New York Trust LawUnder New York law, the extent of a trusts authority is determined by common law. It is undisputed that the powers of a trust are limited by the trust agreement.1 However, it is an open question as to whether a trust is presumed to have power unless there is an express limitation on that power in the trust agreement (Third Restatement)2 or whether a trust is presumed to not have a power unless the trust agreement expressly authorizes such power or the power is necessary for the execution of an expressed power (Second Restatement).3 While New York courts have adopted other provisions of the Third Restatement of Trusts,4 no New York on record has adopted 85 of the Third Restatement. New York courts for over seventy years have adhered to the general principles of the Second Restatement.5 It would be presumptive for a foreign court to hold that New York adheres to the Third Restatement 85 when no New York court has ruled on the issue and New York has followed the general principles of the Second Restatement for over seventy years. Even if New York adheres to the Third Restatement, a trusts powers are still limited under the Third Restatement by the terms of the trust.6 When constructing a trust agreement the purpose is to ascertain the intention of the testor or settlor. . . When possible, intention should be determined from the four corners of the instrument and the 7 surrounding circumstances not in dispute. No words used by the testator should be cast aside 8 as meaningless, but the effect must be given, if possible, to every word and provision. In the context of mortgage securitization trusts, under both Restatements, as the trust agreements (pooling and servicing agreements) expressly limit the trustees authority to adherence with the provisions of the I.R.S. R.E.M.I.C. Code, mortgage securitization trusts are not authorized to operate in violation of the I.R.S. R.E.M.I.C. Code. An analogous case is In re 9 Olneys Estate where a trustee was liable for operating outside his specifically limited authority.AG Capital Funding Partners v. State Street Bank, 2008 N.Y. Lexis 1815 (N.Y. 2008) (Indenture Trusts); In re Application of IBJ Schroder Bank & Trust Co., 706 N.Y.S.2d 114, 115 (N.Y.A.D. 2000); Restatement (Third) of Trusts 85 (2007). 2 Restatement (Third) of Trusts 85 (2007). 3 Restatement (Second) of Trusts 186 (1959). 4 In re Terranova, 873 N.Y.S.2d 651 (N.Y.A.D. 2009) ( 240); The Presbytery of Hudson River of the Presbyterian Church (U.S.A.) v. Trustees Of First Presbyterian Church and Congregation of Ridgeberry, 821 N.Y.S.2d 834 (N.Y.Sup. 2006) ( 13); Sankel v. Spector, 819 N.Y.S.2d 520 (N.Y.A.D. 2006) ( 35); Sankel v. Spector, 799 N.Y.S.2d 356 (N.Y.Sup. 2005) ( 35) ( 36); In re Goodman, 790 N.Y.S.2d 837 (N.Y.Sur. 2005) ( 50); Aspro Mechanical Contracting, Inc. v. Fleet Bank, N.A., 805 N.E.2d 1037 (N.Y. 2004) ( 170); Matter of Estate of Aronoff, 653 N.Y.S.2d 844 (N.Y.Sur. 2006) ( 11); Matter of Bankers Trust Co., 219 A.D.2d 266 (N.Y.A.D. 1995) ( 227). 5 In re Application of IBJ Schroder Bank & Trust Co., 706 N.Y.S.2d 114, 115 (N.Y.A.D. 2000); Donnelly v. Bank of New York Co., 801 F.Supp. 1247, 1256-1257 (.S.D. N.Y. 1992); Matter of Sackler, 149 Misc.2d 734, 738 (N.Y. Sur. 1990); In re Neills Estate, 89 N.Y.S.2d 394, 399 (N.Y.Sur. 1949); In re Leeds Will, 276 N.Y.S. 950, 232 (N.Y. Sur. 1935); In re Wolanskis Estate, 283 N.Y.S. 797, 800 (N.Y.Sur. 1935); In re Ebbets Estate, 267 N.Y.S. 268, 275 (N.Y. Sur. 1933). 6 Restatement (Third) of Trusts 85 (2007). 7 Matter of Sackler, 149 Misc.2d 734, 738 (N.Y. Sur. 1990). 8 In re Olneys Estate, 20 N.Y.S.2d 884, 892 (N.Y. Sur. 1940); see also Estate of McKenna, 451 N.Y.S.2d 617, 620 (N.Y.Sur. 1982). 9 In re Olneys Estate, 20 N.Y.S.2d 884 (N.Y. Sur. 1940).1

In Olney, the trustee reinvested assets of the trust in a stock that was not one of four securities 10 types that were specifically authorized for reinvestment by the trust agreement. As such, the 11 trustees action was unauthorized and he was liable for losses as a result of the transfer. Under New York statutory law, any action undertaken by a trust that is not within the authorized powers of a trust is void.12

In re Olneys Estate, 20 N.Y.S.2d 884, 893 (N.Y. Sur. 1940). In re Olneys Estate, 20 N.Y.S.2d 884, 893 (N.Y. Sur. 1940). 12 McKinneys Consolidated Law of New York Annotated, Estates Powers and Trusts Laws 72.4 (2002); see Allison & Ver Valen Co. v. McNee, 9 N.Y.S.2d 708 (N.Y. Sur. 1939).11

10

New York Trust LawUnder New York statutory law, any action undertaken by a trust that is not within the authorized powers of a trust is void. If the trust is expressed in the instrument creating the estate of the trustee, every sale, conveyance or other act of the trustee in contravention of the trust, except as authorized by this article and by any other provision of law, is void. 1 In New York, the extent of a trusts authority is determined by common law. It is undisputed that the powers of a trust are limited by the trust agreement. 2 However, it is an open question as to whether a trust is presumed to have power unless there is an express limitation on that power in the trust agreement (Third Restatement) 3 or whether a trust is presumed to not have a power unless the trust agreement expressly authorizes such power or the power is necessary for the execution of an expressed power (Second Restatement). 4 While New York courts have adopted other provisions of the Third Restatement of Trusts, 5 no New York court on record has adopted 85 of the Third Restatement. New York courts for over seventy years have adhered to the general principles of the Second Restatement. 6 It would be presumptive for a foreign court to hold that New York adheres to the Third Restatement 85 when no New York court has ruled on the issue and New York has followed the general principles of the Second Restatement for over seventy years. Even if New York adheres to the Third Restatement, a trusts powers are still limited under the Third Restatement by the terms of the trust. 7 When constructing a trust agreement the purpose is to ascertain the intention of the testor or settlor. . . When possible, intention should be determined from the four corners of the instrument and the surrounding

McKinneys Consolidated Law of New York Annotated, Estates Powers and Trusts Laws 72.4 (2002); see Allison & Ver Valen Co. v. McNee, 9 N.Y.S.2d 708 (N.Y. Sur. 1939). 2 AG Capital Funding Partners v. State Street Bank, 2008 N.Y. Lexis 1815 (N.Y. 2008) (Indenture Trusts); In re Application of IBJ Schroder Bank & Trust Co., 706 N.Y.S.2d 114, 115 (N.Y.A.D. 2000); Restatement (Third) of Trusts 85 (2007). 3 Restatement (Third) of Trusts 85 (2007). 4 Restatement (Second) of Trusts 186 (1959). 5 In re Terranova, 873 N.Y.S.2d 651 (N.Y.A.D. 2009) ( 240); The Presbytery of Hudson River of the Presbyterian Church (U.S.A.) v. Trustees Of First Presbyterian Church and Congregation of Ridgeberry, 821 N.Y.S.2d 834 (N.Y.Sup. 2006) ( 13); Sankel v. Spector, 819 N.Y.S.2d 520 (N.Y.A.D. 2006) ( 35); Sankel v. Spector, 799 N.Y.S.2d 356 (N.Y.Sup. 2005) ( 35) ( 36); In re Goodman, 790 N.Y.S.2d 837 (N.Y.Sur. 2005) ( 50); Aspro Mechanical Contracting, Inc. v. Fleet Bank, N.A., 805 N.E.2d 1037 (N.Y. 2004) ( 170); Matter of Estate of Aronoff, 653 N.Y.S.2d 844 (N.Y.Sur. 2006) ( 11); Matter of Bankers Trust Co., 219 A.D.2d 266 (N.Y.A.D. 1995) ( 227). 6 In re Application of IBJ Schroder Bank & Trust Co., 706 N.Y.S.2d 114, 115 (N.Y.A.D. 2000); Donnelly v. Bank of New York Co., 801 F.Supp. 1247, 1256-1257 (.S.D. N.Y. 1992); Matter of Sackler, 149 Misc.2d 734, 738 (N.Y. Sur. 1990); Rievman v. Burlington Northen R. Co., 618 F.Supp. 592 (D.C.N.Y. 1985) (Indenture trustee); In re Neills Estate, 89 N.Y.S.2d 394, 399 (N.Y.Sur. 1949); In re Leeds Will, 276 N.Y.S. 950, 232 (N.Y. Sur. 1935); In re Wolanskis Estate, 283 N.Y.S. 797, 800 (N.Y.Sur. 1935); In re Ebbets Estate, 267 N.Y.S. 268, 275 (N.Y. Sur. 1933); The Colorado and Southern Railway Co. v. Blair, 108 N.E. 840, 842 (N.Y. 1915) (Indenture trustee). 7 Restatement (Third) of Trusts 85 (2007).

