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HSBC BANK, USA, NATIONAL ASSOCIATION, AS TRUSTEE FOR HOME EQUITY LOAN TRUST SERIES ACE 2006-HEI

SUPERIOR COURT OF NEW JERSEY, MONMOUTH COUNTY CHANCERY DIVISION

Plaintiff, v. JACQUELINE KUSHNER, LARRY KUSHNER, ET AL. Defendants DOCKET NO. F-30194-08

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MEMORANDUM OF LAW IN SUPPORT OF ORDER TO SHOW CAUSE WITH RESTRAINTS

LARRY & JACQUELINE KUSHNER DEFENDANTS PRO-SE 731 GREENS AVE LONG BRANCH, NJ 07740 (732) 670-6703

FACTS Defendant Jacqueline Kushner own their residence at 731 Greens Ave, Long Branch, NJ. Plaintiff claims that they hold the mortgage on said residence, by virtue of an assignment of the mortgage and note from MERS which assignment was executed by a partner in the Plaintiffs law firm, and that the defendants are in default on said mortgage, and that they have a right to accelerate and foreclose that debt. The debt that this matter arises out of was a refi of the Defendants home, on September 19, 2005, at which time a Note was executed by Jacqueline Kushner in favor of FGC Commercial Mortgage Finance d/b/a Fremont Mortgage and a mortgage was executed by Jacqueline and Larry Kushner in favor of MERS as nominee of the Lender... The motion was also opposed because the correct party in interest did not serve a valid Notice of Intent to Foreclose under NJ Statutes (which is a condition precedent to commencing this action), and since the Plaintiff does not hold a legal and valid assignment of the mortgage. On a further substantive basis, the defendants opposed Summary Judgment because the loan itself is predatory and must be voided, reformed or adjusted. The original holder of the note Fremont has been cited in several States and enjoined from doing business because of its predatory lending practices and in fact that lender has filed for protection under the United states Bankruptcy Code. That is one of the issues raised herein. Since Fremont was in bankruptcy, they could not assign the Note without Bankruptcy Court approval and the MERS (as nominee for

Fremont) could NOT assign the mortgage, since there agency relationship terminated in the bankruptcy without Court approval..

PRIOR PROCEEDINGS

The Plaintiff commenced the instant action to foreclose under Docket No. F- 30194-08 by service of a Summons and Complaint. Defendant

interposed an Answer containing Affirmative Defenses and Counterclaims. Plaintiff made a Motion for Summary Judgment and to Strike the defendants Answer. The defendant opposed that Motion and after oral argument the Court granted to the Plaintiff Summary Judgment and an Order striking the defendants answer. Your defendant moved to re argue or reconsider that decision and that request was denied. The Plaintiff improperly offered into evidence at the Summary judgment oral argument additional documents which had no legal foundation and which could not have been admitted without a proper foundation and authentication (attorney took papers from file which was hearsay at best and offered verbal explanations when he was not a qualified witness). The Plaintiff sought and obtained (over defendants objections) a Final Judgment of foreclosure, on February 16, 2010, which Judgment is the basis of this Application to relief from. An application was made to the this Court, Justice Thomas Cavanaugh, Jr, for a stay pending appeal, on July 6, 2010. Justice Cavanaugh granted a Stay to 7/12/10 so that a stay could be applied for and obtained from the

Appellate Division, where the matter was pending. The Appellate Division denied the Stay and asked that a trancript be furnished. That has been done. A copy will be furnished to this Court at the time of Oral argument. This Court ordered mediation in this matter. Prior to the mediation I was assigned to a housing counselor, Ivy Jacobs. I was also assigned an attorney, Mark Cherry, who I did not meet or was advised of until the date of the mediation. At the mediation, Mr. Cherry proposed a short pay-off and the attorney for the bank rejected that proposal. Mr. Cherry asked WHO the attorney was talking to since NO BANK REPRESENTATIVE was present. He was advised, by Plaintiffs counsel it is the servicer ASC. Mr. Cherry asked to speak with them and did. Last week, I received a letter, a copy of which is attached as Exhibit A to the certification in support of this motion, which shows the servicer is Litton Loan Serving NOT ASC. Thus, the Plaintiff did not act in good faith in this mediation, should be penalized as set forth below, but for the minimum a stay should be granted and a new mediation ordered with a requirement that an officer of the Plaintiff, not its servicer be present.

