Mortgage Securitization and MERs challenges

I think the foreclosure playing field, as enormously tilted as it still is, has changed. My
name is Jeff Greenberg, I am a certified forensic mortgage auditor. This credential is
recognized by NAMU, the National Association of Mortgage Underwriters, albeit rubber
stamped nonetheless we are one of very few mortgage auditors with the only credential
available.

I have been for some time opining about RESPA, TILA, ECOA and HOEPA violations,
regulation z and the merits of rescission as a method to place pressure on your lender to
modify the terms of your mortgage. At my certification class I met Doug Rian and
Beth Jacobson of PaCE-Professional Compliance Examiners, LLC from Maryland.
Now I have remained, to a significant extent interested in the spelunkers who crawl
down through the SEC.gov website pouring through SEC filings to find just how the
subprime mortgage lenders are able to sell a mortgage to a homeowner, transfer it 5 or
10 times until it ends up in a trust with a group of other similarly pooled mortgage assets
via a pooling and servicing agreement (PSA), create a prospectus and get a mortgage
backed securities offering approved at the SEC in such a manner that they can sell off
interests in the pool to investors, and then for those assets in the pool that are non-
performing, use a substitute trustee to foreclose on a house, without proper chain of title
or without endorsing the note and deed from one owner to the next and it all be Lilly
white and legal. Too many hoops, Too many hurdles. Somebody must have done
something wrong, something must be running afoul of federal statutes, somebody is
committing securities fraud. Someone somewhere is without a doubt. It plain old
fashion stinks to high heaven.

Well, I thing our friends in Easton Maryland have found the treasure room in the
spelunking cave. I was extremely impressed with the knowledge these two homeowner
advocates have amassed and were able to eloquently convey to a room full of
securitization neophytes.

Here’s the skinny. The secret sauce is located in three places. The pooling and
servicing agreement, the prospectus for the mortgage backed securities offering and the
unendorsed note. You see, in a Mortgage backed, securitized loan purchase the PSA will
typically have very specific language regarding endorsements that are required in order to
perfect a proper and legal conveyance of the note into the pool. Typically there will an
entire section or article describing exactly how each subsequent owner of the note must
convey title to the note or ownership of the note to the next holder of record in order to
properly convey such ownership. Without such proper and legal conveyance of the
financial instrument, as with a stock, bond or even check, the pool of mortgage backed
securities has no rights to the note in accordance with IT’S OWN PSA agreement. Nor
does the trust have any ability to convey upon a substitute trustee any rights to foreclose
on the note. Having said that, beg the obvious question? How is this happening every
day?

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Well, I think we are witnessing the largest de-frauding of the people of the US and the
federal government by Banks, As these foreclosures are allowing the banks (without
having legally documented/perfected their assignments and therefore their
foreclosures) to draw down on TARP and FDIC loss share dollars from our government,
placing the future of our Country in certain economic peril. Why can’t we just let the
investors in these mortgage backed securities eat the shit sandwich? They were relying
upon the securities brokers and broker dealers who underwrote them? Why should the
problem of this huge scandal hurt the ripped-off homeowner instead of the spoiled
protected investor? Why is wall street more important to save than our entire
economy. I say make the homeowner borrower whole by giving them their homes at
the expense of the miss-lead investors instead of paying for the losses of these crooked
predatory bankers on our future tax revenue. Just MHO.

Anyways: Here is a description of what Doug & Beth at PaCE do.. They go well
beyond a normal forensic audit because they trace the ownership of your mortgage from
the Pool back to the day you signed your loan documents finding chinks in the custody
chain.

Professional Compliance Examiners, LLC (PaCE)

Forensic Loan Auditing & Compliance In Real Property Transactions

(410)-650-4121 (Intake Line) (410)-690-4891 (Fax)

Pace@LegalForensicAuditors.com

What is PaCE?

PaCE is the nation’s only certified forensic loan auditing team examining real
property and securitized transactions!

PaCE meets the needs of today’s homeowners by performing forensic audits that
review our clients’ loan documents, loan transactions involving servicing and
negotiating, and deficiency and/or foreclosure notice documents. Obtaining a loan
from a borrower and negotiating its terms is a fundamental part of buying a home
and that is why we review foreclosure as a basic contractual right. Contracts cannot
be changed unless all parties to the contract agree. It is not possible to negotiate loan
modifications unless all parties in the real property transactions know who the
creditor, the secured party, is. Borrowers are as much a party in interest to
securitized mortgage loans as investment banks, servicers, aggregators, and trustees
because the mortgage is a basic loan transaction between the borrower and the
investor.