1

circumstances not in dispute. No words used by the testator should be cast aside as 9 meaningless, but the effect must be given, if possible, to every word and provision. In the context of mortgage securitization trusts, under both Restatements, as the trust agreements (pooling and servicing agreements) expressly limit the trustees authority to adherence with the provisions of the I.R.S. R.E.M.I.C. Code, mortgage securitization trusts are not authorized to operate in violation of the I.R.S. R.E.M.I.C. Code. An analogous case is In re 10 Olneys Estate where a trustee was liable for operating outside his specifically limited authority. In Olney, the trustee reinvested assets of the trust in a stock that was not one of four securities 11 types that were specifically authorized for reinvestment by the trust agreement. As such, the 12 trustees action was unauthorized and he was liable for losses as a result of the transfer.

8

Matter of Sackler, 149 Misc.2d 734, 738 (N.Y. Sur. 1990). In re Olneys Estate, 20 N.Y.S.2d 884, 892 (N.Y. Sur. 1940); see also Estate of McKenna, 451 N.Y.S.2d 617, 620 (N.Y.Sur. 1982). 10 In re Olneys Estate, 20 N.Y.S.2d 884 (N.Y. Sur. 1940). 11 In re Olneys Estate, 20 N.Y.S.2d 884, 893 (N.Y. Sur. 1940). 12 In re Olneys Estate, 20 N.Y.S.2d 884, 893 (N.Y. Sur. 1940).9

8

It is a principle of the law of trusts that a trustee has only the authority granted by the instrument under which he holds, either deed or will. This fundamental rule has existed from the beginning and is still law. It applies to every kind of trustee whether a trustee to hold, invest and pay over income or a mere trustee to sell or to liquidate for the benefit of creditors. Allison & Ver Valen Co. v McNee (1939) 170 Misc 144, 9 NYS2d 708. Viewed, thus, as a gift, the transaction was inchoate. An intention may be assumed, and indeed is not disputed, that what was incomplete at the moment, should be completed in the future. The difficulty is that the intention was never carried out. The transaction, failing as a gift because inchoate or incomplete, is not to be sustained as the declaration of a trust ( Beaver v. Beaver, supra; Matter of Crawford, 113 N. Y. 560, 566; Wadd v. Hazelton, 137 N. Y. 215). The donor had no intention of becoming a trustee herself. The donee never got title, and so could not hold it for another. There was no equitable assignment. Farmers' Loan & Trust Co. v. Winthrop, 238 N.Y. 477, 487 (N.Y. 1924) Second, a settlor must describe securities which are said to constitute the assets of the trust so that they may be definitely ascertainable. "If the owner of several bonds declares that one of them is held in trust for another but does not specify which bond is so held, no trust is created" (1 Scott, Trusts [3d ed], 76, p 684). The same principle is true as to after-acquired property ( 86, pp 711-714). Sussman v. Sussman, 61 A.D.2d 838 (N.Y. App. Div. 2d Dep't 1978) [b] Restrictions on Acts by Trustee in Contravention of Trust Terms Any sale, conveyance or other act of a trustee in contravention of the trust instrument is void unless specifically authorized by law.50 Beneficiaries are thus protected from the unauthorized actions of a trustee, and third persons who knowingly enter into transactions with a trustee are charged with knowledge of the trust provisions. For example, where the existence of a trust is disclosed in the assignment of the mortgage to the trustee, the parties are charged with the knowledge of the trust's terms and with whether the assignment was in breach of the trust even though the terms of the trust were not expressed.51 In Dye v. Lewis,52 a third party purchased mortgaged property from the mortgagee pursuant to a contract that was approved by the trustees of the mortgagor. The terms of the contract provided that upon the full payment of the purchase price by the third party to the mortgagee, the trustees would agree to discharge the mortgage. The trust provided the trustees with the power to release any portion of the mortgaged real property, "provided, in the opinion of Trustees same can be done without prejudice to the security herein provided for the bondholders." The property at issue constituted the only security provided for the beneficiaries of the trust indenture, and thus the consent of the trustees to discharge the mortgage without any provision for payment or substitution of security constituted a dissipation of the security. Therefore, the court found that the trustees' actions were beyond the powers of the trustees and accordingly void.

On the other hand, in the companion case of Dye v. Lincoln Rochester Trust Co.,53 the court held that the language of the trust indenture quoted above granted the trustees the authority to subordinate the lien. Thus, the trustees were acting within their authority, and the third party mortgagee was protected unless it knew of circumstances that would reasonably put it on notice of a breach of trust. The court stated that "An act within [the trustee's] authority will bind the trust estate or the beneficiaries as to third persons acting in good faith and without notice, although the trustee intended to defraud the estate, and actually did accomplish his purposes by means of the act in question."54 Though an act in contravention of the trust is void, the trust will not be voided by such act. Where an act of self-dealing is specifically prohibited by a trust instrument, and this provision is violated by the trustees, the court may declare the violative transactions void pursuant to EPTL 7-2.4 but, regardless of the consequences of the Internal Revenue Code with respect to the transaction, the court will not ordinarily void the trust.55 3-46 Warren's Heaton on Surrogate's Court Practice 46.05 [d] Trustee Must Hold Trust Property Separately A trustee must keep trust property segregated from his individual property, and all transactions by the trustee with respect to the trust property must be in his name as trustee.62 In fact, a grant of authority by the trust instrument to the contrary will be void as against public policy. In one case, trustees permitted a firm of stockbrokers to keep in their possession stock certificates that were in the name of the nominee of the brokers. The trustees defended their action based on the language in the Will that provided the trustees with the authority to "hold any security in bearer form in their discretion and/or register any security held by them hereunder in their own name or in the name of their nominees, with or without the addition of words indicating that they hold such security in a fiduciary capacity."63 The court held that the possession and registration in the nominees was against public policy despite the trust provision. The court, however, would not address the right of the trustee, given the language of the trust, to register with the nominee while maintaining possession, but the court hinted this would also violate public policy. Notwithstanding the foregoing, a bank or trust company acting as trustee may, with the consent of the individual trustee, if any, register and hold securities in the name of the nominee of such bank or trust company.64 Also, an individual trustee may direct a bank or trust company incorporated in New York, a national bank located in New York, or a private banker authorized to engage in business in New York, to register and hold securities in the name of the nominee of such bank or private banker. Such bank may not redeliver the securities to the trustee without reregistering the securities in the name of the individual as trustee.65 These statutory exceptions were provided for in a 1939 amendment to the predecessor to EPTL 11-1.6 (i.e., former Surrogate's Court Act Section 231). According to the legislative history to this amendment, former Surrogate's Court Act Section 231 needed to be liberalized since it was impossible for the stock exchanges to make prompt sales of securities held in the name of the trustee. The safeguards employed by corporate fiduciaries who placed securities in the name of nominees were believed to be sufficient to prevent misappropriation.66

A 1970 amendment to EPTL 11-1.6 added provisions that clarify the various methods by which bearer securities may be earmarked by a bank holding them as trustee. Specifically, this addition provides that securities held in bearer form by a bank must be kept separate from the assets of the bank and may be held either in a manner such that all bearer certificates of a particular trust are segregated from the certificates of all other fiduciary accounts, or the bearer certificates belonging to fiduciary accounts that are of the same class and from the same issuer are held in bulk, including the merging of certificates into larger denominations.67 Banks that elect the second option are subject to the regulations issued by the banking board or the comptroller of the currency, and such banks, on demand of a trustee, must provide written certification of the securities held for the particular trust.