BASIS FOR STAY Rule 2-9:5 (b) provides the basis for this court to grant a stay pending appeal of while the matter is pending in the Appellate Division. A stay is an extraordinary remedy and is only granted in circumstances where the equities favor such a result. The general rule is that in Order to

Obtain a 'stay pending appeal there must be irreparable injury if the Stay is not granted and a likelihood of success on the merits or at least a legal basis for the appeal which will be circumvented if the Stay is not granted. In the instant case the irreparable injury question is a no brainier. The defendants reside in these premises as their marital home with their 13 children. A sale of that home, their principal residence would cause a hardship on themselves and their children that could not be corrected when this appeal is determined and won. As to the likelihood of success on the merits, and a good faith legal argument, I direct the court attention to the facts and legal arguments presented in this brief. RECENT CASE In oral argument in opposition to the Motion for Summary Judgment, I cited numerous cases from Ohio and other authorities. The court indicated they would review them but they are not binding. Recently, a Justice of Chancery Court, in Atlantic County, determined a case of similar if not identical facts and DISMISSED the case (a result opposite to this decision). Although, it is not an appellate case, it is at least persuasive' authority and I ask this Court to first review the 53 page decision of Hon. Justice Todd, JSC Ch. Div, Superior Court Atlantic County, in Bank of New York v. Michael Raftogianis (decidedJJune24, 2010 and published 7/6/10 Slip Op) wherein Justice Todd reviewed the many of the issues pertaining to MERS assignments and the failure of a Plaintiff to produce proof of ownership of the Note and DENIED that

plaintiff Summary and at trial DISMISSED action, a result opposite to the decision in this matter. That decision cites may authorities outside the State Of New Jersey, since there is No authority in New Jersey, cites relevant New Jersey statutes and comes to a simple conclusion that without ownership of the note, and proof of that ownership, on the date of the commencement of the action the case MUST BE DISMISSED. I will not re-cite all those cases and statutory authority but ask this Court to review that well reasoned opinion and the cases and authorities contained therein. Further, in connection with determining if a stay should be granted the Court should consider if there are any Public Policy considerations. In the instant case, other States has ruled assignments of this type not valid and have denied standing to these Plaintiffs, and to cases involving robo signers . In the instant case the decision is opposite to the ruling of Judge Todd in Bank of New York v. Raftogianis (cited above) Since public policy requires 'equal justice' and due process it is a requirement that Laws be applied equally and fairly. Since the determinations on similar facts in Atlantic County is different than the conclusion reached in Monmouth County, it is in the interests of the Public Policy of New Jersey to STAY enforcement of this judgment until the Appellate Courts make a complete ruling and determine the applicable law in the State of New Jersey uniformly applied. In addition to the request for a Stay pending appeal, we ask for a stay pending a mediation with a PROPER BANK REPRESENTATIVE IN ATTENDANCE and that be granted in the interests of Justice.

LEGAL ISSUES (based on FACTS) RAISED

In the Complaint filed in this matter in par. 2 the Plaintiff asserts: On July 12, 2007, Mortgage Electronic Registration Systems, Inc, as nominee for FGC Commercial Mortgage Finance d/b/a Fremont Mortgage assigned the mortgage to HSBC Bank..... The assignment is in the process of being recorded. Thus, in the Complaint the Plaintiff basis their entire entitlement to the relief sought, and their basis for standing on an assignment of mortgage in the process of being recorded. Thus, they had NO STANDING on the date the action was commenced based upon their own admission in the Complaint. Further they DO NOT attached the assignment to be recorded to their complaint. The plaintiff then made a Motion for summary judgment on December 3, 2008 returnable January 9, 2009. A review of that motion and Exhibits show: 1. Exhibit A is the purported NOTE (copy)that was in the Plaintiffs possession at that time. It is stamped original but it does NOT contain any endorsement or allowance or negotiation of any kind. Thus, at the time of the filing of this Motion and therefore clearly when the complaint was filed the Plaintiff was not the holder of an assigned or endorsed note. Thus, by their own admission they did not

