Homeowner: WILLIAM A. GOTTLEID, JEAN  W. MICHAUD

Original Lender: FREMONT INVESTMENT & LOAN                          Current Owner:  JP MORGAN CHASE , NA      

1^st Mortgage Loan Amount:  $749,000                      Original Loan Number:

Per your request, we have conducted a Mortgage Loan Forensic Audit on the loan closing documents for William A. Gottleid, Jean w. Michaud. The loan closing documents are in reference to the homeowner’s refinancing of his residential dwelling located at 40 Back Creek Road, Dowell, MD 20629 on February 23, 2007. Based on the mortgage loan closing documents provided, we have determined the following Federal and State violations and discrepancies:

U.S. Code Title 15 / Truth in Lending Act (TILA) /RESPA (Real Estate Settlement Procedures Act) / 12 U.S.C. 2601 et seq. Violations

(1)    Original Note Not Endorsed to MERSCORP, Inc. (MERS):   Lender did not endorse the original Note or endorse the Note in “blank” to MERS.    MERS as a “nominee” or “trustee”  (Page 1 of the Security Deed) of the mortgage note must prove that the company owns the loan.  MERS must produce the original mortgage note.  Without this endorsement or production of the original mortgage note, MERS cannot exercise the right of foreclosure in this mortgage transaction The Lender or Trustee MUST produce the original mortgage note.  Borrower should issue aQualified Written Request (QWR) to the current Loan Servicer or Lender to produce the Mortgage Note.  Without this endorsement or production of the original mortgage note, the Lender or Trustee cannot exercise the right of foreclosure in this mortgage transaction.  In order for a claimant to prove itself to be the real party in interest to support a proof of claim or motion for relief from stay in bankruptcy, as well as to prove itself to be a holder in due course, they have to prove the entire chain of “ownership” and “holdership” of the Note complete with proof of “value” paid to purchase the note ownership.    Judge Arthur M. Schack, a Justice on the New York State Supreme Court, has required Trustees or Loan Servicers to produce the original note.  In 14 published foreclosure decisions handed down since January 1, 2010, Justice Shack has granted only one lender the right to foreclose.  Of the 13 other cases, he dismissed one outright and dismissed 12 without prejudice. In Penellas County in Florida , 28 pending foreclosures in Florida brought by MERS were dismissed by the Court for want of a proper party plaintiff.  MERS has inconsistently listed itself as a nominee of several different owners of the note, but showed NO CHAIN OF TRANSFER FROM ANY OF THEM.

IMPORTANT UPDATE:   The United States Bankruptcy Court for the Eastern District of California has issued a ruling dated May 20, 2010 in the matter of In Re: Walker, Case No. 10-21656-E-11 which found that MERS COULD NOT, as a matter of law, have transferred the note to Citibank from the original lender, Bayrock Mortgage Corp.  The Court’s opinion is headlined stating that MERS AND CITIBANK ARE NOT THE REAL PARTIES IN INTEREST.  The Court further stated that “Any attempt to transfer the beneficial interest of a trust deed without ownership of the underlying note IS VOID UNDER CALIFORNIA LAW.

(2)       Fatal Flaw in Homeowner’s Title / Lender is Unsecured:   Per the MERS nominee assignment in the Security Deed, Lender has SPLIT the Note and Mortgage.    Lender named MERS as a nominee in the Security Deed, but doesNOT in the Mortgage Note.  The Kansas Supreme Court (Case No. 98,489 Landmark National Bank v Boyd A. Kesler)  states that in the event a mortgage loan separates interests of the note and the deed of trust, with the deed of trust lying with some independent entity, the MORTAGE MAY BE UNENFORCEABLE.   In summary, homeowner’s title may be flawed due to the split of the Note and Mortgage resulting in the Lender being unsecured.

         The Kansas Supreme Court stated that MERS' relationship "is more akin to that of a straw man than to a party possessing all the rights given a buyer." The court stated: By statute, assignment of the mortgage carries with it the assignment of the debt ... Indeed, in the event that a mortgage loan somehow separates interests of the note and the deed of trust, with the deed of trust lying with some independent entity, the mortgage may become unenforceable. 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, unless the holder of the deed of trust is the agent of the holder of the note. Without the agency relationship, the person holding only the note lacks the power to foreclose in the event of default. 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. The mortgage loan becomes ineffectual when the note holder did not also hold the deed of trust. [Citations omitted; emphasis added.]

(3)    Lender’s  Trustee Failed to Register to Conduct Business in Maryland :     Per the Maryland Secretary of State’s Office, Lender’s  Trustee or Nominee (MERS)  FAILED to  register as a domestic corporation to conduct business in the State of  Maryland . “Per the Secretary of State’s Office, a domestic or foreign corporation my NOT transact business in this state until it obtains a certificate of authority from the State of Maryland . Consequences of transacting business without authority is that the corporation or it assignees CANNOT FILE A LAWSUIT IN THE STATE of Maryland .  MERS (Mortgage Electronic Registration System) reserved their name for a corporate registration, but FAILED to complete the application.  Their respective name reservation has EXPIRED.

