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FILED: NEW YORK COUNTY CLERK 08/16/2011

NYSCEF DOC. NO. 20

INDEX NO. 651442/2011 RECEIVED NYSCEF: 08/16/2011

SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK -------------------------------------------------------X ) KNIGHTS OF COLUMBUS, ) ) Index No. 651442/2011 Plaintiff, ) ) Kornreich, J. v. ) ) AMENDED COMPLAINT THE BANK OF NEW YORK MELLON, ) ) Defendant. ) ) -------------------------------------------------------X

Plaintiff Knights of Columbus, by their attorneys Peter N. Tsapatsaris LLC and Talcott Franklin P.C., for their Amended Complaint against Defendant The Bank of New York Mellon, allege the following: SUMMARY 1. This action originally requested the Court to order an immediate accounting of

two trusts known as CWALT 2005-6CB and CWALT 2006-6CB. These trusts hold residential mortgage loans for the benefit of investors such as Plaintiff. The original Complaint was not directed at the Defendant Trustee, but information obtained after the filing of the Complaint demonstrates that the Defendant Trustee has violated its contractual and other obligations to Plaintiff. Accordingly, Plaintiff seeks to hold the Defendant Trustee liable for Plaintiffs damages in all of the following trusts: CWALT 2004-2CB, CWALT 2005-3CB, CWALT 2005-6CB, CWALT 2006-6CB, CWALT 2006-19CB, CWALT 2006-25CB, CWALT 2006-31CB, CWALT 2006-32CB, CWALT 2007-2CB, CWALT 2007-4CB, CWALT 2007-16CB, CWHL 2003-4, CWHL 2003-18,

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CWHL 2004-14, CWHL 2005-17, CWHL 2005-26, CWHL 2005-30, and CWHL 2006-6. 2. Plaintiff also seeks an accounting concerning the actions of the Defendant Trustee

regarding all of the above-listed Trusts. 3. On June 29, 2011, without Plaintiffs knowledge or consent, Defendant

commenced an Article 77 proceeding in this Court (before Justice Kapnick) (the Settlement Action) that purports to settle all of Plaintiffs claims against Bank of America and its affiliates (the Proposed Settlement Agreement). Notably, the Proposed Settlement Agreement does not purport to release any of Plaintiffs claims against Defendant, other than those regarding Defendants entry into the Proposed Settlement Agreement. 4. Plaintiff continues to seek an accounting as to the actions of Bank of America and

its affiliates, but agrees that those claims could be affected by the Courts approval of the Proposed Settlement Agreement. Accordingly, Plaintiff has no choice but to intervene in the Settlement Action to express its views on the Proposed Settlement Agreement, particularly in light of Defendants recent Motion to Transfer or Stay this action, filed July 20, 2011. In the event the Proposed Settlement Agreement is not approved or is modified to exempt Plaintiffs claims against Bank of America and its affiliates, Plaintiff preserves those claims by pleading them here. 5. An accounting is required because one or more of the Trust administrators have:

(1) been examined by the Office of Comptroller of the Currency, the Office of Thrift Supervision, the Federal Deposit Insurance Corporation, and the Federal Reserve Board, which found critical deficiencies and shortcomings in foreclosure governance processes,

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foreclosure document preparation processes, and oversight and monitoring of third party law firms and vendors; (2) been found by the Office of the Comptroller of the Currency to have engaged in unsafe or unsound banking practices [i]n connection with certain foreclosures of loans in its residential mortgage servicing portfolio, which is subjecting each Trust to unknown costs and expenses; (3) been accused by the City of Buffalo, among others, for failing to properly care for and dispose of unoccupied properties, contributing to the deterioration of neighborhoods and increasing losses to the Trusts beneficiaries; (4) been accused by the Federal Trade Commission of engaging in a deliberate strategy to mark up the actual cost of services that are ultimately paid by each Trust; (5) been exposed by AMERICAN BANKER for using affiliates to place on homes insurance costing up to ten times the price of regular policies, which premiums are ultimately charged to the beneficiaries of each Trust; and (6) had a court find that a practice that an employee of a Trust administrator testified under oath was customary precluded a similar trust from enforcing its rights under a mortgage. THE PARTIES 6. Plaintiff, Knights of Columbus, is a fraternal benefit society organized and

existing under the laws of the State of Connecticut. Plaintiffs principal place of business is 1 Columbus Plaza, New Haven, Connecticut 06510. Plaintiff owns a beneficial interest in each Trust in the form of certificates issued for each Trust in the manner described below. 7. Defendant, The Bank of New York Mellon, formerly named The Bank of New

York, is a New York state chartered bank with trust powers with its principal place of

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business located at One Wall Street, New York, NY 10286. Defendant serves as Trustee for each Trust, as described below. 8. Defendants Chairman and Chief Executive Officer described Defendants

business model in his February 11, 2009 testimony before the House Financial Services Committee as follows: The business model of The Bank of New York Mellon is very different from a traditional retail or commercial or investment bank. In contrast to most of the other companies here today, our business model does not focus on the broad retail market or products such as mortgages, credit cards or auto loans. Nor do we even do typical lending to corporate businesses. A good way to think of The Bank of New York Mellon is that we are a bank for banks. The lions share of our business is dedicated to helping other financial institutions around the world. JURISDICTION AND VENUE 9. The Court has jurisdiction over this proceeding pursuant to CPLR 301 and 302.

The Bank of New York Mellon is a New York state charted bank with its principal place of business in the City of New York. Each Trust is a New York Trust formed under the laws of the State of New York. The Bank of New York Mellon participated in the transaction, the formation of each Trust, and other activities within the State that led to the events forming the basis of this Complaint. 10. Venue is proper in this Court pursuant to CPLR 503(c) and 506. The Bank of

New York Mellons principal office is located at One Wall Street, New York, NY 10286. BACKGROUND THE KNIGHTS OF COLUMBUS 11. The Knights of Columbus (the Knights or Plaintiff), the worlds largest

Catholic family fraternal service organization, was chartered as a fraternal benefit society by the Connecticut state legislature in 1882 to further its mission of rendering financial aid to sick, disabled, and needy members. Founded on the principles of charity, unity,

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patriotism, and fraternity, the Knights promote social and intellectual fellowship among its members and their families through educational, charitable, religious, social welfare, war relief, and public relief works. Membership in the Knights is open to men 18 years of age or older who are practicing Catholics and are committed to supporting the Catholic Church and making their community a better place. The Order has been called the strong right arm of the Church and has been praised by popes, presidents, and other world leaders for support of the Church, civic involvement, and aid to those in need. In 2008, the Holy See gave the founder of the Knights, parish priest Father Michael J. McGivney, the title Venerable Servant of God, which marks an important step on the journey to his beatification and canonization. 12. In 2009, the Knights raised and donated more than $151 million to charitable

needs and projects, and members volunteered more than 69 million hours of their time to charitable initiatives including 227,900 hours to Habitat for Humanity. In the last decade, the Knights have donated more than $1.367 billion to charity and provided nearly 640 million service hours. The charitable work performed by the Knights is vast and varied and includes disaster relief in Japan, Haiti, and the Philippines; donations of over $1 million to local food banks; and the distribution of new coats to children and wheelchairs to those in need. More recently the Knights have begun an extensive

program in Haiti to assist children who lost limbs in the earthquake by fitting them with prosthetics, providing rehabilitation services, and operating The Return to Sports program so that amputees can run and play soccer once again. 13. Since its inception the Knights have sought to protect the membership through the

tool of insurance. Initially, the founding parish priest, Father McGivney, instituted a not-

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for-profit life insurance program to provide for the widows and orphans of deceased members. This not-for-profit program has expanded substantially to more effectively serve the organizations 1.8 million members worldwide and now includes annuity, disability, and long-term care products. Today, the Knights maintain an investment portfolio of $17 billion and operate a fraternal insurance organization doing business in the 50 states of the United States, the District of Columbia, the 10 provinces of Canada, Puerto Rico, the Virgin Islands, Northern Mariana Islands, Guam, Mexico, the Philippines, and Poland. In April of 2011, life insurance in force exceeded $80 billion. The Knights are one of only five insurers in North America to receive the highest possible rating for financial stability from both A.M. Best and Standard & Poors, and one of only three U.S. insurers to have both those accolades plus the Insurance Marketplace Standards Association certification for ethical business and marketing practices. 14. As a fraternal benefit society, the Knights have no stockholders; the Knights

owners are its members, and just as those members are committed to performing an impressive array of charitable, religious, and patriotic works, the Knights are committed to protecting the financial futures of the members and their families. One way the Knights do this is by paying claims and dividends to insured members. In 2009, the Knights paid well over $431 million in death claims and other benefits, and more than $309 million in dividends to policyholders. From 2000 to 2009, the Knights paid $3.191 billion in dividends to insured members.

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BACKGROUND THE TRUSTS 15. The Bank of New York Mellon, formerly the Bank of New York (Defendant or

Trustee), is the Trustee of numerous trusts for the benefit of investors (called certificateholders), including Plaintiff. 16. The document providing for the establishment and administration of each Trust is

called a Pooling and Servicing Agreement (PSA). 17. The corpus of each Trust consists primarily of residential mortgage loans made by

Countrywide Home Loans, Inc. and/or its affiliates Park Granada LLC, Park Monaco Inc., and Park Sienna LLC. 18. Based upon the assumption that the loans were deposited into each Trust, the

borrowers began making payments to each Trust through Countrywide Home Loans Servicing LP as Master Servicer for each Trust. 19. Countrywide Home Loans Servicing LP is now known as BAC Home Loans

Servicing, LP. Throughout the remainder of the Complaint, this entity and its parent will be referred to as the Master Servicer. 20. When the Master Servicer collects loan payments from borrowers, the Master

Servicer transfers those payments less allowable deductions to the Defendant, who as Trustee of each Trust distributes those payments to each Trusts beneficiaries the certificateholders such as Plaintiff. Thus, the certificateholders are entitled to

participation in the cash flow the Master Servicer collects from borrowers relating to the mortgage loans each Trust holds on behalf of the certificateholders.

