 22 23 24 25
Starkovich Reporting Services Page: 98
___________________________ NOTARY PUBLIC in and for the State of Washington, residing at ________. My commission expires _____.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
CERTIFICATE OF REPORTER I, Emily K. Niles, Washington Certified Court Reporter, pursuant to RCW 5.28.010 authorized to administer oaths and affirmations in and for the State of Washington, do hereby certify: That I reported the deposition of
Jeff Stenman, commencing on Friday, September 13, 2013, at 9:37 a.m. That prior to being deposed, the witness was duly sworn by me to testify to the truth. That I thereafter
transcribed my said shorthand notes into typewriting and that the typewritten transcript is a complete, true and accurate transcription of my said shorthand notes prepared pursuant to Washington Administrative Code 308-14-135, the transcript preparation format guideline and to the best of my ability. I further certify that I am not a relative or employee of counsel of any of the parties, nor a relative or employee of the parties involved in said action, nor a person financially interested in the action. IN WITNESS WHEREOF, I have set my hand in my office in the County of Whatcom, State of Washington, this 15th day of September, 2013.
_____________________________________ EMILY K. NILES, RMR, CCR #2794
STARKOVICH REPORTING SERVICES P.O. Box 22884 Seattle, Washington 98122 (206) 323-0919 FAX 328-0632 SEPTEMBER 16, 2013 To: ROUTH CRABTREE OLSEN, P.S. SAKAE SAKAI 13555 SE 36th Street Suite 300 Bellingham, Washington 98006 425.247.2025 ssakai@rcolegal.com
Re: LEMELSON VS. NORTHWEST TRUSTEES SERVICES, INC. Deposition of: JEFF STENMAN Date Taken: SEPTEMBER 13, 2013 Cause No.: 13-2-27480-9 SEA PLEASE TAKE NOTICE THAT: Enclosed please find your copy of the above transcript, including the original correction sheet and the affidavit. Please instruct the deponent to review the deposition, record any corrections over his signature on the correction sheet, and sign the affidavit before a Notary Public. If there are corrections, please furnish other counsel with copies. The deposition should be read and signed within 30 days from the date of this notice or before the date of the trial, whichever occurs first. If the witness elects to waive signature or refuses to sign the deposition, please state so in writing. Please return the signed correction sheet and affidavit to our office for inclusion in the original transcript. If the correction sheet and affidavit are not received within the time period noted above, signature will be for all purposes waived and the deposition will be sealed unsigned. Emily K. Niles CCR, RMR, CRR cc: scott@stafnelawfirm.com
STARKOVICH REPORTING SERVICES P.O. Box 22884 Seattle, Washington 98122 (206) 323-0919 FAX 328-0632 _________________________________________________________ C O R R E C T I O N S H E E T _________________________________________________________ PLEASE NOTE ALL CHANGES OR CORRECTIONS ON THIS SHEET BY PAGE AND LINE NUMBER AND THE REASON THEREFOR. _________________________________________________________ PAGE ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ LINE ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ CORRECTION AND REASON _________________________________________ _________________________________________ _________________________________________ _________________________________________ _________________________________________ _________________________________________ _________________________________________ _________________________________________ _________________________________________ _________________________________________ _________________________________________ _________________________________________ _________________________________________ _________________________________________ _________________________________________ _________________________________________ _________________________________________
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Lamelson Case Deposition of Jeff Stenman

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Lamelson Case Deposition of Jeff Stenman

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Deposition of Jeff Stenman

Lemelson v Northwest Trustees Services, Inc., et al.

Starkovich Reporting Services

Deposition of Jeff Stenman

Lemelson v Northwest Trustees Services, Inc., et al.

For the Defendants:

Deposition of Jeff Stenman

Lemelson v Northwest Trustees Services, Inc., et al.

INSTRUCTED NOT TO ANSWER PAGE 71 LINE 6

Deposition of Jeff Stenman

Lemelson v Northwest Trustees Services, Inc., et al.

Exh. 6 Exh. 7 Exh. 8

Deposition of Jeff Stenman

Lemelson v Northwest Trustees Services, Inc., et al.

and I've never met you.

both speak at once.

Starkovich Reporting Services

Deposition of Jeff Stenman

Lemelson v Northwest Trustees Services, Inc., et al.

And, you know, no matter how hard I might try,

I'm not sure I understand what you

Starkovich Reporting Services

Deposition of Jeff Stenman

Lemelson v Northwest Trustees Services, Inc., et al.

MR. STAFNE: your objection.

Well, let's start by responding to

And if you could go through those

Starkovich Reporting Services

Deposition of Jeff Stenman

Lemelson v Northwest Trustees Services, Inc., et al.

Well, I don't know the definition of a 30(b)(6),

Starkovich Reporting Services

Deposition of Jeff Stenman

Lemelson v Northwest Trustees Services, Inc., et al.

Starkovich Reporting Services

Deposition of Jeff Stenman

Lemelson v Northwest Trustees Services, Inc., et al.

Try to figure out what those are. Okay. Well --

I respect that. All right.

Starkovich Reporting Services

Deposition of Jeff Stenman

Lemelson v Northwest Trustees Services, Inc., et al.

Go ahead, please, Mr. Stenman. I think I -- if I understand the question, I have

Starkovich Reporting Services

Deposition of Jeff Stenman

Lemelson v Northwest Trustees Services, Inc., et al.

publication, recording, and those things we follow.

It's a set of events.

process the foreclosure follow the events.

I use the beneficiary's declaration that tells

fact finding; you just rely on the beneficiary's

Starkovich Reporting Services

Deposition of Jeff Stenman

Lemelson v Northwest Trustees Services, Inc., et al.

applies in this situation of what -- that you're giving me.

Starkovich Reporting Services

Deposition of Jeff Stenman

Lemelson v Northwest Trustees Services, Inc., et al.

note, I rely on the beneficiary's declaration.

Well, let's take like the situation in Klem where

upon you, is it not, to apply the law to the facts as you

Starkovich Reporting Services

Deposition of Jeff Stenman