PaCE believes that homeowners have a right to know who they are dealing with in a
loan modification process and who is proceeding with the foreclosure process
against them when their request for a loan modification has been denied. PaCE

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strives to uncover the true identity and role of each party to the loan
modification/foreclosure process. A forensic audit follows the ownership trail of the
relevant loan documents and analyzes those documents to assure that a homeowner
is not wrongly ousted from his/her home. As forensic auditors, we also examine
whether the lender has complied with state and federal regulations.

Although PaCE does not provide legal advice, we attend court proceedings as expert
auditors and witnesses, and provide expertise to law firms, realtors, and mortgage
brokers who aspire to recognize a homeowner’s rights during the foreclosure/loan
modification process.

We specialize in the most useful loss mitigation options which include:

-GSE-Based Loan Modifications

- Forensic Loan Auditing & Forensic Securitized Loan Examination

- Foreclosure Prevention

We also provide case analysis in the following areas:

• Securitization Defense
• TILA / RESPA Violations
• Predatory Loans
• Notice Requirements
• Short Sale Pros/Cons
• Credit & Tax Ramifications
• Challenging Status of Secured Creditor
• Mortgage Note Retrieval, Authentication, Endorsements
• Hidden SEC Pooling & Servicing (PSA) Entries
• Trustee Being Individual and/or Out of State
• Collection Rights Defense (FDCPA, FTC)
• MERS involvement (MERS is a registry and NOT a mortgagee)
• Deficiency Balances
• Auction Cease/Notification of Clouded Title Defense
• State-Specific Rules of Lawyers’ Professional Conduct

PaCE is:

Elizabeth Jacobson is a partner at PaCE. She became a Certified Forensic Loan

Auditor in June 2010. Elizabeth graduated with her American Bar Association-
approved paralegal degree from Stevenson University (formerly Villa Julie College)
and later attended the University of Maryland Baltimore County. Thereafter, she
assisted in asbestos litigation research over an eight-year period that resulted in the
largest punitive damage awarded by a jury in Maryland. Prior to co-founding
PaCE, Elizabeth was also recognized as Wells Fargo’s top-producing national loan

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officer for nearly 10 years. In that capacity, she developed invaluable skills to help
her clients maneuver through the mortgage landscape, and in 2009 penned an
article for Harper’s Magazine detailing her experience. Elizabeth now focuses on
assisting homeowners in saving their homes from foreclosure, and she has appeared
on CNN, NPR, and the BBC for interviews related to her efforts to do so. She served
as Foreclosure Prevention Coordinator for Mid-Shore Pro Bono in 2008-2009, and
her expertise has been tapped by the United States Department of Justice, Federal
Bureau of Investigation, Comptroller of Currency, and the Maryland Department
of Labor, Licensing & Regulation. Most recently, Elizabeth appeared in Michael
Moore’s documentary Capitalism: A Love Story. Although her efforts to assist
homeowners have landed her many accolades, she is most proud of recently being
recognized by the U.S. House of Representatives for her service to homeowners in
the State of Maryland.

Douglas Rian, M.A., co-founded PaCE and is Elizabeth Jacobson’s partner. Doug
became a Certified Forensic Loan Auditor in June 2010. His background includes
academia, public policy and legal/financial analysis consultation. He applies a
rigorously analytic approach to uncovering little-known, rarely used defenses in
areas of mortgage securitization and mortgage deficiency. After obtaining a B.A.
(cum laude) in English from the University of North Dakota, he earned his M.A.
from the University of Chicago during which time he attended its School of Law and
worked at its Mandel Legal Aid Clinic. He later completed investing coursework
from The Investment Analysts Society of Chicago, and worked with the Tennessee
Supreme Court’s Board of Professional Responsibility while obtaining an ABA-
approved paralegal certificate from the Kaplan Institute. Doug’s research, analysis,
teaching, and writing skills have been tapped by state and federal agencies and
private-sector companies including the FBI’s Uniform Crime Reporting (UCR) of
its Bureau of Justice Statistics, the Minnesota House of Representatives, U.S.
Senator Kent Conrad, two Governors and State Attorneys-General, the Minnesota
Public Service Commissioner’s Planning Center Division, IBM, ITT Educational
Services, Morningstar, Inc., and the National Association of State Boards of
Accountancy (NASBA). He recently served as Visiting Professor of Law and
Politics at Universidad Espiritu Santo in Guayaquil, Ecuador. Doug has acted as a
delegate to the National Conference of State Legislatures, and is a member of Pi
Sigma Alpha, the International Association of Business Communicators, and the
Society of American Business Editors and Writers.