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21.

Therefore, each Trust is primarily administered by two entities: The Defendant

Trustee, who is the face of each Trust with the Trust beneficiaries such as Plaintiff, and the Master Servicer, who is the face of each Trust with borrowers. The entire process is graphically illustrated as follows:

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Because a trustee such as Defendant holds the trust corpus for the beneficiaries, a

servicer such as the Master Servicer here will act in the name of the trustee when taking action against borrowers, which includes the servicer in the name of a trustee bringing foreclosure actions against borrowers who are allegedly delinquent on their loan payments. Government officials who are unaware of this practice thus often blame a trustee for the acts of the servicer, even though the trustee is typically only a nominal party to the foreclosure. As set forth below, both the Defendant and each Trust have suffered significant reputational damage as a consequence of the allegations leveled against the Master Servicer.

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BACKGROUND GENERAL ALLEGATIONS 23. Recent revelations from a variety of credible sources indicate that the Trustee and

the Master Servicer may be acting for their own benefit rather than for the benefit of investors. Furthermore, the acts detailed below indicate that the Trustee and the Master Servicer may be damaging the borrowers whose loans make up each Trusts corpus and undermining efforts to restore economic prosperity to this Country. BACKGROUND THE NATIONAL FINANCIAL CRISIS 24. As this Court well understands, a national financial crisis exists, which was

primarily caused by irresponsible lending practices and leveraging of debt on the part of the nations largest financial institutions. 25. This financial crisis required an unprecedented federal bailout of the nations

largest financial institutions, including the Defendant Trustee and the Master Servicer described in this Complaint. The Defendant Trustee received $3 billion under the Capital Purchase Program, while the Master Servicer received $25 billion under the Capital Purchase Program and $20 billion under the Targeted Investment Program. BACKGROUND THE NATIONAL FORECLOSURE CRISIS 26. As this Court also understands, a national foreclosure crisis accompanies the The Federal Reserve considers the record rate of mortgage

financial crisis.

delinquencies, foreclosures and their impacts on communities an urgent problem. See http://data.newyorkfed.org/creditconditionsmap/#. Losing a home to foreclosure can be one of the most serious, stressful, and devastating events in a persons life. During the foreclosure process, borrowers should be treated with respect, and the foreclosure process

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should be performed in a manner that is honest, legal, and in compliance with due process of law. 27. Borrowers losing homes to foreclosure can fall into a number a categories,

examples of which include the following borrowers who are working to save their homes from foreclosure: (1) honest borrowers experiencing difficult life events (Good Faith Borrowers); and (2) victims of predatory lending activities who were misled or outright defrauded into obtaining a loan they could not afford (Predatory Lending Victims). The Master Servicer should provide Good Faith Borrowers a reasonable opportunity to stay in their homes where that result exceeds the net present value of foreclosing. The entity (or its successor in interest) who sold a Trust a loan made to a Predatory Lending Victim should repurchase the loan from the Trust as it warranted it would upon sale and face the consequences of its wrongful acts against the borrower under applicable law. 28. Borrowers losing homes to foreclosure can also fall into other categories,

including the following: (1) borrowers who cannot make net present value positive payments under any circumstances and/or have abandoned the premises (Abandoned Properties); and (2) borrowers who engaged in property-flipping schemes, straw-man purchases, or other fraudulent acts, which often are accompanied by a failure to make any payments to a Trust (Fraudulent Borrowers). Abandoned Properties and Fraudulent Borrowers (who typically either abandon the property or start to destroy it) are a source of great concern to local governments charged with maintaining quality of life in these neighborhoods. There is virtually no dispute that some foreclosures including those involving Abandoned Properties and Fraudulent Borrowers are necessary from both a lending and societal perspective (Valid Foreclosures). Valid Foreclosures should be

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done quickly to reduce the decay and decimation to a neighborhood that accompanies abandoned or vandalized properties. BACKGROUND DEFENDANTS OBLIGATION TO ACQUIRE THE TRUST CORPUS 29. Each PSA contained express terms for the delivery of the loans into the Trust.

Specifically, each PSA contained language to the effect that the Depositor would deliver certain critical documents evidencing and supporting each loan to the Defendant Trustee: In connection with the transfer and assignment set forth in clause (b) above, the Depositor has delivered or caused to be delivered to the Trustee (or, in the case of the Delay Delivery Mortgage Loans that are Initial Mortgage Loans, will deliver or cause to be delivered to the Trustee within thirty (30) days following the Closing Date and in the case of the Delay Delivery Mortgage Loans that are Supplemental Mortgage Loans, will deliver or cause to be delivered to the Trustee within twenty (20) days following the applicable Supplemental Transfer Date) for the benefit of the Certificateholders the following documents or instruments with respect to each Mortgage Loan so assigned: (i) 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); or [] (iii) in the case of each Mortgage Loan that is not a MERS Mortgage Loan, a duly executed assignment of the Mortgage, (which may be included in a blanket assignment or assignments), together with, except as provided below, all interim recorded assignments of such mortgage (each such assignment, when duly and validly completed, to be in recordable form and sufficient to effect the assignment of and transfer to the assignee thereof, under the Mortgage to which the assignment relates); provided that, if the related Mortgage has not been returned from the applicable public recording office, such assignment of the Mortgage may exclude the information to be provided by the recording office; provided, further, that such assignment of Mortgage need not be delivered in the case of a Mortgage for which the related Mortgaged Property is located in the Commonwealth of Puerto Rico; CWALT 2006-6CB PSA 2.01(c).

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30.

Moreover, the Trustee acknowledged the receipt of these critical documents and

promised to hold them in trust for the exclusive use and benefit of all present and future Certificateholders. The Defendant Trustee further acknowledged that it will maintain possession of the Mortgage Notes in the State of California: The Trustee acknowledges receipt of the documents identified in the Initial Certification in the form annexed hereto as Exhibit F-1 and declares that it holds and will hold such documents and the other documents delivered to it constituting the Mortgage Files, and that it holds or will hold such other assets as are included in the Trust Fund, in trust for the exclusive use and benefit of all present and future Certificateholders. The Trustee acknowledges that it will maintain possession of the Mortgage Notes in the State of California, unless otherwise permitted by the Rating Agencies. CWALT 2006-6CB PSA 2.02(a). 31. The Trustee was required to execute the Initial Certification in the form annexed

hereto as Exhibit F-1 (attached to this Complaint as Exhibit F-1), in which it was to state that it had both received a Note and an assignment, and that it had undertaken a review and examination of those documents: In accordance with Section 2.02 of the above-captioned Pooling and Servicing Agreement (the Pooling and Servicing Agreement), the undersigned, as Trustee, hereby 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 schedule) it has received: (i) (a) the original Mortgage Note endorsed in the following form: Pay to the order of __________, without recourse or (b) with respect to any Lost Mortgage Note, a lost note affidavit from Countrywide stating that the original Mortgage Note was lost or destroyed; and (ii) a duly executed assignment of the Mortgage (which may be included in a blanket assignment or assignments). Based on its review and examination and only as to the foregoing documents, such documents appear regular on their face and related to such Mortgage Loan. CWALT 2006-6CB PSA Form F-1.

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32.

The Trustee subsequently had to issue a Final Certification (attached to this

Complaint as Exhibit H-1) with respect to the loans: Not later than 90 days after the Closing Date, the Trustee shall deliver to the Depositor, the Master Servicer and Countrywide (on its own behalf and on behalf of Park Granada, Park Monaco and Park Sienna) a Final Certification with respect to the Initial Mortgage Loans in the form annexed hereto as Exhibit H-1, with any applicable exceptions noted thereon. If, in the course of such review, the Trustee finds any document constituting a part of a Mortgage File which does not meet the requirements of Section 2.01, the Trustee shall list such as an exception in the Final Certification [.] CWALT 2006-6CB PSA 2.02(a). 33. It was also the Trustees duty to affix certain language to each assignment of

Mortgage: As promptly as practicable subsequent to such transfer and assignment, and in any event, within thirty (30) days thereafter, the Trustee shall (i) as the assignee thereof, affix the following language to each assignment of Mortgage: CWALT Series 2006-6CB, The Bank of New York, as trustee, (ii) cause such assignment to be in proper form for recording in the appropriate public office for real property records and (iii) cause to be delivered for recording in the appropriate public office for real property records the assignments of the Mortgages to the Trustee, except that, with respect to any assignments of Mortgage as to which the Trustee has not received the information required to prepare such assignment in recordable form, the Trustees obligation to do so and to deliver the same for such recording shall be as soon as practicable after receipt of such information and in any event within thirty (30) days after receipt thereof and that the Trustee need not cause to be recorded any assignment which relates to a Mortgage Loan, (a) the Mortgaged Property and Mortgage File relating to which are located in California or (b) in any other jurisdiction (including Puerto Rico) under the laws of which in the opinion of counsel the recordation of such assignment is not necessary to protect the Trustees and the Certificateholders interest in the related Mortgage Loan. CWALT 2006-6CB PSA 2.01(c). 34. Furthermore, numerous provisions of the PSA made clear that the Trustee was

required to maintain possession of the Mortgage File, which contained among other things the Note and any assignments, and that possession of the Mortgage File by any

