LOAN AUDIT AND MORTGAGE BACKED SECURITY ANALYSIS

Homeowner/Mortgagor:

Confidential

Securitized Property:

                 

Confidential Torrance, CA 90501

 
Paladin Associates – Forensic Mortgage Experts 

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MORTGAGOR
BORROWER
Confidential

 

CO-BORROWER PROPERTY ADDRESS
Confidential, Torrance, CA 90501

CURRENT ADDRESS
Confidential, Torrance, CA 90501
 

         

TRANSACTION PARTICIPANTS
MORTGAGE BROKER MORTGAGE SERVICER MORTGAGE NOMINEE/BENEFICIARY

Allstate Home Loans, Inc. dba Allstate Funding 5 Corporat5e Park, Suite 100 Irvine, CA 92606

BAC Home Loans Servicing, LP 400 Countrywide Way Simi Valley, CA 93065

Mortgage Electronic Registration Systems, Inc.

ORIGINAL MORTGAGE LENDER

MORTGAGE TRUSTEE

TITLE COMPANY

Shearson Home Loans 8 Hughes Suite 250 Irvine, CA 92618

Progressive Title Co. 425 W. Broadway Glendale, CA 91206

Progressive Title Co. 425 W. Broadway Glendale, CA 91206

 
Paladin Associates – Forensic Mortgage Experts 

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NATIONAL ASSOCIATION SERVICER(S) CUT – OFF DATE CLOSING DATE OCWEN LOAN SERVICING. BOX 4308 LOS ANGELES.O. NATIONAL EQUITY LOAN TRUST. HOME HSBC BANK USA. ACE SECURITIES CORP. P. LLC COUNTRYWIDE HOME LOANS SERVICING LP FEBRUARY 1. 2007     Paladin Associates – Forensic Mortgage Experts  Page 3 .  SECURITIZATION PARTIES TRUE LENDER SPONSOR/SELLER DEPOSITOR WMC MORTGAGE CORP. 2007 ON OR ABOUT MARCH 8. ASSOCIATION SERIES2007-HE2 WELLS FARGO BANK. ISSUING ENTITY TRUSTEE MASTER SERVICER/ SECURITIES ADMINISTRATOR ACE SECURITIES CORP. CA 90054 DB STRUCTURED PRODUCTS. INC.

2007         The Deed of Trust and the Note have taken two distinctly different paths.000 (approximate). INC.  CHAIN OF TITLE DEED DATE NOTE     DATE MORTGAGE ELECTRONIC REGISTRATION SYSTEMS. sold and transferred. MI 48501-2026 MAY 25. BOX 2026 FLINT. P. HOME EQUITY LOAN TRUST SERIES 2007-HE2 FEBRUARY 1. 2006 ALLSTATE HOME LOANS.178. 2006 ASSET BACKED PASSTHROUGH CERTIFICATES.00 was combined with other loans and mortgages and this pool of loans and mortgages is valued at approximately $1. INC. SERIES 2007-HE2 ACE SECURITIES CORP.the borrower‟s loan of $701. 5 CORPORATE PARK IRVINE.O.250. The Deed of Trust was never transferred. The Note was however pooled. The links are:     Paladin Associates – Forensic Mortgage Experts  Page 4 . CA 92606 MAY 25.167.

The Offered Certificates represent an interest solely in the Issuing Entity and do not represent interests in or obligations of the Sponsor. Series 2007-HE2 Asset Backed Pass-Through Certificates ACE Securities Corp. 2006) $749. Home Equity Loan Trust. Home Equity Loan Trust.000 (Approximate) ACE SECURITIES CORP. Distributions on the Offered Certificates will be made on the 25th day of each month. the Depositor. Sponsor ACE Securities Corp.  Prospectus Supplement dated March 8. LLC Countrywide Home Loans Servicing LP Servicers Wells Fargo Bank.664. 2007 (to Prospectus dated April 18. Inc. Series 2007-HE2 Issuing Entity DB Structured Products. beginning in March 2007. if such day is not a business day. or any of their affiliates. or.   Paladin Associates – Forensic Mortgage Experts  Page 5 . Depositor Ocwen Loan Servicing. National Association Master Servicer You should consider carefully the risk factors beginning on page S-12 in this prospectus supplement. This prospectus supplement may be used to offer and sell the Offered Certificates only if accompanied by the prospectus. on the next succeeding business day.

000 33.000 14.50%. the Offered Certificates may benefit from a series of net swap payments pursuant to an interest rate swap agreement and interest rate cap payments pursuant to two separate cap agreements. Class A-2C and Class A-2D Certificates will increase by 100% and the margins applicable to the Class M-1. 2036 December 25. Class M-6.  Offered Certificates The trust created for the Series 2007-HE2 certificates will hold a pool of first and second lien fixed-rate and adjustable-rate.000 188.939.689.076. In addition. Proceeds to the Depositor from the sale of the Offered Certificates will be approximately 98.177.98% of their initial Certificate Principal Balance before deducting expenses. 2036 December 25.14% One-Month LIBOR + 0.75% One-Month LIBOR + 1.000 18.000 13. one.000 16. Class M-2.813. Any representation to the contrary is a criminal offense.40% One-Month LIBOR + 0. 2036 December 25.073. 2036 One-Month LIBOR + 0.442. The Attorney General of the State of New York has not passed on or endorsed the merits of this offering. (2) Pass-Through Rate One-Month LIBOR + 0. 2036 December 25. 2036 December 25.00% (2)(3) (2)(3) (2)(3) (2)(3) (2)(3) One-Month LIBOR + 2. The certificates offered by this prospectus supplement will be purchased by Deutsche Bank Securities Inc. 2036 December 25. Credit enhancement for all of the Offered Certificates will be provided in the form of excess interest.12% One-Month LIBOR + 0.810. 2036 December 25.442. Class M-5.32% (2)(3) One-Month LIBOR + 0.000 30.50% (2)(3) (2)(3) (3) The pass-through rate for each class of Offered Certificates will be subject to the applicable Net WAC Pass-Through Rate as described in this prospectus supplement under “Description of the Certificates-Pass-Through Rates. 2036 December 25.40% One-Month LIBOR + 0.000 48. 2036 December 25. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the Offered Certificates or determined that this prospectus supplement or the prospectus is truthful or complete. Deutsche Bank Securities   Paladin Associates – Forensic Mortgage Experts  Page 6 . Class A-2A.” After the first possible optional termination date. in each case.000 32. You can find a list of these classes.000 11.000 Class A-1 A-2A A-2B A-2C A-2D M-1 M-2 M-3 M-4 M-5 M-6 M-7 M-8 M-9 ______________________ (1) Approximate. 2036 December 25.24% One-Month LIBOR + 0.381. Class M-7. which are intended partially to mitigate interest rate risk.30% (2)(3) (2)(3) (2)(3) (2)(3) Assumed Final Distribution Date December 25.354.65% One-Month LIBOR + 0. in the table below.243. The trust will issue fourteen classes of Offered Certificates. 2036 December 25. residential mortgage loans.599. Class A-2B. Class M-3. Initial Certificate Principal Balance(1) $ $ $ $ $ $ $ $ $ $ $ $ $ $ 283.626. from the Depositor. from time to time for sale to the public in negotiated transactions or otherwise at varying prices to be determined at the time of sale.to four-family. overcollateralization and subordination. Class M-4. and are being offered by Deutsche Bank Securities Inc.000 12.000 11. 2036 December 25.50% One-Month LIBOR + 2.000 34. Class M-8 and Class M-9 Certificates will increase by the lesser of (i) the product of the applicable margin and 50% and (ii) 0. Any representation to the contrary is unlawful. 2036 December 25. together with their initial certificate principal balances and pass-through rates. the margins applicable to the Class A-1.50% (2)(3) One-Month LIBOR + 2.14%(2)(3) One-Month LIBOR + 0.

