Memorandum

To: JLS
From: NAV
Re: BAC vs. Damiano Case Evaluation
Date: July 31, 2013
EVALUATION OF THE ACTION AND THE DEFENSES
Like most of the early foreclosure cases, standing and failure to comply with conditions
precedent are the largest problems to BACs foreclosure case. There are also technical problems
with the complaint, and potential evidentiary issues. Here is a list of some of the obstacles that
BAC faces:

The complaint has a count to foreclose and a count to reestablish the lost note. The
factual basis for these counts conflict, which can potentially weaken BACs case if their
complaint is not amended prior to a trial. BAC has filed a notice of dropping their lost
note count, but there is case law that states that the lost note count needs to be dropped
through an amended complaint.

The complaint did not attach a note. Damiano raised this issue in a motion to dismiss
which the court denied. This defect can be resurrected at trial and possibly even appealed
if it is not cured through an amended complaint.

There is reason to doubt that the amount of debt claimed is the amount of debt actually
owed. The Complaint alleges that $157,500.00 is owed as an Approximate Amount
Due. This amount may be accurate. $157,500.00 is the original principal on the
mortgage and the payments were interest-only until January 2012. If Damiano ever
overpaid, this amount would not be accurate. If Damiano paid only the minimum on the
interest-only plan, this amount would be accurate.

There is a default letter, but BAC will have to prove that it was sent. This can sometimes
be difficult due to the complexity of the business records exception and the fact that most
banks do not proffer any document that verifies that the letter was sent.

The default letter may be defective. The default letter, as provided by Michael Germain, is
dated on October 17, 2008. It states that $2,154.28 was due on the date of the default
which was September 1, 2008. However, the note identifies the monthly payments as
$820.31. Therefore, the $2,154.28 cited by the default letter is arguably incorrect. It is
inaccurate because $2,154.28 was not likely due on September 1, 2008. It may be correct
if that sum constitutes the mortgage, taxes, and insurance for both September and
October, but BAC will have to explain how much taxes and insurance are included in each
monthly payment. Arguments over the correct amount due can be technical, and BACs
witness may not be able to navigate those technicalities. BAC will also need to overcome
evidentiary objections since these numbers come from Countrywides business records
(i.e., they will have to lay the predicate for the business records exception). These
objections would likely be overcome through a records custodian who worked for

Countrywide before being transferred to BAC.

The default letter may have not complied with some of the technical requirements of
paragraph 22 of the mortgage. Paragraph 22 requires the mortgagee to inform the debtor
that the foreclosure and sale will be by a judicial proceeding. The default letter sent does
not mention that the foreclosure and sale will be through a judicial proceeding. Also,
paragraph 22 requires the mortgagee to inform the debtor of the right to assert in the
judicial proceeding the non-existence of the default or any other defense. The default
letter sent does not comply with this requirement because it states that a defense must be
raised by bringing a separate court action.
The assignment of mortgage, and the endorsements on the note were signed by
robosigners who have fairly damning depositions that are available on the internet. The
deposition of Michelle Sjolander, who endorsed the note in blank, reveals that she did not
sign or rubber stamp the notes herself, other people did. The deposition of Renee
Hertzler, who signed the assignment of mortgage, reveals that she signed thousands of
documents per day and that she did not read any of the documents that she signed.
Admissions verifying the veracity of these facts may be helpful. However the depositions
may be admissible themselves since these signatories are within BACs corporate structure
and may be admissions by a party opponent.