have standing to commence and prosecute this action. (see Point I below). 2. Exhibit C is the purported assignment executed by MERS. However a review of that assignment shows it is executed by Rosemarie Diamond who is a partner in Phelon, the Plaintiff's law firm. Clearly, that doesn't meet the smell test in that a partner in the Plaintiff's law firm (representing alleged assignees in this matter) is executing documents on behalf of the assignor! (This issue about robo signers' has become major news, with Bank of America and GMAC suspending foreclosures. It is worse in this case since the 'robo signer' is an officer of the Court and a partner in the law firm prosecuting this foreclosure). Beside not being 'kosher or above board these documents were first produced in connection with the Motion for Summary Judgment and should not have been considered. Upon receipt, of our opposition to the Summary Judgment Motion the Plaintiff upon Oral argument produced an alleged Agreement for signing authority between MERS, Wells Fargo bank and Plaintiff's law firm Phelan Hallinan and Schmeig. That agreement was considered and reviewed by the Court in error, since it was not a part of the pleading or motion and should not have been considered as evidence since it was without foundation or

authentication. It was at best hearsay' and should not have been considered. Further, since the lender was not a party to that agreement there would be NO BASIS for anyone to authorize any assignment of their mortgage. Otherwise stated, the mortgage is in the name of MERS as nominee of FGC. No one could authorize anyone to assign it except the principal to wit: FGC. FGC as an agent of Fremont Mortgage could also not assign it because Fremont was in bankruptcy and that would take a Court order of the United States Bankruptcy Court.

POINT I PLAINTIFF FAILED TO PARTICIPATE IN THE MEDIATION IN 'GOOD FAITH

As stated above, a mediation was held on October 5, 2010. Defendant appeared and was represented by Counsel, Mark Cherry. The plaintiff's counsel appeared and said NO to a short pay off at the amount that they would have stopped bidding at, at the scheduled sheriff's sale- for no reason. Mr. Cherry, pressed who was 'rejecting this and was advised the servicer ASC. It was not the Plaintiff. Attached as Exhibit A to the certification in support of this motion, is a letter dated October 4, 2010 (one day before the mediation) that shows Litton Loan Servicing to be the servicer of this loan. Thus at the least the plaintiff made a mistake at the mediation and the sheriffs sale should be stayed and a new mediation ordered. they

Alternatively, since I believe that these actions by the Plaintiff show a pattern of bad faith (see the history of this proceeding and the prior one), I respectfully ask the Court to dismiss this action with prejudice. That basis for this drastic relief is Indy Mac v. Yano-Horoski, 11/19/2009, Supreme Court of New York, Suffolk County, Justice Jeffrey A. Spinner, wherein Justice Spinner dismissed a complaint and canceled a mortgage where the Plaintiff failed to participate in a mediation in good faith. Further, see HSBC v. Orlando Eslava Dade County Florida (same Plaintiff as this matter), wherein Judge Jennifer Bailey dismissed a case with prejudice and canceled the mortgage where the Plaintiff violated one of her prior court orders. It is respectfully requested, that based upon the totality of the proceeding that this matter be dismissed, and/or the judgment vacated and the matter set for trial, but at least a stay granted, a new mediation directed and at said mediation an officer of the actual plaintiff be present in person.

POINT II THIS COURT SHOULD VACATE THE JUDGEMENT ENTERED IN THIS MATTER ON FEBRUARY 16, 2010 AND EITHER DISMISS THE COMPLAINT OR ALLOW DISCOVERY AND SCHEDULE IT FOR TRIAL Rule 4:50-1 provides on motion with briefs...the Court may relieve a party ...from a final judgment or order for the following reasons and enumerates six (6) reasons. Sub-paragraph (f) provides: for any other reason justifying relief from the operation of the judgment or order. It is under that