” The Group I Mortgage Loans consist of first and second lien. fixed-rate and adjustable-rate mortgage loans on residential real properties (the “Mortgage Loans”). Class A-2B. Class A2C and Class A-2D Certificates (collectively.909.  The Trust The Depositor will establish a trust with respect to the certificates under the pooling and servicing agreement dated as of the Cut-off Date among the Depositor. distributions of interest and principal. The principal balances of the Group II Mortgage Loans at origination may or may not have conformed to Freddie Mac loan limits.607 fixed-rate and adjustable-rate mortgage loans having an aggregate principal balance as of the Cut-off Date of approximately $382. The Group II Mortgage Loans consist of first and second lien. the Master Servicer. In general. The Mortgage Loans References to percentages of the mortgage loans under this section are calculated based on the aggregate principal balance of the mortgage loans as of the Cut-off Date.542 after application of scheduled payments due on or before the Cut-off Date whether or not received. fixed-rate and adjustable-rate mortgage loans (the “Mortgage Loans”) on residential real properties (the “Mortgaged Properties”) having an aggregate principal balance as of the Cut-off Date of approximately $796.999 after application of scheduled payments due on or before the Cut-off Date whether or not received. There are seventeen classes of certificates representing the trust. fixed-rate and adjustable-rate mortgage loans with principal balances at origination that conformed to Freddie Mac loan limits. The principal balances of the Group I Mortgage Loans at origination conformed to Freddie Mac loan limits. payments made by the Swap Provider under the interest rate swap agreement and payments made by the cap provider under the cap agreements. For purposes of calculating interest and principal distributions on the Class A Certificates. For purposes of calculating interest and principal distributions on the Class A-1 Certificates and the Class A-2A. the Mortgage Loans have been divided into two loan groups. the Mortgage Loans have been divided into two loan groups.524. and subject to a permitted variance of plus or minus 5%. first and second lien.543 after application of scheduled payments due on or before the Cut-off Date whether or not received. and subject to a permitted variance of plus or minus 5%.434. one. if applicable. The Group II Mortgage Loans consist of 2.” The Group I Mortgage Loans consist of 2. The trust will contain 4. The certificates represent in the aggregate the entire beneficial ownership interest in the trust. the Securities Administrator and the Trustee. the “Class A-2 Certificates”.330 fixed-rate and adjustable-rate mortgage loans having an aggregate principal balance as of the Cut-off Date of approximately $413. The Mortgage Loans have original terms to maturity of not greater than 30 years. first and second lien. on the Offered Certificates will be made only from payments received or advanced in respect of the mortgage loans.to four-family. and together with the Class A-1 Certificates. and subject to a permitted variance of plus or minus 5%.937 conventional. the Servicers.   Paladin Associates – Forensic Mortgage Experts  Page 7 .937 conventional. one.   THE MORTGAGE POOL General The pool of mortgage loans (the “Mortgage Pool”) will consist of 4. designated as the “Group I Mortgage Loans” and the “Group II Mortgage Loans.to four-family. fixed-rate and adjustable-rate mortgage loans with principal balances at origination that may or may not have conformed to Freddie Mac loan limits. See “Description of the Certificates” in this prospectus supplement. the “Class A Certificates”). designated as the “Group I Mortgage Loans” and the “Group II Mortgage Loans.