Under these facts, standing is the strongest defense. BAC can attack this defense through
under three different theories: (1) that BAC took ownership and possession of the note as the
corporate successor to Countrywide; (2) that BAC is the holder in due course of the note through
possession and an endorsement in blank, and therefore entitled to enforce the note and mortgage;
(3) that the assignment of mortgage to BAC made BAC the owner of the note and mortgage.
The first theory is probably the best, because it can avoid the robo-signing issues that taint the
other two theories. Under the first theory, BAC may be able to proffer evidence of a chain of
corporate buyouts to demonstrate that the note transferred to the current plaintiff. While this
would be the best proof, rarely do foreclosure Plaintiffs attempt this type of proof.
A holder in due course theory might be difficult because BAC did not attach the note to
the complaint and it also alleged a lost note count. Therefore, BAC will need to proffer testimony
that it both held the note at the time of the complaint, and that the endorsements existed on the
note at that time. BAC would also have to overcome objections over the validity of the
endorsements. Michele Sjolander, the individual who signed the blank endorsement on the note,
has testified at a deposition that others stamp her name on the notes and she only oversees this
stamping process during an audit conducted once every three months. The stampers allegedly
have power of attorney to use her name, but it is uncertain whether that can or will be proven.
BAC could also rely on the assignment of mortgage that it attached to its complaint.
Under this theory, the assignment of mortgage equitably assigned with the note. The weakness in
this theory is Renee Hertzler. Renee Hertzler signed the assignment of mortgage in this case, and
she has testified in a deposition that she did not review the underlying validity of the assignments,
and that her assignments were not signed in the presence of a notary. She also testified that she
signed 6000 to 7000 documents per month, and that at that volume she did not have time to read
the documents or confirm their validity.
Litigating standing may win the case, but there may be an easier way. Eventually
threatening sanctions may pressure the plaintiff to dismiss the case. Butler and Hosch has been

the plaintiffs counsel since this cases inception, and they were the ones that created the robosigned assignment. If threatened with a motion for sanctions addressing potentially fraudulent
documents that Butler and Hosch created and filed with the court, the mill and its client may
choose to dismiss the case rather than litigate the issue.
EVALUATION OF THE CURRENT CASE STATUS
Recently, the Plaintiff has signaled its readiness for trial by filing a Notice of Non-Jury
Trial on July 24, 2013, and a Notice Case is Ready for Trial on July 25, 2012. They are
requesting a 15 minute trial, which is not enough time. There are a number of things that I would
like to fix before a trial occurs. Here is a list of the work that I believe should be done:

Damiano needs relief from technical admissions resulting from an untimely response to
BACs request for admissions (his counsel was served with a request for admissions on
September 8, 2011, who did not file responses to the admissions until November 21,
2011well past the 30 day mark).

Damiano needs discovery. His counsel sent out a very broad request for production of
documents. BAC did not really provide anything, so Damianos counsel filed a motion to
compel. For reasons unknown, the judge denied the motion to compel on October 2,
2012. Reasons why the judge may have denied the discovery: (a) much of the discovery
was overly broad; (b) much of the discovery would not have lead to relevant evidence; (c)
Damiano never certified that he made a good faith effort to resolve the discovery dispute.
Since there really has not been any true discovery, here are some areas where discovery is
needed:

Production of a statement of Damianos account, which will likely be presented at

trial.

Discovery on facts surrounding the signatories on the note and the assignment of
mortgage since they are all known robo-signers.

Discovery on the issue of standing since the complaint contains a lost note count
and the copy of the note was not attached to the complaint.

Discovery pertaining to BACs compliance with the national mortgage settlement

as it relates to this case (under the national mortgage settlement, BAC is supposed
to review their foreclosure documents for robosigning and other sloppiness).

BAC needs discovery. BAC sent out interrogatories and request to produce which have
not been answered. Damianos counsel filed a motion for extension of time to respond
and the Court denied that motion on October 2, 2012. BAC may not want this discovery,
since they have not filed a motion to compel, and it is not really helpful.

Damiano needs an amended answer. The current answer does not include a lack of
condition precedent defense. Floridas Consumer Collection Practices Act also requires a
creditor to give a written notice of an assignment to the debtor prior to a suit to collect
that debt. Some circuit courts have held that this is a statutory condition precedent to a
foreclosure action (the issue has not reached an appellate court). Also, BAC signed a
national mortgage settlement with the federal government and the attorney generals of
almost all 50 states which arguably places conditions precedent to a foreclosure judgment.