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other entity was to be a closely guarded and monitored exception rather than the rule. For example: a. The Trustee shall retain possession and custody of each Mortgage File in accordance with and subject to the terms and conditions set forth herein. The Master Servicer shall promptly deliver to the Trustee, upon the execution or receipt thereof, the originals of such other documents or instruments constituting the Mortgage File as come into the possession of the Master Servicer from time to time. 2.02(d) (emphasis added). b. With respect to any Substitute Mortgage Loan or Loans, sold to the Depositor by a Seller, Countrywide (on its own behalf and on behalf of Park Granada, Park Monaco and Park Sienna) shall deliver to the Trustee for the benefit of the Certificateholders the Mortgage Note, the Mortgage, the related assignment of the Mortgage, and such other documents and agreements as are required by Section 2.01, with the Mortgage Note endorsed and the Mortgage assigned as required by Section 2.01. CWALT 2006-6CB PSA 2.03(c) (emphasis added). c. Upon the payment in full of any Mortgage Loan, or the receipt by the Master Servicer of a notification that payment in full will be escrowed in a manner customary for such purposes, the Master Servicer will immediately notify the Trustee by delivering, or causing to be delivered a Request for Release substantially in the form of Exhibit N. Upon CWALT 2006-6CB PSA

receipt of such request, the Trustee shall promptly release the related

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Mortgage File to the Master Servicer, and the Trustee shall at the Master Servicers direction execute and deliver to the Master Servicer the request for reconveyance, deed of reconveyance or release or satisfaction of mortgage or such instrument releasing the lien of the Mortgage in each case provided by the Master Servicer, together with the Mortgage Note with written evidence of cancellation thereon. CWALT 2006-6CB PSA 3.12. d. From time to time and as shall be appropriate for the servicing or foreclosure of any Mortgage Loan, including for such purpose, collection under any policy of flood insurance, any fidelity bond or errors or omissions policy, or for the purposes of effecting a partial release of any Mortgaged Property from the lien of the Mortgage or the making of any corrections to the Mortgage Note or the Mortgage or any of the other documents included in the Mortgage File, the Trustee shall, upon delivery to the Trustee of a Request for Release in the form of Exhibit M signed by a Servicing Officer, release the Mortgage File to the Master Servicer. Subject to the further limitations set forth below, the Master Servicer shall cause the Mortgage File or documents so released to be returned to the Trustee when the need therefor by the Master Servicer no longer exists, unless the Mortgage Loan is liquidated and the proceeds thereof are deposited in the Certificate Account, in which case the Master Servicer shall deliver to the Trustee a Request for Release in the form of Exhibit N, signed by a Servicing Officer. CWALT 2006-6CB PSA 3.12

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(emphasis added).

Each Request for Release referenced above is

attached to this Complaint as Exhibit M and Exhibit N. Both Exhibits M and N make clear that they are to be used for individual loans, not for the entire loan pool. e. Notwithstanding any other provisions of this Agreement, the Master Servicer shall transmit to the Trustee as required by this Agreement all documents and instruments in respect of a Mortgage Loan coming into the possession of the Master Servicer from time to time and shall account fully to the Trustee for any funds received by the Master Servicer or which otherwise are collected by the Master Servicer as Liquidation Proceeds, Insurance Proceeds or Subsequent Recoveries in respect of any Mortgage Loan. CWALT 2006-6CB PSA 3.13 (emphasis added). 35. Even the PSAs fail safe provision (providing that if a true sale does not take

place then the Trustee has a security interest in the loans) required that the Mortgage File be delivered to the Trustee: a. In connection with the pledge of the fail safe security interest, [t]he Depositor hereby represents that: [] (v) All original executed copies of each Mortgage Note that are required to be delivered to the Trustee pursuant to Section 2.01 have been delivered to the Trustee. CWALT 2006-6CB PSA 10.04(b). b. The Master Servicer shall take such action as is reasonably necessary to maintain the perfection and priority of the security interest of the Trustee in the Mortgage Loans; provided, however, that the obligation to deliver

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the Mortgage File to the Trustee pursuant to Section 2.01 shall be solely the Depositors obligation and the Master Servicer shall not be responsible for the safekeeping of the Mortgage Files by the Trustee. CWALT 2006-6CB PSA 10.04(c) (emphasis added). BACKGROUND DEFENDANTS FAILURE TO ACQUIRE THE TRUST CORPUS 36. Based on the following allegations, it is apparent that the Defendant knowingly

failed in its obligation to receive, process, maintain, and hold all or part of the Mortgage Files as required under the PSA. As a consequence, Plaintiff did not acquire residential mortgage-backed securities, but instead acquired securities backed by nothing at all. 37. In a case styled Kemp v. Countrywide Home Loans, Inc., 440 B.R. 624 (D.N.J.

Bankr. 2010), the Master Servicer, identifying itself as the servicer for Defendant, filed a secured claim in the bankruptcy of homeowner and debtor Kemp. Kemp filed an

adversary complaint against the Master Servicer asserting that the Bank of New York cannot enforce the underlying obligation. Id. at 626. 38. At trial, a supervisor and operational team leader for the Litigation Management

Department for the Master Servicer testified that to her knowledge, the original note never left the possession of Countrywide, and that the original note appears to have been transferred to Countrywides foreclosure unit, as evidenced by internal FedEx tracking numbers. She also confirmed that the new allonge had not been attached or otherwise affixed to the note. She testified further that it was customary for Countrywide to maintain possession of the original note and related loan documents. Id. at 628. 39. Summarizing the record, the New Jersey Bankruptcy Court found that: [W]e have established on this record that at the time of the filing of the proof of claim, the debtors mortgage had been assigned to the Bank of New York, but that

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Countrywide did not transfer possession of the associated note to the Bank. Shortly before trial in this matter, the defendant executed an allonge to transfer the note to the Bank of New York; however, the allonge was not initially affixed to the original note, and possession of the note never actually changed. The Pooling and Servicing Agreement required an indorsement and transfer of the note to the Trustee, but this was not accomplished prior to the filing of the proof of claim. The defendant has now produced the original note and has apparently affixed the new allonge to it, but the original note and allonge still have not been transferred to the possession of the Bank of New York. Countrywide, the originator of the loan, filed the proof of claim on behalf of the Bank of New York as Trustee, claiming that it was the servicer for the loan. Pursuant to the PSA, Countrywide Servicing, and not Countrywide, Inc., was the master servicer for the transferred loans. At all relevant times, the original note appears to have been either in the possession of Countrywide or Countrywide Servicing. Id. at 629. 40. With this factual backdrop, the New Jersey Bankruptcy Court turned to the

issue of whether the challenge to the proof of claim filed on behalf of the Bank of New York, by its servicer Countrywide, can be sustained, and found that: Countrywides claim here must be disallowed, because it is unenforceable under New Jersey law on two grounds. First, under New Jerseys Uniform Commercial Code (UCC) provisions, the fact that the owner of the note, the Bank of New York, never had possession of the note, is fatal to its enforcement. Second, upon the sale of the note and mortgage to the Bank of New York, the fact that the note was not properly indorsed to the new owner also defeats the enforceability of the note. Id. at 629-630. 41. To test the Kemp testimony concerning endorsements, FORTUNE magazine

examined [104] foreclosures filed in two New York counties (Westchester and the Bronx) between 2006 and 2010, and reported the following: None of the 104 Countrywide loans were endorsed by Countrywide they included only the original borrowers signature. Two-thirds of the loans made by other banks also lacked bank endorsements. The other third were endorsed either directly on the note or on an allonge, or a rider, accompanying the note. The lack of Countrywide endorsements, combined with the banks representation to the court that these documents are accurate copies of the original notes, calls

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into question the securitization of these loans, as well as Bank of New Yorks right, as trustee, to foreclose on them. These notes ostensibly belong to over 100 different Countrywide securities and worse, they were originally made as long ago as 2002. If the lack of endorsement on these notes is typical -- and 104 out of 104 suggests it is -- the problem occurs across Countrywide securities and for loans that pre-date the peak-bubble mortgage frenzy. The lack of Countrywide endorsements also corroborates [the Master Servicer employee who testified in Kemp], who said that in her 10 years at Countrywide she had never seen a note with an endorsement, and that as foreclosures had been increasingly litigated, she had been handling the original notes, not just the copies scanned into the bank's database.1 42. The process adopted by the Proposed Settlement Agreement where the Master

Servicer instead of the Trustee conducts an inventory of the Mortgage File demonstrates that Defendant failed to receive and retain possession of all or part of the Mortgage Files, which failure persists to this day. 43. Defendant had the opportunity to demonstrate that it possesses the Mortgage Files

through discovery served by Plaintiff in this action. Defendant has failed to answer Plaintiffs properly propounded and narrowly tailored discovery requests. 44. The Attorneys General of both New York and Delaware recently requested

information from Defendant to determine whether the Trusts for which Defendant served as Trustee were properly documented and valid. See Gretchen Morgensen, Two States Ask if Paperwork in Mortgage Bundling Was Complete, NEW YORK TIMES, June 12, 2011, at http://www.nytimes.com/2011/06/13/business/13mortgage.html. The Attorney

General of New York, moreover, has filed a proposed Verified Pleading in Intervention, dated August 4, 2011, in In the matter of the application of The Bank of New York Mellon, Index No. 651786/2011, which alleges that Defendant not only knew that

http://bit.ly/kZJfGn.

