UNITED STATES BANKRUPTCY COURT

SOUTHERN DISTRICT OF ALABAMA

IN RE: CASE NO: 10-04790-MAM-7

SALLY W STRACHAN aka
SALLY WHEELAHAN STRACHAN
DEBTOR

OBJECTION TO MOTION FOR RELIEF FROM STAY FILED BY CHASE HOME

FINANCE LLC AND MOTION TO STRIKE AFFIDAVIT FILED BY COUNSEL FOR
CREDITOR REGARDING THE VALUE OF DEBTOR’S HOME

COMES NOW the Debtor, by and through counsel, and objects to the Motion for
Relief From Stay filed by Chase Home Finance LLC (herein referred to as the
“Creditor”) and moves the Court to strike the Affidavit filed by counsel for the Creditor
which asserts that Debtor misrepresented the value of her home on Schedule A of her
petition in this case on the following grounds:

OBJECTION TO MOTION FOR RELIEF FROM STAY

1. Creditor has no standing to bring this action because the real estate mortgage
described in and attached to the Motion of Creditor (herein referred to as the “Mortgage”)
on the principal residence of Debtor (herein referred to as the “Property) was given by
Debtor and her brother Kevin Wheelahan (also a debtor under Chapter 13 in this Court,
case no: 10-04792) to the Mortgage Electronic Registration Systems, Inc (“MERS”) as
nominee for Renasant Bank, a Mississippi corporation. (herein referred to “Renesant”).
There is no assignment from Renasant Bank to Creditor and, accordingly, Renasant is the
real party in interest and Creditor has no standing. While there is an assignment from
MERS to Creditor, only Renasant is the proper party to assign the Mortgage and
associated note. As nominee MERS has no authority to assign the Note and Mortgage
despite any language to the contrary in the Mortgage.

2. Creditor does not hold the power of sale of the Mortgage and no evidence has
been presented that it holds such power of sale because MERS is not qualified to do
business in Alabama and never paid a mortgage tax on the assignment of the Mortgage to
MERS or subsequently to Creditor.

3. Creditor is not a ‘holder’ of the Note and Mortgage and accordingly has
absolutely no right, at law or equity, to enforce the Note and Mortgage. The date of the
Assignment from MERS to Creditor is November 2, 2010, which is after the date the
bankruptcy was filed but Creditor had required debtor to make payments to creditor a
substantial time before November 2, 2010, which calls into question the validity of the
last minute assignment of the Note and Mortgage to Creditor. Upon information and
belief, this Note and Mortgage were part of a pooled investment and were one time held
by 100’s if not thousand’s of investors through a derivative security pool and each of
whom would be required to assign the Note and Mortgage back to MERS before MERS
could assign to Creditor.

4. There are necessary parties who have not been joined and who must be joined
in the Motion for relief to be granted. These necessary parties are Renasant and MERS,
as well as the 100’s if not thousands of investors in the pooled derivative trust which,
upon information and belief, this Note and Mortgage were a part. The power of sale is
ostensibly held by MERS and MERS is not a party and there is no proof that the power of
sale was transferred with the Note and Mortgage, and, in fact, there is no proof that the
Note and Mortgage were ever properly negotiated to Creditor. MERS allegedly assigned
the Mortgage and Note to Creditor but such assignment did not include the power of sale
that was ostensibly granted to MERS.

5. Even if the two primary parties mentioned in 4 above were joined, the Court
could not grant termination of the stay because, upon information and belief, based
largely upon the existence of MERS as nominee under the Mortgage, this Mortgage and
the associated Note are one of those instruments transferred to a pass through pool of
investors who then created a trust and resold parts of the loan pool to various tranches of
derivative securities. These derivative securities may then have been sold and resold.
Accordingly, either the Creditor has absolutely no right to bring this case or, even if it
does, it cannot obtain a judgment or any other relief as the right to recover on the Note
and Mortgage has been pledged to hundreds, perhaps thousands, of other investors in the
pool. Alternatively, the Creditor may only have rights to the Note and Mortgage as a
security position itself, in which case it is not the proper “holder” to bring this action.
Any foreclosure of a pooled mortgage would violate Ala Code section 35-10-12 (1975) in
that the persons entitled to the money “thus secured” have not been located and perhaps
scattered throughout America and the world. Compare Crum v LaSalle Bank, NA, No.
2080110 (Ala.Civ App. 2009).