provision that this motion is made. Prior to itemizing the reasons why this motion should specifically be granted, we ask the court to take judicial notice to the current mortgage upheaval caused by robo-signers who execute foreclosure documents in mass, and the fact that the AG in all 50 states is looking into this problem. In the instant case we have No note produced in the complaint or at the time the motion for Summary judgment was made, and we have 'assignment executed by an partner in the plaintiffs law firm and notarized by an employee in that firm. That is worse than a robo-signer because she is in a clear conflicting role and would have no access to the files of the one whom she is allegedly signing on behalf of!!!!! Thus, based on the current issues and this fact alone this request for relief from this Judgment should be granted. In greater detail , please note that the Plaintiff alleges that when this mortgage debt was created that the defendants executed a promissory note to FGC Commercial d/b/a Fremont and a mortgage to MERS. Thus, there was separate instruments to different persons. Plaintiff now claims that they own the mortgage having taken it by assignment from MERS. They attach a copy of that alleged assignment which defendants dispute as invalid. Since the Plaintiff in its Complaint and Motion for Summary Judgment did not produce the original note and did not produce any endorsements of the note to them, or any proof how it was acquired and if in fact they are the owner with a

financial interest, they cannot be considered the owner and holder of that obligation. Since they do not own the debt, they have no standing to claim the default and proceed with this foreclosure. To have legal standing to maintain a foreclosure action the party maintaining that action must own the debt and be the beneficial owner of it. The Courts of New Jersey have not yet addressed these issues, except in recent decision of Justice Todd (Bank of New York v. Raftogianis cited above) . In instances where there is no New Jersey case law on point' the Courts have utilized opinions from other jurisdictions for guidance. ( Greate Bay Hotel and Casino v. City of Atlantic City, 264 NJ Super 213, 217-218, 624 A. 2d 102 (NJ Super L 1993 and Gregory v. Allstate 315 NJ Super 78, 82-83, 716 A. 2d 573 (NJ Super L 1997). Recently there has been a major upheaval in the mortgage industry involving mortgage backed securities and an separate upheaval in the Courts involving the foreclose process when lenders attempt to foreclose without producing proper and complete assignments and the original notes properly endorsed. This began in Ohio, on October 31, 2007 in the United States District Court (N.D. Ohio) Judge Christopher A. Boyko ( In re Foreclosure Cases 2007 WL 3232430 (ND Ohio October 31, 2007) wherein Judge Boyko dismissed 14 foreclosure actions based on the Plaintiff-lenders inability to establish standing. Based upon their failure to produce notes and mortgages to the lender properly endorsed and assigned. He continued in his decision to say that the court possesses the independent obligations to preserve the judicial integrity of the

Federal Court and to jealously guard federal jurisdiction. In a footnote he indicated that the Courts must act as gatekeepers on the issue of standing. In some colorful verbiage after saying what some things are worth he stated: the jurisdictional integrity of the United States District Court-Priceless. The jurisdictional integrity of the New Jersey Superior Court should also be priceless and this complaint dismissed. Thus Court has no less obligation, but to deny

judgment to anyone who fails to have standing to maintain an action for the relief they seek. That decision was followed two weeks thereafter by another decision the United States District Court (again ND Ohio) wherein Judge Kathleen McDonald OMalley dismissed thirty-two (32) foreclosure actions for lack of standing. In her decision she stated a foreclosure Plaintiffespecially one not identified on the note and/or mortgage at issue, must attach to its complaint documentation demonstrating that it is the owner and holder of the note and mortgage. (In Re Foreclosure Actions 2007 WL 4034554 (ND Ohio, November 14, 2007). See also In Re foreclosure cases 2007 WL 4056586 (S.D. Ohio, Nov. 15, 2007) wherein a Judge of that District agreed with Judge Boyko and again stressed that judicial integrity in these cases was priceless and again dismissed foreclosure actions based on Judge Boykos reasoning. Further, the alleged assignment of the Mortgage that the Plaintiff is relying is void. However, legally the issue of whether or not MERS has the standing to commence a foreclosure action, and thus the ability to assign the mortgage (if it doesn't own anything it has nothing to assign) has been determined (that they DON'T have standing) in many Courts. It appears that many courts are holding

