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Re: Lauren Paulson/Fairway/FHLF, LLC and others

Dear Mr. Kwitman:

This is a demand letter.

THE M. E. BLANTON HOUSE LOAN

Fairwav's Follv
This lender-fiasco is the poster child of predatory loans. It is the
poster child of lender bad faith. The predatory crown jewel for Fairway
Commercial Mortgage Corporation (Fairway) lies in its illegal
nonjudicial foreclosure by Fairway's subsidiary, FHLF, LLC, on
September 25, 2009.

It is a tale of attorney negligence, attorney malpractice and

attorney hubris .....on a grand scale by'white-shoe'Portland law firms.

Sadly, it demonstrates our legal system at its worst, governed

by a judiciary that has only a vague allegiance to Due Process and The
Rule of Law. This case demonstrates a judiciary with no empathy to
debtors a nd blata nt bias towards their'brothers/sisters-in-arms'.

Fairway's Folly is marked by their assignment of The Mortgage to

FHLF, LLC, and their concomitant failure to assign The Promissory
Note. This mistake vitiates the secured interest in the property and
violates the Uniform Commercial Code. It violates a settled rule of
law in the United States since the 17th Century: -- A mortgage
follows the promissory note, but a promissory note does not
follow a mortgage. No attorney picked up on this. None of the
Fourteen (14) judges that have been involved in the six (6) judicial
forums on this case have picked up on this. The Bankruptcy Court and
its cadre of Trustees didn't pick up on the issue. The Ninth Circuit
didn't care. Only the victim, Lauren Paulson, finally became aware of
Fairway's Folly and brings it to your attention now.
 These lawyer's malpractice insurance carrier was alerted several
months ago to the fact that FHLF, LLC has no standing before any of
these courts. They did nothing, probably due to the'white shoe'
factor. Yet, Oregon Federal District Court Judge Garr King ruled in a
case exactly on point with this set of circumstances, in favor of the
debtor, on October 6th, 2070.

Illeqal Foreclosure
Thus, FHLF, LLC's foreclosure of September 25, 2009 is patently
illegal. FHLF, LLC did not hold the promissory Note when they
foreclosed. The law across the United States requires that the Note be
endorsed to and possessed by FHLF, LLC before they foreclosed. That
didn't happen. This means that FHLF, LLC did not have legal standing
to foreclose. Standing is jurisdictional and cannot be waived.

There are dozens of cases coming down throughout the United

States that hold uniformly the Note must be endorsed and delivered to
the assignee, here, FHLF, LLC. If the Note is not so endorsed and
delivered, that breaks the chain of title and any foreclosure by an
assignee of the deed of trust without also being the legal 'holder'of
the Note is void. There are no cases otherwise, Moreover, the entity
without constitutional standing cannot subsequently establish a valid
assignment, Humpty Dumpty cannot be put together again.

SETTLEMENT LETTER

This solicitation for an offer to settle is open for 30 days

following the date of this letter. A comprehensive discussion of the
overall liability of the parties has been previously furnished to some of
you in the form of a thirty four (34) page class action complaint dated
November 4,2010. This complaint will be filed immediately if this case
is not settled forthwith,

Discussion

1. FHLF, LLC, as discussed above, has made the grievous mistake

of conducting a nonjudicial foreclosure on September 25,2009
when they were not the Holder of the promissory Note as
required by law. This alone voids the foreclosure sale and
strips the lender of security.

But, the team of Matt Burk, CEO of Fairway and their attorneys,
Greg Blair, Joel Parker, and Craig Russillo conspired to make other

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fraudulent acts (in addition to allowing an Order of Default in the
District Court case) as follows:
. The Stay Attorney Joel Parker as successor trustee failed
to obtain relief from the automatic stay of my bankruptcy
before proceeding with the foreclosure. A successor trustee
becomes a stakeholder in a bankruptcy proceeding exactly
like FHLF, LLC. The latter obtained a relief from stay, the
former did not.
. The Required'Warning" Notice-- Attorney Craig Russillo
failed to provide the'warning'notice to me as required by
ORS 86.737, This means Paulson has five years to redeem
this property as allowed by ORS 88.030
. The Riqht to Cure Attorneys Parker and Russillo conducted
the September 25, 2009 foreclosure without providing
Paulson with the right to cure up to five days before the sale
as required by ORS 87.753
. The Required Notice of Sale Parker and Russillo did not
give actual notice prior to the foreclosure sale as required by
ORS 86.742 et seq.

