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Response to BNY Mellon Supplemental Memorandum

Response to BNY Mellon Supplemental Memorandum

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Published by: Andrew Cameron Bailey on Mar 10, 2011
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ANDREW C. BAILEY 2560 N. Page Springs Rd Cornville, AZ 86325 928 634-4336 email: andrew@cameronbaxter.net Self-Represented Litigant IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF ARIZONA ANDREW C. BAILEY Plaintiff. V. THE BANK OF NEW YORK MELLON, as trustee of the CWALT, INC. ALTERNATIVE LOAN TRUST 2007-HY4 MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2007-HY4; BAC HOME LOANS SERVICING, LP F/K/A COUNTRYWIDE HOME LOANS SERVICING, LP; COUNTRYWIDE BANK, FSB; MORTGAGE ELECTRONIC REGISTRATIONS SYSTEMS INC; AND JOHN DOES 1-10 inclusive, Defendant/s. PLAINTIFF’S RESPONSE TO DEFENDANTS’ SUPPLEMENTAL MEMORANDUM IN SUPPORT OF MOTION TO DISMISS, WITH PREJUDICE, PLANITIFF’S 4TH AMENDED COMPLAINT TO DETERMINE THE VALIDITY, PRIORITY OR EXTENT OF A LIEN OR OTHER INTEREST IN REAL PROPERTY AND PETITION FOR INJUNCTIVE RELIEF. Re: Real Property located at: 2560 N. Page Springs Rd, Cornville, AZ 86325 Chapter 11 BK Case #: 2:09-bk-06979-PHX-RTBP AP Case #: 2:09-ap-01728-SSC

COMES NOW the Debtor/Plaintiff, Andrew C. Bailey, and hereby submits this Response and Opposition To Defendants’ Supplemental Memorandum In Support Of Motion To Dismiss, With Prejudice, Plaintiff’s Fourth Amended Complaint To Determine The Validity, Priority Or Extent Of A Lien Or Other Interest In Real Property And Petition For Injunctive Relief, as set forth below: Plaintiff’s Response and Opposition is supported by the following Memorandum of Points
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and Authorities, by Plaintiff’s Objection to the Supplemental Declaration Of Keri A. Giardino In Support Of Chain Of Title Of Collateral File filed contemporaneously with this Response and Opposition, by the case law for which judicial notice has been requested, and by the entire record in the lead case and in adversary proceeding 2:09-ap-01728-SSC, all of which are incorporated herein by this reference.

Plaintiff alleges as follows: 1. This Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1334; 11 U.S.C. § 506(a); 11 U.S.C. § 1123(b)(5); and Rule 7001, et seq. Rules of Bankruptcy Procedure. This is a core proceeding pursuant to 28 U.S.C. §§ 157(b)(2)(A), 157(b)(2)(B) and 157(b)(2)(K). 2. Venue is proper in this Court pursuant to 28 U.S.C. §§ 1408 and 1409.

3. Defendants’ allegation that Plaintiff has failed to state a claim upon which relief can be granted is incorrect and without merit. The Motion to Dismiss should be denied, with prejudice.

PREAMBLE 4. The Court has expressed frustration that the Plaintiff has taken so long to articulate his position. On the other hand, Defendants could, if such existed, have provided the necessary supporting documentation at the start of these proceedings. This would have saved Plaintiff and the Court a great deal of time and trouble. Instead Plaintiff has been compelled to undertake complex research involving thousands of hours, including searches for documents “none of which were on record at the Registry at the time of notice and sale, all

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of which require a close reading of a complex set of securitization documents, and many of which lack proper evidentiary support – (to) show them to have been “the mortgagee or person having his [the mortgagee’s] estate in the land mortgaged” at the time of notice and sale” (In re: Ibanez, infra)

5. In his Fourth Amended Complaint (4th AC) and subsequent oral argument, Plaintiff raised two fundamental questions of material fact: (i) Is his Loan lawfully in the CWALT Trust for which Defendant BNY Mellon says it is the trustee? and (ii) Do any of Defendants BNY Mellon, BAC, CWALT or MERS have authority and standing to proceed with the foreclosure action against the Property?

6. Plaintiff would say no to both of the foregoing questions. In support of his position, and in response to Defendants’ Supplemental Memorandum, Plaintiff relies partly upon the logic of the recent Massachusetts decision In Re: Ibanez, United States Bank Nat'l Ass'n v. Ibanez, 458 Mass. 637 (Mass. 2011) in which Massachusetts Supreme Court Judge Keith C. Long performed an incisive analysis of the consequences of the securitization of the Ibanez and Larace loans and the failure, as here, of the plaintiffs to follow lawful procedures.

7. While not binding in Arizona, Ibanez provides an analysis of the relevant issues in a closely-related case involving the same parties (Larace). Plaintiff finds further support from US Bankruptcy Judge Robert E. Grossman concerning MERS’ lack of authority (In Re Agard, February 15, 2011, US Bankruptcy Court, E.D.N.Y. Case # 810-77338-REG CH 7 US Bankruptcy Judge Robert E. Grossman) and from the recent Zitta decision in this Court.

