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FILED: KINGS COUNTY CLERK 03/12/2022 11:58 PM INDEX NO. 3881/2011
NYSCEF DOC. NO. 8 RECEIVED NYSCEF: 03/12/2022
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF KINGS
DEUTSCHE BANK NATIONAL TRUST Index No.: 3881/11
COMPANY, AS INDENTURE TRUSTEE, FOR
NEW CENTURY HOME EQUITY LOAN TRUST
2005-4, AFFIDAVIT AND TESTIMONY OF
MARIE MCDONNELL, CFE
Plaintiff,
~against~
HARVEY LANDAU; MIRIAM LANDAU; NEW
YORK CITY ENVIRONMENTAL CONTROL
BOARD; NEW YORK CITY PARKING
VILOATIONS BUREAU; NEW YORK CITY
TRANSIT ADJUDUCATION BUREAU,
Defendants.
COMMONWEALTH OF MASSACHUSETTS)
COUNTY OF BARNSTABLE ) ss.
Being duly sworn, Marie McDonnell hereby deposes and says on oath as follows:
1. I am a natural born citizen of the United States of America and a resident of the
Commonwealth of Massachusetts. I am over the age of majority and believe in the obligations of
an oath.
2. I am a Mortgage Fraud and Forensic Analyst, and a credentialed Certified Fraud
Examiner (“CFE”) with over thirty (30) years’ experience in transactional analysis, mortgage
auditing, and mortgage fraud investigation.
3. I am the President and Chief Executive Officer of McDonnell Analytics, Inc. also
d/b/a McDonnell Property Analytics (the “Firm”), a litigation support and research firm having a
AFFIDAVIT OF M ARIE MCDONNELL, CFE PAGE 1 OF 37
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principal place of business at 15 Cape Lane, Brewster, Massachusetts 02631. The Firm, among
other services, provides mortgage-backed securities research and foreclosure forensics to
attorneys nationwide. McDonnell Property Analytics also advises and performs services for
county registers of deeds, attorneys general, courts and other governmental agencies.
4. I have personal knowledge of the facts contained herein and, if called upon, could
and would competently testify thereto. My credentials are set forth in a curriculum vitae attached
hereto as Exhibit A. (See Exhibit A. – Curriculum Vitae of Marie McDonnell)
5. I make this affidavit in support of Defendants’ Motion for Relief from Judgment
based upon my introduction of newly discovered evidence that subjects the Court’s March 13,
2017 Order Granting Summary Judgment in favor of Plaintiff to judicial review pursuant to NY
CVP Law R5015 Relief from judgment or order, which states in relevant part as follows:
Rule 5015. Relief from judgment or order. (a) On motion. The court which
rendered a judgment or order may relieve a party from it upon such terms as
may be just, on motion of any interested person with such notice as the court
may direct, upon the ground of:
1. excusable default, if such motion is made within one year after service
of a copy of the judgment or order with written notice of its entry upon
the moving party, or, if the moving party has entered the judgment or
order, within one year after such entry; or
2. newly-discovered evidence which, if introduced at the trial, would
probably have produced a different result and which could not have
been discovered in time to move for a new trial under section 4404; or
3. fraud, misrepresentation, or other misconduct of an adverse party; or
4. lack of jurisdiction to render the judgment or order; or
5. reversal, modification or vacatur of a prior judgment or order upon
which it is based.
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6. With this affidavit, I introduce [R5015(a)(2)] newly discovered evidence which, if
introduced by Defendants prior to the Court’s March 13, 2017 Order Granting Summary
Judgment in favor of Plaintiff, would probably have produced a different result. Defendants
could not have discovered this evidence any sooner without the assistance of a subject matter
expert with specialized knowledge in the field of residential mortgage finance.
7. I state facts sufficient to establish that Plaintiff, through its agents and attorneys,
has committed acts of [R5015(a)(3)] fraud, misrepresentation, or other misconduct; that
Plaintiff’s fraud has interfered with the judicial machinery by improperly influencing the trier of
fact and unfairly hampering the presentation of Defendants’ claims and defenses, and therefore,
the judgment of March 13, 2017 should be vacated.
8. The Honorable Lawrence Knipel rendered his decision on Plaintiff’s Motion for
Summary Judgment on March 13, 2017; therefore, Defendants’ motion is both timely and just.
I. BACKGROUND
9. This litigation is remarkably similar to another case in which I served as the
Consumer-Plaintiffs’ expert in the matter of Mary Ellen Wolf v. Wells Fargo Bank, N.A. et al.,
Case Number 2011-36476, brought in the 151st Judicial District Court of Harris County, Texas
(“Wolf”).1 On November 10, 2015, after a four-day trial, the jury returned a verdict in favor of
1
Wolf v. Wells Fargo Bank, N.A. $5.4 Million Verdict: Securitization Flow Chart to Prove
that Wells Fargo Bank, N.A. Committed Fraud When It Used Robo-Signed Document. Published on
11/23/2015 by Barry Fagan.
A Texas state jury awarded nearly $5.4 million to a couple accusing Wells Fargo NA and others
of “robosigning” documents that led to the wrongful foreclosure of their home, holding that the banking
giant knew that documents supporting the foreclosure were fraudulent.
After four days of trial and just four hours of deliberation, the jury found that there was “clear and
convincing evidence” that Wells Fargo and Carrington Mortgage Services LLC knew that the supporting
documents were a fraudulent claim on the property owner.
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Plaintiffs totaling $5.38 million consisting of: a) $190,000.00 in actual and emotional distress
damages; b) $190,000.00 in attorneys’ fees; c) $2,500,000.00 in exemplary damages against
Wells Fargo Bank, N.A. as Trustee of the Carrington Mortgage Loan Trust, Series 2006-NC3;
and d) $2,500,000.00 in exemplary damages against Carrington Mortgage Services, LLC, the
mortgage loan Servicer.
10. My involvement in the Wolf case is relevant here because it closely parallels the
experience of Miriam Landau and Harvey Landau (“the Landaus”) in several material respects,
for example:
a. Both the Wolfs’ Mortgage Loan and the Landaus’ Mortgage Loan were either
originated by or sold to New Century Mortgage Corporation.
b. Both Mortgage Loans were allegedly conveyed to a Qualified Special Purpose
Entity (“QSPE” or “Trust”) that issued securities pursuant to registration
statements filed with the Securities and Exchange Commission.
The jury was shown the sequence of “true sales” that were necessary to properly securitize the
Wolfs’ mortgage loan using the attached “Securitization Flow Chart.”
Once the jury understood the requirements of the Mortgage Loan Purchase Agreement and the
Pooling and Servicing Agreement, they were able to see why the Transfer of Lien executed by Tom Croft
was fraudulent on the face of the document.
The jury also found that even though Wells Fargo Bank was in physical possession of the original
note, it did not own the mortgage loan because it was never securitized into the Carrington Mortgage
Loan Trust, Series 2006-NC3 over which Wells Fargo serves as Trustee.
The $5.4 million dollar jury verdict, and especially their finding that the Transfer of Lien was
fraudulent, supports findings in all of the registry of deeds audits that have been conducted for:
John L. O’Brien, Register of Deeds, Essex Southern District, MA
Nancy J. Becker, Recorder of Deeds, Montgomery County, PA
Seattle City Council, Seattle, WA
In re: Mortgage Electronic Registration Systems, Inc. Litigation, Maricopa, Pima, and
Pinal Counties, AZ
This case provides a road map for cutting through the complexities of modern finance to arrive at
a just result. (See http://www.jdsupra.com/legalnews/54-million-verdict-securitization-flo-79391/)
See also: Law360, Los Angeles (November 12, 2015, 8:47 PM ET) – (Found at:
http://www.law360.com/articles/726312/wells-fargo-carrington-must-pay-5m-in-foreclosure-row)
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c. Both the Wolfs and the Landaus alleged that their Mortgage Loans never made it
into the Trust, and therefore, the Trustee was neither the owner, holder or the
person entitled to enforce their Note.
d. Both the Wolfs and the Landaus complained that a fraudulent assignment of
mortgage had been robosigned by Tom Croft, Vice President of REO for
Carrington Mortgage Services, LLC, and subsequently filed in the public land
records against their title purporting to grant the Trustee the authority to foreclose
upon their respective properties.
11. My pivotal role in the Wolf case was to explain to the judge and jury the precise
steps that were necessary to securitize the Wolfs’ Mortgage Loan into the Carrington Mortgage
Loan Trust, Series 2006-NC3 over which Wells Fargo Bank, N.A. serves as Trustee. Once I had
laid this foundation, I could show the fatal breaks in the securitization process and demonstrate
why the recorded transfer of lien (assignment of mortgage) contained false statements,
misrepresentations, and omissions of material fact that rendered the assignment void.