3-46 Warren's Heaton on Surrogate's Court Practice 46.05 186 Extent of Trustee's Powers Except as stated in 165-168, the trustee can properly exercise such powers and only such powers as (a) are conferred upon him in specific words by the terms of the trust, or (b) are necessary or appropriate to carry out the purposes of the trust and are not forbidden by the terms of the trust. COMMENTS & ILLUSTRATIONS: Comment: a. When it is said that a trustee "can properly" do an act, it is meant that he can do the act without violating any duty to the beneficiary; he has both a power and a privilege to do the act. b. The terms of the trust. The terms of the trust may clearly appear from written or spoken words of the settlor or may be determined by interpretation of the words or conduct of the settlor in the light of the circumstances. See 164, Comment c. The expression "terms of the trust" here as elsewhere in the Restatement of this Subject is used in this broad sense and is not limited to the specific language of the instrument, if any, under which the trust is created. c. Deviation from the terms of the trust. In accordance with the rule stated in 166, although a power is conferred upon the trustee by a term of the trust, he cannot properly exercise the power if the term of the trust is illegal. In accordance with the rules stated in 167, the court may confer upon a trustee powers not conferred upon him by the terms of the trust, or even powers specifically denied to him by the terms of the trust, or may direct him not to exercise a power which is conferred upon him by the terms of the trust. The mere fact that owing to a change of circumstances not anticipated by the settlor the accomplishment of the purposes of the trust would be defeated or substantially impaired if the trustee were not permitted to exercise a power, does not of itself confer power upon the trustee to act without obtaining the permission of the court,

unless there is an emergency such that he has no opportunity to apply to the court for such permission. See 167. Thus, if a power to mortgage trust property is not conferred upon the trustee by the terms of the trust either in specific words or otherwise, he does not have a power to mortgage merely because owing to a change of circumstances it becomes necessary to mortgage the property in order to prevent the loss of the trust property. In such a case, however, the court may confer upon the trustee power to mortgage the trust property. See 191, Comment d. d. General scope of trustee's powers. In addition to the powers conferred in specific words by the terms of the trust, the trustee has such powers as are necessary or appropriate to carry out the purposes of the trust and are not forbidden either in specific words or otherwise by the terms of the trust. It is to be inferred that the settlor intended to confer upon the trustee such powers as under the circumstances known to or anticipated by the settlor are necessary or appropriate to carry out the purposes of the trust. The trustee can properly exercise such powers as it appears from the language used in the trust instrument were intended to be conferred upon him, although not conferred in specific words. Thus, a general authority to manage or control or dispose of the trust property may, depending on the circumstances, be interpreted to confer a power of sale both of real and personal property. The existence of powers in the trustee may be gathered not merely from the language in the trust instrument but from the nature of the purposes of the trust. Thus, if land is devised in trust to pay the income accruing therefrom to a beneficiary for life and to convey the land on his death to anotherbeneficiary, the trustee can properly do such acts as are necessary or appropriate to protect and preserve the land, to make it productive, and to transfer it upon the death of the life beneficiary. The extent of the powers of the trustee varies with the character and purposes of the trust. If the trust is merely for the purpose of having the trustee hold the title to the trust property until the trust terminates, the powers of the trustee are comparatively few in number. Where, however, as is more commonly the case today, the purpose of the trust is to commit the care and management of the trust property to the trustee, the powers of the trustee are much more extensive. The trustee may be forbidden by the terms of the trust, either in specific words or otherwise, to exercise powers which but for such prohibition he could properly exercise, because they would otherwise be regarded as necessary or appropriate to carry out the purposes of the trust. If the settlor manifests an intention that certain property shall be retained by the trustee, the trustee cannot properly sell the property even under circumstances where but for such manifestation of intention the trustee would have a power of sale. Thus, where the trustee has power to sell land because such sale is necessary or appropriate to raise money to make payments necessary to carry out the purposes of the trust, such power does not extend to property which by the terms of the trust it appears that the settlor intended should be retained in specie. Restat 2d of Trusts, 186 164 Duties and Powers of the Trustee

The nature and extent of the duties and powers of the trustee are determined (a) by the terms of the trust, except as stated in 165-168; and (b) in the absence of any provision in the terms of the trust, by the rules stated in 169-196. COMMENTS & ILLUSTRATIONS: Comment on Clause (a): a. "Terms of the trust." By the "terms of the trust" is meant the manifestation of intention of the settlor with respect to the trust expressed in a manner which admits of its proof in judicial proceedings. See 4. b. Intention at time of creation of trust. The intention of the settlor which determines the terms of the trust is his intention at the time of the creation of the trust and not his subsequent intention. The duties or powers of the trustee cannot be enlarged or diminished by a direction of the settlor given subsequent to the creation of the trust, except to the extent to which the settlor has reserved power to revoke or modify the trust or to control its administration. Illustration: 1. By a deed of trust A transfers shares of stock to B in trust for C, without reserving power to revoke or modify the trust or to control its administration. By the terms of the deed B is authorized to sell the shares. Subsequently A writes a letter to B forbidding him to sell the shares. B can properly sell the shares. c. Determination of terms of the trust. If the manifestation of intention of the settlor is admissible in evidence, it is a term of the trust whether expressed by written or spoken words or by conduct. See 4, Comment a. The terms of the trust may clearly appear from written or spoken words or may be determined by interpretation of the words or conduct of the settlor in the light of the circumstances. Among the circumstances which may be of importance in determining the terms of the trust are the following: (1) the situation of the settlor and of the beneficiaries and of the trustee, such as age, sex, competence, station in life, financial circumstances, and their relations to each other; (2) the value and character of the trust property; (3) the purposes for which the trust is created; (4) the usages of business; (5) the circumstances under which the trust is to be administered; (6) the formality or informality, the care or lack of care, with which any instrument containing the manifestation is drawn. See 4, Comment a. Restat 2d of Trusts, 164 166 Illegality (1) The trustee is not under a duty to the beneficiary to comply with a term of the trust which is illegal.