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(In Re: Zitta BAC Home Loans Servicing, LP vs Zitta U.S. Bankruptcy Court, D. Arizona January 21, 2011).

8. Additionally, Chief U. S. Bankruptcy Judge Judith H. Wizmur’s analysis in In Re: Kemp is apposite. (Kemp vs Countrywide Case No 08-18700-JHW, adversary No 08-2448 Bankr. NJ 2010) (Judicial Notice requested January 1, 2011) where, as here, the PSA required certain indorsements on the Note but the Note did not carry those indorsements. The Kemp court found that Countrywide had no right to enforce the Note.

9. Plaintiff asks that the Court take judicial notice of the three rulings cited to, namely, Ibanez, Agard and Zitta. See Fed. R. Evid. 201 (judicial notice is mandatory when requested by a party and the Court is supplied with the necessary information to assess the accuracy of the material presented for judicial notice).

10. Taken together, the cited case law provides compelling support for Plaintiff’s position that his Loan was never lawfully transferred into the CWALT Trust, that BNY Mellon is the Trustee for a Trust that has not been shown to lawfully include Plaintiff’s loan, and that none of Defendants BNY Mellon, BAC, CWALT or MERS has authority and standing to proceed with any foreclosure action against the Plaintiff’s Property.

PROCEDURAL HISTORY 11. At the November 9, 2010 hearing on Defendants’ Motion to Dismiss the 4th AC, the Court ordered the Defendants to produce (1) the Plaintiff’s custodial file and (2) an affidavit averring that the custodial file had not been altered since 2006.

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MINUTE ENTRY: Mr. Hirsch is directed to get the original custodial file from New York for the court to review. He should also get an affidavit from the individual getting the file, that there has not been any changes since 2006. It is ordered continuing this hearing to January 13, 2011 at 10:00 A.M. (emphasis added)

12. The January 13, 2011 hearing was continued to January 19, 2011 (the Hearing). At the Hearing, Defendants’ counsel produced a large file, several inches thick, filled with several hundred pages of documents, and two supporting Declarations.

13. Neither of the Declarations was the Affidavit ordered by the Court on November 9, 2010. Defendants had completely ignored part (2) of the Court’s Nov 9th 2010 order.

14. At the Hearing, Plaintiff brought this omission to the attention of the Court. At the conclusion of the Hearing, the Court ordered the Defendants to produce: (A) (B) (C) (D) An Affidavit as to “how” the loan got into the CWALT Trust An Affidavit that the collateral file has been “with BONY” since 2007. The PSA and evidence that a specific endorsement is not necessary The Assignment of the Deed of Trust.

[14(A) calls for evidence of precisely how Plaintiff’s loan came to be in the Trust. The Court instructed Mr Hirsch to go back to Declarant Jaqui Whitney and produce a more thorough Affidavit from her. The date of production was set for February 22, 2011. ]

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15. The Court’s instructions unambiguously require Defendants to explain “how” this “particular” loan “got into the CWALT Trust”. The explanation would also answer the critical question of “when” this “particular” loan came to be transferred to the Trust.

16. On February 22, 2011, the Defendants filed a Supplemental Declaration and a Supplemental Memorandum. Neither of these documents fulfills the Court’s requirements, as set forth below. Defendants submitted the instant Supplemental Declaration Of Keri A. Giardino In Support Of Chain Of Title Of Collateral File. No additional Affidavit from Ms Whitney was produced as instructed. Ms Giardino’s Supplemental Declaration did not competently address the Court’s questions and was not supported by any evidence, exhibit or documentation.

17. In the Supplemental Declaration, Ms Giardino alleges merely that she “confirmed” a date of May 23, 2007 as the date Plaintiff’s loan was “received” by the Trust.

18. If true this might partially answer the “when” component of the Court’s order, but entirely fails to address the “how” of the transfer. “How” was the word specifically used by the Court in its instruction to Mr. Hirsch.

19. The date the Mortgage Note was “received” by the custodian for the Trust is not necessarily the date it was lawfully conveyed or transferred into the Trust, if such transfer ever occurred. The term “received by” does not imply “lawfully conveyed to”. No documents are offered verifying the date and manner of any conveyance or transfer into the Trust.

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20. There can be no Effective Date of Transfer as a lawful timely conveyance would have required the Note to be in proper executed and recordable form pursuant to the Pooling and Servicing Agreement and the IRS Code, and be accompanied by an assignment of the security instrument in recordable form within 120 days. As set forth below, the Note was never in recordable form, nor was an assignment of the Mortgage ever prepared.

21. It is clear from the copy submitted to the Court with the Whitney Declaration that the Note is not in recordable form. Plaintiff has not seen the allegedly original Note in the custodial file, but as the Court has accepted it as authentic, it must be assumed to be identical to the Whitney Note.