18% of the Mortgage Loans are fixed-rate mortgage loans and approximately 72. The first adjustment with respect to each ARM Loan will not occur until after an initial period of one. the mortgagor’s monthly payment will be recalculated to cover both interest and principal so that such Mortgage Loan will amortize fully on or prior to its final payment date. are secured by second mortgages or deeds of trust or other similar security instruments creating second liens on residential properties (“Second Lien Mortgage Loans”). the Mortgage Rate on each ARM Loan.92% of the Mortgage Loans. townhouses and rowhouses. three. in each case on each applicable adjustment date (each such date. an “Adjustment Date”). are balloon loans (the “Balloon Loans”). the Servicer will be responsible for calculating and implementing Mortgage Rate adjustments. are calculated based on the aggregate principal balance of the Mortgage Loans as of the Cut-off Date. which require the related mortgagors to make balloon payments on the maturity date of such Balloon Loans that are larger than the monthly payments made by such mortgagors on prior due dates in order to amortize such Balloon Loans fully over their terms. are secured by first mortgages or deeds of trust or other similar security instruments creating first liens on residential properties (“First Lien Mortgage Loans”). as applicable and a fixed percentage amount (the “Gross Margin”) for that ARM Loan specified in the related mortgage note.82% of the Mortgage Loans are adjustable-rate mortgage loans. All of the ARM Loans provide for semi-annual adjustment to the Mortgage Rates applicable thereto based on Six-Month LIBOR (as described below). by aggregate principal balance as of the Cut-off Date. provide for level monthly payments in an amount sufficient fully to amortize the Mortgage Loans over their terms or. As to each Mortgage Loan.62% of the Mortgage Loans. as adjusted on any related Adjustment Date. are interest only loans (the “Interest Only Loans”) which require the related mortgagors to make monthly payments of only accrued interest for the first five. S-24   Paladin Associates – Forensic Mortgage Experts  Page 8 . the monthly payment amount on each ARM Loan (other than any ARM Loan which is a Balloon Loan) will be adjusted to an amount that will fully amortize the outstanding principal balance of the related ARM Loan over its remaining term and pay interest at the Mortgage Rate as so adjusted. The mortgage rate (the “Mortgage Rate”) on each Mortgage Loan is the per annum rate of interest specified in the related mortgage note as reduced by application of the Relief Act or similar state or local laws and bankruptcy adjustments.977% per annum and approximately 1. by aggregate principal balance as of the Cut-off Date. individual condominium units. The Mortgage Rate on each ARM Loan. monthly payments that will be adjusted to an amount that will amortize such Mortgage Loans fully over their terms. however. and the related Gross Margin.98% of the Mortgage Loans. Due to the application of the Periodic Rate Caps and the Maximum Mortgage Rates. including each Delayed First Adjustment Mortgage Loan. the ARM Loans have corresponding adjustments to their monthly payment amount.08% of the Mortgage Loans.095% per annum. the Mortgage Rate on each ARM Loan will be adjusted generally to equal the sum of the related Index. will not increase or decrease by more than the initial periodic rate cap (the “Initial Periodic Rate Cap”) specified in the related mortgage note on the initial Adjustment Date or increase or decrease by more than the subsequent periodic rate cap (the “Subsequent Periodic Rate Cap”) specified in the related mortgage note on any subsequent Adjustment Date and will not exceed a specified maximum mortgage rate (the “Maximum Mortgage Rate”) over the life of the ARM Loan or be less than a specified minimum mortgage rate (the “Minimum Mortgage Rate”) over the life of the ARM Loan. Approximately 41. in the case of adjustable rate Mortgage Loans. in each case.98% of the Mortgage Loans. calculated as described in this prospectus supplement. detached or semi detached. may be less than the sum of the related Index. Approximately 8.  Approximately 48. Effective with the first monthly payment due on each ARM Loan after each related Adjustment Date. by aggregate principal balance as of the Cut-off Date. seven or ten years following origination. respectively. The weighted average Initial Periodic Rate Cap and Subsequent Periodic Rate Cap for the ARM Loans is approximately 2. a “Delayed First Adjustment Mortgage Loan”). two. The Mortgaged Properties generally consist of attached. Approximately 4. by aggregate principal balance as of the Cut-off Date. individual units in planned unit developments. by aggregate principal balance as of the Cut-off Date. After such interest-only period. References to percentages of the Mortgage Loans. None of the ARM Loans permit the related mortgagor to convert the adjustable Mortgage Rate thereon to a fixed Mortgage Rate. See “—The Indices of the Mortgage Loans” in this prospectus supplement. Approximately 27. Approximately 95. five or ten years from the date of origination thereof (each. one to four family dwelling units. On each Adjustment Date. unless otherwise noted. In connection with each Mortgage Rate adjustment. by aggregate principal balance as of the Cut-off Date. The adjustable-rate mortgage loans are referred to in this prospectus supplement as “ARM Loans”.

was amended. Each Mortgage Loan will contain a customary “due-on-sale” clause which provides that the Mortgage Loan must be repaid at the time of a sale of the related Mortgaged Property or assumed by a creditworthy purchaser of the related Mortgaged Property. See “Certain Legal Aspects of the Mortgage Loans. The Depositor makes no representations as to the effect that the Prepayment Charges and the amendment of the Parity Act may have on the prepayment performance of the Mortgage Loans. As of July 1. if any. 2003. the amendment of the Parity Act does not retroactively affect loans originated before July 1. 2003. a lost note affidavit. plus all accrued and unpaid interest thereon. the “Due Date”). computed at the Mortgage Rate through the end of the calendar month in which the purchase is effected. by aggregate principal balance as of the Cut-off Date. provide for payment by the mortgagor of a prepayment charge (a “Prepayment Charge”) in limited circumstances on certain prepayments as provided in the related mortgage note. Inc. the Depositor will deliver or cause to be delivered to the Trustee (or the applicable Custodian. The assignments of mortgage are generally required to be recorded by or on behalf of the Depositor in the appropriate offices for real property records. which regulates the ability of Originators to impose prepayment charges. decisions by the Servicers with respect to the waiver of the Prepayment Charges and the amendment to the Parity Act. prior to the Closing Date. the Trustee or the applicable Custodian on its behalf will review the Mortgage Loans and the Related Documents pursuant to the related Custodial Agreement and. with respect to a lost mortgage note. or (ii) with respect to any Mortgage Loan electronically registered through the Mortgage Electronic Registration Systems. may have on the prepayment performance of the Mortgage Loans. as provided in the related mortgage note. The Depositor makes no representation as to the effect that the Prepayment Charges. S-25 The Pooling and Servicing Agreement will require that. the Sponsor will be obligated either to (i) substitute for such Mortgage Loan a Qualified Substitute Mortgage Loan. the Originators will be required to comply with state and local laws in originating mortgage loans with prepayment charge provisions with respect to loans originated on or after July 1. The amount of the Prepayment Charge is as provided in the related mortgage note. Approximately 68. On or prior to the Closing Date. the Servicers may waive the payment of any otherwise applicable Prepayment Charge with respect to the related Mortgage Loans. or. decisions by the Servicers with respect to the waiver of the Prepayment Charges and the amendment to the Parity Act. Each such Mortgage Loan provides for payment of a Prepayment Charge on certain partial prepayments and all prepayments in full made within a certain period of time from the date of origination of the Mortgage Loan. or (ii) purchase such Mortgage Loan at a price (the “Purchase Price”) equal to the outstanding principal balance of such Mortgage Loan as of the date of purchase. The Purchase Price will be required to be remitted to the related Servicer for deposit in the related Collection Account (as defined in this prospectus supplement) for remittance to the Securities Administrator prior to the next succeeding Distribution Date after such obligation arises. as the Trustee’s agent for such purpose) the mortgage notes endorsed in blank and the Related Documents.98% of the Mortgage Loans. however. the Depositor may deliver or cause to be delivered true and correct copies thereof. and as a result. that the Prepayment Charges. Investors should conduct their own analysis of the effect. and these amounts will not be available for distribution on the other classes of certificates.Prepayment Charges and Late Fees.  Substantially all of the Mortgage Loans have scheduled monthly payments due on the first day of the month (with respect to each Mortgage Loan. 2003. Under the limited instances described under the terms of the pooling and servicing agreement. the Alternative Mortgage Parity Act of 1982 (the “Parity Act”). However. may have on the prepayment performance of the Mortgage Loans. The obligation of the Sponsor to repurchase or substitute for a Deleted Mortgage Loan (as defined in this prospectus supplement) is the sole remedy regarding any defects in the Mortgage Loans and Related Documents available to the certificateholders. The holders of the Class P Certificates will be entitled to all Prepayment Charges received on the Mortgage Loans. In lieu of delivery of original mortgages or mortgage notes.   Paladin Associates – Forensic Mortgage Experts  Page 9 . if such original is not available or lost. except (i) in states as to which an opinion of counsel is delivered to the effect that such recording is not required to protect the Trustee’s interest in the Mortgage Loan against the claim of any subsequent transferee or any successor to or creditor of the Depositor or the Sponsor. plus the amount of any unpaid Servicing Fees or unreimbursed P&I Advances and servicing advances made by the related Servicer plus all unreimbursed costs and damages incurred by the trust and the Trustee in connection with any violation by any such Mortgage Loan of any predatory or abusive lending law. Debt-Acceleration Clauses” in the prospectus. if any Mortgage Loan or Related Document is found to be defective in any material respect and such defect is not cured within 90 days following notification thereof to the Sponsor by the Trustee or the related Servicer. such substitution is permitted only within two years of the Closing Date and may not be made unless an opinion of counsel is provided to the effect that such substitution will not disqualify any of the REMICs (as defined in the Pooling and Servicing Agreement) as a REMIC or result in a prohibited transaction tax under the Code.