6. MERS is a necessary and indispensable party to this action and the failure of
MERS to be a party renders the rights of Creditor nonexistent.

7. Creditor is not a valid continuation of or successor in interest to the original

mortgagee, who was MERS as nominee for Renasant (not Creditor), despite the
purported last minute assignment from MERs to Creditor. This is because the fourth
paragraph of the Mortgage attached as exhibit B to Creditor’s Motion states, in part, as
follows:
“for this purpose, Borrower does hereby mortgage, grant and convey to
MERS (solely as nominee for Lender and Lender’s successors and assigns) and to the
successors and assigns of MERS, with power of sale…….” (emphasis supplied)

This language should be interpreted to mean that only Lender (Renasant Bank)
could rightfully assign the Note and Mortgage to Creditor and not MERS. The language
mentioning MERS successors and assigns should be interpreted to mean an entity that
succeeds to MERS in its entirety. It should not be interpreted to allow MERS to execute
individual assignments from its principal to another successor lender like it tried to do in
this case. See Argent Classic Convertible Arbitrage Fund, LP v. Countrywide Financial
Corp 07-CV-07097 (CD CA 2009).

8. MERS is a necessary party and is not qualified to do business in Alabama and,

accordingly, may not sue on any contract in Alabama since MERS does considerable
business in Alabama. In fact, MERS was formed for, inter alia, escaping mortgage
transfer taxes that otherwise would have been required to pool investments such as the
Mortgage.

9. Creditor will find it impossible to prove that it is a holder in due course of the
Note and Mortgage and hence it is subject to any of the foregoing defenses that are
deemed substantive and not jurisdictional. Most importantly, for Creditor to be able to
foreclose and file a motion for relief from stay, there would have to be a valid assignment
from Renasant to Creditor and the assignment from MERS to Creditor is ineffective for
any purpose. There is no authority or apparent authority for MERS to undertake
substantive assignment transactions on behalf of its principal. Instead, it was only given
the power of sale for Renasant, and was not given the right to assign Renasant’s rights to
another lender.

10. There is absolutely no evidence that the original Note has been endorsed or
that an allonge has been signed and affixed to the Note in any manner effective to make
Creditor a holder of the Note much less a holder in due course of the Note. See UCC 7-3-
201.

11. The Note was a negotiable instrument under Alabama’s Uniform Commercial
Code and the Creditor did not properly acquire the Note via negotiation. See Union Bank
& Trust Co. v Thompson, 202 Ala. 537, 81 So. 39, 40 (1919) and Crum, supra. See also,
Alabama Code Sections 7-3-104(a) and 7-3-301.

12. In order to endorse a note, the current holder must either sign the instrument
itself or an allonge (a paper so firmly affixed to the note that it becomes part of the note).
See, e.g. Crossland Sav. Bank FSB v. Constant, 737 S.W. 2d 19 (Tex Ct.App. 1987). The
text of the UCC suggests mere assignment of an instrument is not sufficient to make the
assignee a holder. This is because when an instrument is assigned, it is not necessarily
indorsed to the assignee. Courts have supported this interpretation and in a bankruptcy
proceeding, one court held that assignment alone does not make the note owner a holder
in the absence of endorsement and delivery to the person currently in possession. In re
Governor’s Island, 39 B.R. 417 (Bankr E.D.N.C. 1984)(holding mere assignment of a
note without endorsement by the note’s previous owner prevents the note’s current owner
from being a holder of the note). Without status as a holder, one can never be a holder in
due course. There is no evidence whatsoever, and, indeed, Creditor will not be able to
produce any evidence that it is the “holder” of the Note or Mortgage.
 13. Alternatively, even if the alleged assignment from MERS to Creditor is
deemed to be within the authority of MERs (which debtor strongly disputes), if the
assignment is not firmly affixed to the Note, there has not been a valid endorsement. See
Adams v Madison Realty & Development, 853. F.2d 163 (3rd Cir 1998).