22. There are strict legal and procedural requirements pursuant to which Mortgage Loans are conveyed to the Trust. The Transfer Documents include a formal Certificate memorializing the Transfer and Effective Date of Transfer. No copies of any such documents accompany the Supplemental Declaration. (PSA, Section 2:01 et seq)

23. In14(B) (supra) the Court’s instruction calls for an Affidavit that the collateral file has been “with BONY” since 2007. This instruction is a restatement of the November 9, 2010 Order “He should also get an affidavit from the individual getting the file, that there has not been any changes since 2006.(sic)”

24. The Giardino Affidavit does not aver that the file had not been altered since 2006 (sic). The Declarant merely makes the following statement: “BNY Mellon Trust Co. does not maintain records reflecting whether the Loan File was accessed between May 23, 2007, the date the Loan File was placed in the vault, and January 6, 2011, the date the Loan File was
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released to Bank of America’s Release and Reinstatement Office located in Simi Valley, California, as requested.” (Supplemental Declaration pg2, at 27)

25. If true, the foregoing statement is an admission of an extraordinary failure in the security of the nation’s banking system. Hundreds of thousands or even millions of valuable negotiable instruments are stored in an unregulated facility, if the Declaration is true.

26. If untrue, the Supplemental Declaration is false and possibly perjurious. The statement would appear to be untrue as evidenced by the PSA in “EXHIBIT N [FORM OF] REQUEST FOR RELEASE OF DOCUMENTS”.

27. Thirdly, pursuant to 14(C) (supra) Mr. Hirsch was instructed to produce the Pooling and Servicing Agreement (PSA) and show that the language in the governing trust documents does not require a specific endorsement into the Trust or endorsement at each step of the securitization.

28. Mr. Hirsch produced a copy of the PSA which was downloaded from the Internet. It is not the fully executed trust document. In any event, the PSA does not support Mr. Hirsch’s analysis as set forth in detail below.

29. Pursuant to 14(D) (supra) the Court’s fourth and final instruction to Mr Hirsch was to produce the Assignment of the Deed of Trust, which the Court reasonably assumed to exist somewhere. 30. Mr. Hirsch could not and did not produce an Assignment of the Deed of Trust.

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Significantly, and fatally to BNY Mellon’s position, it is clear from Mr. Hirsch’s admission that no assignment of the security instrument was ever prepared or executed. 31. Mr. Hirsch admits: “MERS, as the nominee of the beneficial interests of the original lender and the original lender’s successors and assigns (including but not limited to BNY Mellon, as trustee of the Trust), remains the beneficiary under the Deed of Trust.” (Suppl. Memo pg 6 at 16) 32. The PSA requires, among other things, that the Deed of Trust be assigned to the CWALT Trust in recordable form within 120 days of conveyance of the mortgage Note, as set forth below. There can be no doubt that this was not done.

MEMORANDUM OF POINTS AND AUTHORITIES

The Supplemental Declaration Of Keri A. Giardino Is False and Incompetent 33. See Plaintiff’s Objection filed contemporaneously with this Response and incorporated herein by this reference.

Defendant Failed To Comply With Court Order Of Nov 9, 2010

34. The Minute Entry (supra) states in pertinent part: “He should also get an Affidavit from the individual getting the file, that there has not been any changes since 2006”. (sic) (emphasis added)

35. Defendant has failed to prove that the Plaintiff’s Mortgage Note has not been altered since 2007. In fact, Defendant claims that the Custodian, BNY Mellon Trust Co. does not
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keep records of when and by whom the file has been accessed, or of what changes, if any, are made to the documents contained therein. 36. The startling “fact” that BNY Mellon Trust Co. does not keep such records is not an excuse. To the contrary, if true, it is a damning admission. The Court ordered proof. Proof was not provided. Instead, an excuse was made. 37. The assertion is clearly untrue, given the terms of the PSA in EXHIBIT N [FORM OF] REQUEST FOR RELEASE OF DOCUMENTS and may constitute perjury under the laws of the State of Arizona.

Defendants Failed To Comply With Court Order Of January 19, 2011

38. Four months have elapsed since the November 9th 2010 hearing. The Defendants have: a. Failed to provide evidence as to how the Note was placed in the CWALT trust. They have provided no evidence of any lawful transfer into the Trust, if such exists. b. Provided no Affidavit certifying that the collateral file has been “with BONY” since 2007 or that it has not been altered. c. Produced an unexecuted, unsigned copy of the PSA and failed to show that the PSA allows a single indorsement in blank. d. Provided no assignment of the Deed of Trust. The Mortgage was never assigned to the Trust as required by the PSA, the IRS code and ARS § 33-818 inter alia.

39. The Defendants and their law firm should be held in contempt for these failures. The Defendants and their law firm knew or should have known that they could not produce the

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evidence requested by the Court.

Plaintiff Has Not Been Allowed To See The Evidence 40. Plaintiff has not been provided with a reasonable opportunity to examine the Custodial File and the purported “original wet-ink note” submitted on January 19, 2011.