have a Maximum Mortgage Rate and Minimum Mortgage Rate not less than the respective rate for the Deleted Mortgage Loan and have a Gross Margin equal to or greater than the Deleted Mortgage Loan. on the date of such substitution. (iii) if such mortgage loan is an adjustable-rate mortgage loan. New Mexico. predatory lending laws. and (iv) no proceeds from any Mortgage Loan were used to purchase single premium credit insurance policies as part of the origination of. that. New Jersey. The Depositor will file the mortgage loan purchase agreement as an exhibit to the Pooling and Servicing Agreement with the Securities and Exchange Commission in a Current Report on Form 8-K. free of any lien. (vi) comply with each representation and warranty as to the Mortgage Loans set forth in the Mortgage Loan Purchase Agreement (deemed to be made as of the date of substitution). or as a condition to closing. at the time of origination. (iii) or (iv) above (or certain other representations and warranties made by the Sponsor with respect to any Group I Mortgage Loan). among other things: (i) at the time of transfer to the Depositor. the Sponsor will have a period of 90 days after the earlier of discovery or receipt of written notice of the breach to effect a cure. (viii) have the same lien priority on the related mortgaged property as the Mortgage Loan being replaced and (ix) satisfy certain other conditions specified in the Pooling and Servicing Agreement. “covered” or “predatory” loan under any other federal. The same procedure and limitations that are set forth above for the substitution or purchase of Deleted Mortgage Loans as a result of deficient documentation relating thereto will apply to the substitution or purchase of a Deleted Mortgage Loan as a result of a breach of a representation or warranty in the Mortgage Loan Purchase Agreement that materially and adversely affects the interests of the certificateholders. state or local law or ordinance or regulation including. Arkansas. (v) have a remaining term to maturity not more than one year earlier and not later than the remaining term to maturity of the Deleted Mortgage Loan. title and interest in each Mortgage Loan and the Related Documents. the Sponsor will be required to remit to the related Servicer for deposit in the related Collection Account for remittance to the Securities Administrator prior to the next succeeding Distribution Date after such obligation arises an amount (the “Substitution Shortfall Amount”) equal to the excess of the principal balance of the related Deleted Mortgage Loan over the principal balance of such Qualified Substitute Mortgage Loan.S-167   In connection with the substitution of a Qualified Substitute Mortgage Loan. Kentucky. provided. If the breach cannot be cured within the 90-day period. but not limited to. shall be deemed to materially and adversely affect the interests of the certificateholders in the related Group I Mortgage Loan. but not limited to. the Sponsor will be obligated to (i) substitute for such Deleted Mortgage Loan a Qualified Substitute Mortgage Loan or (ii) purchase such Deleted Mortgage Loan from the trust. not in excess of the principal balance of the Deleted Mortgage Loan. (iv) have the same Due Date as the Deleted Mortgage Loan. (ii) have a Mortgage Rate not less than the Mortgage Rate of the Deleted Mortgage Loan and not more than 1% in excess of the Mortgage Rate of such Deleted Mortgage Loan. Upon discovery of a breach of any such representation and warranty which materially and adversely affects the interests of the certificateholders in the related Mortgage Loan and Related Documents. the Sponsor will represent and warrant. Indiana or Illinois. (iii) the Mortgage Loans are not subject to the requirements of the Home Ownership and Equity Protection Act of 1994 and no Mortgage Loan is classified and/or defined as a “high cost”. (i) have an outstanding principal balance (or in the case of a substitution of more than one Mortgage Loan for a Deleted Mortgage Loan. (ii) each Mortgage Loan complied. such Mortgage Loan. A “Qualified Substitute Mortgage Loan” is a mortgage loan substituted for a Deleted Mortgage Loan which must. however that any breach of the representations and warranties set forth in clauses (ii). the Sponsor has transferred or assigned all of its right. an aggregate principal balance). The Sponsor will make certain representations and warranties as to the accuracy in all material respects of certain information furnished to the Trustee with respect to each Mortgage Loan. Mortgage Loans required to be transferred to the Sponsor as described in the preceding paragraphs are referred to as “Deleted Mortgage Loans.”   Paladin Associates – Forensic Mortgage Experts  Page 10 . in all material respects with applicable state and federal laws including. the States of Georgia. In addition. as of the Closing Date. (vii) be of the same or better credit quality as the Mortgage Loan being replaced.