12. Similarly, in this case, there is clear and convincing evidence that the assignment
of mortgage that purports to grant, assign and transfer the Landaus’ Mortgage together with the
Note to Deutsche Bank National Trust Company, as Indenture Trustee, for New Century Home
Equity Loan Trust 2005-4 (“Deutsche Bank”) is ineffective, null and void. Moreover, the
documentary evidence strongly suggests that the Trust does not “own” the Landaus’ “Whole
Loan;” nor is Deutsche Bank the person entitled to enforce the Note or foreclose upon their
Mortgage.
13. With respect to my qualifications regarding the illegal industry practice of robo-
signing mortgage assignments and affidavits, the Court should know that my Firm was the first
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in the nation to audit a registry of deeds, and subsequently, to develop a list2 of robo-signers in
conjunction with a publicly elected registrar who has continuously held that office for the past
forty (40) years. Here, I am referring to The Honorable John L. O’Brien, Register of the Essex
Southern District Registry of Deeds in Salem, Massachusetts, who commissioned my Firm to
conduct an audit to test the integrity of his Registry due to the mortgage industry’s ubiquitous
use of Mortgage Electronic Registration Systems, Inc. (“MERS”). Mr. O’Brien was troubled by
MERS’s contention that its members can avoid having to record mortgage assignments in the
public land records if they register them in the MERS® System instead. As a result of this
practice, Mr. O’Brien complained that he could no longer look his constituents in the eye and tell
them who owned their property. 3
14. I submitted my findings to Register O’Brien on June 28, 2011, and reported
widespread, systemic patterns of practice employed by several of the nation’s largest banks that
had eroded the transparency and corrupted the chain of title to real property records maintained
by the Essex Southern District Registry of Deeds.4
II. EXPERT ENGAGEMENT
15. Miriam Landau engaged me to examine the mortgage loan documents that
memorialize a certain consumer mortgage transaction consummated on June 10, 2005 by and
2
Notably, Tom Croft is on this list of robo-signers. (See
http://www.salemdeeds.com/robosite/pdf/robosigners.pdf)
3
Massachusetts is a title theory state.
4
A true and correct copy of the Firm’s report entitled Forensic Examination Of Assignments Of
Mortgage Recorded During 2010 In The Essex Southern District Registry Of Deeds is available on
Register O’Brien’s website at: http://salemdeeds.com/salemdeeds/pdf/PressRelease7-29-11.pdf and
http://salemdeeds.com/salemdeeds/pdf/Audit.pdf.
For a list of known robo-signers See also:
http://salemdeeds.com/salemdeeds/DownLoadFile.aspx?newsid=69.
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between Miriam Landau and Harvey Landau (“Mortgagors” or “the Landaus”) and Precision
Financial, Inc. (“Lender” or “Mortgagee”), and to conduct the following investigation:
A. Review Plaintiff’s Complaint, Defendants’ Answer, Plaintiff’s Motion for
Summary Judgment, Plaintiff’s Attorney’s Affirmation and Affidavit of Merit
in Support of the Motion for Summary Judgment, and the Court’s Orders.
B. Examine the copy of the Note attached to the Plaintiff’s Attorney’s
Affirmation in support of Plaintiff’s Motion for Summary Judgment.
C. Describe the paper trail, geographic travel, and evidence that would exist if
the Landaus’ original Note, Mortgage, and collateral file (“Whole Loan”) had
been properly and legally conveyed to Deutsche Bank National Trust
Company, as Indenture Trustee, for New Century Home Equity Loan Trust
2005-4 on or about August 17, 2005.
D. Describe the process by which Deutsche Bank National Trust Company would
release physical custody of the original Note and Mortgage to its foreclosing
attorney, Rosicki, Rosicki & Associates, P.C.
E. Describe the special role of the Depositor, New Century Mortgage Securities
LLC, in the securitization of the Landaus’ Mortgage Loan; and explain why
only the Depositor is permitted to transfer the mortgage loans into the
qualified special purpose vehicle that holds the trust assets.
F. Analyze the Assignment of Mortgage allegedly executed on June 15, 2005 by
Salvatore Salamone as Compliance Officer of Precision Financial, Inc.
(“Assignment #1”) and determine —as a matter of fact— whether this
Assignment is valid and in conformance with all “Applicable Laws” as
required by the Note and Mortgage.
G. Analyze the Assignment of Mortgage allegedly executed on January 13, 2011
by Tom Croft as Vice President of REO of Carrington Mortgage Services,
LLC as Attorney in Fact for New Century Mortgage (“Assignment #2”) and
determine —as a matter of fact— whether this Assignment effectuated a valid
transfer of the Landaus’ Note and Mortgage in conformance with all
“Applicable Laws” as required by the Note and Mortgage.
H. Based on all available evidence, express an opinion as to whether Plaintiff
was, in fact, the lawful owner and holder in physical possession of the
Landaus’ Note when on February 17, 2011 it filed its Complaint in mortgage
foreclosure with this Court.
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III. REQUEST FOR JUDICIAL NOTICE
16. Federal Rule of Evidence 201 states: “The court may judicially notice a fact that
is not subject to reasonable dispute because it: (1) is generally known within the trial court’s
territorial jurisdiction; or (2) can be accurately and readily determined from sources whose
accuracy cannot reasonably be questioned.” Rule 201 goes on to state that upon the request of a
party, a court may take judicial notice of a fact as long as the party provides the court with the
necessary showing that the fact is not subject to reasonable dispute. (See also NY CPLR §
R4511- Judicial notice of law)
17. The origination, securitization, and enforcement of the consumer mortgage
transaction at issue is governed by a variety of state and federal laws of which this Court may
take judicial notice. In addition, the Court may take judicial notice of documents published on
government websites, such as on the Securities and Exchange Commission’s EDGAR website;
the New York City Department of Finance, Office of the City Register; Public Access to Court
Electronic Records (“PACER”); and to the New York State Court System.
18. To avoid burdening the Court with “lengthy documents,” I will note my sources,
provide hyperlinks to the documents filed with the Securities and Exchange Commission, and
excerpt only the most relevant sections as necessary to establish the factual foundation for my
analysis and opinions.
IV. SUMMARY OF FINDINGS
19. On March 13, 2017, this Court issued an Order Granting Summary Judgment,
Appointing a Referee to Compute and Amending Caption in favor of Plaintiff. In making his
decision, the Honorable Lawrence Knipel relied in large part upon the Affirmation of Lijue T.
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Philip, Esq., of Rosicki, Rosicki & Associates, P.C. (Plaintiff’s counsel), dated October 13, 2016,
and the Affidavit of Elizabeth A. Ostermann (Plaintiff’s servicer) sworn to on October 12, 2016,
with exhibits annexed including the Summons and Complaint duly filed in the Office of the
Clerk of the County of Kings on February 17, 2011.
20. After conducting an intensive examination of Plaintiff’s prima facie evidence, I
noted the following failures:
A. There is no admissible evidence presently before the Court that Plaintiff was the
holder or assignee of the underlying Adjustable Rate Note when on February 17,
2011 it filed its Summons and Complaint. In fact, Plaintiff’s evidence is
countervailing.
B. Furthermore, there is no admissible evidence presently before the Court that
Carrington Mortgage Services, LLC, Plaintiff’s current servicer, was in physical
possession of the original Adjustable Rate Note on February 17, 2011 when
Plaintiff filed its Summons and Complaint, as will be explained in detail below.
C. On October 12, 2016, Elizabeth A. Ostermann, Vice President of Carrington
Mortgage Services, LLC, Plaintiff’s servicer, prepared an Affidavit of Merit in
support of Plaintiff’s Motion for Summary Judgment in which she averred:
“Carrington Mortgage Services, LLC was in possession of the original note on
July 5, 2005” which is a patently and provably false statement for reasons I
document and explain below.
D. On October 25, 2016, Plaintiff’s attorney, Lijue T. Philip, submitted an Attorney’s
Affirmation in support of Plaintiff’s Notice of Motion for Summary Judgment.
Exhibit “A” attached thereto is a purported copy of the Note together with an
undated Allonge containing two indorsements. The inferior quality of these
instruments indicates they are scanned images of 3rd generation copies of the
Landau Note, not a photocopy of the original. If Plaintiff or its servicer were in
physical possession of the original Note, Exhibit “A” should be crystal clear due
to the fidelity of today’s copy and scanning technology.
E. Plaintiff submitted an Assignment of Mortgage dated June 15, 2005 from
Precision Financial Inc. to New Century Mortgage a corporation organized and
existing under the laws of the United States of America (a non-existent entity).
This Assignment was recorded on October 30, 2007, and was either altered after
the fact, or backdated to avoid triggering a violation of the automatic stay
imposed on April 2, 2007 when New Century Mortgage Corporation filed for
bankruptcy.