41. At the Hearing, Plaintiff was subjected to the impossible task of studying and analyzing the massive Custodial File as well as both Declarations in the context of a stressful court appearance. Plaintiff reasonably assumed he would be allowed to examine the file at a later date.

42. Plaintiff did not see, nor was he given a later opportunity to see, the disputed Note carrying the alleged improper alteration to the Note, the authenticity of which is a major issue in this proceeding.

43. Plaintiff requested that the Court allow him a later opportunity to view and review the Custodial File. The Court denied Plaintiff’s request.

44. Plaintiff was prepared to have the alleged original Note examined by a professional forensic analyst, which would have dispelled any doubt as to the authenticity or otherwise of the document.

45. The Court thus denied Plaintiff any reasonable opportunity to examine evidence which had at last been produced.

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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 48. At the Hearing, Plaintiff pointed out that there was no assignment of the Deed of Trust to the CWALT Trust in the public record. The Court instructed Mr. Hirsch to find and produce the Assignment. The Court reasonably assumed that such an Assignment existed. 49. The Defendants’ Supplemental Memorandum clearly admits that no such assignment was ever prepared or executed. The security instrument remains with MERS. (Suppl. Memo pg 6 at 16) 50. This admission is fatal to BNY Mellon’s position. 51. Assignment of the Mortgage in recordable form is required by the PSA. The PSA states in pertinent part (PSA Section 2, page 54 of 262): “As promptly as practicable subsequent to such transfer and assignment, and in any event, within one hundred twenty (120) days after such transfer and assignment, the Trustee shall (A) as the assignee thereof, affix the following language to each assignment of Mortgage: “CWALT Series 2007HY4, The Bank of New York as trustee”, (B) cause such assignment to be in proper form for recording in the appropriate public office for real property records and (C) cause to be delivered for recording in the appropriate public office for real property records the assignments of the Mortgages to the Trustee”(emphasis added)
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46. Defendants’ counsel subsequently refused to provide a certified copy of the Note to the Court and Plaintiff, on the grounds that the Court had already found it to be in order.

47. Pursuant to the Federal Rules of Evidence, Plaintiff has a right to a certified copy of the disputed Note for his records, and to review the loan file in an appropriate setting.

The Deed of Trust Was Never Assigned To The Trust

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 55. The Deed of Trust cannot belatedly be assigned “post-date”. Execution and recording of an assignment of a deed of trust after the petition date is a violation of the automatic stay subsequent to any alleged default and prior to the commencement of the Chapter 11 bankruptcy case, an assignment be prepared and properly recorded in the County in which the property is located, if the Defendant wished to protect its interest in the Property. It is undisputed that Defendant did not execute and record any such assignment pursuant to ARS § 33-818. 54. Further, consequent to the Debtor’s May 2009 filing of a Chapter 11 bankruptcy petition, Arizona Revised Statute § 33-818 and 11 U.S.C. § 544(a)(3) require that, 53. As Judge Long notes in Ibanez “I am puzzled at this since, as noted above and discussed more fully below, the plaintiffs’ own securitization documents required mortgage assignments to be made to the plaintiffs in recordable form for each and every loan at the time the plaintiffs acquired them. Surely, compliance with this requirement would (and certainly should) have been a priority for an entity issuing securities dependent on recoveries from loans, such as these, known from the start to have a higher than normal risk of delinquency and default.” (In Re: Ibanez, supra) 52. The Defendants have clearly failed to comply with the terms of their own governing documents. The Mortgage, in Plaintiff’s specific case, was not assigned to the Trust and such assignment was not recorded in “the appropriate public office for real property records”, which would be the Yavapai County Recorder’s Office.

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pursuant to 11 USC Section 362(a)(4) and (5). A post-petition transfer or assignment of a deed of trust would be void pursuant to 11 USC 549.

56. In any event, MERS lacks authority to assign the mortgage (In Re Agard, infra)

57. In light of the foregoing, it is indisputable that Defendant BNY Mellon has failed to establish or maintain a continuously perfected security interest in the Property.

A Debtor In Possession Can Avoid A Lien

58. Pursuant to 11 U.S.C. § 544(a)(3) a Debtor In Possession can avoid a lien unless a party who wishes to preserve its interest executes and records a timely assignment of the security instrument assignment pursuant to ARS § 33-818. (In Re: Zitta, supra) 59. As set forth above, Defendant has failed to establish and maintain a continuously perfected security interest in the Property.