for the benefit of the Certificateholders. does hereby transfer. Series 2007-HE2 Asset Backed Pass-Through Certificates ARTICLE II CONVEYANCE OF MORTGAGE LOANS. Home Equity Loan Trust. title and interest of the Depositor. 2007 ACE Securities Corp.01. assign. including any security interest therein for the benefit of the Depositor. in and to the Mortgage Loans identified on the Mortgage Loan Schedule. Such   Paladin Associates – Forensic Mortgage Experts  Page 11 . LLC a Servicer COUNTRYWIDE HOME LOANS SERVICING LP a Servicer WELLS FARGO BANK. NATIONAL ASSOCIATION Master Servicer and Securities Administrator HSBC BANK USA. The Depositor. on behalf of the Trust. the rights of the Depositor under the Mortgage Loan Purchase Agreement (including. Conveyance of the Mortgage Loans. set over and otherwise convey to the Trustee. without limitation the right to enforce the obligations of the other parties thereto thereunder). ORIGINAL ISSUANCE OF CERTIFICATES SECTION 2. Depositor OCWEN LOAN SERVICING. all the right. the rights of the Depositor under the Cap Contracts.      ACE SECURITIES CORP. the right to any payments made by the Cap Counterparty under the Cap Contracts. without recourse. the right to any Net Swap Payment and any Swap Termination Payment made by the Swap Provider and all other assets included or to be included in REMIC I. NATIONAL ASSOCIATION Trustee POOLING AND SERVICING AGREEMENT Dated as of February 1. concurrently with the execution and delivery hereof.

effective November 7. Ann.02. Laws Ch. effective as of January 1. the representation and warranty of the Sponsor that no Qualified Substitute Mortgage Loan is a “High-Cost Home Loan” as defined in the New Jersey Home Ownership Act effective November 27. 2004 (Mass. acceptance.11 of this Agreement. effective as of January 1. 2004. In addition. Neither Servicer shall be responsible for any custodian fees or other costs incurred in obtaining such documents and the Depositor shall cause each Servicer to be reimbursed for any such costs it may incur in connection with performing its obligations under this Agreement. 2003 or as defined in the New Mexico Home Loan Protection Act effective January 1. Sections 24-9-1 through 24-9-9) or a “high risk home loan” under the Illinois High Risk Home Loan Act. Laws Ch. Page 12 . as defined in the Massachusetts Predatory Home Loan Practices Act. The Depositor shall deliver or cause the related originator to deliver to the related Servicer copies of all trailing documents relating to Mortgage Loans serviced by such Servicer and required to be included in the related Mortgage File at the same time the originals or certified copies thereof are delivered to the Trustee or Custodian. under the Custodial Agreement the Depositor will be required to cure certain defects with respect to the Mortgage Loan Documents for the related Mortgage Loans after the delivery thereof by the Depositor to the Custodian as more particularly set forth therein. Sections 24-9-1 through 24-9-9) or a “high risk home loan” under the Illinois High Risk Home Loan Act. but not limited to certain insurance policies and documents contemplated by Section 4. 89 The Mortgage Loans permitted by the terms of this Agreement to be included in the Trust are limited to (i) Mortgage Loans (which the Depositor acquired pursuant to the Mortgage Loan Purchase Agreement. Laws Ch. In connection with such transfer and assignment. among other representations and warranties. effective November 7. among other representations and warranties. Code Ann. SECTION 2. 2003. by definition as set forth herein and referred to in the Mortgage Loan Purchase Agreement. effective January 1. the Depositor. the Custodian will be required to review such Mortgage Loan Documents and deliver to the Trustee. In connection with such delivery and as further described in the Custodial Agreement. 2004). such documents including the mortgagee policy of title insurance and any Mortgage Loan Documents upon return from the recording office. 183C) or as defined in the Indiana Home Loan Practices Act. 2004. effective January 1. which contains. Code Ann. 2005 (Ind. 2004). and deposit with the Custodian pursuant to the Custodial Agreement the documents with respect to each Mortgage Loan as described under Section 2 of the Custodial Agreement (the “Mortgage Loan Documents”). are required to conform to. effective November 7. 2004 (Mass. and (ii) Qualified Substitute Mortgage Loans (which. 2004. 183C) or as defined in the Indiana Home Loan Practices Act. including. 2005 (Ind.   Paladin Associates – Forensic Mortgage Experts  Acceptance of REMIC I by Trustee. The Depositor and the Trustee on behalf of the Trust understand and agree that it is not intended that any Mortgage Loan be included in the Trust that is a “High-Cost Home Loan” as defined in the New Jersey Home Ownership Act effective November 27. Sections 24-9-1 through 24-9-9) or a “high risk home loan” under the Illinois High Risk Home Loan Act. 2004 (Mass. 2004. effective as of January 1. as defined in the Massachusetts Predatory Home Loan Practices Act. the Depositor does hereby deliver to. Code Ann. Ann. Notwithstanding anything to the contrary contained herein. the parties hereto acknowledge that the functions of the Trustee with respect to the custody. a representation and warranty of the Sponsor that no Mortgage Loan is a “High-Cost Home Loan” as defined in the New Jersey Home Ownership Act effective November 27. and preparation and delivery of the certifications shall be performed by the Custodian pursuant to the terms and conditions of the Custodial Agreement. as defined in the New Mexico Home Loan Protection Act effective January 1. Ann. 183C) or as defined in the Indiana Home Loan Practices Act. as defined in the Massachusetts Predatory Home Loan Practices Act.  assignment includes all interest and principal received by the Depositor and the Servicer on or with respect to the Mortgage Loans (other than payments of principal and interest due on such Mortgage Loans on or before the Cut-off Date). 2005 (Ind. inspection and release of the Mortgage Files. 2003 or as defined in the New Mexico Home Loan Protection Act effective January 1. effective January 1. the Servicers and the Sponsor certifications (in the forms attached to the Custodial Agreement) with respect to such review with exceptions noted thereon. A copy of the Mortgage Loan Purchase Agreement is attached hereto as Exhibit F.