(2) The trustee is under a duty to the beneficiary not to comply with a term of the trust which he knows or should know is illegal, if such compliance would be a serious criminal offense or would be injurious to the interest of the beneficiary or would subject the interest of the beneficiary to an unreasonable risk of loss. (3) To the extent to which a term of the trust doing away with or limiting duties of the trustee is against public policy, the term does not affect the duties of the trustee. COMMENTS & ILLUSTRATIONS: Comment on Subsection (1): a. No duty to comply. The trustee is not under a duty to the beneficiary to do an act which is criminal or tortious. See 61. It is immaterial that the act is not criminal or tortious at the time of the creation of the trust, if it becomes so before the time for performance. Illustrations: 1. A bequeaths money to B in trust to pay the income to C. A war breaks out and C becomes an alien enemy. Payment of money to an alien enemy is illegal. B is not under a duty to pay the income to C. 2. A, the owner of a whiskey distillery, devises and bequeaths all his property to B in trust. By the terms of the trust B is directed to carry on the business. After A's death the manufacture and sale of intoxicating liquor is prohibited by law. B is not under a duty to carry on the business. 3. A devises Blackacre to B in trust. By the terms of the trust B is directed to erect a public garage on the premises. Blackacre is situated in a residential district where such garages are forbidden by a zoning ordinance. B is not under a duty to erect a public garage on Blackacre. 4. A devises Blackacre to B in trust. By the terms of the trust B is directed to operate a soap factory on the premises. Blackacre is so situated that it would be a nuisance to operate a soap factory thereon. B is not under a duty to operate a soap factory on Blackacre. As to the effect of the illegality of a trust or of a provision in the terms of the trust, see 65. b. Enforcement against public policy. A trustee is not bound by a term of the trust which directs him to do an act, although the act itself is not criminal or tortious, if it is against public policy to compel the performance of such an act. See 62. Similarly, a trustee is not bound by a term of the trust which directs him to refrain from doing an act, if it is against public policy to compel the trustee to refrain from doing the act. Thus, the trustee is not bound by a term of the trust which violates the rule against perpetuities or a rule as to accumulations or a rule against restraints on alienation. See 62, Comments l-u. On grounds of public policy the trustee is not under a duty to the beneficiary to comply with a term of the trust if such compliance would be injurious to the community as well as to the beneficiary. See 62, Comment v. Illustration:

5. A devises a tract of land to B in trust. By the terms of the trust the trustee is forbidden to erect on the land buildings of more than three stories or to lease the land for more than one year. After A's death the land becomes the center of the business district of the city in which it is situated with the result that if the trustee were to comply with the terms of the trust the income from the land would be much smaller than it otherwise would be and the development of the community would be retarded. The restrictions imposed by the terms of the trust are under the circumstances against public policy, and the trustee is not under a duty to comply with them. So too on grounds of public policy the trustee is not under a duty to the beneficiary to comply with a term of the trust if it is capricious and compliance with it would be injurious to the beneficiary. See 62, Comment w. Illustration: 6. A devises a farm to B in trust to sow it with salt and then to convey it to C. The provision for sowing the land with salt is against public policy and the trustee is not under a duty to comply with the provision. c. Where performance subsequently becomes legal. If by the terms of the trust the trustee is directed to do an act which is illegal at the time of the creation of the trust but which subsequently becomes legal, the trustee is ordinarily under a duty thereafter to comply with the terms of the trust. If, however, the trust fails altogether for illegality ( 65), the trustee is not under a duty to perform although performance subsequently becomes legal. Comment on Subsection (2): d. Duty not to comply. Not only is the trustee under no duty to the beneficiary to comply with a term of the trust which is illegal, but he is ordinarily under a duty not to comply. He is not justified in complying if such compliance would be a serious criminal offense. Thus, in Illustration 2 the trustee is not justified in carrying on the distillery business. Similarly, the trustee is not justified in complying if such compliance would be injurious to the interest of the beneficiary or would subject his interest to an unreasonable risk of loss. Whether the risk of loss is unreasonable depends upon the extent of the risk, the amount of loss which might be incurred, and the possible advantages resulting to the trust. Thus, in Illustration 3 the trustee would not be justified in erecting a garage, since the operation of the garage might be enjoined. Similarly, also, in Illustration 6 the trustee would not be justified in sowing the land with salt. Similarly, in Illustration 5 the trustee may be under a duty to erect a building of more than three stories or to lease the land for more than one year if in the absence of the provision prohibiting these things it would be unreasonable not to do them. e. Application to court. If the trustee is in doubt whether a term of the trust is illegal, he may apply to the proper court for instructions. See 259. The court will

direct or permit the trustee to deviate from a term of the trust if it appears to the court that compliance is illegal. Comment on Subsection (3): f. Provisions as to duties which are against public policy. The duties of the trustee which are stated in 169-185 can generally be negatived or limited by the provisions of the terms of the trust. Such provisions, however, may be against public policy. Thus, no provision in the trust instrument will be effective to permit the trustee to act in bad faith. For example, if it is provided by the terms of the trust that the trustee shall convey the trust property to the beneficiary if it would be for his best interest, otherwise to convey it to a third person on the death of the beneficiary, and it is further provided that the trustee shall have absolute discretion free from the control of any court in determining whether to convey to the beneficiary or not, and the trustee receives from the third person a sum of money for refusing to convey to the beneficiary although it would clearly be for the best interest of the beneficiary to convey the property to him, the beneficiary can hold him liable for breach of trust. See 62, Comment x; 187, Comment k. Comment: g. Duty of agent. A similar situation may arise in the case of an agency. One who undertakes to perform service as the agent of another is not liable for failing to perform such service if, at the time of the undertaking or of performance, such service is illegal. See Restatement of Agency 2d, 411. See also, Restatement of Agency 2d, 86, 116, 412; Restatement of Contracts, 498, 609. REPORTERS NOTES: In Colonial Trust Co. v. Brown, 105 Conn. 261, 286, 135 A. 555 (1926), a provision directing the trustee not to erect buildings of more than three stories in height and not to make leases for more than one year was held to be invalid on grounds of public policy since the enforcement of the provisions would be injurious to the trust and to the community, even though there was no change of condition after the testator's death. A direction to carry on a whiskey distillery business is invalid where the carrying on of such a business is illegal. See Stout v. Stout, 192 Ky. 504, 233 S.W. 1057 (1921).

Restat 2d of Trusts, 166

167 Change of Circumstances (1) The court will direct or permit the trustee to deviate from a term of the trust if owing to circumstances not known to the settlor and not anticipated by him compliance would defeat or substantially impair the accomplishment of the purposes of the trust; and in such case, if necessary to carry out the purposes of the trust, the court may direct or permit the trustee to do acts which are not authorized or are forbidden by the terms of the trust. (2) Under the circumstances stated in Subsection (1), the trustee can properly

deviate from the terms of the trust without first obtaining the permission of the court if there is an emergency, or if the trustee reasonably believes that there is an emergency, and before deviating he has no opportunity to apply to the court for permission to deviate. (3) Under the circumstances stated in Subsection (1), the trustee is subject to liability for failure to apply to the court for permission to deviate from the terms of the trust, if he knew or should have known of the existence of those circumstances. COMMENTS & ILLUSTRATIONS: Comment on Subsection (1): a. Change of circumstances. If owing to circumstances not known to the settlor and not anticipated by him compliance with a specific direction by the settlor would defeat or substantially impair the accomplishment of the purposes of the trust, the court will permit or direct the trustee not to comply with the specific direction. This is true even though it is provided by statute that every conveyance by the trustee in contravention of the trust shall be absolutely void. Compliance with a direction may be enough substantially to impair the purposes of the trust although it may not defeat the whole trust. Thus, although a sale of certain property is forbidden by the terms of the trust, the court may direct a sale of the property where its retention would result in a serious loss to the trust estate even though there may be other trust property which is sufficiently productive to effectuate the purposes of the trust. The rules stated in this Section are applicable to leases (see 189, Comment d), to sales of land or personal property (see 190, Comment f), to mortgages (see 191, Comment c), to investments (see Comment c), as well as to other situations. In order to carry out the purposes of the trust, the court may permit or direct the trustee not to perform an act directed by the terms of the trust. Illustrations: 1. A bequeaths money to B in trust and directs him to invest the money in bonds of the Imperial Russian government. A revolution takes place in Russia and the bonds are repudiated. The court will direct B not to invest in these bonds. 2. A, the owner of a factory manufacturing whiskey barrels, devises and bequeaths all his property to B in trust for C. By the terms of the trust B is directed to carry on the business. After A's death the manufacture and sale of intoxicating liquor is prohibited by law. The court will direct B not to carry on the business. 3. A devises Blackacre to B in trust and directs B to sell Blackacre within one year. Owing to a depression in the real estate market it is impossible the sell the land except at a great sacrifice. The court will permit or direct B not to sell Blackacre within one year. 4. A bequeaths money to B in trust and directs that the money shall be invested only in railroad bonds. The United States becomes engaged in a war which in the event of the defeat of the United States would result in a great depreciation of railroad bonds. The court may permit B to invest in bonds issued by the United States for the purpose of enabling it to carry on the war.