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F. Plaintiff also submitted an Assignment of Mortgage dated January 13, 2011 from
New Century Mortgage a corporation organized and existing under the laws of the
United States of America (a non-existent entity) to Plaintiff which is ineffective,
null and void for several reasons:
(i) The Assignor, “New Century Mortgage a corporation organized and
existing under the laws of the United States of America” is a non-existent
entity.
(ii) New Century Mortgage Corporation registered as a domestic stock
corporation with the California Secretary of State on August 3, 1995 (I.D.
# C1945192) and remains active to this day.
(iii) Based on documentary evidence filed with the Securities and Exchange
Commission (“SEC”) of which this Court may take judicial notice, New
Century Mortgage Corporation (“NCMC”) did not sell, assign, transfer
and convey the loans it originated for securitization into the New Century
Home Equity Loan Trust 2005-4 to Plaintiff; rather, NCMC transferred
those mortgage loans to an affiliate, New Century Credit Corporation, on
some date between June 15, 2005 and August 17, 2005.
(iv) According to an SEC-filed Indenture dated as of August 17, 2005,
between New Century Home Equity Loan Trust 2005-4, a Delaware
statutory trust over which Wilmington Trust Company serves as Owner
Trustee, and Deutsche Bank National Trust Company, a national banking
association, as Indenture Trustee, Wilmington Trust Company conveyed
its interest in the Trust Estate to Deutsche Bank National Trust Company
on August 17, 2005.
(v) The documents filed with the SEC incident to the creation of the New
Century Home Equity Loan Trust 2005-4 must be truthful, may not
contain false statements, and may not omit to state a material fact required
to make the statements not misleading. To do otherwise would be to
commit securities fraud.5
(vi) Based on the information obtained through the SEC, and for other reasons
described in detail below, I concluded that the Assignment of Mortgage
dated January 13, 2011 by which New Century Mortgage (a non-existent
entity) purports to assign the Landaus’ Note and Mortgage to Plaintiff
contains false statements, misrepresentations and omissions of material
fact that render it void ab initio.
5
See Section 11 of the Securities Act of 1933, 15 U.S.C. § 77k.
See also Omnicare, Inc. v. Laborers Dist. Council Constr. Industry Pension Fund, 135 S. Ct.
1318 (2015), and Freidus v. ING GROEP, Supreme Court 2015.
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21. After examining Plaintiff’s documentary evidence, conducting research,
analyzing the Attorney’s Affirmation and the Affidavit of Merit filed in support of Plaintiff’s
Motion for Summary Judgment, I concluded that Plaintiff succeeded in obtaining a favorable
judgment from this Honorable Court by: a) fabricating evidence; b) forging legal documents; c)
making false statements in court papers; d) suppressing facts material and necessary to a fair
adjudication of Defendants’ rights; and e) by falsely perpetuating the illusion that Plaintiff has
standing when the evidence it has produced to the Court proves that it does not.
V. DOCUMENTARY EVIDENCE AND FOUNDATIONAL FACTS
The Transaction
22. The subject of this analysis is a consumer mortgage transaction (i.e., a refinance
of the Landaus’ primary residence) that took place on June 10, 2005 (“Consummation Date”), by
and between Miriam Landau and Harvey Landau (“Borrower” or “the Landaus”) and Precision
Financial, Inc. (“Lender” or “PFI”).
23. On the Consummation Date, Miriam Landau executed an Adjustable Rate Note
(“Note”) in favor of PFI and, together with her husband Harvey Landau, granted a Mortgage
(“Mortgage”) to obtain funds in the amount of $285,000.00 secured by residential property
located at 2024 East 64th Street, Brooklyn, Kings County, New York 11234 (“Property”). The
Mortgage was recorded in the Office of the City Register of the City of New York (“Register’s
Office”) on July 7, 2005, as City Register File No. (“CRFN”) 2005000381299. (See Exhibit B. –
Mortgage, 06/10/2005)
24. The Mortgage begins with its own definition of terms lettered (A) through (P).
Definition (C) defines the Lender as follows:
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“Lender.” Precision Financial, Inc. a New York Corporation will be called “Lender.”
Lender is a corporation or association which exists under the laws of New York.
25. The Note establishes the terms of a Hybrid Adjustable Rate Mortgage (“HARM”)
loan that calls for the principal amount of $285,000.00 to be financed at a yearly interest rate of
6.750% for the first two (2) years. On July 1, 2007, and every 6th month thereafter (called a
“Change Date”), the interest rate was to adjust according to an Index and Margin formula
described in Paragraph 4 of the Note. To calculate the interest rate change, the Lender was to add
a Margin of Five and 550/1000 percentage points (5.550%)6 to the Current Index and then round
that figure to the nearest one-eighth of one percentage point (0.125%).
26. In the month following each Change Date, monthly payments were to reset in an
amount sufficient to fully amortize the Principal to a zero balance by the maturity date of July 1,
2035. (See Exhibit C. – Adjustable Rate Note, 06/10/2005)7
27. The Note attached to Plaintiff’s Attorney’s Affirmation filed in support of
Plaintiff’s Motion for Summary Judgment includes an Allonge To Promissory Note containing
two undated endorsements. The first is a specific endorsement executed by Salvatore Salamone
6
The key to pricing an adjustable rate mortgage loan is not so much the selection of the index
used to benchmark interest rate changes from time to time; but the margin to be added to the index on
each interest rate change date.
Borrowers who qualify for the best available prime rate offered can expect to receive a margin
that is less than 3.000%. A margin of 3.000% or more signifies a subprime pricing structure. A margin of
5.000% or higher is considered to be punitive and predatory in nature. In this case, the Borrower received
a Margin of 5.550% which clearly falls into the predatory category.
7
The copy of the Adjustable Rate Note attached hereto as Exhibit C, as well as the Allonge To
Promissory Note that follows, were taken from Plaintiff’s Motion for Summary Judgment filed with this
Court on October 25, 2016.
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as Compliance Officer of Precision Financial, Inc. purporting to transfer the Note from Precision
Financial, Inc. to New Century Mortgage Corporation.
28. The second one is a blank endorsement executed by Magda Villanueva in her
alleged capacity as Assistant Vice President/Shipping Manager of New Century Mortgage
Corporation, which purports to convert the Note to bearer paper. (See Exhibit D. – Allonge To
Promissory Note)
29. An Assignment of Mortgage dated June 15, 2005 was purportedly executed by
Salvatore Salamone as Compliance Officer of Precision Financial, Inc. (“Assignor”), which
purports to transfer all right, title and interest in the Landaus’ Mortgage together with the note to
New Century Mortgage (“Assignee”) (“Assignment #1”). This document was recorded in the
Register’s Office on October 30, 2007, as CRFN.: 2007000545126. (See Exhibit E. –
Assignment #1, 06/15/2005)
30. On January 13, 2011, Tom Croft, Vice President of REO of Carrington Mortgage
Services LLC as Attorney in Fact for New Century Mortgage, executed an Assignment of
Mortgage (“Assignment #2”) which purports to transfer the Mortgage together with the bond or
note from New Century Mortgage (“Assignor”) to Deutsche Bank National Trust Company, as
Indenture Trustee, for New Century Home Equity Loan Trust 2005-4 (“Assignee”). Assignment
#2 was filed of record in the Register’s Office on March 2, 2011, as CRFN.: 2011000076477.
(See Exhibit F. – Assignment #2, 01/13/2011)
31. On February 17, 2011, Catherine Guy, Esquire of Rosicki, Rosicki & Associates,
P.C. filed a Complaint on behalf of Deutsche Bank National Trust Company, as Indenture
Trustee, for New Century Home Equity Loan Trust 2005-4, Plaintiff. The Complaint alleges in
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paragraph four that “Plaintiff (a) is the owner and holder of the subject mortgage and note, or has
been delegated the authority to institute a mortgage foreclosure action by the owner and holder
of the subject mortgage and note.”
Documents Examined
32. In forming my opinions, I researched and reviewed the following relevant
documents and information:
(a) Documents provided by the Landaus incident to the transaction with Precision
Financial, Inc.
(b) Documents submitted to the Supreme Court of the State of New York, County of
Kings, under Index #: 3881/2011.
(c) Documents filed for record with the Office of the City Register of the City of
New York incident to the subject transaction encumbering the Landaus’ primary
residence located at 2024 East 64th Street, Brooklyn, New York 11234.
(d) Research obtained from Bloomberg Finance L.P. on November 17, 2017 which
includes general information about the New Century Home Equity Loan Trust
2005-4, as well as specific information on the Landaus’ Mortgage Loan including:
documents, data, screen shots, loan level details contained in monthly servicer
tapes, and a pay history for the Landaus’ mortgage account provided by the
servicer to Deutsche Bank National Trust Company, as Indenture Trustee.
(e) Researched Deutsche Bank’s Investor Reporting portal at:
https://tss.sfs.db.com/investpublic/.
(f) Researched the Securities and Exchange Commission’s public access website at:
http://www.sec.gov/edgar and http://www.secinfo.com/.