subject to the provisions of Section 2. TRUST 2006. (iii). (iv) and (v) (to the extent of amounts deposited into the Distribution Account) and declares that it holds (or the Custodian on its behalf holds) and will hold such documents and the other documents delivered to it constituting a Mortgage Loan Document.           PARTY A ORIGINATOR/LENDER THE CORRECT PROCESS OF SECURITIZATION         1) 2) 3) 4) 5) PARTY B SPONSOR                         WMC MORTGAGE CORP. TRUST 2006HE1 PARTY C DEPOSITOR MORGAN STANLEY CAPITAL I INC.                 PARTY D TRUST/ISSUING ENTITY MORGAN STANLEY CAPITAL I INC.   TRUE SALE LEGAL OPINIONS ASSET PURCHASE / SALE AGREEMENTS DELIVERY & ACCEPTANCE RECEIPTS COMPENSATION / MONEY CAPACITY OF PARTIES TO BUY AND SELL   MORGAN STANLEY MORTGAGE CAPITAL INC.           HOW LENDERS “SIDE-STEPPED” THE PROCESS         PARTY A ORIGINATOR/LENDER WMC MORTGAGE CORP. of the Mortgage Loan Documents and all other assets included in the definition of “REMIC I” under clauses (i).                     PARTY B SPONSOR   TRUE SALE MORGAN STANLEY CAPITAL I INC.01 hereof and Section 2 of the Custodial Agreement. and that it holds (or the Custodian on its behalf holds) or will hold all such assets and such other assets included in the definition of “REMIC I” in trust for the exclusive use and benefit of all present and future Certificateholders.HE1 MORGAN STANLEY MORTGAGE CAPITAL INC.  The Trustee acknowledges receipt. 1) 2) LEGAL OPINIONS ASSET PURCHASE / SALE AGREEMENTS 3) DELIVERY & ACCEPTANCE RECEIPTS 4) COMPENSATION / MONEY 5) CAPACITY OF Page 13                 PARTY D TRUST/ISSUING ENTITY Paladin Associates – Forensic Mortgage Experts  .

  PARTIES TO BUY AND SELL                 PARTY C DEPOSITOR MORGAN STANLEY CAPITAL I INC. Page 14   Paladin Associates – Forensic Mortgage Experts  .

BOX 4308 LOS ANGELES. SAN DIEGO. BOX 22004 EL CAJON. (Lender) MIN 10013630011356     OCTOBER 10.. 2009 Instrument # 2009-138866 Official Records. P. 2008 Instrument # 2008-006029 Official Records. 2005   WMC MORTGAGE CORP. LLC 15000 SURVEYOR BLVD. San Mateo County California DATE October 21.00 MIN:100136300113560154     DATE Sept 24. CA 92127 Assignment of Deed of Trust #2 NDEx WEST. SERIES 2006-HE1 MORGAN STANLEY CAPITAL I INC. 2008 Instrument # 2008-017857 Official Records. TEXAS 75001             FEBRUARY 1.    SECTION 3: Recorded Chain of Deed Possession Date   FORECLOSURE Chain of Note Possession Date     Note Holder Chain of Title and Chain of Note Recorded Events on the Loan Including Foreclosure Issues and Securitization Original Deed of Trust   DATE Instrument # 2005-190356 Official Records. San Mateo County California   (Borrowers) WMC MORTGAGE CORP. San Mateo County California       Notice of Default NDEx WEST..O. San Mateo County California   DATE January 18. 2006 MORTGAGE PASS-THROUGH CERTIFICATES. BOX 22004 EL CAJON. CA 90054 Principal Amount $701. SUITE 500 ADDISON. TRUST 2006-HE1   DATE February 21. TEXAS 75001 Substitution of Trustee #1 CAL WESTERN RECONVEYANCE CORPORATION 525 EAST MAIN STREET P. 2008 Instrument # 2008-007627 Official Records.O. San Mateo County California   DATE January 24. CA 92022 Substitution of Trustee #2 CAL WESTERN RECONVEYANCE CORPORATION 525 EAST MAIN STREET P. SUITE 500 ADDISON. LLC 15000 SURVEYOR BLVD. CA 92022                         Paladin Associates – Forensic Mortgage Experts  Page 15 . San Mateo County California   Assignment of Deed of Trust #1 CHASE HOME FINANCE (SAN DIEGO) 10790 RANCHO BERNARDO RD.O.250. 2009 Instrument # 2009-128856 Official Records.

2009 Instrument # 2009-159152 Official Records. TEXAS 75001       DATE March 29. 2010 Instrument # 2010-033869 Official Records. San Mateo County California       Notice of Trustee‟s Sale NDEx WEST. TEXAS 75001       DATE November 3. San Mateo County California     Substitution of Trustee #3 NDEx WEST. New York City... LLC 3415 VISION DRIVE COLUMBUS. 2010 Instrument # 2010-131033 Official Records. LLC 15000 SURVEYOR BLVD. ET AL C/O CHASE HOME FINANCE. SUITE 500 ADDISON. SUITE 500 ADDISON. NY MIN:1002143-0000001991-3 Note Date:05/25/2006 MIN Status:Active Phone:(800) 746-2936 Phone:(212) 525-1592 Note Date:05/25/2006 MIN Status:Active Need to correct MERS record to show 1st TD   Paladin Associates – Forensic Mortgage Experts  Page 16 .      DATE December 7. FL Investor: HSBC Bank USA. San Mateo County California   Trustee‟s Deed Upon Sale WELLS FARGO BANK.. OH 43219         MIN:1002143-0000001992-1 Servicer: Ocwen Loan Servicing. National Association.A. LLC West Palm Beach. N. LLC 15000 SURVEYOR BLVD.

Notice of Default:  On September 28. but is named as acting solely as a “nominee” for lender as the beneficiary of the security interest Deed of Trust. This Document properly identifies the amount of the mortgage loan that debtors obtained on October 10. 2009 Document number 2009-128856 (Notice of Default and Election to Sell under Deed of Trust) was filed in the Official Records. Exhibit “B. (hereafter “MERS”) is not named as the payee of the note.00. Mortgage Electronic Registration Systems. CA. The original trustee under this Deed of Trust is Westwood Associates. a California Corp. recorded October 31. A True Copy of the Deed of Trust is hereto attached as Exhibit “A”. San Mateo County. 2005. 2005.This document was filed as document number 2005-190358 in the Official Records San Mateo County. CA. Inc. Paragraph R of the Deed of Trust provides in part “This Security Instrument secures to Lender: (i) the repayment of the Loan…” Paragraph 20 of the Deed of Trust provides “The Note or a partial interest in the Note (together with this Security Instrument) can be sold one or more times without prior notice to Borrower.”         Paladin Associates – Forensic Mortgage Experts  Page 17 .    REPORT SUMMARY Deed of Trust:  On October 11. The original lender of the promissory note is WMC Mortgage Corp.250. executed a negotiable promissory note and a security interest in the form of a Deed of Trust in the amount of $701. 2005 Debtors Audit Recipient.