5. A devises and bequeaths all his property to B in trust, and directs B to erect a building upon a particular tract of land included in the trust. It is discovered that quicksand underlies the tract and that the building could not be constructed except at extraordinary expense. The court may permit or direct B not to erect the building. In order to carry out the purposes of the trust, the court may permit or direct the trustee to do acts not authorized by the terms of the trust. Illustrations: 6. A devises Blackacre to B in trust to pay the income to C and on C's death to convey Blackacre to D. The income from Blackacre is insufficient to pay taxes thereon. The court may permit B to sell Blackacre to prevent its being sold for nonpayment of taxes. 7. A devises a piece of land on which is a building containing stores and offices to B in trust out of the income to support A's children until the youngest reaches the age of twenty-one, and to apply any income not needed for their support to reducing a mortgage on part of the land. The building is damaged by fire. The court may permit B to mortgage the property in order to raise money to make permanent repairs. 8. A devises an apartment house to B in trust to pay the income to C and on C's death to convey the house to D. Owing to a change in the character of the neighborhood it is impossible to find tenants at a rent which will render the property productive. The court may permit B to sell the apartment house. 9. A devises his residence to B in trust to allow C, A's widow, to occupy it during her lifetime and on her death to convey it to A's children. The house becomes the center of a manufacturing district so that it becomes undesirable as a residence. The court may permit B to sell the house. In order to carry out the purposes of the trust, the court may permit or direct the trustee to do acts which are forbidden by the terms of the trust. Illustrations: 10. A devises an apartment house to B in trust to pay the income to C and on C's death to convey the house to D. By the terms of the trust B is directed not to sell the apartment house. Owing to a change in the character of the neighborhood it is impossible to find tenants. The court may permit B to sell the apartment house. 11. A devises a farm to B in trust to pay the income to C for life and on C's death to convey the farm to D. It is provided that the farm shall not be sold. The income from the farm is insufficient to pay taxes and mortgage interest. The court may permit B to sell the farm. 12. A devises a farm to B in trust to manage it as a farm and to pay the net income to C for life and on C's death to convey the farm to C's children. By the terms of the trust the farm is to be kept unencumbered. The farm has become included within the limits of a neighboring city so that its usefulness as a farm has decreased and its general value has materially advanced. The income is insufficient to pay the taxes and assessments. The court may permit B to sell or mortgage or lease the land or a

part of it. b. Deviation advantageous but not necessary. The court will not permit or direct the trustee to deviate from the terms of the trust merely because such deviation would be more advantageous to the beneficiaries than a compliance with such direction. Illustrations: 13. A bequeaths money to B in trust and directs that the money shall be invested only in railroad bonds. Owing to developments in the electrical science and industry it appears that bonds of electric companies are as safe an investment as railroad bonds and yield a higher return. The court will not direct or permit B to invest in bonds of electric companies. 14. A devises Blackacre to B in trust to pay the income to C and on C's death to convey Blackacre to D. B receives an advantageous offer to buy Blackacre. The court will not permit or direct B to sell Blackacre. By statute in some States it is provided that the court may authorize a sale or mortgage of trust property, whenever it shall in the opinion of the court best promote the interest of the beneficiaries, provided that such sale or mortgage is not prohibited by the terms of the trust. c. Investments. Where by the terms of the trust the scope of investments which would otherwise be proper is restricted, the court will permit the trustee to deviate from the restriction, if, but only if, the accomplishment of the purposes of the trust would otherwise be defeated or substantially impaired. Thus the court will permit the investment if owing to changes since the creation of the trust, such as the fall in interest rates, the danger of inflation, and other circumstances, the accomplishment of the purposes of the trust would otherwise be defeated or substantially impaired. Where by the terms of the trust the trustee is not permitted to invest in shares of stock, the court will not permit such an investment merely because it would be advantageous to the beneficiaries to make it. Illustrations: 15. A bequeaths $ 50,000 to B in trust to pay the income to C for life and on C's death to pay the principal to a designated charitable institution. By the terms of the will B was directed to invest the fund by depositing it in savings banks. At the time of A's death savings banks werepaying four percent interest. Subsequently savings banks are paying interest at two percent. The income is now insufficient for the support of C. The court may authorize investment of the funds in other legal trust investments. 16. A bequeaths $ 500,000 to B in trust to pay the income to C for life and on C's death to pay the principal to a designated charitable institution. By the terms of the will B was directed to invest only in bonds rated as AAA bonds. At the time of A's death such bonds were paying interest at about five percent. Subsequently such bonds are paying interest at three percent. The court will not authorize investment in common stocks although they are legal trust investments. If by statute investment in shares of stock is forbidden, the court will not permit such an investment. The mere fact that it appears that under the circumstances the

statute is unwise is not a sufficient ground for the court to permit a departure from the statute, the remedy being with the legislature. The propriety of an investment is determined by the terms of the statute at the time when the investment is made, and not at the time of the creation of the trust, unless it is otherwise provided by the terms of the trust. See 227, Comment b. d. Where terms of the trust provide for change of circumstances. The settlor may manifest an intention to authorize the trustee, in the event of a change of circumstances, to do acts not otherwise authorized, if such acts are necessary to prevent a defeat or substantial impairment of the purposes of the trust. In such case it is not necessary for the trustee to apply to the court for permission to do the act, since it is not a deviation from the terms of the trust to do the act. Comment on Subsection (2): e. Deviation without permission of court. If owing to circumstances not known to the settlor and not anticipated by him, to comply with the terms of the trust would defeat or substantially impair the purposes of the trust, and the trustee deviates from the terms of the trust without having first obtained the permission or direction of the court to do so, the trustee is not liable to the beneficiary if the court subsequently approves such deviation. If the trustee deviates from the terms of the trust without first obtaining the permission or direction of the court, he does so at his own risk; when the propriety of the deviation is doubtful, the doubt is to be resolved by the court and not by the trustee. f. Deviation subsequently approved. If the trustee without first applying to the court deviates from a term of the trust and subsequently applies to the court for approval of the deviation, the propriety of the deviation will be determined as of the time when the approval of the court is sought, except where the trustee acted in an emergency. Thus: 1. The court will not approve a deviation if the deviation is such that the court would not have authorized it at the time of the deviation and would not have authorized it at the time when the propriety of the deviation is before the court. Restat 2d of Trusts, 167

IN THE CIRCUIT COURT OF JEFFERSON COUNTY, ALABAMA DEUTSCHE BANK NATIONAL TRUST COMPANY AS TRUSTEE UNDER POOLING AND SERVICING AGREEMENT DATED AS OF MAY 1, 2004 MORTGAN STANLEY ABS CAPITAL 1 INC. TRUST 2004 HE3 MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2004-HE3, Plaintiffs, vs. ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) )