(g) Consulted the following white papers, articles, and primary source materials:
Asset-Backed Securitization, Special Purpose Vehicles and Other
Securitization Issues, by Kenneth N. Klee and Brendt C. Butler.8
8
See Kenneth N. Klee and Brendt C. Butler, Asset-Backed Securitization, Special Purpose
Vehicles and Other Securitization Issues, 35 U.C.C. Law Journal 23 (2002) at:
http://www.ktbslaw.com/news-publications-17.html.
AFFIDAVIT OF M ARIE MCDONNELL, CFE PAGE 14 OF 37
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NYSCEF DOC. NO. 8 RECEIVED NYSCEF: 03/12/2022
The Elusive True Sale in Securitization, by Artem Shtatnov.9
Update On The Amendments To FAS 140—Accounting For Transfers Of
Financial Assets And Repurchase Financing Transactions, by G. Wogan
Bernard. 10
Summary Of Statement No. 140 – Accounting For Transfers And Servicing
Of Financial Assets And Extinguishments Of Liabilities-A Replacement Of
FASB Statement No. 125 (Issued 9/00).11
17 CFR 240.3a12-4 Exemptions from sections 15(a) and 15(c)(3) for
certain mortgage securities. (Code of Federal Regulations (2016 Edition))
(h) Researched the following New York Statutes:
New York UCC § 3-201 — Transfer: Right to Indorsement.
New York UCC § 3-202 — Negotiation
New York CVP Law Rule 3122-A — Certification of Business Records.
New York Penal Law § 170 — Forgery and Related Offenses.
(i) Researched the following Opinions:
U.S. Bank v. Noble, (2016 NY Slip Op 07315)
Justinian Capital SPC v. WestLB AG (2014 NY Slip Op 24046)
Bank of N.Y. v. Silverberg, 86 A.D.3d 274, 926 N.Y.S.2d 532, 2011 N.Y.
Slip Op. 5002 (N.Y. App. Div., 2011)
Consumer Financial Protection Bureau v. CashCall, Inc., et al.; United
States District Court, Central District of California; Case No. CV 15-7522-
JFW (RAOx); August 31, 2016.
(j) Conducted extensive research in the U.S. Bankruptcy Court, District of Delaware
with respect to In re: New Century TRS Holdings, Inc., Case No. 07-10416; as
well as an associated case: UBS Real Estate Securities Inc. v. New Century
Mortgage Corporation, Adversary Proceeding #: 07-50875.
9
See Shtatnov, Artem, The Elusive True Sale in Securitization (January 4, 2012). Available at
SSRN:http://ssrn.com/abstract=2115054 or http://dx.doi.org/10.2139/ssrn.2115054.
10
See G. Wogan Bernard, Update On The Amendments To FAS 140—Accounting For Transfers
Of Financial Assets And Repurchase Financing Transactions at:
http://www.americanbar.org/content/dam/aba/publications/rpte_ereport/2009/june/rp_g_wogan_bernard.a
uthcheckdam.pdf (Published 6/16/2009)
11
See Financial Accounting Standards Board, Summary of Statement No. 140, (Issued 9/00) at:
http://www.fasb.org/summary/stsum140.shtml.
AFFIDAVIT OF M ARIE MCDONNELL, CFE PAGE 15 OF 37
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VI. ANALYSIS
Affidavit of Elizabeth A. Ostermann
33. In her Affidavit of Merit and Amounts Due dated October 12, 2016 (“2016
Affidavit of Merit”) submitted to the Court on October 25, 2016 in support of Plaintiff’s second
Motion for Summary Judgment, Elizabeth A. Ostermann states her authority and the basis for her
personal knowledge as follows: (See Exhibit G. – 2016 Affidavit of Merit, 10/12/2016)
1. I am the Vice President of Carrington Mortgage Services, LLC Servicer and Attorney-
in-Fact for Deutsche Bank National Trust Company, as Indenture Trustee, for New
Century Home Equity Loan Trust 2005-4 (“Plaintiff”), the plaintiff herein, and as
such, am fully familiar with the facts and circumstances hereinafter set forth based
upon a review and examination of the records maintained by Carrington Mortgage
Services, LLC in the regular course of business. It is Carrington Mortgage Services,
LLC’s regular course of business to keep and maintain such records.
2. These records were made at the time of the act, transaction, occurrence or event, or
within a reasonable time thereafter, by a person with knowledge and under duty to
make such records, and are made in the course of business activity conducted
regularly by Carrington Mortgage Services, LLC. To the extent that the business
records contain records created by prior servicers/holders of the loan, those records
have been integrated into the business records of Carrington Mortgage Services, LLC
and are relied upon in the regular course of business. I am also familiar with
Carrington Mortgage Service [sic] LLC’s regular office practices with regards to the
mailing of pre foreclosure notices.
34. The 2016 Affidavit of Merit was prepared to overcome deficiencies in Ms.
Ostermann’s prior Affidavit of December 26, 2012 (“2012 Affidavit of Merit”) in support of
Plaintiff’s first Motion for Summary Judgment filed with the Court on January 11, 2013. (See
Exhibit H. – 2012 Affidavit of Merit, 12/26/2012)
35. In an order dated March 20, 2013, the Honorable Wayne P. Saitta denied
Plaintiff’s motion for the following reasons: (See Exhibit I. – Court Order on Motion for
Summary Judgment, 03/20/2013)
AFFIDAVIT OF M ARIE MCDONNELL, CFE PAGE 16 OF 37
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Denied without prejudice. Affidavit of merit submitted by Elizabeth
Ostermann as attorney in fact for Plaintiff. As attorney in fact she does not
have the testimonial capacity to assert the records she reviewed are
maintained in the regular course of Plaintiff’s business, Nor does she state the
basis for asserting that the note was delivered to Plaintiffs on 7/5/05.
36. Despite Ms. Ostermann’s attempt to rehabilitate her testimony by stating that she
is “fully familiar with the…records maintained by Carrington Mortgage Services, LLC” (2016
Affidavit of Merit) rather than “the books and records maintained by Plaintiff in the regular
course of business” (2012 Affidavit of Merit), she fails to do so because she still does not have
“the testimonial capacity to assert the records she reviewed are maintained in the regular course
of Plaintiff’s business” which Judge Saitta found to be fatal to Plaintiff’s first Motion for
Summary Judgment.