60. Given the status of the Plaintiff as Debtor In Possession, the Plaintiff may avoid the lien pursuant to 11 U.S.C. § 544(a)(3). (In Re: Zitta, supra)

61. As this Court recently noted in Zitta “As outlined above, the Debtor, as Debtor In Possession, acquires the status of a bona fide purchaser and is able to set aside any real estate transaction, concerning his Property, for which the creditor has not taken appropriate steps under Arizona law. See 11 U.S.C. § 544(a)(3) (West 2010). Arizona law requires that if a secured creditor with a lien on the Debtor’s Property wishes to ensure that said interest
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is not subject to the claims of a bona fide purchaser, that said secured creditor record an assignment of its interest with the Recorder in the County where the Debtors’ Property is located. If notice of the assignment has not been provided, through recordation, the secured creditor may have its interest avoided by a bona fide purchaser. See Rodney v. Arizona Bank, 836 P.2d 434, 172 Ariz. 221 (Ariz. App. Div. 2 1992) (Unless and until the transferee of the beneficial interest in the deed of trust records an assignment of the deed of trust, the security interest in the real property remains unperfected.)” (In Re: Zitta, supra) A Single Assignment In Blank Is Insufficient To Transfer Any Security Interest

62. On February 22, 2011, Mr. Hirsch attached a copy of the CWALT Trust’s Pooling and Servicing agreement to his Supplemental Memorandum. The copy is apparently downloaded from the Internet. It is not a signed and executed copy of the PSA, and as such, carries no authority.

63. The PSA as submitted defines precisely who are the parties to the securitization. In Section 2:01, it lays out the lawfully required sequence of events for proper conveyance of Mortgage Loans into the Trust.

64. Mr. Hirsch’s analysis is factually incorrect. There is one more intermediary in the chain of title than Mr. Hirsch’s analysis would indicate. Mr. Hirsch implies an A to B to C chain. In fact the securitization hierarchy is an A to B to C to D sequence as set forth below. Mr. Hirsch ignores Section 2:01 (b) of the PSA, which controls the conveyance from the Depositor CWALT, Inc to the Trust.

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65. This is not the first time these Defendants have attempted this same improper ploy. (see for example In Re Kemp, supra, finding that the Assignment of the Note directly from Originator to the Trustee, “skipping” the Depositor, failed for violation of the PSA and IRS codes.)

66. The PSA, Section 2:01 (b), provides the piece of the puzzle ignored by Mr. Hirsch: (b) Immediately upon the conveyance of the Mortgage Loans referred to in clause (a),

the Depositor sells, transfers, assigns, sets over and otherwise conveys to the Trustee for the benefit of the Certificateholders, without recourse, all the right, title and interest of the Depositor in and to the Trust Fund together with the Depositor’s right to require each Seller to cure any breach of a representation or warranty made in this Agreement by such Seller or to repurchase or substitute for any affected Mortgage Loan in accordance herewith. (emphasis added)

67. The conveyance from the Depositor to the Trustee is a true sale, which cannot be simply “skipped over” in a false or fraudulent attempt to make the single endorsement in blank sufficient.

68. The single endorsement in blank is insufficient to transfer any interest in the loan, as set forth in more detail below: Securitization Hierarchy for ALTERNATIVE LOAN TRUST 2007-HY4 MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2007-HY4 Originator Seller Countrywide Bank FSB Countrywide Home Loans, Inc

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Depositor

CWALT, INC

Master Servicer Countrywide Home Loans Servicing, LP Trustee The Bank of New York n/k/a BNY Mellon

69. As the PSA reveals, the complete chain of endorsement in the CWALT Trust is as follows: (A) Originator (Countrywide Bank FSB) conveys loan to (B) Seller (Countrywide Home Loans Inc) who conveys loan to (C) Depositor (CWALT) who conveys loan to (D) Trustee (BNY Mellon).

70. There are thus, undeniably, a minimum of three (3) transactions or true sales in the securitization scenario, not two (2) as Mr. Hirsch incorrectly asserts. Transaction 1 (A to B) CW to CHL (assignment) Transaction 2 (B to C) CHL to CWALT, Inc (assignment in blank) Transaction 3 (C to D) CWALT to BNY Mellon (no valid assignment)

71. As there is a clear break in the chain of endorsements, the fraudulent attempt to convey Plaintiff’s Note to the trust transferred nothing.

The PSA And The Chain Of Endorsement 72. The CWALT trust is a New York Common Law Trust according to the Trust Agreements.(PSA etc) . A trust cannot act outside of the authority creating it (PSA etc). 73. The trust documents say that only the Depositor (CWALT) can move a mortgage into the Trust and only in the manner prescribed in the documents (see Section 2.00 et seq of the PSA for the rules governing conveyancing.)
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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 79. Further, Exhibit H-1 to the PSA must be signed by the Trustee and it states in pertinent part: “In accordance with Section 2.02 of the above-captioned Pooling and Servicing Agreement (the “Pooling and Servicing Agreement”), the undersigned, as Trustee, hereby 77. Mr. Hirsch states (citing to Exhibit A, at 44) “The endorsements on the Note satisfy the transfer provision of the PSA: a complete chain of endorsements from the originator (Countrywide Bank, FSB) to the person endorsing the Note (Countrywide Home Loans, Inc.) in blank using the required language.” 78. This erroneous analysis falsely disregards the Depositor, which is the only entity authorized to transfer anything into the Trust. 76. Mr. Hirsch’s analysis (Suppl. Memo. p6 at 8) erroneously “skips” the Depositor and attempts to go straight to the Trust from the Seller. In addition, whether or not the conveyance can have been done in the allowed time frame is highly questionable, if not impossible. Because Defendants do not have a valid chain of assignments that are timely and pass through the Depositor, there is no ownership in the Trust. 74. The trust documents have a cut off date (the date beneficial interest transfers to the trust) and a close date (date by which all mortgages must be properly conveyed to the trust). The conveyancing section (PSA 2:01 et seq) allows 90 days for the trust to review the mortgage files and 180 days for the Originator to replace any bad loans. 75. Any mortgage that is attempted to be conveyed into the Trust that avoids the Depositor (and thus breaks the chain of title) or that is outside of this time frame cannot legally be Trust property since it does not comply with the conveyancing requirements of the Trust Documents (PSA Section 2:01 et seq)