Case No.: CV-2008-903732

ANDREA BENNETT & MICHAEL BENNETT Defendants,

DEFENDANTS RESPONSE IN OPPOSITION TO PLAINTIFFS MOTION FOR SUMMARY JUDGMENT

STANDARD OF REVIEW Rule 56 of the Alabama Rules of Civil Procedure details the procedure for a party in a legal action to file a Motion for Summary Judgment. Ala. Civ. P. R. 56. The Court may grant Summary Judgment to either party upon a motion showing that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. Ala. R. CIV. P. 56. The burden is on the one moving for summary judgment to demonstrate that no genuine issue of material fact is left for consideration by the jury; the burden does not shift to the opposing party to establish a genuine issue of material fact until the moving party has made a prima facie showing that there is no such issue of material fact. Armstrong v. McGee, 579 So. 2d 1310 (Ala. 1991)(emphasis added). However, once the movant makes a prima facie showing that no genuine issue of material fact exists, the nonmovant has the burden to present

substantial evidence creating such an issue. Mathis v. Harrell Co., 828 So. 2d 248, 255 (Ala. 2002). Substantial evidence is evidence of such weight and quality that fair-minded persons in the exercise of impartial judgment can reasonably infer the existence of the fact sought to be proved." Wright v. Wright, 654 So. 2d 542, 543 (Ala. 1995) (quoting West v. Founders Life Assurance Co. of Florida, 547 So. 2d 870, 871 (Ala. 1989)). In a motion for Summary Judgment, when factual allegations in pleadings of a party opposing a motion for Summary Judgment are supported by affidavits or other evidentiary material, they must be taken as true in ruling on the motion, as the court does not try issues of fact but determines whether there are issues to be tried. Arata v. Martin-Prine Entertainment, 342 So. 2d 925 (Ala. Civ. App. 1977). Moreover, the Court must review the record in the light most favorable to the non-movant and must resolve all reasonable doubts against the movant. Jones v. Blanton, 644 So. 2d 882 (Ala. 1994). If the court has reasonable doubts concerning the existence of a material fact all doubts must be resolved in favor of the nonmoving party. Hughes v. Hertz Corp.,670 So. 2d 882 (Ala. 1995). Furthermore the Alabama Supreme Court has said, to defeat a Motion for Summary Judgment, it is not necessary that the non movant prove his case; it is necessary only that the non-movant present evidence creating a genuine issue of material fact. Ex parte Nelson, 607 So. 2d 1259 (Ala. 1992). The Supreme Court has made plain, trial by affidavit is no substitute for trial by jury which so long has been the hallmark of even handed justice. Robinson, 463 F.2d 853, 856 (D.C. Cir. 1971); Poller v. Columbia Broadcasting System, Inc., 368 U.S. at 473, 82 S.Ct. at 491. 463 F.2d 853, 856 (D.C. Cir. 1971). In addition, the Alabama Supreme Court has held, Where evidentiary matter in support of the motion for summary judgment does not establish absence of genuine issue, summary judgment must be denied even if no opposing evidentiary matter is

presented. Vasko v. Jardine, 346 So. 2d 962 (Ala.1977). After reviewing the pleadings and all other filings in the court record, the trial court must determine if there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. Id before the movant is entitled to the entry of summary judgment in their favor.

ARGUMENT

I.

SUMMARY JUDGMENT IS IMPROPER IN THIS CASE BECAUSE THERE EXISTS A GENUINE ISSUE OF MATERIAL FACT IN DISPUTE AS TO WHETHER THE FORECLOSURE SALE WAS PROPER.

In its motion for summary judgment, the plaintiff contends that it is entitled to the entry of summary judgment because there is no dispute that the bank is entitled to possession of the property. This proposition is simply incorrect and the plaintiff is completely wrong. The plaintiff in this case is not the proper party. The plaintiff in this case did not acquire title by virtue of the October 8, 2008 mortgage assignment and the plaintiff lacks standing to institute or maintain a foreclosure action against the defendants in this case as will be set forth in this responsive pleading. Alabama law places limitations upon who may foreclose. Those persons entitled to foreclose are set out in Alabama Code Section 35-10-12. In the evidentiary submissions made by the Plaintiff in support of its summary judgment motion they have filed with the Court an assignment of mortgage dated October 8, 2008 (Exhibit N to the Defendants motion for summary Judgment). This assignment is from New Century Mortgage Corporation to the Plaintiff trust. This mortgage assignment is void and unenforceable as will be demonstrated herein.

I. A. THE PLAINTIFF TRUST LACKS STANDING TO PROSECUTE A FORECLOSURE AGAINST THE DEFENDANTS AND ITS OCTOBER 8, 2008 ASSIGNMENT IS VOID AND UNENFORCEABLE

Alabama law is clear that all Courts are required to inquire of the subject matter jurisdiction in the case or controversy which is present before the Court. International Longshoremen's Asso. v. Davis, 470 So. 2d 1215, 1216 (Ala. 1985) held that Subject matter jurisdiction can neither be conferred by agreement nor can it be waived. Indeed, it is incumbent upon the court to notice subject matter jurisdiction sua sponte. Further "When a party without standing purports to commence an action, the trial court acquires no subject-matter jurisdiction." State v. Property at 2018 Rainbow Drive, 740 So. 2d 1025, 1028 (Ala. 1999).

I.B. THE PLAINTIFF TRUST WAS NOT THE OWNER OF THE NOTE AT THE TIME OF FORECLOSURE AND WAS NOT OPERATING AS THE AGENT OF THE OWNER OF THE NOTE AT THE TIME OF FORECLOSURE

The Plaintiff in this action claimed the present right to foreclose against the plaintiffs in this case. However, as the defendants own exhibits clearly demonstrate, the note in this case was in the name of New Century Mortgage Corporation at the time that the Trust commenced the foreclosure against the defendants in this action (See Exhibit A to the plaintiffs Summary Judgment motion). There is no dispute that the promissory note in this case has never been conveyed to the Plaintiff trust. There is no dispute that the plaintiff trust is not the owner of the indebtedness. This uncontradicted evidence is in direct and stark contrast to the claims of the plaintiff trust in its motion.

I. C.

THE PLAINTIFF TRUST CANNOT ENFORCE THE MORTGAGE LIEN WITHOUT HAVING AN INTEREST IN THE PROMISSORY NOTE

In the present case, the plaintiff trust has foreclosed upon the property of the defendants allegedly by virtue of an assignment of mortgage from New Century. However, in the present case there has never been a transfer of the underlying indebtedness. Alabama law is very clear that the right to foreclose follows the indebtedness and not the lien. The power of sale is a part of the security, and may be exercised by an assignee, or any person who is entitled to the mortgage debt.--Code 1907, 4896; McGuire v. Van Pelt, 55 Ala. 344; Buell v. Underwood, 65 Ala. 285; Wildsmith v. Tracy, 80 Ala. 258; Ward v. Ward, 108 Ala. 278, 19 So. 354. And a transfer of the debt, by writing or by parol, is in equity an assignment of the mortgage.-McMillan v. Craft, 135 Ala. 148, 33 So. 26; Buckheit v. Decatur Co., 140 Ala. 216, 37 So. 75. as cited in Harton v. Little, 176 Ala. 267, 270 (Ala. 1911).

I. D. THE PLAINTIFF TRUST IS PROHIBITED FROM ACQUIRING ANY ASSETS BY THE VERY TERMS OF ITS TRUST AGREEMENT AND CAN NEVER ACQUIRE OWNERSHIP OF THE DEFENDANTS PROMISSORY NOTE The plaintiff trust is a New York Corporate Trust formed to act as a REMIC trust pursuant to the IRS Tax Code. The plaintiff trust is formed and by its terms subject to New York law regarding its rights, duties, powers and obligations. The Trust was formed by the execution of a trust agreement referred to in the finance and securitization industry as a Pooling and Servicing Agreement or PSA. The trust agreement is filed of record with the Securities and Exchange Commission and is found at the hyperlink to the SEC filings with the following address: http://www.secinfo.com/dRSm6.113y.d.htm#6vvh . This document is attached the defendants response as Exhibit 1 in PDF format.

In summary this trust was created on or about May 1, 2004. The Trust by its terms set a cut-off date of May 27, 2004. Pursuant to the terms of the Trust and the applicable IRS Regulations this date was also the Start up date for the trust under the IRS tax code. The Start up date is significant because the IRS tax code ties the limitations upon which a REMIC trust may be funded with its assets to this date. The relevant portion of the IRS tax code addressing the definition of a REMIC is:26 USCS 860D

860D. REMIC defined.