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Mortgage Files were not transferred properly ( 23-28), but also breached its duty to notify Certificateholders like the Knights of this fact ( 29-34). BACKGROUND THE COVER-UP THROUGH CERTIFICATIONS AND SECURITIES FILINGS 45. For older trusts, the Master Servicer, consistent with contractual obligations,

annually and at its own expense causes a nationally or regionally recognized independent public accounting firm (which is a member of the American Institute of Certified Public Accountants) to furnish a statement to Defendant to the effect that such firm has examined certain documents and records relating to the servicing of the Mortgage Loans and that, on the basis of such examination, such servicing has been conducted in compliance with the Master Servicers contractual obligations, with any significant exceptions or errors reported. 46. For newer trusts, the Master Servicer and the Trustee, pursuant to Regulation AB

of Rule S-X of the Securities Exchange Act, annually must provide to the Depositor individual Assertions [or Assessments] of Compliance with Applicable Servicing Criteria, which are assessments of compliance or non-compliance with applicable Servicing Criteria as defined and described in Item 1122(d) of Regulation AB (collectively, Servicing Criteria Assessments). For the Master Servicer, Servicing Criteria Assessments relate to the Master Servicers compliance or non-compliance with a wide range of individual servicing or administrative tasks, record creation and delivery, and processes required to service and administer each mortgage loan properly under the pooling and servicing agreement, e.g., reconciling borrower payments, posting loan related disbursements, timely reporting to investors, employment of proper loss

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mitigation practices, and the like. For the Trustee, the Servicing Criteria Assessments include its compliance or non-compliance under Item 1122(d)(4)(i) and (ii): (4) Pool asset administration. (i) Collateral or security on pool assets is maintained as required by the transaction agreements or related pool asset documents. (ii) Pool assets and related documents are safeguarded as required by the transaction agreements. 47. For each newer Trust, the Depositor must file with the SEC the Servicing Criteria

Assessments executed by the Master and the Trustee, and the SEC makes those Servicing Criteria Assessments available for public viewing, including by investors and rating agencies. In addition, under Regulation AB and the related PSA, the Trustee and the Master Servicer also must cause their respective approved registered public accounting firms to deliver separate attestation reports (collectively, Accountant Attestation Reports) to the SEC regarding the Trustees and the Master Servicers individual assessments of compliance with the Applicable Servicing Criteria. 48. For each newer Trust, the Master Servicer and the Trustee filed Servicing Criteria

Attestations indicating their respective compliance with the Applicable Servicing Criteria, including the Trustees attestations that the pool assets and related documents are safeguarded as required by the transaction documents and that collateral security on pool assets is maintained as required by transaction documents In the Servicing Criteria Attestation Reports executed and filed with the SEC in accordance with the Trusts pooling and servicing agreements and Regulation AB, both the Trustee and the Servicer asserted that they were in material compliance with the Applicable Servicing Criteria.

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49.

As set forth elsewhere in this Amended Complaint, the Servicing Criteria

Attestations of the Trustee and of the Master Servicer were untrue, inaccurate and misleading, to the detriment of the Knights. 50. On information and belief, based on the public allegations detailed herein, any

Master Servicer or Trustee self-assessment or independent accounting firm report produced by a competent nationally or regionally recognized independent public accounting firm should have reported material non-compliance with certain servicing criteria. 51. On information and belief, based on the language of certain PSAs, the Master

Servicer each year provides to Defendant the Report of an Independent Accounting Firm. On information and belief, Defendant has not shared with Certificateholders at large findings regarding any material non-compliance identified. 52. Some PSAs require the Trustee to provide the Report of an Independent

Accounting Firm to any Certificateholder who requests it. Based on the Affidavit of a representative of a Certificateholder in another trust, however, the Trustee does not provide the Report of an Independent Accounting Firm to Certificateholders when requested to do so. BACKGROUND THE COVER-UP IN FORECLOSURE AND PROPERTY TRANSFER FILINGS 53. In a February 19, 2010, deposition in a Massachusetts bankruptcy case, Renee D.

Hertzler, an employee of the Master Servicer, admitted under oath to signing seven to eight thousand legal documents a month outside the presence of a notary and without reviewing the documents prior to signing them. Ms. Hertzler testified I typically dont read them because of the volume that we sign.

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54.

Ms. Hertzler further admitted to signing affidavits as the Vice President of the

Defendant The Bank of New York Mellon when, in fact, she was not and never had been employed by Defendant. 55. Tam Doan worked on pre-sale foreclosures for the Master Servicer in Southern

California. While his job required him to sign various legal documents, he primarily handled notices to delinquent borrowers that their loans were proceeding to foreclosure. His signature constituted an affirmation that the Master Servicer had reviewed the loan and it did not qualify for modification. Yet, Mr. Doan told CNN that [w]e had no knowledge of whether the foreclosure could proceed or couldn't, but regardless, we signed the documents to get these foreclosures out of the way. In some cases he claimed that he did not even know what kind of document he was signing. I had no idea what I was signing, said Doan. Either you were in or you were out.2 56. This practice of signing documents in an assembly-line manner and swearing to

personal knowledge of facts that the affiant has not even reviewed has popularly become known as robo-signing. 57. The media revelations about robo-signing were a topic of discussion during a A WASHINGTON POST

Congressional hearing3 on the financial regulatory overhaul.

article dated September 30, 2010, entitled 7 Major Lenders Ordered to Review Foreclosure Procedures quoted John Walsh, acting director of the Office of the Comptroller of the Currency, as telling lawmakers that some lenders clearly had

http://bit.ly/q4ISRp.

The transcripts of the Senate Banking Committee Hearing on Financial Overhaul can be found at http://1.usa.gov/9XkhWP, while the hearing video can be viewed at http://www.c-spanvideo.org/program/OverhaulI.

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deficiencies in their foreclosure systems.

Accordingly, seven banks, including the

Master Servicer, were ordered to review their foreclosure processes. 58. In her testimony before this same Congressional panel, Federal Deposit Insurance

Corp. Chairman Sheila C. Bair described the issue of document processing errors as troubling. She also said its just a further indication of how wrong we went with the mortgage origination process and securitization process. 59. According to the Congressional Oversight Panels November Oversight Report,

Affidavits such as the ones involved in the foreclosure irregularities are statements made under oath and thus clearly fall within the scope of the perjury statutes. Congressional Oversight Panel, November Oversight Report, Nov. 16, 2010, at 42. 60. On October 1, 2010, the Master Servicer announced that it was putting

foreclosures on hold in the 23 judicial foreclosure states. According to the Master Servicers spokesman Dan Frahm: To be certain affidavits have followed the correct procedures, Bank of America will delay the process in order to amend all affidavits in foreclosure cases that have not yet gone to judgment.4 61. In October 2010, Attorneys General in California, Florida, Connecticut, Illinois,

Ohio, and Colorado called for foreclosure moratoriums, and then-New York Attorney General and now Governor Andrew Cuomo began an investigation of the issue.5 On October 4, 2010, the Attorney General of Texas sent notices to the Master Servicer and 29 other mortgage companies in the state demanding that all foreclosures be halted until all robo-signers were identified, remedial steps taken to deal with legally insufficient

http://wapo.st/bNumWZ. http://bit.ly/cNBCBX.

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documentation, and proper assurances of compliance with Texas law were given.6 On October 5, 2010, Massachusetts Attorney General Martha Coakley asked the Master Servicer and other banks to suspend foreclosures and evictions in that state, and Delaware Attorney General Joseph R. Biden, III called on the Master Servicer and other banks to halt all pending foreclosures until a thorough review of their foreclosure policies and procedures was complete.7 That same day North Carolina Attorney General Roy Cooper asked the Master Servicer and 13 other mortgage companies to suspend foreclosures in his state.8 All told, at least 10 states - with Iowa and Delaware being the latest - are seeking to expand a voluntary freeze on foreclosures by some of the nation's largest mortgage lenders to include more companies and more regions.9 62. The Master Servicer responded on October 8, 2010, by releasing the following

statement: Bank of America has extended our review of foreclosure documents to all fifty states. We will stop foreclosure sales until our assessment has been satisfactorily completed. Our ongoing assessment shows the basis for our past foreclosure decisions is accurate. We continue to serve the interests of our customers, investors and Providing solutions for distressed homeowners remains our primary

communities. focus.10 63.

In response to the ongoing dissemination of information regarding robo-signing,

in October 2010, the Attorneys General of all 50 states formed the Mortgage Foreclosure
6

http://www.oag.state.tx.us/oagNews/release.php?id=3500. http://bloom.bg/d9TBzu; http://1.usa.gov/prWSAc; http://bit.ly/quFw9c. http://bit.ly/quFw9c. http://wapo.st/bn8GEq. http://bit.ly/cic5pl.

10

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Multistate Group. In a joint statement issued October 13, 2010, the group opined that robo-signing may constitute a deceptive act and/or an unfair practice or otherwise violate state laws. 64. On October 18, 2010, the Master Servicer released a statement that We have

reviewed our process for resubmission of foreclosure affidavits in the 23 judicial states with key stakeholders, including our largest investors. Accordingly, Bank of America today began the process of preparing foreclosure affidavits for submission in 102,000 foreclosure actions in which judgment is pending. We anticipate that by Monday, Oct. 25, the first foreclosure affidavits will be resubmitted to the courts. Upon judgment, foreclosure dates will be set and Bank of America will resume foreclosure sales in such proceedings in the 23 judicial states.11 65. However, on October 24, 2010, THE WALL STREET JOURNAL reported that the

Master Servicer admitted finding errors in ten to twenty-five out of the first several hundred foreclosure files it examined. The mistakes included lack of signatures, missing files, and inconsistent information about the property and the payment history. In

addition, a Master Servicer spokesman admitted that, rather than review all of the files for accuracy, the Master Servicer only reviewed several hundred, which represents less than 1% of the foreclosure filings it intends to resubmit to the courts. The WASHINGTON POST quoted Master Servicer spokesman Dan Frahm as stating: We never said that our review tested each of these previously filed affidavits in these 102,000 proceedings.

http://bit.ly/pZmzSB. The states where foreclosures were suspended are: Connecticut, Delaware, Florida, Hawaii, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Nebraska, New Jersey, New Mexico, New York, North Dakota, Ohio, Oklahoma, Pennsylvania, South Carolina, South Dakota, Vermont, and Wisconsin.

11

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66.

Thus, despite the Master Servicers review of its process for resubmission of

foreclosure affidavits in the 23 judicial states with key stakeholders, the Master Servicer review appears to be little more than a robo-review, which is insufficient to determine whether or not the foreclosures are fully compliant with law. 67. On May 4, 2011, the Register of Deeds of Guilford County, Jeff L. Thigpen,

surveyed various recorded documents filed with his office. Scores of filings in the name of Bank of America, N.A. were signed by Christie Baldwin. Filings in the name of Bank of New York Trust Company, N.A. were signed by Pat Kingston, who also signed for numerous other entities, including EMC Mortgage Corp., Citi Residential Lending Inc., Mortgage Electronic Registration Systems Inc., and Wells Fargo Bank, N.A. Pat Kingston and Christie Baldwin respectively used eight and twelve different signatures in Guilford County, including the following examples:

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68.