14. MERS was created to facilitate the easy transfer of equity participation rights
in mortgages and notes, but overlooked was the law on the proper transfer of instruments
in the various states, including Alabama, and when MERS is named as a nominee with a
power of sale and no more, it does not have the authority to transfer or assign the
underlying instrument from lender to lender. Transfers and assignments from lender to
lender must be conducted by each lender and not its power of sale nominee.

15. There is no evidence contained in Creditor’s Motion that would indicate that
MERS has any right to transfer or assign the Note and Mortgage. Even if the Court holds
that MERS does have that right, there is no evidence in the file to indicate that Renasant
directed MERS to assign this Note and Mortgage to Creditor.

16. Finally, there have been serious questions raised concerning the execution of
documents by lenders and MERS by what are being referred to as “robosigners” to the
point that numerous jurisdictions have suspended all foreclosures. Moreover, the fact that
Creditor was collecting payments from debtor for several months prior to November 2,
2010, the assignment from MERS to Creditor was executed only after this bankruptcy
case was filed. Moreover, the person signing the assignment has a title of Vice President-
Bankruptcy Manager. This leads to the inevitable conclusion that the assignment filed in
this case by Creditor was not done in the ordinary course of business of MERS or
Renasant or Creditor for that matter.

WHEREFORE, the Court is respectfully requested to deny the Creditor’s Motion

for Relief From Stay until such time as Creditor can show a valid chain of title to the
Note and Mortgage which would require, at a very minimum, an assignment from
Renasant to Creditor and some evidence that the Note and Mortgage were not sold as a
derivative investment.

MOTION TO STRIKE AFFIDAVIT OF COUNSEL TO CREDITOR

17. Counsel for Creditor filed an affidavit re fair market value of debtor’s
home (document number 22 in this case) stating that debtor had misrepresented the value
of the home on her schedule A by stating the value was $58,500 when said counsel
asserts the true value is $155,800.

18. First of all, debtor has only a one-half undivided interest in the home
with the other half interest being owned by her brother Kevin Wheelahan (Case no: 10-
04790), so debtor was therefore asserting that the value of the home was $117,000, not
$58,500.
 19. Second, counsel for Creditor asserts that the fair market value of the
home is equal to the tax assessed value of $155,800 but it is common knowledge that, in
Baldwin County, the tax assessment values are far in excess of the true value, especially
after the BP oil spill and the real estate market retreat. Neither debtor nor Kevin
Wheelahan challenged the assessed value of the home, but if they had it is certain that the
value would have been substantially reduced.

20. Debtor asserts that the fair market value of the home is $117,000 and
that she only owns a one half undivided interest in the home, and therefore debtor did not
misrepresent anything on schedule A of her petition.

21. Debtor therefore objects to the affidavit submitted by counsel for

Creditor and moves that it be struck from the record in this case.

22. Debtor asserts that the affidavit submitted by counsel for Creditor
served no purpose in this case as debtor indicated that she was surrendering the home,
and debtor therefore asserts that the affidavit was filed to vex and harass debtor and to
call into question the veracity of debtor and counsel for debtor.

23. Even though the opinion of counsel for Creditor as to fair market value
of debtor’s home has absolutely no relevance to this case, it should be struck from the
record as vexatious, harassing and irrelevant and because it negatively affects the truth
and veracity of debtor and counsel for debtor.

WHEREFORE, debtor respectfully requests this Court to strike the

Affidavit re Fair Market Value, document number 22 in this action, on the grounds stated
above.

/s/ Ronald F. Suber

Ronald F Suber (Sub 3612)
Attorney for Debtors
PO Box 1297
Fairhope, AL 36533
(251) 209-3269
Ronald.suber@att.net

CERTIFICATE OF SERVICE

I do hereby certify that on the 25th day of November 2010 I caused a copy of the
foregoing document to be served upon the Trustee, J.C. McAleer, III, by the ECF system
and by mailing a copy of the foregoing by first class mail to Steven J. Shaw at PO Box
307, Huntsville, AL 35804.

/s/ Ronald F. Suber