(4)    Lender’s  Settlement Agent Failed to Register to Conduct Business in Maryland :      Per the Maryland Secretary of State’s Office, Lender’s  Settlement Agent America ’s Servicing Company  FAILED to  register as a foreign corporation to conduct business in the State of  Maryland . “Per the Secretary of State’s Office, a domestic or foreign corporation my NOT transact business in this state until it obtains a certificate of authority from the State of Maryland . Consequences of transacting business without authority is that the corporation or it assigneesCANNOT FILE A LAWSUIT IN THE STATE of Maryland . 

(5)    Former Loan Servicer Failed to Register to Conduct Business in Maryland :      Per the Georgia Secretary of State’s Office, Lender’s  former Servicer George Mason Mortgage LLC, a Virginia Limited Liability Company  FAILED to  register as a foreign corporation to conduct business in the State of  Maryland . “Per the Secretary of State’s Office, a domestic or foreign corporation my NOT transact business in this state until it obtains a certificate of authority from the State of Maryland . Consequences of transacting business without authority is that the corporation or it assignees CANNOT FILE A LAWSUIT IN THE STATE of Marylandand CANNOT CONTINUE TO COLLECT FUNDS ON BEHALF OF THE MORTAGE LOAN INVESTORS, thus creating deed book 02963 page 431 on March 22, 2007 an invalid assignment and a break in the chain of title.

(6)        Failure to Provide Special Information Booklet:   In addition to the financial disclosures required under Federal statute, the creditor or other person providing such disclosures to the consumer shall provide

·         The booklet titled Consumer Handbook on Adjustable Rate Mortgages  published by the Board and the Federal Home Loan Bank Board; or

·         Any pamphlet which provides substantially similar information to the information described in such section, as determined by the Board.

7.  Lender FAILED to provide the Borrower this information. Waiver of Borrower’s Rights Violates 12 C.F.R. Part 617 –  Lender’s Document  “Maryland Rider to the Security Deed” (Waiver of Borrower’s Rights) states that the Borrower “Waives any and all rights which grantor may have under the fifth and fourteenth amendments to the Constitution of the United States .”   In the Lender’s Waiver, Judicial Hearings are waived by the Borrower.  Per 12 C.F.R. Part 617 Title 12 of the Federal Banking Regulations, a qualified lender may NOT obtain a waiver of borrower rights, except as indicated in paragraphs (b) and (c) of this section.  In addition Lender CANNOT Waive their Anti Predatory Lending Responsibilities by REQUIRING the Borrower to sign an  Anti Predatory Disclosure.

A borrower may waive rights relating to distressed loan restructuring, credit reviews, and the right of first refusal when a loan is guaranteed by the Small Business Administration or in connection with a loan sale as provided in §617.7015. Waivers obtained pursuant to this paragraph must be voluntary and in writing. The document evidencing the waiver must clearly explain the rights the borrower is being asked to waive.

 A borrower may waive all borrower rights provided for in part 617 of these regulations in connection with a loan syndication transaction with non-System lenders that are otherwise not required by section 4.14A(a)(6) of the Act to provide borrower rights. For purposes of this paragraph,“loan syndication” is a multi-lender transaction in which each member of the lending syndicate has a direct contractual relationship with the borrower, but does not include a transaction created for the primary purpose of avoiding borrower rights. Waivers obtained pursuant to this paragraph must be voluntary and in writing. The document evidencing the waiver must clearly disclose the rights the borrower is waiving. Additionally, the borrower's written waiver must contain a statement that the borrower was represented by legal counsel in connection with execution of the waiver.

[69 FR 10907, 10908, Mar. 9, 2004, as amended at 70 FR 18968, Apr. 12, 2005]

Lender  is in violation of the federal regulations governing Borrower’s rights.

(7)                        Borrower’s Identity Not Verified:   The Borrower was NOT identified by the Lender or the closing attorney.   The U.S. Patriot Act requires the purchaser to be IDENTIFIED.    The Lender did not request a copy of the Borrower’s driver license or another source of identity.   Federal statutes require a borrower’s identity to be verified during the loan closing process.   No ID type, No ID Number, and No ID Expiration Date were obtained at closing.  

(8)   Failure to Disclose Adjustable Rate Payment Disclosures:   The Lender failed to provide the Borrower the required Federal  Statement of Disclosures  concerning his Adjustable Rate Mortgage (ARM):

·         A historical example, based on a $10,000 loan amount, illustrating how payments and the loan balance would have been affected by interest rate changes implemented according to the terms of the loan program disclosure.  The example shall reflect the most recent 15 years of index values.   The example shall reflect all significant loan program terms that would have been affected by the index movement during the period.