37. Judge Saitta was also troubled by the fact that in her 2012 Affidavit of Merit, Ms.
Ostermann did not “state the basis for asserting that the note was delivered to Plaintiffs on
7/5/05”. On that point, Ms. Ostermann states in Paragraph 6 of her 2016 Affidavit of Merit:
The note provided for repayment in monthly installments commencing August
1, 2005 and continuing thereafter on the same date of each subsequent month
until the note was paid, along with pro-rated monthly escrow payments as
more fully provided therein. Final payment, if not sooner paid was due on July
1, 2035. Thereafter, the original note, endorsed in blank, was delivered [sic]
Carrington Mortgage Services, LLC, acting on behalf of Plaintiff, and
Carrington Mortgage Services, LLC was in possession of the original note
on July 5, 2005. Plaintiff maintains possession of the original note at this
time. (emphasis supplied)
38. Ms. Ostermann’s statement that “Carrington Mortgage Services, LLC was in
possession of the original n
Preview
FILED: KINGS COUNTY CLERK 03/12/2022 11:58 PM INDEX NO. 3881/2011 NYSCEF DOC. NO. 8 RECEIVED NYSCEF: 03/12/2022 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF KINGS DEUTSCHE BANK NATIONAL TRUST Index No.: 3881/11 COMPANY, AS INDENTURE TRUSTEE, FOR NEW CENTURY HOME EQUITY LOAN TRUST 2005-4, AFFIDAVIT AND TESTIMONY OF MARIE MCDONNELL, CFE Plaintiff, ~against~ HARVEY LANDAU; MIRIAM LANDAU; NEW YORK CITY ENVIRONMENTAL CONTROL BOARD; NEW YORK CITY PARKING VILOATIONS BUREAU; NEW YORK CITY TRANSIT ADJUDUCATION BUREAU, Defendants. COMMONWEALTH OF MASSACHUSETTS) COUNTY OF BARNSTABLE ) ss. Being duly sworn, Marie McDonnell hereby deposes and says on oath as follows: 1. I am a natural born citizen of the United States of America and a resident of the Commonwealth of Massachusetts. I am over the age of majority and believe in the obligations of an oath. 2. I am a Mortgage Fraud and Forensic Analyst, and a credentialed Certified Fraud Examiner (“CFE”) with over thirty (30) years’ experience in transactional analysis, mortgage auditing, and mortgage fraud investigation. 3. I am the President and Chief Executive Officer of McDonnell Analytics, Inc. also d/b/a McDonnell Property Analytics (the “Firm”), a litigation support and research firm having a AFFIDAVIT OF M ARIE MCDONNELL, CFE PAGE 1 OF 37 FILED: KINGS COUNTY CLERK 03/12/2022 11:58 PM INDEX NO. 3881/2011 NYSCEF DOC. NO. 8 RECEIVED NYSCEF: 03/12/2022 principal place of business at 15 Cape Lane, Brewster, Massachusetts 02631. The Firm, among other services, provides mortgage-backed securities research and foreclosure forensics to attorneys nationwide. McDonnell Property Analytics also advises and performs services for county registers of deeds, attorneys general, courts and other governmental agencies. 4. I have personal knowledge of the facts contained herein and, if called upon, could and would competently testify thereto. My credentials are set forth in a curriculum vitae attached hereto as Exhibit A. (See Exhibit A. – Curriculum Vitae of Marie McDonnell) 5. I make this affidavit in support of Defendants’ Motion for Relief from Judgment based upon my introduction of newly discovered evidence that subjects the Court’s March 13, 2017 Order Granting Summary Judgment in favor of Plaintiff to judicial review pursuant to NY CVP Law R5015 Relief from judgment or order, which states in relevant part as follows: Rule 5015. Relief from judgment or order. (a) On motion. The court which rendered a judgment or order may relieve a party from it upon such terms as may be just, on motion of any interested person with such notice as the court may direct, upon the ground of: 1. excusable default, if such motion is made within one year after service of a copy of the judgment or order with written notice of its entry upon the moving party, or, if the moving party has entered the judgment or order, within one year after such entry; or 2. newly-discovered evidence which, if introduced at the trial, would probably have produced a different result and which could not have been discovered in time to move for a new trial under section 4404; or 3. fraud, misrepresentation, or other misconduct of an adverse party; or 4. lack of jurisdiction to render the judgment or order; or 5. reversal, modification or vacatur of a prior judgment or order upon which it is based. AFFIDAVIT OF M ARIE MCDONNELL, CFE PAGE 2 OF 37 FILED: KINGS COUNTY CLERK 03/12/2022 11:58 PM INDEX NO. 3881/2011 NYSCEF DOC. NO. 8 RECEIVED NYSCEF: 03/12/2022 6. With this affidavit, I introduce [R5015(a)(2)] newly discovered evidence which, if introduced by Defendants prior to the Court’s March 13, 2017 Order Granting Summary Judgment in favor of Plaintiff, would probably have produced a different result. Defendants could not have discovered this evidence any sooner without the assistance of a subject matter expert with specialized knowledge in the field of residential mortgage finance. 7. I state facts sufficient to establish that Plaintiff, through its agents and attorneys, has committed acts of [R5015(a)(3)] fraud, misrepresentation, or other misconduct; that Plaintiff’s fraud has interfered with the judicial machinery by improperly influencing the trier of fact and unfairly hampering the presentation of Defendants’ claims and defenses, and therefore, the judgment of March 13, 2017 should be vacated. 8. The Honorable Lawrence Knipel rendered his decision on Plaintiff’s Motion for Summary Judgment on March 13, 2017; therefore, Defendants’ motion is both timely and just. I. BACKGROUND 9. This litigation is remarkably similar to another case in which I served as the Consumer-Plaintiffs’ expert in the matter of Mary Ellen Wolf v. Wells Fargo Bank, N.A. et al., Case Number 2011-36476, brought in the 151st Judicial District Court of Harris County, Texas (“Wolf”).1 On November 10, 2015, after a four-day trial, the jury returned a verdict in favor of 1 Wolf v. Wells Fargo Bank, N.A. $5.4 Million Verdict: Securitization Flow Chart to Prove that Wells Fargo Bank, N.A. Committed Fraud When It Used Robo-Signed Document. Published on 11/23/2015 by Barry Fagan. A Texas state jury awarded nearly $5.4 million to a couple accusing Wells Fargo NA and others of “robosigning” documents that led to the wrongful foreclosure of their home, holding that the banking giant knew that documents supporting the foreclosure were fraudulent. After four days of trial and just four hours of deliberation, the jury found that there was “clear and convincing evidence” that Wells Fargo and Carrington Mortgage Services LLC knew that the supporting documents were a fraudulent claim on the property owner. AFFIDAVIT OF M ARIE MCDONNELL, CFE PAGE 3 OF 37 FILED: KINGS COUNTY CLERK 03/12/2022 11:58 PM INDEX NO. 3881/2011 NYSCEF DOC. NO. 8 RECEIVED NYSCEF: 03/12/2022 Plaintiffs totaling $5.38 million consisting of: a) $190,000.00 in actual and emotional distress damages; b) $190,000.00 in attorneys’ fees; c) $2,500,000.00 in exemplary damages against Wells Fargo Bank, N.A. as Trustee of the Carrington Mortgage Loan Trust, Series 2006-NC3; and d) $2,500,000.00 in exemplary damages against Carrington Mortgage Services, LLC, the mortgage loan Servicer. 10. My involvement in the Wolf case is relevant here because it closely parallels the experience of Miriam Landau and Harvey Landau (“the Landaus”) in several material respects, for example: a. Both the Wolfs’ Mortgage Loan and the Landaus’ Mortgage Loan were either originated by or sold to New Century Mortgage Corporation. b. Both Mortgage Loans were allegedly conveyed to a Qualified Special Purpose Entity (“QSPE” or “Trust”) that issued securities pursuant to registration statements filed with the Securities and Exchange Commission. The jury was shown the sequence of “true sales” that were necessary to properly securitize the Wolfs’ mortgage loan using the attached “Securitization Flow Chart.” Once the jury understood the requirements of the Mortgage Loan Purchase Agreement and the Pooling and Servicing Agreement, they were able to see why the Transfer of Lien executed by Tom Croft was fraudulent on the face of the document. The jury also found that even though Wells Fargo Bank was in physical possession of the original note, it did not own the mortgage loan because it was never securitized into the Carrington Mortgage Loan Trust, Series 2006-NC3 over which Wells Fargo serves as Trustee. The $5.4 million dollar jury verdict, and especially their finding that the Transfer of Lien was fraudulent, supports findings in all of the registry of deeds audits that have been conducted for: John L. O’Brien, Register of Deeds, Essex Southern District, MA Nancy J. Becker, Recorder of Deeds, Montgomery County, PA Seattle City Council, Seattle, WA In re: Mortgage Electronic Registration Systems, Inc. Litigation, Maricopa, Pima, and Pinal Counties, AZ This case provides a road map for cutting through the complexities of modern finance to arrive at a just result. (See http://www.jdsupra.com/legalnews/54-million-verdict-securitization-flo-79391/) See also: Law360, Los Angeles (November 12, 2015, 8:47 PM ET) – (Found at: http://www.law360.com/articles/726312/wells-fargo-carrington-must-pay-5m-in-foreclosure-row) AFFIDAVIT OF M ARIE MCDONNELL, CFE PAGE 4 OF 37 FILED: KINGS COUNTY CLERK 03/12/2022 11:58 PM INDEX NO. 3881/2011 NYSCEF DOC. NO. 8 RECEIVED NYSCEF: 03/12/2022 c. Both the Wolfs and the Landaus alleged that their Mortgage Loans never made it into the Trust, and therefore, the Trustee was neither the owner, holder or the person entitled to enforce their Note. d. Both the Wolfs and the Landaus complained that a fraudulent assignment of mortgage had been robosigned by Tom Croft, Vice President of REO for Carrington Mortgage Services, LLC, and subsequently filed in the public land records against their title purporting to grant the Trustee the authority to foreclose upon their respective properties. 