2. Fairway Commercial Mortgage Corporation, Matt Burk,

Greo Blair, Joel Parker and Craio Russillo conspired to
'dehorse'Paulson from this property. They did this by
unstealthy (possibly criminal) fraud: At the very least Fairway
has committed fraud on the courts. In addition, there has been
blatant contractual bad faith: -- The Forbearance
'Nonagreement', The Swenson sale, the El Mansey sale, the
Reverse Mortgage. It has not been pretty. The twenty seven
(27) Count complaint recounts the horribles.

Offer
This is a solicitation for an offer to settle with the following
required components:

. This offer to settle is contingent upon a full return of all of

Paulson's personal property under the supervision of a
Court-appointed mediator or master.

. Fairway and FHLF, LLC/Skylands Investment Corporation

and all Fairway subsidiaries including investors on these
matters shall reconvey the deeds of trust, provide a
statutory warranty deed on all properties free and clear of
all encumbrances along with a full and complete title
report through First American Title Insurance Company
and Candace Brown as escrow agent. This transaction shall
include a hold harmless agreement from Fairway to
Paulson and mutual full and final releases of all claims.

$100,000 liquidated damages shall be paid to Paulson by

the corporate defendants in the federal court Case No. cv
OB-982-PK

$100,000 liquidated damages shall be paid to Paulson by

the individual defendants in the same case.

There shall be a return to Paulson of all rents collected by

any Fairway entity from May, 2010 to present. All unpaid
taxes, utility bills and insurance must be paid from May 24,
2010 to settlement date.

There shall be an accounting and return of all Paulson's

personal property in good repair to the exact place where
ta ken.

There shall be a written confirmation from an authorized

defendant representative (Anne Helton would be preferred)
that the confidential computer hard drive and other
confidential documents have not been breached by any
defendant or party hired by defendants. In addition, this
representative will certify in writing the return of all of
Paulson's personal property through the services of the
mediator discussed above and below. This defendant
representative shall also furnish all inventories and
paperwork in connection with the initial confiscation of
Paulson's personal property, into August, 2010 and to
present. The three vehicles taken by defendants shall be
examined by qualified mechanics to certify the condition of
those vehicles upon return,

Paulson's credit record shall be corrected and cleared of all

these matters.

All client files shall be returned with confirmation that no

client or customer lists have been retained by any
defendant, person or party.

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 . The parties will sign a joint stipulated dismissal of all
litigated matters without costs or fees to any party,
. The parties will stipulate to vacate all extant orders and
judgments in all forums without costs or fees to any party,

Time is of the essence. If settlement discussions are not

complete within 30 days of the date of this letter then any subsequent
negotiations will require an additional $1,000 per day increase in
liquidated damages.

Punitive Damages
This case has been marked by antagonism and acrimony not
exceeded by any other matter of which paulson has ever been
involved. This offer to setile is conditioned upon respectful,
business-like and polite setUement discussions mediated by
Roxane G. Ashe, Circuit Mediator of the Ninth Circuit Mediation
Program or surrogate. If anything of the sort of past false
negotiations or posturing occurs, then all settlement overtures will
terminate and litigation will be the only vehicle of resolution. punitive
damages will be sought in every authorized forum.

Under no circumstances will paulson negotiate direcily or

indirectly with Matt Burk, Greg Blair, Joel parker nor craig Russillo.

Thank you for your interest and consideration in these matters.

Very truly yours,

Lauren Paulson