2009. This document properly identifies the amount of the mortgage loan that debtor obtained on October 31. (Not Known) County. CA. Exhibit „G. CA. This document properly identifies the amount of the mortgage loan that debtor obtained on October 31. states that MERS was the beneficiary under the Deed of Trust – it does not state that MERS was the beneficiary under the promissory note. a Substitution of Trustee was filed as document number 2009-159152 in the Recorder‟s Office.    Assignment of Deed of Trust #1:  An Assignment of deed of Trust was filed as document number 2008-017857 in the Official Records. 2005. as Attorney In Fact for Deutsche Bank National Trust Company. like the Deed of Trust. 2005. like the Deed of Trust. a true copy is hereto attached as Exhibit “D‟. Exhibit “H”.” Substitution of Trustee 2:  On January 24. a true copy is hereto attached as Exhibit “C‟.. 2005. Unknown County. 2008.” Notice of Trustee’s Sale:  On March 29. San Mateo County. San Mateo County. CA. This document. CA on October 21. This document. Substitution of Trustee #1:  On January 18. 2008. 2009.A. This document purports to be executed by JP Morgan Chase Bank N. Exhibit „E. 2010. San Mateo County. • Assignment of Deed of Trust #2:  An Assignment of deed of Trust was filed as document number 2009-138866 in the Official Records. San Mateo County. a Notice of Trustee‟s Sale was filed as document number 2010-033869 in the Official Records. states that MERS was the beneficiary under the Deed of Trust – it does not state that MERS was the beneficiary under the promissory note. like the Deed of Trust. This document. Exhibit „F” Substitution of Trustee #3:  On December 7. This document purports to be executed by MERS. CA on February 21. a Substitution of Trustee was filed as document number 2008-006029 in the Recorder‟s Office. a Substitution of Trustee was filed as document number 2008-007627 in the Recorder‟s Office. CA. states that MERS was the beneficiary under the Deed of Trust – it does not state that MERS was the beneficiary under the promissory note. This document properly identifies the amount of the mortgage loan that debtor obtained on October 31. 2008.                     Paladin Associates – Forensic Mortgage Experts  Page 18 .

TRUST 2006HE1. transferred and securitized to MORTGAGE PASS-THROUGH CERTIFICATES. Exhibit “J. the power of sale can only be invoked by the original lender and trustee no matter if the servicing rights have been sold or transfer to another party.    MERS:    The Deed of Trust shows MIN:100136300113560154 and MERS SERVICER ID website https://www. Trustee.”  The California Secretary of State Business Entity websites shows that MERS has a SUSPENDED status for agent of process. Exhibit “I. Lender shall execute or cause Trustee to execute a written notice of the occurrence of an event of default and of Lender‟s election to cause the Property to be sold. without demand on the Borrower.” NOTE: S ecti on 22 par a graph 2 of the o ri ginal De ed of Trust stated as “ If Lend er invokes th e powe r of sale. Trustee shall cause this notice to be recorded in each county in which any part of the Property is located. 2006.           Securitization:  The NOTE was sold. shall sell the Property at public auction to the highest bidder at the time and place and under the terms designated in the notice of sale in one or more parcels and in any order Trustee determines. After the time required by Applicable Law. with a Closing Date of on or about February 28. Lender or Trustee shall mail copies of the notice as prescribed by Applicable Law to Borrower and to the other persons prescribed by Applicable Law.org/sis/search indicates that Chase Home Finance LLC is the Servicer and Investor .mers-servicerid. If a subject property is being foreclosed and there is no recorded Assignment of Deed and Trust and Substitution of Trustee.       Paladin Associates – Forensic Mortgage Experts  Page 19 . This “Power of Sale” belongs to the original Lender and original Trustee. SERIES 2006-HE1 MORGAN STANLEY CAPITAL I INC.

              MORTGAGE ELECTRONIC REGISTRATION SYSTEM ORIGINAL NOMINEE         FORECLOSING AGENT REPRESENTED ASSIST SECRETARY OF “MERS” ASSIGNMENT #1 WORKS FOR ORIGINAL FORECLOSING AGENT           Certified Forensic Loan Auditors     Paladin Associates – Forensic Mortgage Experts  Page 20 .

        SUBSTITUTED FORECLOSING TRUSTEE       AVIS R. Thomas. THOMS – SIGNING AS ASSISTANT SECRETARY OF “MERS” IN FACT IS VICE PRESIDENT OF PROMMIS SOLUTIONS PARENT COMPANY OF CALWESTERN RECONVEYANCE CORP. ORIGINAL FORECLOSING AGENT. Vice President  Prommis Solutions    Paladin Associates – Forensic Mortgage Experts  Page 21 . Default Super Session  Moderators:  Avis R. Vice President Prommis Solutions. Thomas.       National Mortgage Servicing Conference and Expo Avis R.

Page 22 Paladin Associates – Forensic Mortgage Experts          . CA CIVIL CODE 2932. CA CIVIL CODE 2932. (Apparently. It would be the Servicers. It requires that the Assignment of the Deed to the Beneficial Interest Holder of the note. there are some agreements which “authorize” these people to act in an Agency manner for MERS). foreclosure company or other firm signed up to become a member of MERS. When a lender. They were named “Certified Officers” solely for the purpose of signing foreclosure and other legal documents in the name of MERS. in an instrument intended to secure the payment of money. or other encumbrance. then that party would be the foreclosing party. These practices were not and have not codified. The power of sale may be exercised by the assignee if the assignment is duly acknowledged and recorded.5 – ASSIGNMENT Where a power to sell real property is given to a mortgagee. stated that they could be the foreclosing party only if the Note was endorsed in blank. Trustees and Title Companies conducting the day-to-day operations needed for MERS to function. so they are major points of contention today. However. As well. it was thought that this would provide MERS and their “Corporate Officers” with the “legal standing” to foreclose. As a result. the power is part of the security and vests in any person who by assignment becomes entitle to payment of the money secured by the instrument. most Notes are endorsed in blank. one of more of their people were designated as “Corporate Officers” of MERS and given the title of either Assistant Secretary or Vice President. which purportedly allow MERS to be the foreclosing party. in the manner of a person signing his paycheck over to another party. Customary procedure was to endorse it as “Pay to the Order of” and the name of the party taking the Note and then signed by the endorsing party. it must be endorsed and signed. This could not work if MERS was to be the foreclosing party. nor received income from MERS. However.             MERS has recognized the Note endorsement problem and on their website. If it was endorsed to another party. These personnel were not employed by MERS. This “solved” the issue of not having enough personnel to conduct necessary actions.      SECTION 4:  CONCLUSION Securitization and MERS required many changes in established practices.5 has a completely different say in the matter. the above statute would suggest that Assignment of the Deed to the Note Holder is a requirement for enforcing foreclosure. this brought up another issue that now needed addressing:  When the Note is transferred. As is readily apparent. With a new party holding the note. title company. there would now need to be an Assignment of the Deed.