During the fourth quarter of 2010, the Office of Comptroller of the Currency, the

Office of Thrift Supervision, the Federal Deposit Insurance Corporation, and the Federal Reserve Board undertook a coordinated horizontal examination of foreclosure processing at the nations 14 largest federally regulated mortgage servicers, including the Master Servicer. As John Walsh, Acting Comptroller of the Currency, testified before the Senate Committee on Banking, Housing, and Urban Affairs on February 17, 2011: In general, the examinations found critical deficiencies and shortcomings in foreclosure governance processes, foreclosure document preparation processes, and oversight and monitoring of third party law firms and vendors. These deficiencies have resulted in violations of state and local foreclosure laws, regulations, or rules and have had an adverse affect on the functioning of the mortgage markets and the U.S. economy as a whole. By emphasizing timeliness and cost efficiency over quality and accuracy, examined institutions fostered an operational environment that is not consistent with conducting foreclosure processes in a safe and sound manner.12 69. On April 13, 2011, the Office of the Comptroller of the Currency announced

formal enforcement actions against eight national bank mortgage servicers and two third12

Written testimony available at http://1.usa.gov/pcJlpq.

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party servicer providers for unsafe and unsound practices related to residential mortgage loan servicing and foreclosure processing. The eight servicers included the Master Servicer. See http://occ.gov/news-issuances/news-releases/2011/nr-occ-2011-47.html. 70. That same date, the Office of the Comptroller of the Currency signed and

published a consent order styled In the Matter of Bank of America, N.A. (the Consent Order), which found that the Master Servicer engaged in unsafe or unsound banking practices by reason of the following conduct: In connection with certain foreclosures of loans in its residential mortgage servicing portfolio, the Bank: (a) filed or caused to be filed in state and federal courts affidavits executed by its employees or employees of third-party service providers making various assertions, such as ownership of the mortgage note and mortgage, the amount of the principal and interest due, and the fees and expenses chargeable to the borrower, in which the affiant represented that the assertions in the affidavit were made based on personal knowledge or based on a review by the affiant of the relevant books and records, when, in many cases, they were not based on such personal knowledge or review of the relevant books and records; (b) filed or caused to be filed in state and federal courts, or in local land records offices, numerous affidavits or other mortgage-related documents that were not properly notarized, including those not signed or affirmed in the presence of a notary; (c) litigated foreclosure proceedings and initiated non-judicial foreclosure proceedings without always ensuring that either the promissory note or the mortgage document were properly endorsed or assigned and, if necessary, in the possession of the appropriate party at the appropriate time; (d) failed to devote sufficient financial, staffing and managerial resources to ensure proper administration of its foreclosure processes; (e) failed to devote to its foreclosure processes adequate oversight, internal controls, policies, and procedures, compliance risk management, internal audit, third party management, and training; and (f) failed to sufficiently oversee outside counsel and other third-party providers handling foreclosure-related services. 71. On May 20, 2011, the Connecticut Attorney General sent a letter to the Master

Servicer regarding the numerous complaints from consumers whose loans are served by Bank of America received by his office: Just this week my office received a complaint from a former Navy Corpsman who described his two-year ordeal with the bank as a nightmare. This customers experience is far from unique. Indeed, our colleagues at the Connecticut

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Department of Banking and the Connecticut Fair Housing Center report that they continue to assist many consumers who are experiencing significant difficulties with Bank of America. Despite having had more than two years to right-size your staff and establish effective procedures and systems, Bank of America has so far not prevented even the most common consumer complaints regarding lost documentation, poor communication, misinformation, dual tracking, and lack of a single point of contact. Such consumer complaints are common and a clear indication that Bank of America has not devoted sufficient resources toward addressing its well-documented default servicing problems. http://www.ct.gov/ag/lib/ag/press_releases/2011/brianmoynihanboa_.pdf 72. According to the Associated Press, the Master Servicer continues to engage in

robo-signing despite entering into the consent order: Since [June 7, 2011], [John] OBrien[, the registrar of deeds in Essex County,] has received nine documents from Bank of America purportedly signed by Linda Burton, another name on authorities list of known robo-signers. For years, his office has regularly received documents signed with Burton's name but written in such vastly different handwriting that two forensic investigators say its highly unlikely it all came from the same person. OBrien returned the nine Burton documents to Bank of America in mid-June. He told the bank he would not file them unless the bank signed an affidavit certifying the signature and accepting responsibility if the title was called into question down the road. Instead, Bank of America sent new documents with new signatures and new notaries. A Bank of America spokesman says Burton is an assistant vice president with a subsidiary, ReconTrust. That company handles mortgage paperwork processing for Bank of America. She signed the documents on behalf of the bank, spokesman Richard Simon says. The bank says providing the affidavit OBrien asked for would have been costly and time-consuming. Instead, Simon says Bank of America sent a new set of documents signed by an authorized associate who Mr. OBrien wasnt challenging. The bank didnt respond to questions about why Burtons name has been signed in different ways or why her signature appeared on documents that investigators in at least two states have deemed invalid. Several attempts by the AP to reach Burton at ReconTrust were unsuccessful. OBrien says the banks actions show consciousness of guilt. Earlier this year, he hired Marie McDonnell, a mortgage fraud investigator and forensic document - 30 -

analyst, to verify his suspicions about Burtons and other names on suspect paperwork. She compared valid copies of Burtons signature with the documents OBrien had received in 2008, 2009 and 2010 and found that Burtons name was fraudulently signed on hundreds of documents. Most of the documents reviewed by McDonnell were mortgage discharges, which are issued when a home changes hands or is refinanced by a new lender and are supposed to confirm that the previous mortgage has been paid off. Bank of America declined comment on McDonnells findings.13 73.
News

Examples of the Master Servicers latest robo-signed documents include the


Si g n in

following signatures:

74.

Similarly, Reuters published a special report on July 19, 2011, in which it claimed

that five mortgage loan servicers, including the Bank of America, had filed foreclosure documents of questionable validity since agreeing to stop doing so earlier this year. Reuters went on to describe an incident only a week earlier in which Robert Drain, United States Bankruptcy Judge for the Southern District of New York: [O]rdered an investigation involving a foreclosure case brought by [Bank of America]. [In re: Priscilla C. Taylor, Debtor, U.S. Bankruptcy Court, Southern District of New York, Case #10-22652]. Two earlier copies of a promissory note filed in court had lacked any endorsement, but then one appeared on the note when bank lawyers produced the original. The judge said the sudden appearance of an endorsement, and his own close look at it, raised questions about whether it has been added illegally to make the note look legitimate. It raises a sufficiently
Michelle Conlin, AP Exclusive: Mortgage robo-signing goes on, Associated Press, July 18, 2011, at http://apne.ws/mYIUus.
13

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serious issue as to when and more importantly by whom this note was endorsed, the judge said.14 BACKGROUND IMPACT ON FORECLOSURES 75. Defendants failure to possess the complete Mortgage File and properly execute

assignments has prevented, obstructed, delayed, and/or increased the expense of otherwise proper foreclosures. 76. The nations courts have responded to the servicers notoriously flawed

paperwork by instituting new procedures in foreclosure matters in an effort to insure the integrity of the process. For example: a. The New York Court of Appeals implemented a new rule on October 20,

2010, requiring that every attorney handling a foreclosure matter sign a form verifying that the documentation presented to the court is valid. b. On November 8, 2010, the Cuyahoga County Court of Common Pleas

(covering Ohios largest county including the Cleveland metro area) announced a new residential mortgage foreclosure affidavit policy that will require attorneys to provide details of their communication with the representative of the party seeking foreclosure and certify that, to the best of their knowledge, the pleadings and other court filings are complete and accurate. c. In Maryland, the states highest court approved new emergency measures

that provide for examiners and/or special masters to scrutinize the documentation in foreclosure matters. The new rules specifically allow the courts to pass on the cost of the examinations to the firms foreclosing on debtors.

Scot J. Paltrow, Special Report: Banks still robo-signing, Reuters, July 19, 2011. Available online at http://t.co/0BmGkVH.

14

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77.

Due to Defendants failings, no foreclosure can take place at the cost anticipated

when Plaintiffs invested in the Trusts, because the cost of preparing foreclosure paperwork has increased exponentially. 78. Further, Defendants failings give rise to additional expenses associated with

foreclosures. Such expenses include, but are not limited to: (1) sanctions for misconduct in legal proceedings; (2) attorneys fees and costs of filing a foreclosure complaint dismissed or delayed due to improper documentation; (3) attorneys fees and costs of refiling or amending a foreclosure complaint or affidavit; (4) attorneys and other professional fees related to defenses against government investigations and claims; (5) costs of evaluating servicing procedures to ensure compliance with law; (6) the payment to borrowers and/or government entities of settlements, fines, penalties, or judgments related to this issue; (7) increased costs of future foreclosures; and (8) carrying costs associated with delaying Valid Foreclosures such as force-placed insurance, default-related services, and taxes. BACKGROUND IMPACT ON SALES OF FORECLOSED-UPON PROPERTIES 79. When a homeowner loses a home to foreclosure, title to the home passes to the

lender before the property is marketed and sold to a third party. At this stage in the process, the property is called Real Estate Owned (i.e., real estate owned by the lender). During this time, the property is typically vacant the homeowner no longer lives at the property. Real Estate Owned has certain costs of carry, which are

necessary to preserve the value of the property and get the best possible price from a buyer to reduce the deficiency owed by the borrower and maximize the return to the