that MERS does not have standing to pursue a foreclosure since they do not hold a beneficial interest in the mortgage, and therefore they have no interest to assign, so their assignments without further proof have no legal force and effect. In New York, in 2006, in LaSalle Bank National Association v. Lamy , 12 Misc. 3d 1191 (NY Supp,2006), the Court held that LaSalle Bank as assignee of MERS, had no ownership in the mortgage, and as such, no cognizable claim for foreclosure. The court further stated it is axiomatic that to be effective, an assignment of a note and mortgage given as security therefore must be made by the owner of such note and mortgage and that an assignment made by entities having no ownership interest in the note and mortgage pass no title therein to the assignee. That court then concluded that a nominee of the owner of a note and mortgage may not effectively assign the note and mortgage to another for want of an ownership interest in said note and mortgage. In Florida, in Aurora Loan Services v. Mendes da Costa (circuit Court 20th Judicial Circuit (09-142-CA April 28, 2010) Judge Rob Crown reviewed and discussed MERS cases all over the Country and decided that without any specific evidence of authority to act and proof that the note and mortgage were specifically assigned and paid for they HAD NO STANDING and he dismissed the Complaint. ( see also JP Morgan Chase v. Doldron, Case no. 16-2006-CA000998_MA, 4th Judicial Circuit Fla for a discussion of MERS assignments, with the Court again holding MERS had no standing to sue or assign). In his ruling (Judge Crown-Aurora Case) cited how MERS works and in DISMISSING the case and invalidating MERS assignments he reviewed Mortgage Electronic

Registration Systems v. Nebraska Department of Banking, 704 NW 2d 784 (Neb. 2005):wherein The Supreme Court of Nebraska held (with emphasis) that MERS is contractually prohibited from exercising any rights with respect to mortgages (ie foreclosures) without the specific authorization of the member...There is no evidence of any such authorization in the instant case. There is also NO EVIDENCE of such authorization in the case at bar and thus should be dismissed. Other courts around the Country have also rejected MERS assignments and dismissed the actions (again see analysis of Justice Todd in Bank of America v. Raftogianis (cited above). The Arkansas Supreme Court in Mortgage Electronic Registration Systems, inc v. Southwest Homes 2009 WL 723182 (2009, Supreme Court of Arkansas ) stated: We specifically reject the notion that MERS may act on its own, independent of the the direction of the specific lender who holds the repayment interest in the security instrument at the time MERS purports to act...Nothing in the record shows that MERS had authority to act. In our case that is also true. The mortgage was held by MERS as nominee of FGC. The plaintiff makes no allegations and offers no evidence that FGC authorized MERS or anyone else to assign this mortgage. Additionally, IF the new note tendered by Plaintiffs counsel after the Summary Judgment motion is properly offered into evidence- that also cannot be the basis of this lawsuit since it was assigned to another entity Fremont Investment and Loan and thus ONLY that entity would have standing to prosecute this action or assign that Note. Thus, Summary judgment should have been denied and the Complaint

dismissed. The Supreme Court of Kansas also ruled against MERS having standing and in Landmark National Bank v. Kesler (216 P. 3d 158 (Supreme Court of Kansas, 2009) which court defined MERS relationship as more akin to that of a straw man than to a party possessing all the rights given to a buyer. Bankruptcy Courts have also ruled against MERS having anything they can assign or having standing. See In Re Vargas 396 B.R. 511 (Bankr. C.D, Cal. 2008 wherein in holding against standing for a MERS assignee stated : MERS presents no evidence as to who owns the note, or if it has any authorization to act on behalf of the present owner. See also In Re Atlantic Mortgage Corporation 69 BR 321, 1987 Bankr. Lexis 44 (US Bankruptcy Court ED MICH) wherein the Court said the Bankruptcy trustee had a better claim to ownership than the assignees if the assignees did not have properly assigned notes and In Re: Peter A. Jacobson and Marla Jacobson USBC, WD Washington, March 10, 2009 where standing to move for relief of a stay was denied because there was no proof the movant had authority and was assigned the note. That judge in that decision noted that some Court actually require admissible evidence tracing the identity of the various holders and servicers. Based on that rational it should be pointed out that New Jersey Court Rules also require that the Complaint set forth all assignments in the chain of mortgage assignments up to the time of filing. (R-4:64-1(b)(!0) and R-4:34-3) which condition was not meet or plead in this case and is thus an additional reason the complaint should have been dismissed and Summary Judgment denied.