(a) General rule. For purposes of this title, the terms 'real estate mortgage investment conduit' and 'REMIC' mean any entity-(1) to which an election to be treated as a REMIC applies for the taxable year and all prior taxable years, (2) all of the interests in which are regular interests or residual interests, (3) which has 1 (and only 1) class of residual interests (and all distributions, if any, with respect to such interests are pro rata), (4) as of the close of the 3rd month beginning after the startup day (emphasis supplied) and at all times thereafter, substantially all of the assets of which consist of qualified mortgages and permitted investments,

The IRS Code also provides definitions of prohibited transactions and prohibited contributions. In the context of this case, the relevant statute is the definition of prohibited contributions which is as follows: 26 U.S.C. 860G(d)(1) states that, except as provided in section 860G(d)(2), if any amount is contributed to a REMIC after the startup day, there is hereby imposed a tax for the taxable year of the REMIC in which the contribution is received equal to 100 percent of the amount of such contribution. 26 U.S.C. 860G(d)(2) states: (2) Exceptions. Paragraph (1) shall not apply to any contribution which is made in cash and is described in any of the following subparagraphs: (A) Any contribution to facilitate a clean-up call (as defined in regulations) or a qualified liquidation. (B) Any payment in the nature of a guarantee. (C) Any contribution during the 3-month period beginning on the startup day. (D) Any contribution to a qualified reserve fund by any holder of a residual interest in the REMIC. (E) Any other contribution permitted in regulations. These sections are addressed in the Trust agreement dealing with the parties to the trust agreement and their obligations to avoid any action which might jeopardize the tax status of any

REMIC and / or impose any tax upon the Trust for prohibited contributions or prohibited transactions. Specifically, section 8.11 of the Trust agreement deals with tax matters of the Trust and states in pertinent part: Section 8.11 Tax Matters. It is intended that the assets with respect to which any REMIC election pertaining to the Trust Fund is to be made, as set forth in the Preliminary Statement, shall constitute, and that the conduct of matters relating to such assets shall be such as to qualify such assets as, a "real estate mortgage investment conduit" as defined in and in accordance with the REMIC Provisions. In furtherance of such intention, the Trustee covenants and agrees that it shall act as agent (and the Trustee is hereby appointed to act as agent) on behalf of the Lower Tier REMIC and Upper Tier REMIC and that in such capacity it shall:

(f) to the extent that they are under its control, conduct matters relating to such assets at all times that any Certificates are outstanding so as to maintain the status of each of the Upper Tier REMIC and Lower Tier REMIC as a REMIC under the REMIC Provisions; (g) not knowingly or intentionally take any action or omit to take any action that would cause the termination of the REMIC status of either the Lower Tier REMIC or the Upper Tier REMIC created hereunder; These sections of the trust agreement are important to the Courts analysis of the facts in this case because of the interplay between the Trust agreement under New York Law and the adoption and ratification of the IRS tax code regarding REMICs and the limits upon these trusts placed by the agreement itself, New York Trust law and the IRS tax code.

I. E. THE PLAINTIFF TRUST IS PROHIBITED FROM ACQUIRING ANY ASSETS IN VIOLATION OF THE TRUST AGREEMENT PURSUANT TO NEW YORK LAW AND ANY ATTEMPT TO ACQUIRE ASSETS IN VIOLATION OF THE TRUST AGREEMENT IS VOID

As stated earlier in this response this Trust is formed and governed by New York law according to section 10.03 of the Trust agreement. Under New York law, the extent of a trusts

authority is determined by common law. It is undisputed that the powers of a trust are limited by the trust agreement. 1 New York courts for over seventy years have adhered to the general principles of the Second Restatement. 2 When constructing a trust agreement the purpose is to ascertain the intention of the testor or settlor. . . When possible, intention should be determined from the four corners of the instrument and the surrounding circumstances not in dispute. 3 No words used by the testator should be cast aside as meaningless, but the effect must be given, if possible, to every word and provision. 4 In the context of mortgage securitization trusts the trust agreements (pooling and servicing agreements) expressly limit the trustees authority to adherence with the provisions of the I.R.S. Code defining REMICs. Mortgage securitization trusts are not authorized to operate in violation of the I.R.S. Code. An analogous case is In re Olneys Estate where a trustee was liable for operating outside his specifically limited authority. 5 Under New York statutory law, any action undertaken by a trust that is not within the authorized powers of a trust is void. If the trust is expressed in the instrument creating the estate of the trustee, every sale, conveyance or other act of the trustee in contravention of the trust, except as authorized by this article and by any other provision of law, is void. 6

AG Capital Funding Partners v. State Street Bank, 2008 N.Y. Lexis 1815 (N.Y. 2008) (Indenture Trusts); In re Application of IBJ Schroder Bank & Trust Co., 706 N.Y.S.2d 114, 115 (N.Y.A.D. 2000); Restatement (Third) of Trusts 85 (2007). 2 In re Application of IBJ Schroder Bank & Trust Co., 706 N.Y.S.2d 114, 115 (N.Y.A.D. 2000); Donnelly v. Bank of New York Co., 801 F.Supp. 1247, 1256-1257 (.S.D. N.Y. 1992); Matter of Sackler, 149 Misc.2d 734, 738 (N.Y. Sur. 1990); In re Neills Estate, 89 N.Y.S.2d 394, 399 (N.Y.Sur. 1949); In re Leeds Will, 276 N.Y.S. 950, 232 (N.Y. Sur. 1935); In re Wolanskis Estate, 283 N.Y.S. 797, 800 (N.Y.Sur. 1935); In re Ebbets Estate, 267 N.Y.S. 268, 275 (N.Y. Sur. 1933). 3 Matter of Sackler, 149 Misc.2d 734, 738 (N.Y. Sur. 1990). 4 In re Olneys Estate, 20 N.Y.S.2d 884, 892 (N.Y. Sur. 1940); see also Estate of McKenna, 451 N.Y.S.2d 617, 620 (N.Y.Sur. 1982). 5 In re Olneys Estate, 20 N.Y.S.2d 884 (N.Y. Sur. 1940). 6 McKinneys Consolidated Law of New York Annotated, Estates Powers and Trusts Laws 7-2.4 (2002); see Allison & Ver Valen Co. v. McNee, 9 N.Y.S.2d 708 (N.Y. Sur. 1939).

1

In the present case the attempted assignment of this mortgage to the plaintiff trust is void under the terms of the Pooling and Servicing agreement and is therefore unenforceable. This is because Section 2.01 of the PSA provides the only mechanism by which assets of this trust may be delivered to the trust and sets forth the only party who may convey the assets to the Trust. Further, because there is no provision of the Trust agreement that provides for the acquisition of assets in violation of the IRS Code and its REMIC provisions; the assignment of this mortgage to the Trustee nearly two years after the last possible arguable date that the trust could have lawfully acquired an asset is void under New York law and is therefore a nullity under Alabama law. Done and Filed this the 11th day of January 2010.

/s/ Nick Wooten _________ Nicholas H. Wooten (WOO084) Of counsel for the Defendants

OF COUNSEL: WOOTEN LAW FIRM, P.C. Trial Lawyers P.O. Drawer 3389 Auburn, Al. 36831 (334) 887 3000 fax: (334) 821-7720 nhwooten@gmail.com

CERTIFICATE OF SERVICE I hereby certify that on the 11th day of January, 2010, I electronically filed the foregoing with the Clerk of the Court using the ALAFILE system which will send notification of such filing to the following: All counsel of record.

/s/ Nick Wooten _____ OF COUNSEL

REMICS

Servicing Real Estate Mortgage Investment Conduits in U.S. Mortgage SecuritizationsMilton A. Vescovacci, Esq. *The U.S. securitization market is the largest market in the world for issuances of asset securitizations. As of December 31, 2005, over $1.68 trillion of asset-backed securities were issued in the U.S.1 The great majority of those asset securitizations involve securities backed by pools of mortgage loans sold via Real Estate Mortgage Investment Conduits (or REMICs). The purpose of this article is to (1) describe certain features of REMICs that are generally applicable to pools of mortgage loans in securitizations and (2) highlight certain REMIC-related provisions that are typically found in servicing agreements of securitized mortgage pools. Capitalized terms used in this article and not otherwise defined in the body of the article will have the meanings assigned to them in Schedule A attached hereto. I. What is a REMIC?