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Trust. Such carrying costs include property maintenance, force-placed insurance coverage, taxes, and other expenses. 80. Further, once a property becomes Real Estate Owned, it cannot be allowed to

deteriorate so that it becomes unsellable and a public nuisance. Such practices damage both the borrower and the investor by increasing the deficiency owed by the borrower on the loan and the loss associated with the property, as well as the community at large. 81. An example of this practice is alleged by the City of Buffalo in a complaint (the

Buffalo Complaint) styled City of Buffalo v. ABN AMRO Mortgage Group, Inc., Case No. 2008002200 (N.Y. Sup. Ct. Feb. 20, 2008), which states at paragraph 117 that Bank of New York Trust was granted a judgment of foreclosure for the property know[n] as 508 Dodge in the City of Buffalo, New York and thereby was the owner, occupant, mortgagee in possession, equitable owner, or that which exercised dominion and control over said property and adds at paragraph 120 on information and belief that Defendant Bank of New York permitted, suffered and allowed the aforesaid building(s) located at 508 Dodge [to] become so dilapidated, deteriorated, abandoned and/or decayed so as to present a danger to the health, safety and welfare of the public. Similar allegations are made against the parent of the Master Servicer respecting a property at 1 Ruhland. Buffalo Compl. 109-114. 82. According to a Brookings Institution Senior Fellow, the impact of an REO

property that sits vacant and boarded up for a year after a foreclosure sale is far more damaging than that of a property that is quickly fixed up and sold at an affordable price to a homebuyer. [] The magnitude of that impact, as noted above, is largely a function of how long the property sat vacant prior to resale. The shorter the period from initial notice

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to foreclosure sale, and from then until the property is resold and reoccupied, the less the impact. Alan Mallach, REO Properties, Housing Markets, and the Shadow Inventory, REO and Vacant Properties: Strategies for Neighborhood Stabilization (Federal Reserve Banks of Boston and Cleveland and the Federal Reserve Board), at 16. 83. By contrast, according to the president of the National Community Stabilization

Trust, a quick sale of Real Estate Owned property means lower carrying and marketing costs, less property deterioration and vandalism, and other savings. Craig Nickerson, Acquiring Property for Neighborhood Stabilization: Lessons Learned from the Front Lines, REO and Vacant Properties: Strategies for Neighborhood Stabilization (Federal Reserve Banks of Boston and Cleveland and the Federal Reserve Board), at 92. 84. To obtain maximum value for an REO property, the Trust must be able to assure

the purchaser that the Trust has good and marketable title to the property. 85. The inability to assure the purchaser that the Trust has good and marketable title

to the property greatly suppresses the value the Trust can obtain for the property. 86. To the extent that title insurance can be obtained on the sale of an REO property,

title insurers now must perform significant additional diligence, which increases the time that the Trust must hold the REO property even after a potential purchaser has made an offer to buy the property. 87. Defendants failure to receive, process, retain, and hold the Mortgage Files in

accordance with the PSA calls into question title on REO properties that have been sold as well as current and future REO inventory. Damages due to Defendants failures include: (1) potential liability on already-sold REO property from borrowers, purchasers, and title insurers; (2) suppressed values of and/or the inability to sell REO property due

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to suspected or actual title defects; (3) increased expenses to remedy and/or insure against potential purchaser title defects; and (4) reduced property values and/or increased costs of carry due to longer timelines between foreclosure and REO sale dates. BACKGROUND OTHER IMPACTS 88. Defendants failings could have an additional impact. In an exclusive report,

Reuters noted on April 27, 2011 that: The U.S. Internal Revenue Service has launched a review of the tax-exempt status of a widely-held form of mortgage-backed securities called REMICs. The IRS confirmed to Reuters that the review comes in response to mounting evidence that banks violated tax requirements by mishandling the transfer of mortgages to REMICs, short for Real Estate Mortgage Conduits. Should the IRS find reason to take tough action, the financial impact could be enormous. REMIC investments are held by pension funds, in individual retirement plans such as 401(k)s and by state and local government entities. As of the end of 2010, investments in REMICs totaled more than $3 trillion, according to data supplied by the Securities Industry and Financial Markets Association. In a brief statement in response to questions from Reuters, the agency said: The IRS is aware of questions in the market regarding REMICs and proper ownership of the underlying mortgages as set out in federal tax law, and is actively reviewing certain aspects of this issue. The statement said the IRS would not make any further comment. An IRS spokesman declined to say anything about the extent of the review, or whether the agency is likely to take action. The review, however, is a sign that the widespread bank misdeeds in home foreclosure cases are spilling over to threaten the interests of investors in mortgage-backed securities. The banks originated the mortgages and packaged them into securities. These banks transgressions, confirmed in court decisions and through recent action by federal bank regulators, include the failure to formally transfer ownership of mortgages to the trusts that invested in them and the subsequent creation of fraudulent mortgage assignments and other false documents.

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These investment trusts already have suffered big drops in income because of vast numbers of mortgage defaults after the housing boom collapse. They have been hurt too because in an increasing number of instances they have been blocked by courts from foreclosing on defaulted mortgages. The courts ruled that because the trusts never received the required documents establishing that they owned the mortgages, they have no standing to foreclose. For investors, one of the big attractions of REMICs has been that they arent double-taxed. While individual investors pay taxes on income they receive from REMICs, the securities themselves are exempt from business income tax. But if the IRS concludes that the REMIC investments failed to comply with strict requirements in the federal tax code, the REMIC would have to pay a 100 percent tax on the income from those investments. That means that the IRS could confiscate the full amount. Tax law experts said the REMICs also could be subjected to additional penalties for failing to file tax returns on the income. Scot J. Paltrow, IRS weighs tax penalties on mortgage securities, Reuters, April 27, 2011, http://reut.rs/kPqOnE. BACKGROUND ILLICIT FORECLOSURES 89. Consistent with one of the Knights founding principles of patriotism, the people

of the United States have long supported members of the United States Armed Forces during their service. One means of demonstrating this support is to protect active duty military personnel from foreclosure. 90. According to Thomas E. Perez, Assistant Attorney General for the Civil Rights

Division of the Department of Justice: The men and women who serve our nation in the armed forces deserve, at the very least, to know that they will not have their homes taken from them wrongfully while they are bravely putting their lives on the line on behalf of their country. [] All lenders have an obligation to do their part to work with servicemembers while these brave men and women focus on keeping us safe.

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91.

To support of this policy, Congress enacted the Servicemembers Civil Relief Act

(SCRA) (formerly the Soldiers and Sailors Civil Relief Act), which, among other things, prohibits certain foreclosures absent a court order or specified agreement. 92. On the day the Knights original complaint was filed, the Department of Justice

announced that the Master Servicer will pay $20 million to resolve a lawsuit alleging that Countrywide foreclosed on approximately 160 servicemembers between January 2006 and May 2009 without court orders. The complaint supporting the lawsuit alleges that Countrywide did not consistently check the military status of borrowers on whom it foreclosed through at least May 31, 2009. 93. In announcing the settlement, Andr Birotte Jr, U.S. Attorney for the Central

District of California, noted: Countrywide Home Loans failed to protect and respect the rights of our servicemembers, failed to comply with clearly mandated procedures and foreclosed against homeowners who are valiantly serving our nation. Military families lost their homes when Countrywide violated the law, causing undue stress to wartime personnel who have been protected from such actions since the Civil War. 94. James T. Jacks, U.S. Attorney for the Northern District of Texas, added: With the numerous sacrifices our servicemembers make while they are serving our country, the last thing they need to worry about is whether or not their families will be forced from their homes. These lenders callous disregard for the SCRA, a law which was designed to insulate these patriots from unlawful foreclosures and other civil and financial obligations while they are on active duty, is deplorable. 95. The allegations that the Master Servicer engages in illicit foreclosures are not

limited to foreclosures against only servicemembers, however. For example, a Collier County, Florida Court found that the Master Servicer wrongfully tried to foreclose on a Florida couple. The Court found that the couple, who bought the house for cash, did not

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even have a mortgage. The Court ordered the Master Servicer to pay the couples legal fees, but, for more than five months, the Master Servicer failed to comply with the Courts order. 96. Finally, on or about June 5, 2011, the couple foreclosed on a Bank of America

branch, showing up with their attorney and a deputy sheriff, seizing property, and locking out a visibly shaken bank manager for about an hour until he presented the couple with a check for their legal fees. Theyve ignored our calls, ignored our letters, legally this is the next step to get my clients compensated, said the couples attorney. 97. The fees, costs, and liabilities associated with wrongful foreclosures should not be

borne by borrowers or each Trusts beneficiaries. BACKGROUND MARKED UP FEES FOR DEFAULT-RELATED SERVICES 98. According to a complaint filed by the Federal Trade Commission (the FTC

Complaint) on June 7, 2010, styled Federal Trade Commission v. Countrywide Home Loans, Inc. and BAC Home Loans Servicing, LP, Case No. CV-10-4193 (C.D. Cal.), the Master Servicer engaged in unlawful acts and practices in servicing mortgage loans for a particularly vulnerable class of consumers: borrowers in financial distress who are struggling to keep their homes. As with the loans in each Trust, [m]any of the loans serviced by Defendants are risky, high-cost loans that had been originated or funded by Defendants parent company, Countrywide Financial Corporation (CFC) and its subsidiaries. 99. According to the FTC Complaint 15: The scheme works as follows.