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certifies that as to each Initial Mortgage Loan listed in the Mortgage Loan Schedule (other than any Initial Mortgage Loan paid in full or listed on the attached Document Exception Report) it has received: (i) (A) the original Mortgage Note endorsed by manual or facsimile signature in blank in the following form: “Pay to the order of ____________ without recourse,” with all intervening endorsements showing a complete chain of endorsement from the originator to the Person endorsing the Mortgage Note (each such endorsement being sufficient to transfer all right, title and interest of the party so endorsing, as noteholder or assignee thereof, in and to that Mortgage Note”(emphasis added)

80. Without this certification the Plaintiff’s loan could not lawfully have been accepted by the CWALT Trust. The alleged conveyance is therefore VOID. The Loan is not lawfully in the Trust. 81. The language of the PSA makes it clear that the single blank endorsement on the Plaintiff’s Mortgage Note from the Originator is insufficient to transfer any interest in the Note. (See Article II, Section 2:01 (c) (i)(A))

82. Article II, Section 2:01 (c) (i)(A) of the CWALT PSA clearly says the Mortgage Note must be endorsed each and every step of the way. This is unambiguous given the language: “all intervening endorsements showing a complete chain of endorsement from the originator to the Person endorsing the Mortgage Note” (emphasis added)

83. Consequently, while the Trust may be in physical possession of the Note, in the absence of a complete chain of endorsements, it is clear from the language of the PSA that the single assignment in blank transferred nothing.
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The Note Must Be In Recordable Form To Be Accepted By The Trust

84. As set forth above, the Defendants have failed to show, with actual evidence, the complete chain of assignments, in recordable form.

85. To be acceptable by the Trust, the Mortgage Note must be in recordable form. A Note assigned in blank is obviously not recordable, and can never be recorded in the County in which the Property is located.

86. Because the Mortgage Note was not in recordable form, it could never be properly transferred into the Trust pursuant to the governing documents.

87. It is indisputable from the most recent copy of the Note submitted to the Court that the Note was never executed and indorsed PAY TO THE ORDER OF “CWALT Series 2007HY4, The Bank of New York as trustee”, along with the address of the Trust and other identifying information as required by the PSA. To be properly transferred, the Mortgage Note must be endorsed into the Trust in the correct manner.

88. Consequently, while BNY Mellon may be the physical holder of the unrecorded and unrecordable Mortgage Note, BNY Mellon is not a holder in due course. The Note is not lawfully held by the Trust.

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Motion for Stay Relief (MRS) Action.

89. The Note and the Mortgage have to rest in the same entity to be enforceable. 90. In a Motion for Relief from the Automatic Stay, the moving party must show that it “validly holds both the mortgage and the underlying note in order to prove standing before the Court.” (In Re: Agard, supra) Under Arizona law, “the secured creditor should be able to provide support in the motion that it has a perfected security interest in property of the estate in which the debtor or debtor in possession also has an interest.” (In Re: Zitta, supra)

91. The Movant in a MRS action must have the deed of trust assigned to it as of the date of the Motion is filed. (Ibanez, supra) (Finding that U.S. Bank had no standing to foreclose because it lacked any evidence of ownership of the mortgage and the loan at the time it started the foreclosure.) (emphasis in original)

92. As set forth above, it is clear that BNY Mellon does not validly hold and never has validly held the Plaintiff’s Note. The Note is not lawfully held by the Trust.

93. As set forth above, it is clear that BNY Mellon does not now validly hold, and never has validly held the Plaintiff’s Mortgage. As admitted by Mr. Hirsch, the mortgage was never assigned to BNY Mellon. The mortgage is still held by MERS as “beneficiary”.

94. Further, MERS did not have authority, as “nominee” or agent, to assign the Mortgage absent a showing that it was given specific written directions by its principal. (emphasis added) (In Re: Agard, supra)

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 100. Consequently, as asserted in the 4th AC, MERS’ Substitution of Trustee to ReconTrust
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95. It follows that BNY Mellon did not and could not, at the time it filed either of its two Motions for Stay Relief, “provide adequate support in the Motion that it had a perfected security interest in the Property.” (Zitta, supra)

96. In other words, BNY MELLON, as trustee of the CWALT, INC. ALTERNATIVE LOAN TRUST 2007-HY4 MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2007-HY4 did not possess both the Note and the Mortgage as of the date it filed its Motion for Stay Relief (November 11, 2009 at doc 82 in the Lead Case) or as of the date it filed its Renewed Motion for Stay Relief (May 14, 2010 at doc 178 in the Lead Case). In fact it did not lawfully possess either the Note or the Mortgage.