11. My pivotal role in the Wolf case was to explain to the judge and jury the precise steps that were necessary to securitize the Wolfs’ Mortgage Loan into the Carrington Mortgage Loan Trust, Series 2006-NC3 over which Wells Fargo Bank, N.A. serves as Trustee. Once I had laid this foundation, I could show the fatal breaks in the securitization process and demonstrate why the recorded transfer of lien (assignment of mortgage) contained false statements, misrepresentations, and omissions of material fact that rendered the assignment void. 12. Similarly, in this case, there is clear and convincing evidence that the assignment of mortgage that purports to grant, assign and transfer the Landaus’ Mortgage together with the Note to Deutsche Bank National Trust Company, as Indenture Trustee, for New Century Home Equity Loan Trust 2005-4 (“Deutsche Bank”) is ineffective, null and void. Moreover, the documentary evidence strongly suggests that the Trust does not “own” the Landaus’ “Whole Loan;” nor is Deutsche Bank the person entitled to enforce the Note or foreclose upon their Mortgage. 13. With respect to my qualifications regarding the illegal industry practice of robo- signing mortgage assignments and affidavits, the Court should know that my Firm was the first AFFIDAVIT OF M ARIE MCDONNELL, CFE PAGE 5 OF 37 FILED: KINGS COUNTY CLERK 03/12/2022 11:58 PM INDEX NO. 3881/2011 NYSCEF DOC. NO. 8 RECEIVED NYSCEF: 03/12/2022 in the nation to audit a registry of deeds, and subsequently, to develop a list2 of robo-signers in conjunction with a publicly elected registrar who has continuously held that office for the past forty (40) years. Here, I am referring to The Honorable John L. O’Brien, Register of the Essex Southern District Registry of Deeds in Salem, Massachusetts, who commissioned my Firm to conduct an audit to test the integrity of his Registry due to the mortgage industry’s ubiquitous use of Mortgage Electronic Registration Systems, Inc. (“MERS”). Mr. O’Brien was troubled by MERS’s contention that its members can avoid having to record mortgage assignments in the public land records if they register them in the MERS® System instead. As a result of this practice, Mr. O’Brien complained that he could no longer look his constituents in the eye and tell them who owned their property. 3 14. I submitted my findings to Register O’Brien on June 28, 2011, and reported widespread, systemic patterns of practice employed by several of the nation’s largest banks that had eroded the transparency and corrupted the chain of title to real property records maintained by the Essex Southern District Registry of Deeds.4 II. EXPERT ENGAGEMENT 15. Miriam Landau engaged me to examine the mortgage loan documents that memorialize a certain consumer mortgage transaction consummated on June 10, 2005 by and 2 Notably, Tom Croft is on this list of robo-signers. (See http://www.salemdeeds.com/robosite/pdf/robosigners.pdf) 3 Massachusetts is a title theory state. 4 A true and correct copy of the Firm’s report entitled Forensic Examination Of Assignments Of Mortgage Recorded During 2010 In The Essex Southern District Registry Of Deeds is available on Register O’Brien’s website at: http://salemdeeds.com/salemdeeds/pdf/PressRelease7-29-11.pdf and http://salemdeeds.com/salemdeeds/pdf/Audit.pdf. For a list of known robo-signers See also: http://salemdeeds.com/salemdeeds/DownLoadFile.aspx?newsid=69. AFFIDAVIT OF M ARIE MCDONNELL, CFE PAGE 6 OF 37 FILED: KINGS COUNTY CLERK 03/12/2022 11:58 PM INDEX NO. 3881/2011 NYSCEF DOC. NO. 8 RECEIVED NYSCEF: 03/12/2022 between Miriam Landau and Harvey Landau (“Mortgagors” or “the Landaus”) and Precision Financial, Inc. (“Lender” or “Mortgagee”), and to conduct the following investigation: A. Review Plaintiff’s Complaint, Defendants’ Answer, Plaintiff’s Motion for Summary Judgment, Plaintiff’s Attorney’s Affirmation and Affidavit of Merit in Support of the Motion for Summary Judgment, and the Court’s Orders. B. Examine the copy of the Note attached to the Plaintiff’s Attorney’s Affirmation in support of Plaintiff’s Motion for Summary Judgment. C. Describe the paper trail, geographic travel, and evidence that would exist if the Landaus’ original Note, Mortgage, and collateral file (“Whole Loan”) had been properly and legally conveyed to Deutsche Bank National Trust Company, as Indenture Trustee, for New Century Home Equity Loan Trust 2005-4 on or about August 17, 2005. D. Describe the process by which Deutsche Bank National Trust Company would release physical custody of the original Note and Mortgage to its foreclosing attorney, Rosicki, Rosicki & Associates, P.C. E. Describe the special role of the Depositor, New Century Mortgage Securities LLC, in the securitization of the Landaus’ Mortgage Loan; and explain why only the Depositor is permitted to transfer the mortgage loans into the qualified special purpose vehicle that holds the trust assets. F. Analyze the Assignment of Mortgage allegedly executed on June 15, 2005 by Salvatore Salamone as Compliance Officer of Precision Financial, Inc. (“Assignment #1”) and determine —as a matter of fact— whether this Assignment is valid and in conformance with all “Applicable Laws” as required by the Note and Mortgage. G. Analyze the Assignment of Mortgage allegedly executed on January 13, 2011 by Tom Croft as Vice President of REO of Carrington Mortgage Services, LLC as Attorney in Fact for New Century Mortgage (“Assignment #2”) and determine —as a matter of fact— whether this Assignment effectuated a valid transfer of the Landaus’ Note and Mortgage in conformance with all “Applicable Laws” as required by the Note and Mortgage. H. Based on all available evidence, express an opinion as to whether Plaintiff was, in fact, the lawful owner and holder in physical possession of the Landaus’ Note when on February 17, 2011 it filed its Complaint in mortgage foreclosure with this Court. AFFIDAVIT OF M ARIE MCDONNELL, CFE PAGE 7 OF 37 FILED: KINGS COUNTY CLERK 03/12/2022 11:58 PM INDEX NO. 3881/2011 NYSCEF DOC. NO. 8 RECEIVED NYSCEF: 03/12/2022 III. REQUEST FOR JUDICIAL NOTICE 16. Federal Rule of Evidence 201 states: “The court may judicially notice a fact that is not subject to reasonable dispute because it: (1) is generally known within the trial court’s territorial jurisdiction; or (2) can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned.” Rule 201 goes on to state that upon the request of a party, a court may take judicial notice of a fact as long as the party provides the court with the necessary showing that the fact is not subject to reasonable dispute. (See also NY CPLR § R4511- Judicial notice of law) 17. The origination, securitization, and enforcement of the consumer mortgage transaction at issue is governed by a variety of state and federal laws of which this Court may take judicial notice. In addition, the Court may take judicial notice of documents published on government websites, such as on the Securities and Exchange Commission’s EDGAR website; the New York City Department of Finance, Office of the City Register; Public Access to Court Electronic Records (“PACER”); and to the New York State Court System. 18. To avoid burdening the Court with “lengthy documents,” I will note my sources, provide hyperlinks to the documents filed with the Securities and Exchange Commission, and excerpt only the most relevant sections as necessary to establish the factual foundation for my analysis and opinions. IV. SUMMARY OF FINDINGS 19. On March 13, 2017, this Court issued an Order Granting Summary Judgment, Appointing a Referee to Compute and Amending Caption in favor of Plaintiff. In making his decision, the Honorable Lawrence Knipel relied in large part upon the Affirmation of Lijue T. AFFIDAVIT OF M ARIE MCDONNELL, CFE PAGE 8 OF 37 FILED: KINGS COUNTY CLERK 03/12/2022 11:58 PM INDEX NO. 3881/2011 NYSCEF DOC. NO. 8 RECEIVED NYSCEF: 03/12/2022 Philip, Esq., of Rosicki, Rosicki & Associates, P.C. (Plaintiff’s counsel), dated October 13, 2016, and the Affidavit of Elizabeth A. Ostermann (Plaintiff’s servicer) sworn to on October 12, 2016, with exhibits annexed including the Summons and Complaint duly filed in the Office of the Clerk of the County of Kings on February 17, 2011. 