Defendants order default-related services from the default subsidiaries, which in turn obtain the services from third-party vendors. The default subsidiaries then charge

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Defendants a fee significantly marked up from the third-party vendors' fee for the service, and the Defendants, in turn, assess and collect these marked-up fees from borrowers. 100. The FTC Complaint 15 quotes the President, Chief Operating Officer, and

Director of Countrywide Financial Corporation, who indicated that this is a deliberate strategy created to profit from increased delinquencies: Now, we are frequently asked what the impact of our servicing costs and earnings will be from increased delinquencies and [loss] mitigation efforts, and what happens to costs. And what we point out is, as I will now, is that increased operating expenses in times like this tend to be fully offset by increases in ancillary income in our servicing operation, greater fee income from items like late charges, and importantly from in-sourced vendor functions that represent part of our diversification strategy, a counter-cyclical diversification strategy such as our businesses involved in foreclosure trustee and default title services and property inspection services. 101. The FTC Complaint 18 provides a specific example of the manner in which the Countrywide Field Services

Master Servicer charged for default-related services:

Corporation (CFSC), now doing business as BAC Field Services Corporation, is one of the default subsidiaries used by Defendants in servicing borrowers mortgage loans. Until at least July 1, 2008, CFSC was a subsidiary of Defendant CHL. Defendants order property inspections and property preservation services, such as lawn cuts, from CFSC, which in turn orders the services from third-party vendors. The vendors charge CFSC prices for the performance of these services, which prices CFSC then marks up in numerous instances by 100% or more before charging them to Defendants. Defendants then charge the marked-up fees to the borrower. Defendants collect these marked-up fees from borrowers through various means, including in connection with repayment plans, reinstatements, payoffs, bankruptcy plans, and foreclosures. 102. The FTC Complaint 19 details other examples of the manner in which the

Master Servicer on each Trust charged for default-related services: Defendants obtain - 40 -

services through other default subsidiaries in similar fashion and then charge borrowers fees for default services that are substantially marked up from the actual cost of the services. These other default subsidiaries are LandSafe Default, Inc., also known as LandSafe National Default, (LandSafe) and ReconTrust Company, N.A.

(ReconTrust). Defendants order pre-foreclosure title reports from LandSafe at the very beginning of a foreclosure referral. As soon as the report is completed, the borrower is billed for it, and Defendants send the report with the foreclosure referral to a foreclosure attorney or trustee. In many instances, Defendants send foreclosure referrals to ReconTrust. ReconTrust acts as the Defendants foreclosure trustee in non-judicial foreclosure states, such as California. LandSafe hires vendors to perform pre-foreclosure title services and then charges fees to Defendants for those services that are substantially marked up from the vendors prices. Likewise, ReconTrust provides

foreclosure trustee services that have been substantially marked up from the actual cost of the services. Defendants then pass on these marked-up fees to borrowers. 103. The Utah Attorney General has determined that ReconTrust, N.A., is not in

compliance with Utah Code 57-1-21(3) and 57-1-23 when conducting real estate foreclosures in the state of Utah.15. 104. According to the Utah Attorney General, Utah Code 57-1-21(3) and 57-1-23

provide that the only valid trustees of trust deeds with the power of sale are those who are either members of the Utah State Bar or title insurance companies. Because

ReconTrust is neither of these, all real estate foreclosures conducted by ReconTrust in the State of Utah are not in compliance with Utahs statutes, and are hence illegal.
See Letter from Utah Attorney General to Bank of America, May 19, 2011, at http://1.usa.gov/pzW8bF
15

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105.

The FTC Complaint omits one other method by which the Master Servicer can

collect for these marked-up services: by charging them to a Trust and its beneficiaries as expenses incurred in foreclosure. 106. In the most common instance, the borrower in default on the loan lacks sufficient

funds to pay the Master Servicer for these charges. Therefore, the Master Servicer takes its reimbursement for the default-related services from the amount recovered from the foreclosure sale of the home, which reduces the amount to be distributed to each Trusts beneficiaries. In exchange, each Trusts beneficiaries are provided with a deficiency claim against the borrower for these default-related services, which is of debatable validity and has little chance of being collected. 107. Unfortunately, the detail of these charges is not reported in a manner that allows

each Trusts beneficiaries to discern whether or not the Trust fund is incurring these marked-up services as expenses. 108. The FTC Complaint 17 alleges that the charges for default services violate the

borrowers loan documents: In charging marked-up fees for default services, Defendants have violated the mortgage contract by charging borrowers for default services that exceed the actual cost of the services and that are not reasonable and appropriate to protect the note holders interest in the property and rights under the security instrument. In addition, Defendants have charged borrowers for the performance of default services, such as property inspections and title reports, that in some instances were not reasonable and appropriate to protect the note holders interest in the property and rights under the security instrument.

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109.

Any inflated fees charged by the Master Servicer for default related services are

neither customary, nor reasonable, nor necessary, and reflect more than the cost of the services. 110. Based on the information presented above, each Trust has been charged for these

marked-up default-related services, and additional consequences could be incurred by the Trusts in addition to the marked-up charges. BACKGROUND FORCE-PLACED INSURANCE 111. A November 10, 2010 article in AMERICAN BANKER describes the Master

Servicers practice of using an affiliate to force-place insurance at inflated rates on homeowners struggling to make payments, with investors like Plaintiff ultimately bearing the cost: Nominally purchased to protect the owners of mortgage-backed securities, such force-placed insurance can be 10 times as costly as regular policies, raising struggling homeowners' debt loads, pushing them toward foreclosure and worsening the loss to investors on each defaulted loan. Evidence of abuses and self-dealing in the force-placed insurance industry suggests that there may be far larger problems in how servicers are handling distressed loans than the sloppy document recording that has been the recent focus of industry woes. Behind banks servicing insurance practices lie conflicts of interest that align servicers and their insurer partners against borrowers and investors. Bank of America Corp. owns a force-placed insurance subsidiary, and most other major servicers receive commissions or reinsurance fees on the very same policies they purchase on investors and borrowers behalf. There's no arms-length transaction here, and that creates all sorts of incentives for the servicer to force-place excessive insurance and overcharge consumers for policies that provide minimal benefit, said Diane Thompson, of counsel for the National Consumer Law Center. Servicers and insurers have turned this into a gravy train. []

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Foreclosure defense and legal aid attorneys say force-placed insurance is found on most of the severely delinquent loans in this country. If so, the cost to investors may well be in the billions of dollars. [] With little regulatory oversight or even private investor awareness, force-placed insurance has helped make drawn-out foreclosures lucrative for servicers far more so, in some cases, than helping a borrower return to performing status. As the intermediary between borrower and investor, servicers appear to be benefiting themselves at the expense of both. 112. As the AMERICAN BANKER article suggests, force-placed insurance at inflated

rates damages Plaintiff and other investors in the Trusts in two ways. First, force-placing exorbitant insurance premiums on a struggling borrower makes the borrower less likely to recover from the default and make payments on the loan in the future. Second, if the borrower fails to pay the exorbitant premium, as most of them do, then the Master Servicer collects those payments from the proceeds of a foreclosure before passing the remaining funds through to the Trust. By thus reducing the amount paid to each Trust from the foreclosure sale, the Master Servicer has effectively charged its exorbitant premiums to the Trust. 113. Further, well-respected analyst Laurie Goodman notes that by extending time to

foreclosure, Bank of America/Countrywide are not only able to obtain hefty late fees (which payment is at the top of the waterfall at liquidation; paid before investors recover a single dime), but they are also profiting though their Balboa subsidiary [part of the Countrywide Insurance Group]. AMHERST MORTGAGE INSIGHT, May 20, 2010, at 23. 114. Charges for unnecessary insurance coverage at inflated rates increases the losses

to investors associated with defaulted loans while benefiting the Master Servicer and its affiliates.

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COUNT I: BREACH OF CONTRACT 115. Plaintiff incorporates by reference this Complaints preceding paragraphs, and

makes the following allegations on information and belief on the basis set forth in the Complaints preceding paragraphs. 116. Defendant entered into the PSA for the benefit of Plaintiff, as a beneficiary of

each Trust. 117. On the inception date of the PSA, Defendant failed to perform its fundamental

obligation to obtain the corpus of each Trust. 118. Subsequently, Defendant failed to perform its obligations concerning inventories

of each Trusts corpus and assignments of each Trusts corpus. 119. 120. Defendant failed to perform its obligations to hold each Trusts corpus. Defendant covered up its failures by certifying that the Trust assets were

maintained and safeguarded as required by certain transaction agreements. 121. At a minimum, Defendant also witnessed the Master Servicer initiate and execute

a scheme to cover up the failure to deliver the corpus of each Trust to Defendant. 122. The cover-up scheme included the act of filing thousands of false affidavits in

Courts throughout the country, very often in Defendants name, which had the effect of denying due process of law to borrowers facing the loss of a home. 123. Defendants breaches greatly increased costs and risks to each Trust and thus

damaged Plaintiff as a beneficiary of each Trust in an amount to be determined at trial.

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COUNT II: FAILURE OF CONSIDERATION 124. Plaintiff incorporates by reference this Complaints preceding paragraphs, and

makes the following allegations on information and belief on the basis set forth in the Complaints preceding paragraphs. 125. The Trustees receipt, review, assignment, and holding of the Mortgage Files for

the benefit of certificateholders are fundamental terms of the PSA. 126. 127. Defendant failed to perform these fundamental duties. Defendants failures exposed each Trust, and thus Plaintiff as a beneficiary of

each Trust, to unknown and un-bargained for costs and risks. 128. As a consequence of this failure of consideration, Plaintiff is entitled to a return of

the price of investment, minus amounts received, and insulation against all future risks associated with Defendants breaches and other misconduct. COUNT III: BREACH OF FIDUCIARY DUTY 129. Plaintiff incorporates by reference this Complaints preceding paragraphs, and

makes the following allegations on information and belief on the basis set forth in the Complaints preceding paragraphs. 130. Defendant is not entitled to the protections of the PSA, which Defendant violated

from its inception. 131. Defendant, as a Trustee, had fiduciary obligations to Plaintiff, as a beneficiary of

each Trust. 132. Defendant breached its fiduciary obligations, by, among other things failing to

acquire and safeguard Trust corpora.

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133.