97. It therefore follows that the Motion for Stay Relief granted by this Court on July 29, 2010 to Movant BNY Mellon was granted in error upon false and possibly fraudulent grounds.

98. Consequently, the Stay Relief erroneously granted to BNY Mellon on July 29, 2010 should be vacated and the automatic stay should be reinstated.

MERS Had No Authority To Assign The Deed Of Trust Or To Substitute The Trustee

99. The Agard court explains why MERS, absent specific written instructions from its principal, never had authority to act. (In Re: Agard, infra)

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

and the subsequent Notice of Default and Notice of Trustee’s Sale are void and without effect. 101. MERS is falsely named on the trust deed as the “beneficiary”. MERS is clearly not the beneficiary under any accepted definition of that term. MERS cannot be both “nominee” for the beneficiary and the beneficiary itself. That would be a manifest absurdity. 102. Furthermore, because the Deed of Trust identifies a non-beneficiary as the “beneficiary”, the Deed of Trust is false and therefore void. MERS’ business model is fatally flawed and outside of established law. (In Re: Agard)

103. The foregoing arguments as to MERS’ lack of authority and the requirement for possession of both the note and mortgage are well-supported by Judge Grossman’s analysis in In Re Agard, (In Re: Agard US Bankruptcy Court, Eastern District of New York Case # 810-77338-REG CH 7 U.S. Bankruptcy Judge Robert E. Grossman) pertinent parts of which are set forth below: [T]he Court recognizes that an adverse ruling regarding MERS’s authority to assign mortgages or act on behalf of its member/lenders could have a significant impact on MERS and upon the lenders which do business with MERS throughout the United States. However, the Court must resolve the instant matter by applying the laws as they exist today. (emphasis added)

[T]his Court does not accept the argument that because MERS may be involved with 50% of all residential mortgages in the country, that is reason enough for this Court to

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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

turn a blind eye to the fact that this process does not comply with the law. (emphasis added)

[H]owever, even if MERS had assigned the Mortgage acting on behalf of the entity which held the Note at the time of the assignment, this Court finds that MERS did not have authority, as “nominee” or agent, to assign the Mortgage absent a showing that it was given specific written directions by its principal. (emphasis added)

[I]n all future cases which involve MERS, the moving party must show that it validly holds both the mortgage and the underlying note in order to prove standing before this Court. (emphasis added)

The Note Is Not Now Held By The Trustee By Operation Of Law

104. BNY Mellon failed to prove the security interest has been perfected as required under the F.R.B.P. 3001(d).

105. BNY Mellon failed to provide any evidence of an assignment of the Deed of Trust from MERS to itself.

106. BNY Mellon identifies itself as a trustee of a securitized trust. The trust agreement is an IRS REMIC known as a PSA. The PSA provides that New York Law shall apply. (PSA Section 11:06)

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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

107. This case is similar to In Re: Kemp. (Kemp vs Countrywide Case No 08-18700-JHW, Adversary No 08-2448 (Bankr. NJ 2010) )(Judicial Notice requested January 4, 2011) where the PSA required certain indorsements on the Note but the Note did not carry those indorsements. The court found that Countrywide had no right to enforce the note.

108. As here, in Kemp the Assignment of the Note directly from Originator to the Trustee, “skipping” the Depositor, fails for violation of the PSA and IRS codes.

109. Sections 2:01 through and including 2.04 of the PSA provide that on or before the closing date, the Trustee had to receive the original note with its full chain of indorsements. The Trustee could not accept any Mortgage Note after the start-up date other than a Qualified Substitute Mortgage Loan. Because the necessary indorsements are lacking, Plaintiff’s Note was never transferred into the REMIC trust.

110. Because the IRS code prohibits transfers of notes into a REMIC more than 90 days after the Closing Date, and because there is no evidence that this note was a Qualified Substitute Mortgage Loan, this Note cannot now be held by the Trustee, regardless of any indorsements or assignments.

111. Additionally, section 11:06 of the PSA provides that the laws of the State of New York shall provide the governing law for the PSA. The PSA provides that the law of New York applies to any dispute over the PSA. New York law provides that any transfers beyond the stated powers of the trust are void. “If the trust is expressed in the instrument creating the estate of the trustee, every sale, conveyance, or other act of the trustee in contravention of the trust, except as authorized by this article and by any other provisions of law, is void.”
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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

McKinney’s Consolidated Law of New York Annotated Estates Powers and Trust Laws, section 7-2.4 (2003); see Allison & ver Valen Co. v. McNee, 9 NYS 2D 708 (NY Sur 1939)

112. Consequently, the alleged conveyance of Plaintiff’s Note into the Trust is void.

113. Because the PSA provides that the Trustee cannot accept any mortgage loan after the closing date (except for certain substitute mortgage loans which replace deleted mortgage loans ) and because Plaintiff’s Note lacks all necessary indorsements, Plaintiff’s Note is not now held by the Trustee, regardless of any indorsements or assignments, by operation of law.