·         The maximum interest rate and payment for a $10,000 loan originated at the initial interest rate in effect as of an identified month and year for the loan program disclosure assuming the maximum periodic increases in rates and payments under the program; and the initial interest rate and payment for that loan and a statement that the periodic payment may increase or decrease substantially depending on changes in the rate.

·         An explanation of how the consumer may calculate the payments for the loan amount to be borrowed based on either (a) the most recent payment shown in the historical example and (b) the initial interest rate used to calculate the maximum interest rate.

Lender’s “Fixed/Adjustable Rate Rider” FAILED to meet Federal Disclosure Regulations.

(9)       Failure to Disclose Adjustment Rate Mortgage Terms Prior to Closing:  Per Federal regulations, the Adjustable Rate Mortgage Disclosure Statement MUST be provided to the potential Borrower PRIOR to loan approval and the Adjustable Rate Mortgage Disclosure Statement MUST be signed and MUST accompany the loan application.  A signed disclosure statement was not attached to Form 1003 Loan Application. 

(10)    Lender Failed to Register as a Lender with the Maryland Banking and Finance:   Per research of the Maryland  Banking and Finance data base, Mortgage Electronic Registration Systems FAILED to register as a Licensed Lender with the State of Maryland .  Due to the fact that the Lender FAILED to register as a licensed lender, the mortgage loan may be invalid.  Any assignee to the original Mortgage Note assumes the Note under the same legal ramifications.  Per the Maryland Banking and Finance, the following companies were registered at the time of the loan closing:

·         Fremont Investment & Loan.

·         .

·          

Per the Deed of Trust, the Lender of the Note was Fremont Investment & Loan who later transferred loan to Washington Mutual who later was taken over by the F.D.I.C.  Later, J.P. Morgan Chase N.A. may have assumed the original note without showing proof of the original note.  The Deed of Trust  dated Feb. 23, 2007 shows MERS as the beneficiary of the Deed of Trust thus creating a bifurcation or splitting of the security interest. There is a “robo signed” ASSIGNMENT dated May 22, 2009 assigning the Deed of Trust from MERS to JP Morgan Chase Bank, N.A.  The signature of Barbara Hindman as Vice President of MERS is a classic case of “robo signed” document that case after case invalidates the sale.  Barbara Hindman is featured on the web site Foreclosure Fraud as a notorious “robo signer” with no proper authorization to represent MERS.  MERS is a small corporation in Reston , Virginia that employees 14 people none of which is Barbara Hineman.

Federal and State of MARYLAND “Predatory Lending” Legislation / Deceptive Loan Practices / Federal and State of MARYLAND Securities Law/ 18 U.S. Code Section 1014

(1)    Ability to Repay not Evaluated:  Third party verifications of the Borrower’s loan information (assets, liabilities, wage earnings) were not conducted per the Lender’s own underwriting loan guidelines and per federal lending regulations.  The Uniform Residential Loan application for the first mortgage was signed by the Borrower and NOT signed by the Interviewer or the Borrower’s Representative as required by federal regulations and the Lender’s Loan Policy. Loan Application was obtained and completed via “Telephone”.  The SIGNEDLoan Application was not attached to the Mortgage Note as required by Federal guidelines.   IRS Form 4506-T “IRS Tax Transcript Request” was NOT contained within the closing documents, and was NOT requested by the Lender.     As a result, IRS transcripts or tax returns were NOT requested or reviewed PRIOR to loan approval and the loan closing.  Per the documents provided by the Borrower, the Borrower was a self employed contractor.  No business name or business address was provided. No Wage Information was provided on the Loan Application and No W2 Forms  were  requested.  Personal and Business tax returns were NOT requested or reviewed.  Third party verification of the Borrower’s employment was NOT conducted.  Borrower’s Net Worth was listed as            on the Loan Application.  No automobile assets or liabilities were listed on the Loan Application.  No credit card debt was listed on the Loan Application.    Borrower’s Debt to Income (DTI) ratio based on the Loan Application COULD NOT BE CALCULATED DUE TO LACK OF INFORMATION.  Borrower’s mortgage loan was an Adjustable Mortgage Loan and was projected to increase from $ per month to $.  ADJUSTABLE MORTAGE LOANS THAT “EXPLODE” (in this loan, an increase of over 100%) are a basis for PREDATORY LENDING.  The Lender CANNOT waive their responsibility to determine the Borrower’s ABILITY TO REPAY BY REQUIRING THE BORROWER TO sign an Anti Predatory Lending Waiver. Per review of the Borrower’s Closing Documents, the following  Underwriting Loan Guidelines were NOT completed