20. After conducting an intensive examination of Plaintiff’s prima facie evidence, I noted the following failures: A. There is no admissible evidence presently before the Court that Plaintiff was the holder or assignee of the underlying Adjustable Rate Note when on February 17, 2011 it filed its Summons and Complaint. In fact, Plaintiff’s evidence is countervailing. B. Furthermore, there is no admissible evidence presently before the Court that Carrington Mortgage Services, LLC, Plaintiff’s current servicer, was in physical possession of the original Adjustable Rate Note on February 17, 2011 when Plaintiff filed its Summons and Complaint, as will be explained in detail below. C. On October 12, 2016, Elizabeth A. Ostermann, Vice President of Carrington Mortgage Services, LLC, Plaintiff’s servicer, prepared an Affidavit of Merit in support of Plaintiff’s Motion for Summary Judgment in which she averred: “Carrington Mortgage Services, LLC was in possession of the original note on July 5, 2005” which is a patently and provably false statement for reasons I document and explain below. D. On October 25, 2016, Plaintiff’s attorney, Lijue T. Philip, submitted an Attorney’s Affirmation in support of Plaintiff’s Notice of Motion for Summary Judgment. Exhibit “A” attached thereto is a purported copy of the Note together with an undated Allonge containing two indorsements. The inferior quality of these instruments indicates they are scanned images of 3rd generation copies of the Landau Note, not a photocopy of the original. If Plaintiff or its servicer were in physical possession of the original Note, Exhibit “A” should be crystal clear due to the fidelity of today’s copy and scanning technology. E. Plaintiff submitted an Assignment of Mortgage dated June 15, 2005 from Precision Financial Inc. to New Century Mortgage a corporation organized and existing under the laws of the United States of America (a non-existent entity). This Assignment was recorded on October 30, 2007, and was either altered after the fact, or backdated to avoid triggering a violation of the automatic stay imposed on April 2, 2007 when New Century Mortgage Corporation filed for bankruptcy. AFFIDAVIT OF M ARIE MCDONNELL, CFE PAGE 9 OF 37 FILED: KINGS COUNTY CLERK 03/12/2022 11:58 PM INDEX NO. 3881/2011 NYSCEF DOC. NO. 8 RECEIVED NYSCEF: 03/12/2022 F. Plaintiff also submitted an Assignment of Mortgage dated January 13, 2011 from New Century Mortgage a corporation organized and existing under the laws of the United States of America (a non-existent entity) to Plaintiff which is ineffective, null and void for several reasons: (i) The Assignor, “New Century Mortgage a corporation organized and existing under the laws of the United States of America” is a non-existent entity. (ii) New Century Mortgage Corporation registered as a domestic stock corporation with the California Secretary of State on August 3, 1995 (I.D. # C1945192) and remains active to this day. (iii) Based on documentary evidence filed with the Securities and Exchange Commission (“SEC”) of which this Court may take judicial notice, New Century Mortgage Corporation (“NCMC”) did not sell, assign, transfer and convey the loans it originated for securitization into the New Century Home Equity Loan Trust 2005-4 to Plaintiff; rather, NCMC transferred those mortgage loans to an affiliate, New Century Credit Corporation, on some date between June 15, 2005 and August 17, 2005. (iv) According to an SEC-filed Indenture dated as of August 17, 2005, between New Century Home Equity Loan Trust 2005-4, a Delaware statutory trust over which Wilmington Trust Company serves as Owner Trustee, and Deutsche Bank National Trust Company, a national banking association, as Indenture Trustee, Wilmington Trust Company conveyed its interest in the Trust Estate to Deutsche Bank National Trust Company on August 17, 2005. (v) The documents filed with the SEC incident to the creation of the New Century Home Equity Loan Trust 2005-4 must be truthful, may not contain false statements, and may not omit to state a material fact required to make the statements not misleading. To do otherwise would be to commit securities fraud.5 (vi) Based on the information obtained through the SEC, and for other reasons described in detail below, I concluded that the Assignment of Mortgage dated January 13, 2011 by which New Century Mortgage (a non-existent entity) purports to assign the Landaus’ Note and Mortgage to Plaintiff contains false statements, misrepresentations and omissions of material fact that render it void ab initio. 5 See Section 11 of the Securities Act of 1933, 15 U.S.C. § 77k. See also Omnicare, Inc. v. Laborers Dist. Council Constr. Industry Pension Fund, 135 S. Ct. 1318 (2015), and Freidus v. ING GROEP, Supreme Court 2015. AFFIDAVIT OF M ARIE MCDONNELL, CFE PAGE 10 OF 37 FILED: KINGS COUNTY CLERK 03/12/2022 11:58 PM INDEX NO. 3881/2011 NYSCEF DOC. NO. 8 RECEIVED NYSCEF: 03/12/2022 21. After examining Plaintiff’s documentary evidence, conducting research, analyzing the Attorney’s Affirmation and the Affidavit of Merit filed in support of Plaintiff’s Motion for Summary Judgment, I concluded that Plaintiff succeeded in obtaining a favorable judgment from this Honorable Court by: a) fabricating evidence; b) forging legal documents; c) making false statements in court papers; d) suppressing facts material and necessary to a fair adjudication of Defendants’ rights; and e) by falsely perpetuating the illusion that Plaintiff has standing when the evidence it has produced to the Court proves that it does not. V. DOCUMENTARY EVIDENCE AND FOUNDATIONAL FACTS The Transaction 22. The subject of this analysis is a consumer mortgage transaction (i.e., a refinance of the Landaus’ primary residence) that took place on June 10, 2005 (“Consummation Date”), by and between Miriam Landau and Harvey Landau (“Borrower” or “the Landaus”) and Precision Financial, Inc. (“Lender” or “PFI”). 23. On the Consummation Date, Miriam Landau executed an Adjustable Rate Note (“Note”) in favor of PFI and, together with her husband Harvey Landau, granted a Mortgage (“Mortgage”) to obtain funds in the amount of $285,000.00 secured by residential property located at 2024 East 64th Street, Brooklyn, Kings County, New York 11234 (“Property”). The Mortgage was recorded in the Office of the City Register of the City of New York (“Register’s Office”) on July 7, 2005, as City Register File No. (“CRFN”) 2005000381299. (See Exhibit B. – Mortgage, 06/10/2005) 24. The Mortgage begins with its own definition of terms lettered (A) through (P). Definition (C) defines the Lender as follows: AFFIDAVIT OF M ARIE MCDONNELL, CFE PAGE 11 OF 37 FILED: KINGS COUNTY CLERK 03/12/2022 11:58 PM INDEX NO. 3881/2011 NYSCEF DOC. NO. 8 RECEIVED NYSCEF: 03/12/2022 “Lender.” Precision Financial, Inc. a New York Corporation will be called “Lender.” Lender is a corporation or association which exists under the laws of New York. 25. The Note establishes the terms of a Hybrid Adjustable Rate Mortgage (“HARM”) loan that calls for the principal amount of $285,000.00 to be financed at a yearly interest rate of 6.750% for the first two (2) years. On July 1, 2007, and every 6th month thereafter (called a “Change Date”), the interest rate was to adjust according to an Index and Margin formula described in Paragraph 4 of the Note. To calculate the interest rate change, the Lender was to add a Margin of Five and 550/1000 percentage points (5.550%)6 to the Current Index and then round that figure to the nearest one-eighth of one percentage point (0.125%). 26. In the month following each Change Date, monthly payments were to reset in an amount sufficient to fully amortize the Principal to a zero balance by the maturity date of July 1, 2035. (See Exhibit C. – Adjustable Rate Note, 06/10/2005)7 27. The Note attached to Plaintiff’s Attorney’s Affirmation filed in support of Plaintiff’s Motion for Summary Judgment includes an Allonge To Promissory Note containing two undated endorsements. The first is a specific endorsement executed by Salvatore Salamone 6 The key to pricing an adjustable rate mortgage loan is not so much the selection of the index used to benchmark interest rate changes from time to time; but the margin to be added to the index on each interest rate change date. Borrowers who qualify for the best available prime rate offered can expect to receive a margin that is less than 3.000%. A margin of 3.000% or more signifies a subprime pricing structure. A margin of 5.000% or higher is considered to be punitive and predatory in nature. In this case, the Borrower received a Margin of 5.550% which clearly falls into the predatory category. 7 The copy of the Adjustable Rate Note attached hereto as Exhibit C, as well as the Allonge To Promissory Note that follows, were taken from Plaintiff’s Motion for Summary Judgment filed with this Court on October 25, 2016. AFFIDAVIT OF M ARIE MCDONNELL, CFE PAGE 12 OF 37 FILED: KINGS COUNTY CLERK 03/12/2022 11:58 PM INDEX NO. 3881/2011 NYSCEF DOC. NO. 8 RECEIVED NYSCEF: 03/12/2022 as Compliance Officer of Precision Financial, Inc. purporting to transfer the Note from Precision Financial, Inc. to New Century Mortgage Corporation. 