114. Additionally, the only evidence BNY Mellon provides concerning its claim to a security interest is the alleged assignment (in blank) of Plaintiff’s Note, which contradicts the Deed of Trust. The Deed of Trust states that MERS is the beneficiary.

115. BNY Mellon, as trustee of an IRS REMIC, must conform its actions not only to the dictates of the IRS code, but also to the PSA because that document is regulated by New York law, which states that the Trustee has no powers outside of the trust documents. Since both the PSA and the IRS Code provide that the Trust could not take a note more than 90 days after the closing date (the only exception being a qualified substitute mortgage note, but they offered no evidence this was such a note) Plaintiff’s Note was never transferred into the Trust because the PSA required a complete chain of indorsements on the note – which were never executed and do not exist.

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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

116. Consequently, BNY Mellon has no enforceable interest in Plaintiff’s loan by operation of law.

There Was No Meeting Of The Minds. Contract Is Void.

117. Mr. Hirsch asserts that Plaintiff “agreed” to the MERS terms. Plaintiff had never heard of the controversial entity MERS at the time the loan transaction was “closed”. No attorney was present at the “closing” to protect the Plaintiff’s rights or to make sure he understood the arcane and contradictory language in the documents he was signing. The MERS terminology in the Deed of Trust was never explained or even mentioned to Plaintiff by the Defendants. There was, therefore, no meeting of the minds. Any alleged contract (mortgage) involving MERS and the Plaintiff is consequently void.

118. Absent a meeting of the minds, any alleged contract (mortgage) between the parties is void by operation of basic contract law.

Order To Show Cause For Contempt And/Or Sanctions

119. On information and belief, this Court’s reliance upon the purported Assignment of the Mortgage Note (which has now been shown to be deficient) was pivotal to this Court’s decision to lift the Automatic Stay.

120. On information and belief, this Court’s reliance upon the purported Assignment of the Mortgage Note (which has now been shown to be deficient) was pivotal to this Court’s decision to dismiss Plaintiff’s previous amended complaints.
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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 Based on the entire record before this Court, and for cause shown, the Plaintiff asks this Court to:
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121. The Defendants’ Attorney Bryan Cave LLP, knew or should have known that their clients lacked standing to initiate and maintain the foreclosure action. There appears to be an ongoing attempt to commit fraud upon this Court by Defendants’ Attorney Bryan Cave LLP and its clients.

122. The Court should consider an order to show cause for contempt and/or sanctions for the foregoing reasons and because the Defendants and their attorneys chose not to comply with the Court’s instructions as set forth above.

CONCLUSION Based upon the facts, circumstances and legal arguments set forth above, it is clear that none of the Defendants has legal standing to assert a claim on the Promissory Note and Deed of Trust that is the subject matter of this litigation. There are undeniable and unfixable breaks in the chain of title. Defendants have failed to establish and maintain a continuously perfected security interest in the Property. Indicia of fraud are present. As Debtor In Possession, Plaintiff can avoid the alleged lien pursuant to U.S.C. § 544(a)(3). Plaintiff’s Note is not held by the Trust by operation of law. The obligation, if any, is not owed to these parties.

PRAYER FOR RELIEF

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 G. Declare the Substitution of Trustee and Notice of Trustee’s Sale defective, and H. Issue an order to show cause for contempt and/or sanctions, and I. Grant such other relief as this Court may deem just and proper.
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A. Take judicial notice of the three rulings cited, to wit, Ibanez, Agard and Zitta, and

B. Enter an order denying, with prejudice, the Defendants’ Motion to Dismiss, with Prejudice, Plaintiff’s Fourth Amended Complaint To Determine The Validity, Priority Or Extent Of A Lien Or Other Interest In Real Property And Petition For Injunctive Relief, and

C. Declare that sufficient facts are now before this Court to show that no enforceable lien exists against the Plaintiff’s Property, and

D. In the alternative to (C), order immediate disclosure, discovery and an evidentiary hearing, and

E. Vacate the Stay Relief erroneously granted to BNY Mellon, and

F. Reinstate the Automatic Stay, and G. Declare the Mortgage null and void, and F. Enjoin these Defendants from re-filing a Motion for Stay Relief, and

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 COPY of the foregoing was mailed this 7th day of March, 2011 to: Kyle S. Hirsch, Esq Bryan Cave LLP Two North Central Avenue, Suite 2200 Phoenix, Arizona 85004 By________________________________ Andrew C. Bailey, Plaintiff RESPECTFULLY SUBMITTED this 7th day of March, 2011.

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