In Saxon Mortgage Services v. Hillery (2008 WL 5170180 (ND Cal 2008) the Court held: As noted above, MERS purportedly assigned both the deed of trust and the promissory note to Consumer...however, there is no evidence of record that establishes that MERS either held the promissory note or was given authority by New Century to assign the note...Accordingly, the Court concludes that there is insufficient evidence that Consumer has standing to proceed with this litigation That is exactly the situation here- The plaintiff has produced NO EVIDENCE that FGC authorized the assignment and thus for this and the other reasons stated Summary judgment should not have been granted and this action should be dismissed. In Connecticut, the Court of Appeals has held that a mortgage holder may not foreclose absent evidence of ownership of the underlying note, and in Fleet National Bank v. Nazareth 818 A.2d 69 (2003) held that there is no legal authority for the assignee of a mortgage to foreclose absent proof of assignment of the underlying note. Also see In Re Atlantic Mortgage Corporation 69 BR 321, 1987 Bankr. Lexis 44 (US Bankruptcy Court ED Mich 1987) wherein a mortgage was assigned several times. The court held that the bankruptcy trustee had a better claim to ownership of the loans than the assignees of the mortgages if the assignees of the mortgages did not also have properly endorsed notes.

Simply put, the Plaintiff alleges only an assignment of the mortgage from MERS, without any proof of authority from the mortgage holder to assign it to them. They do not attach to their complaint nor to their motion for summary judgment a properly endorsed or assigned assigned note and proof of how it

came to them. Thus, they lack standing to maintain this action.

THE ALLEGED ASSIGNMENT OF THE MORTGAGE IS ALSO VOID AS A MATTER OF LAW As stated above, the mortgage assignment is not valid as a matter of law having coming from MERS since MERS did not have a beneficial interest in the Note and Mortgage. ( see LaSalle v. Lamy, cited above). Further, in the instant case and for the purpose of this Motion the Court must look at this alleged mortgage assignment as suspect. MERS is not a New Jersey Corporation. MERS does not maintain an office in New Jersey. MERS is only office is listed in Virginia. Yet, this alleged assignment is executed by an assistant secretary of MERS in Burlington County, New Jersey, one Rosemarie Diamond. Coincidentally, Plaintiffs law firm is located in Burlington County, New Jersey and Rosemarie Diamond is a partner or associate in that law firm. She has no specific authority offered in evidence to show she had the authority to execute this assignment. I had asked for document production and would have taken a deposition on this issue. Since the relief sought herein is based on contested facts an evidentary hearing must be conducted (see Nolan v. Lee Ho 120 NJ 465, Woltoff v. Villane 288 NJ Supre 282 (1996) and Matuzzo v. Koznick 305 NJ Super 469 (app Div 1997). Basically, since when does the attorney for the assignee execute the documents on behalf of the assignor? This is a blatant conflict and the kind of situation that a Court should fully review and explore. This is more

eggeriosand blatant than the current 'robo-signer issues in the news today. It looks like Plaintiffs counsel is playing fast and loose and at the least their conduct which is suspect should warrant the granting of the requested relief and the judgment vacated.. CONCLUSION Simply based on the current issue' in this industry a mortgage based on an assignment done by an employee of the Plaintiff's ;aw firm should be considered 'suspect and should be the basis to vacate the judgment and order a full trial and discover. Further the decision of Justice Todd and his reasons should be considered and if this relief is not granted a stay should at least granted till appellate review of both cases can be completed. Additionally the Plaintiffs failure to engage in the mediation process should result in either a dismissal of this matter or at least a STAY and a new mediation.Dated: Long Branch, New Jersey October 13, 2010 respectfully submitted,

----------------------------------------LARRY JAY KUSHNER DEFENDANT PRO-SE

------------------------------------------JACQUELINE KUSHNER DEFENDANT PRO-SE