Defendant breached its fiduciary obligations by, among other things, failing to

manage each Trust with the care and skill that a prudent person would use in the exercise of his or her own affairs. 134. Defendant breached its fiduciary obligations by, among other things, laboring

under a conflict of interest and acting for its own benefit rather than for the benefit of the beneficiaries of each Trust. 135. Defendants breaches of fiduciary duty include failing to provide prompt notice to

other parties to the PSA when Defendant discovered breaches of representations and warranties, including those breaches of representations and warranties revealed in Securities and Exchange Commission v. Mozilo, No. 09-CV-3994, 2010 WL 3656068 (C.D. Cal. Sept. 16, 2010) and In the matter of the application of The Bank of New York Mellon, Index No. 651786/2011 (N.Y. Sup. Ct.). 136. Defendants breaches of fiduciary duty include failing to investigate and remedy

numerous defaults by the Master Servicer, including: a. Reports of an Independent Accounting Firm produced by a competent nationally or regionally recognized firm of independent public accountants and member of the American Institute of Certified Public Accountants finding on the part of the Master Servicer material non-compliance with certain servicing criteria; b. The Master Servicers robo-signing scheme, as reported by numerous sources, including those listed in this Complaint; c. The Master Servicers illicit foreclosure activities, including:

(i) foreclosures against borrowers who were not delinquent on payments,

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as reported in various media outlets; and (ii) foreclosures against members of the armed services in violation of the Servicemembers Civil Relief Act (SCRA) (formerly the Soldiers and Sailors Civil Relief Act), as reported in the Department of Justices complaint against and settlement with Master Servicer; d. The Master Servicers marked-up fees for defaultrelated services, as reported in the Federal Trade Commissions complaint against and settlement with the Master Servicer; e. The Master Servicers practice of using an affiliate to force-place insurance at inflated rates on homeowners struggling to make payments, as reported by AMERICAN BANKER; f. The Master Servicers critical deficiencies and shortcomings in foreclosure governance processes, foreclosure document preparation processes, and oversight and monitoring of third party law firms and vendors, as reported in an examination by the Office of Comptroller of the Currency, the Office of Thrift Supervision, the Federal Deposit Insurance Corporation, and the Federal Reserve Board; g. The Master Servicers failure to properly care for and dispose of unoccupied properties, as reported, for example, in a complaint by the City of Buffalo; h. The Master Servicers unsafe or unsound banking practices [i]n connection with certain foreclosures of loans in its residential mortgage

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servicing portfolio, as reported in the Master Servicers consent order with the Office of the Comptroller of the Currency. 137. Defendants breaches of fiduciary duty caused significant economic harm to each

Trust and and to Plaintiff as a beneficiary of each Trust, as well as harm to the public through the national financial crisis, for which Plaintiff is entitled to an award of damages, including punitive damages. COUNT IV NEGLIGENCE/GROSS NEGLIGENCE/RECKLESSNESS 138. Plaintiff incorporates by reference this Complaints preceding paragraphs, and

makes the following allegations on information and belief on the basis set forth in the Complaints preceding paragraphs. 139. Defendant owed Plaintiff numerous duties as a beneficiary of each Trust. Such

duties included, but were not limited to: a. Notifying Plaintiff that Defendant failed to perform its duties regarding the Mortgage Files; b. Notifying Plaintiff that other parties to the PSA had failed to perform obligations regarding, among other things, the Mortgage Files and the administration of the Trusts; c. Refraining from issuing (or allowing to be issued) certifications indicating that Mortgage Files were maintained and/or safeguarded as required by certain transaction agreements; d. e. Making inquiry as to the location and content of the Mortgage Files; Ensuring that the assignments have been filled out properly and executed; and

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f.

Giving notice that the Master Servicer was covering up Defendants failure to receive, review, retain, and process the Mortgage Files.

140. 141.

Defendant breached its duties. Defendants breaches of duties rise to the level of gross negligence and

recklessness. Defendant knew or should have known that: a. Defendants failure to receive, review, retain, and process the Mortgage Files jeopardized the very existence of each Trust, as well as each Trusts ability to realize value on the Trust corpus; b. Defendants failure to receive, review, retain, and process the Mortgage Files for each Trust could cloud title on thousands of mortgages, giving rise to significant societal problems, as well as damages to the Trust; c. Plaintiff and other investors would be purchasing and/or holding certificates in each Trust on the representation that Defendant had properly received, reviewed, retained, and processed the Mortgage Files for the benefit of the Trust beneficiaries; d. The laws of several states required that Defendant hold the Note in order to foreclose on borrowers, and foreclosures performed for each Trust may not comply with those laws; and e. The Master Servicer executed untruthful affidavits and manufactured documents in order to foreclose on borrowers and cover up Defendants failures.

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142.

As a proximate cause of Defendants breaches of duties, Plaintiff has suffered

damages in terms of the current and future value of investments, the return on investments, and the risks of investments. 143. Plaintiff is entitled to punitive damages. COUNT V UNFAIR TRADE PRACTICES 144. Plaintiff incorporates by reference this Complaints preceding paragraphs, and

makes the following allegations on information and belief on the basis set forth in the Complaints preceding paragraphs. 145. Plaintiff held and maintained its investment in the Trusts in the State of

Connecticut, where Defendant also does business. 146. Defendant made or caused to be made to the Knights and other Certificateholders

representations, which were material, false, and likely to mislead and/or made omissions that it had a duty to disclose as identified in the preceding paragraphs of this Complaint. 147. Defendants conduct constituted a pattern and practice of unfair and deceptive

acts and practices and was engaged in as part of its trade or business. 148. Defendants actions as set forth in this Complaint offend Connecticut public

policy in multiple respects, including but not limited to public policy favoring truthfulness in business statements and disclosures, clean title to real estate, duties of trustees to trust beneficiaries, and due process of law. 149. 150. Defendants actions were immoral, unethical, oppressive, and/or unscrupulous. Defendants actions directly and proximately caused substantial injuries to

consumers.

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151.

Defendants actions caused a substantial and ascertainable loss of money and

property to Plaintiff. 152. Plaintiff is entitled to an award of damages for ascertainable loss of money and

property pursuant to Conn. Gen. Stat. 42-110g(a). 153. Plaintiff is entitled to an award of punitive damages for the intentional and

wanton violation of and/or reckless indifference to its rights by Defendant pursuant to Conn. Gen. Stat. 42-110g(a). 154. Plaintiff is entitled to an award of costs and reasonable attorneys fees pursuant to

Conn. Gen. Stat. 42-110g(d). 155. Plaintiff is entitled to such equitable relief as is necessary or proper, including an

accounting, to ensure that Defendant manages these Trusts with the care and skill that a prudent person would use in the exercise of his or her own affairs and does not engage in any acts that violate the Connecticut Unfair Trade Practices Act pursuant to Conn. Gen. Stat. 42-110g(a). 156. Plaintiff will mail a copy of the Amended Complaint to the Attorney General and

Commissioner of Consumer Protection of the State of Connecticut in accordance with the provisions of the Connecticut Trade Practices Act pursuant to Conn. Gen. Stat. 42-110g(c). COUNT VI ACCOUNTING 157. Plaintiff incorporates by reference this Complaints preceding paragraphs, and

makes the following allegations on information and belief on the basis set forth in the Complaints preceding paragraphs.

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158.

Significant evidence exists that Plaintiff and each Trust are suffering irreparable

harm, including but not limited to: (a) the payment to the Master Servicer and its affiliates and vendors of unauthorized, exorbitant, and potentially illegal fees; (b) the failure of each Trust to enforce its rights regarding the loans that comprise the Trust corpus; and (c) the actual size and nature of each Trusts corpus itself. 159. The results of an accounting may demonstrate that Plaintiff and others are entitled

to further relief, including but not limited to money damages, rescission on the purchase of the certificates, a cease and desist order, or other monetary, declaratory, or injunctive remedies. 160. Defendant is obligated, under New York law, to provide an accounting regarding

the issues set forth in this Complaint. 161. Plaintiff demands under New York law an immediate accounting of: (a) all costs,

charges, and expenses for which the Master Servicer has obtained or sought reimbursement from either Trust or from the proceeds of any foreclosure, payment, short sale, or other money received related to a loan in a Trust; (b) the practices of the Master Servicer related to foreclosures and REO Property; and (c) the actual size and nature of each Trusts corpus. COUNT VII ATTORNEYS FEES 162. In order to bring this action, the Knights were required to retain the services of the

law firms representing them in this matter, and have agreed to pay these firms a reasonable fee for their services. The Knights request attorneys fees as set forth in the prayer for relief.

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PRAYER FOR RELIEF WHEREFORE, Plaintiff respectfully prays that this Court enter an Order: a. Requiring Defendant to pay Plaintiffs damages in an amount to be

determined at trial; b. Requiring Defendant to pay Plaintiffs cost of investment, minus amounts

received, and bear all risk of such investment going forward; c. d. Granting Plaintiffs request for an accounting; To the extent that the request for accounting benefits any party, including

the Trustee, the Trusts, or the Trusts beneficiaries, assess all costs and expenses of the accounting and of this action, first, against any party found to have unjustly caused the Trusts to incur losses or expenses, and second, if that is not possible, against the parties receiving the benefit; e. f. g. Granting Plaintiffs request for equitable relief; Attorneys fees and expenses; and Such other and further relief as the Court may deem just and proper.

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JURY DEMAND Plaintiff demands a trial by jury on all claims so triable. Dated: August 16, 2011 Respectfully Submitted,

/s Peter N. Tsapatsaris_ Peter N. Tsapatsaris PETER N. TSAPATSARIS, LLC 200 East 33rd Street 27th Floor, Suite D New York, NY 10016 Office: (646) 490-7795 peter@pntlaw.com OF COUNSEL: Talcott J. Franklin* Sheri Deterling** TALCOTT FRANKLIN P.C. 208 North Market Street Suite 200 Dallas, Texas 75202 214.736.8730 phone 877.577.1356 facsimile tal@talcottfranklin.com sheri@talcottfranklin.com
* ** Licensed only in North Carolina, South Carolina (inactive), and Texas. Pro hac vice application previously approved. Licensed only in Washington (inactive) and Texas. Pro hac vice application to be submitted.

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