Page 23 Paladin Associates – Forensic Mortgage Experts                       . Wendy Perry is an employee of Cal-Western Reconveyance Corp. Starling. and then the same person. The Note was securitized into Morgan Stanley Capital I Inc.” The conveyancing language granted the mortgage to MERS “solely as nominee for Lender and Lender‟s successor‟s and assigns. who is in fact Vice President and Asst. as the bank’s employee. available on the website of the Securities Exchange Commission. Trust 2006-HE1   The Note and Deed have taken two distinctly different paths. The mortgage securing the note. The written agreement that created the Morgan Stanley Capital I Inc. who is in fact. as an “employee” of MERS – with duties owed to the entity selling a mortgage – assigns that mortgage to a bank at presumably market value. The promissory note in this case became trust property in compliance with the requirement set forth in the PSA. There is a potentially serious conflict with the same person. and is a matter of public record. 2010. signed by Starlene L. Trust 2006 HE1 is a “Pooling and Servicing Agreement” (PSA). The acquisition of the assets of the subject Trust and the PSA are governed under the law. Inc (MERS) as the “Mortgagee. LLC did not maintain a secured interest in the subject property. original foreclosing company. The Substitution of Trustee was purportedly executed by MERS signed by Avis R.” separately names the Mortgage Electronic Registration Systems. was a “correspondent lender” that originated mortgage loans which in turn. Secretary of JP Morgan Chase Bank.” WMC Mortgage Corp. signed by Wendy Perry holding the position of Asst. and the same person is also an employee of the foreclosing company.     The first Assignment purports to be executed by MERS. LLC did an invalid non-judicial foreclosure proceeding on November 3. as “Lender. was sold and transferred into a “federally-approved securitization” trust named Morgan Stanley Capital I Inc. The debtors. The Trust agreement is filed under oath with the Securities and Exchange Commission. The Trust by its terms set a “CLOSING DATE” of February 28. The Trust is also described in a “Prospectus Supplement. Thomas. AUDIT RECIPIENT were conducted the title owner of the subject property until NDEX WEST. Prior to the execution of Trustee‟s Deed upon Sale against the subject property. Vice President of Prommis Solutions. The second Assignment purports to be executed by Deutsche Bank National Trust Company. Secretary. 2006.   It is deemed imperative that the two-hat-wearing signer provides employment histories for all the companies they represent. Trust 2006-HE1. NDEX WEST. swears an affidavit in the foreclosure case. while naming WMC Mortgage Corp.” also available on the SEC website.

2909. the person holding only the note lacks the power to foreclose in the event of default. Supreme Court stated “The note and mortgage are inseparable.    In view of the foregoing. unless the holder of the deed of trust is the agent of the holder of the note. has a worthless piece of paper (4 Richard R.S. the obligation is unsecured but still valid. (Civil Code §§ 2872.” ANY ATTEMPT TO TRANSFER THE BENEFICIAL INTEREST OF A TRUST DEED WITHOUT OWNERSHIP OF THE UNDERLYING NOTE IS VOID UNDER CALIFORNIA LAW Page 24 Paladin Associates – Forensic Mortgage Experts              . With no security. the mortgage may become unenforceable. however. A security interest. in the event that a mortgage loan somehow separates interests of the note and the deed of trust. (Kelley v. 274. legally if not physically. 21 L. If the transferee is given the deed of trust without the note accompanying it. . Polhemus v. In Carpenter v.83 U. and Foreclosure Litigation. Longan 16 Wall. It is impossible to define security apart from its relationship to the promise or obligation it secures. the U. if such was the agreement. California Mortgages and Deeds of Trust. Without the agency relationship. Indeed.S. the transaction is a nullity and his “assignee” having received no interest in the underlying debt or obligation. 2920. Fourth Edition. Trust 2006 HE1. the latter as an incident. the transferee has no meaningful rights except the possibility of legal action to compel the transferor to transfer the note as well. Powell on Real Property. Trainer (1866) 30C 685) “Where the mortgagee has “transferred” only the mortgage. . Powell).27 [2] (2000) By statute. the transferee receives a secured note.2d 179. The practical effect of splitting the deed of trust from the promissory note is to make it impossible for the holder of the note to foreclose. while assignment of the latter alone is a nullity. with the deed of trust lying with some independent entity. Upshaw 91952) 39 C. cannot exist without an underlying existing obligation. The mortgage loan becomes ineffectual when the note holder did not also hold the deed of trust. If the creditor transfers the note but not the deed of trust. 246 P. the former as essential.2d 23. There is no record of Assignments to either the Sponsor or Depositor as required by the Pooling and Servicing Agreement. The person holding only the deed of trust will never experience default because only the holder of the note is entitled to payment of the underlying obligation. § 37. by Roger Bernhardt. 313 (1872). the security follows the note.Ed.11) The obligation and the security are commonly drafted as separate documents – typically a promissory note and a deed of trust.” An obligation can exist with or without security. 271. 271. § 1.  The loan was originally made WMC Mortgage Corp and was sold and transferred to Morgan Stanley Capital I Inc. assignment of the mortgage carries with it the assignment of the debt. An assignment of the note carries the mortgage with it. all assignments executed filed three years after the Trust‟s Closing Date would be a void act for the reason that it violated the express terms of the Trust instrument.

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