28. The second one is a blank endorsement executed by Magda Villanueva in her alleged capacity as Assistant Vice President/Shipping Manager of New Century Mortgage Corporation, which purports to convert the Note to bearer paper. (See Exhibit D. – Allonge To Promissory Note) 29. An Assignment of Mortgage dated June 15, 2005 was purportedly executed by Salvatore Salamone as Compliance Officer of Precision Financial, Inc. (“Assignor”), which purports to transfer all right, title and interest in the Landaus’ Mortgage together with the note to New Century Mortgage (“Assignee”) (“Assignment #1”). This document was recorded in the Register’s Office on October 30, 2007, as CRFN.: 2007000545126. (See Exhibit E. – Assignment #1, 06/15/2005) 30. On January 13, 2011, Tom Croft, Vice President of REO of Carrington Mortgage Services LLC as Attorney in Fact for New Century Mortgage, executed an Assignment of Mortgage (“Assignment #2”) which purports to transfer the Mortgage together with the bond or note from New Century Mortgage (“Assignor”) to Deutsche Bank National Trust Company, as Indenture Trustee, for New Century Home Equity Loan Trust 2005-4 (“Assignee”). Assignment #2 was filed of record in the Register’s Office on March 2, 2011, as CRFN.: 2011000076477. (See Exhibit F. – Assignment #2, 01/13/2011) 31. On February 17, 2011, Catherine Guy, Esquire of Rosicki, Rosicki & Associates, P.C. filed a Complaint on behalf of Deutsche Bank National Trust Company, as Indenture Trustee, for New Century Home Equity Loan Trust 2005-4, Plaintiff. The Complaint alleges in AFFIDAVIT OF M ARIE MCDONNELL, CFE PAGE 13 OF 37 FILED: KINGS COUNTY CLERK 03/12/2022 11:58 PM INDEX NO. 3881/2011 NYSCEF DOC. NO. 8 RECEIVED NYSCEF: 03/12/2022 paragraph four that “Plaintiff (a) is the owner and holder of the subject mortgage and note, or has been delegated the authority to institute a mortgage foreclosure action by the owner and holder of the subject mortgage and note.” Documents Examined 32. In forming my opinions, I researched and reviewed the following relevant documents and information: (a) Documents provided by the Landaus incident to the transaction with Precision Financial, Inc. (b) Documents submitted to the Supreme Court of the State of New York, County of Kings, under Index #: 3881/2011. (c) Documents filed for record with the Office of the City Register of the City of New York incident to the subject transaction encumbering the Landaus’ primary residence located at 2024 East 64th Street, Brooklyn, New York 11234. (d) Research obtained from Bloomberg Finance L.P. on November 17, 2017 which includes general information about the New Century Home Equity Loan Trust 2005-4, as well as specific information on the Landaus’ Mortgage Loan including: documents, data, screen shots, loan level details contained in monthly servicer tapes, and a pay history for the Landaus’ mortgage account provided by the servicer to Deutsche Bank National Trust Company, as Indenture Trustee. (e) Researched Deutsche Bank’s Investor Reporting portal at: https://tss.sfs.db.com/investpublic/. (f) Researched the Securities and Exchange Commission’s public access website at: http://www.sec.gov/edgar and http://www.secinfo.com/. (g) Consulted the following white papers, articles, and primary source materials: Asset-Backed Securitization, Special Purpose Vehicles and Other Securitization Issues, by Kenneth N. Klee and Brendt C. Butler.8 8 See Kenneth N. Klee and Brendt C. Butler, Asset-Backed Securitization, Special Purpose Vehicles and Other Securitization Issues, 35 U.C.C. Law Journal 23 (2002) at: http://www.ktbslaw.com/news-publications-17.html. AFFIDAVIT OF M ARIE MCDONNELL, CFE PAGE 14 OF 37 FILED: KINGS COUNTY CLERK 03/12/2022 11:58 PM INDEX NO. 3881/2011 NYSCEF DOC. NO. 8 RECEIVED NYSCEF: 03/12/2022 The Elusive True Sale in Securitization, by Artem Shtatnov.9 Update On The Amendments To FAS 140—Accounting For Transfers Of Financial Assets And Repurchase Financing Transactions, by G. Wogan Bernard. 10 Summary Of Statement No. 140 – Accounting For Transfers And Servicing Of Financial Assets And Extinguishments Of Liabilities-A Replacement Of FASB Statement No. 125 (Issued 9/00).11 17 CFR 240.3a12-4 Exemptions from sections 15(a) and 15(c)(3) for certain mortgage securities. (Code of Federal Regulations (2016 Edition)) (h) Researched the following New York Statutes: New York UCC § 3-201 — Transfer: Right to Indorsement. New York UCC § 3-202 — Negotiation New York CVP Law Rule 3122-A — Certification of Business Records. New York Penal Law § 170 — Forgery and Related Offenses. (i) Researched the following Opinions: U.S. Bank v. Noble, (2016 NY Slip Op 07315) Justinian Capital SPC v. WestLB AG (2014 NY Slip Op 24046) Bank of N.Y. v. Silverberg, 86 A.D.3d 274, 926 N.Y.S.2d 532, 2011 N.Y. Slip Op. 5002 (N.Y. App. Div., 2011) Consumer Financial Protection Bureau v. CashCall, Inc., et al.; United States District Court, Central District of California; Case No. CV 15-7522- JFW (RAOx); August 31, 2016. (j) Conducted extensive research in the U.S. Bankruptcy Court, District of Delaware with respect to In re: New Century TRS Holdings, Inc., Case No. 07-10416; as well as an associated case: UBS Real Estate Securities Inc. v. New Century Mortgage Corporation, Adversary Proceeding #: 07-50875. 9 See Shtatnov, Artem, The Elusive True Sale in Securitization (January 4, 2012). Available at SSRN:http://ssrn.com/abstract=2115054 or http://dx.doi.org/10.2139/ssrn.2115054. 10 See G. Wogan Bernard, Update On The Amendments To FAS 140—Accounting For Transfers Of Financial Assets And Repurchase Financing Transactions at: http://www.americanbar.org/content/dam/aba/publications/rpte_ereport/2009/june/rp_g_wogan_bernard.a uthcheckdam.pdf (Published 6/16/2009) 11 See Financial Accounting Standards Board, Summary of Statement No. 140, (Issued 9/00) at: http://www.fasb.org/summary/stsum140.shtml. AFFIDAVIT OF M ARIE MCDONNELL, CFE PAGE 15 OF 37 FILED: KINGS COUNTY CLERK 03/12/2022 11:58 PM INDEX NO. 3881/2011 NYSCEF DOC. NO. 8 RECEIVED NYSCEF: 03/12/2022 VI. ANALYSIS Affidavit of Elizabeth A. Ostermann 33. In her Affidavit of Merit and Amounts Due dated October 12, 2016 (“2016 Affidavit of Merit”) submitted to the Court on October 25, 2016 in support of Plaintiff’s second Motion for Summary Judgment, Elizabeth A. Ostermann states her authority and the basis for her personal knowledge as follows: (See Exhibit G. – 2016 Affidavit of Merit, 10/12/2016) 1. I am the Vice President of Carrington Mortgage Services, LLC Servicer and Attorney- in-Fact for Deutsche Bank National Trust Company, as Indenture Trustee, for New Century Home Equity Loan Trust 2005-4 (“Plaintiff”), the plaintiff herein, and as such, am fully familiar with the facts and circumstances hereinafter set forth based upon a review and examination of the records maintained by Carrington Mortgage Services, LLC in the regular course of business. It is Carrington Mortgage Services, LLC’s regular course of business to keep and maintain such records. 2. These records were made at the time of the act, transaction, occurrence or event, or within a reasonable time thereafter, by a person with knowledge and under duty to make such records, and are made in the course of business activity conducted regularly by Carrington Mortgage Services, LLC. To the extent that the business records contain records created by prior servicers/holders of the loan, those records have been integrated into the business records of Carrington Mortgage Services, LLC and are relied upon in the regular course of business. I am also familiar with Carrington Mortgage Service [sic] LLC’s regular office practices with regards to the mailing of pre foreclosure notices. 34. The 2016 Affidavit of Merit was prepared to overcome deficiencies in Ms. Ostermann’s prior Affidavit of December 26, 2012 (“2012 Affidavit of Merit”) in support of Plaintiff’s first Motion for Summary Judgment filed with the Court on January 11, 2013. (See Exhibit H. – 2012 Affidavit of Merit, 12/26/2012) 35. In an order dated March 20, 2013, the Honorable Wayne P. Saitta denied Plaintiff’s motion for the following reasons: (See Exhibit I. – Court Order on Motion for Summary Judgment, 03/20/2013) AFFIDAVIT OF M ARIE MCDONNELL, CFE PAGE 16 OF 37 FILED: KINGS COUNTY CLERK 03/12/2022 11:58 PM INDEX NO. 3881/2011 NYSCEF DOC. NO. 8 RECEIVED NYSCEF: 03/12/2022 Denied without prejudice. Affidavit of merit submitted by Elizabeth Ostermann as attorney in fact for Plaintiff. As attorney in fact she does not have the testimonial capacity to assert the records she reviewed are maintained in the regular course of Plaintiff’s business, Nor does she state the basis for asserting that the note was delivered to Plaintiffs on 7/5/05. 36. Despite Ms. Ostermann’s attempt to rehabilitate her testimony by stating that she is “fully familiar with the…records maintained by Carrington Mortgage Services, LLC” (2016 Affidavit of Merit) rather than “the books and records maintained by Plaintiff in the regular course of business” (2012 Affidavit of Merit), she fails to do so because she still does not have “the testimonial capacity to assert the records she reviewed are maintained in the regular course of Plaintiff’s business” which Judge Saitta found to be fatal to Plaintiff’s first Motion for Summary Judgment. 37. Judge Saitta was also troubled by the fact that in her 2012 Affidavit of Merit, Ms. Ostermann did not “state the basis for asserting that the note was delivered to Plaintiffs on 7/5/05”. On that point, Ms. Ostermann states in Paragraph 6 of her 2016 Affidavit of Merit: The note provided for repayment in monthly installments commencing August 1, 2005 and continuing thereafter on the same date of each subsequent month until the note was paid, along with pro-rated monthly escrow payments as more fully provided therein. Final payment, if not sooner paid was due on July 1, 2035. Thereafter, the original note, endorsed in blank, was delivered [sic] Carrington Mortgage Services, LLC, acting on behalf of Plaintiff, and Carrington Mortgage Services, LLC was in possession of the original note on July 5, 2005. Plaintiff maintains possession of the original note at this time. (emphasis supplied) 38. Ms. Ostermann’s statement that “Carrington Mortgage Services, LLC was in possession of the original n