Fort Lauderdale Jacksonville Los Angeles Madison Miami New York Orlando Tallahassee Tampa Tysons Corner Washington, D.C. West Palm Beach

A REMIC is a corporation, trust, partnership or a segregated pool of assets that qualifies for special tax treatment under the Internal Revenue Code of 1986, as amended (the IRC). The REMIC Provisions were adopted with the passing of the Tax Reform Act of 1986. Recent modifications to the REMIC Provisions made by the American Jobs Creation Act of 2004, which became effective on January 1, 2005, permit new kinds of debt obligations, such as reverse mortgages, home equity lines of credit and government originated loans (i.e., small business administration disaster loans), to be securitized using REMICs. The REMIC Provisions are among the most complex and elaborate sections of the IRC. II. Why are REMICs Used in Securitizations?

The principal advantage of forming REMICs for the sale of mortgage-backed securities is that REMICs are treated as pass-through vehicles for tax purposes which are not subject to double taxation. For instance, in many mortgage-backed securitizations, the owner of a pool of mortgage loans sells, transfers or contributes such loans to a special purpose entity, which may be a trust, corporation, limited liability company or partnership, that is designed to qualify as a REMIC and, simultaneously, the special purpose entity issues securities that are backed by the cash flows generated from the transferred assets to investors in order to pay for the loans. If the special purpose entity or the assets transferred qualify as a REMIC, then any income of the REMIC is passed through and taxable to the holders of the REMIC Regular Interests and Residual Interests.* The author is a senior associate in the Securitization and Structured Finance Practice Group of Akerman Sentertt. Akermen Sentertt is a full service law rm consisting of over 475 attorneys and advises issuers, originators, servicers, underwriters, investors and trustees in securitization and structured nance transactions. 1 Asset-Backed Alert, Summary of Worldwide Securitization Volumes 2005 (December 31, 2005).

Copyright 2006 Akerman Sentertt. All Rights Reserved.

To qualify for REMIC status, the following criteria must be satisfied: The mortgage-backed securities offered to investors must be structured to consist of Regular Interests and Residual Interests. The mortgage-backed securities that represent Regular Interests of a REMIC are considered debt for tax purposes and the Regular Interest holders are considered creditors of the REMIC. The mortgage-backed securities that represent Residual Interest of a REMIC are considered equity and the Residual Interest holders are treated as partners for tax purposes. Only a single class of Residual Interests may be created to qualify as a REMIC; and Substantially all of the assets must be Qualified Mortgages and Permitted Investments as of the third month after a REMICs Startup Day. A REMIC may contain a nominal amount (but no greater than 1%) of non-qualified mortgages assets; and A REMIC election must be made on the REMICs first tax return by the person authorized to sign the REMICs tax return (e.g., the sponsor of the REMIC or the trustee) in the first taxable year of the REMICs existence, which begins on the Startup Day and ends on December 31st of that same year in order for a legal entity or a segregated pool of mortgage loans to be treated as a REMIC thereafter.

Most securitizations in the U.S. that qualify as REMICs use the statutory trust or common law trust as the legal entity of choice for various reasons including ease of formation and administration and bankruptcy related reasons, none of which are dealt with in this article. However, a legal vehicle that fails to satisfy the criteria listed above cannot be a REMIC (pass-through vehicle) and may be treated as a taxable mortgage pool under IRC 7701(i), which have less favorable tax considerations and may be subject to double taxation. III. What is the Impact of Non-Compliance with REMIC Provisions?

Generally, non-compliance with REMIC requirements subjects a REMIC to loss of its tax-free status and to a sizeable tax. This can be catastrophic to the REMIC, the investors and, depending on the contractual arrangement, to whomever causes the REMIC to lose its tax-free status. The IRS has the discretion to reverse a REMICs failed status if such termination is inadvertent or steps were taken to reinstate the REMIC status within a reasonable time period. The following events will cause a REMIC to lose its tax-free status and potentially become subject to a sizeable tax: The occurrence of any Prohibited Transaction and the realization of net income from Prohibited Transactions. Any net income generated from a Prohibited Transaction is subject to a 100% tax. A Prohibited Transaction can also cause the tax-free status of a REMIC to be lost or suspended. A Significantly Modified Obligation that is not a Qualified Replacement Mortgage will be considered a Prohibited Transaction and thus be subject to a 100% tax; or The realization of net income from Foreclosure Property. Any net income realized from the operation of Foreclosure Property is subject to IRC 857(b)(4)(B) as if the REMIC were a real estate investment trust, which is then subject to tax at the highest corporate tax rate; or2 Copyright 2006 Akerman Sentertt. All Rights Reserved.

The making of unqualified contributions to a REMIC after the Startup Day. Any contributions to a REMIC after its Startup Day is taxed at a rate of 100% unless they are made in cash and are related to: (i) a contribution made to facilitate a Cleanup Call, (ii) a payment in the nature of a guaranty, (iii) a contribution made during the three-month period beginning on the Startup Day, (iv) contribution made to a Qualified Reserve Fund by a Residual Interest holder in the REMIC or (v) a permitted contribution made under the treasury regulations; or The transfer of Residual Interests to Disqualified Organizations. Any transfers of Residual Interests to Disqualified Organizations are taxed at the highest corporate tax rate and are taxable to the transferor or its agent. Applicable REMIC Provisions under a Typical Pooling and Servicing Agreement.

IV.

A Pooling and Servicing Agreement would typically provide that the trustee of the trust shall elect to treat the Trust Fund as comprised of a certain number of REMICs. The Trust Fund under a typical Pooling and Servicing Agreement in a mortgage-backed securitization contains, among other things, the pool of mortgage loans sold or transferred by the sellers into the trust, including those loans currently being serviced by the servicer. In addition, a typical Pooling and Servicing Agreement will contain the principal REMIC provisions that apply to the servicer of the pool of mortgage loans, who agrees to perform certain functions, make certain payments and provide certain information to help maintain the status of the REMIC. Some of the typical provisions are described in more detail below: A. Furnish Necessary Information. The servicer is required to provide to the trustee upon request any information as the trustee may need with respect to the mortgage loans that the servicer is servicing. B. Trustee to Act or Not Act. The servicer may require the trustee to take certain actions or refrain from taking such actions as to the REMIC assets if the servicer furnishes the trustee an opinion of counsel stating that such actions or inactions may or may not result in an adverse REMIC event. C. Payment of Prohibited Transaction Taxes. The servicer is required to pay any taxes levied on the trust resulting from a Prohibited Transaction caused by a breach in the servicers obligations under the applicable Pooling and Servicing Agreement or if the servicer, in its discretion, has determined to indemnify the Trust Fund against the imposing of such taxes. D. No Contributions of Assets. The servicer is prohibited from accepting any contributions of assets to the REMIC, except with respect to substitutions for Defective Qualified Mortgages, unless the servicer receives an opinion of counsel from the party seeking to make such contributions stating that such contributions will not cause the REMIC to fail to qualify as a REMIC at any time that the Certificates are outstanding or subject the REMIC to any tax under federal, state or local laws. E. No Fees or Income Other Than From Qualified Mortgages or Permitted Investments. The servicer is prohibited from entering into any arrangement by which the REMIC will receive any fees or other compensation and allowing the REMIC to accept any income from assets other than Qualified Mortgages or Permitted Investments.3 Copyright 2006 Akerman Sentertt. All Rights Reserved.

F. No Disposition of Assets. The servicer is prohibited from selling, disposing of or substituting for any of the mortgage loans it services, except in connection with the (i) default, imminent default or foreclosure of a mortgage loan, including but not limited to properties acquired or sold by deed in lieu of foreclosure, (ii) bankruptcy of the REMIC, (iii) termination of the REMIC pursuant to the applicable Pooling and Servicing Agreement and (iv) purchase or repurchase of mortgage loans pursuant to the applicable Pooling and Servicing Agreement. Similarly, the servicer is prohibited from acquiring any assets for the REMIC, selling or disposing of any investments in the collection accounts for gain and accepting any contributions to the REMIC after the closing date, unless the servicer receives an opinion of counsel that such, disposition, substitution or acquisition will not adversely affect the status of the REMIC or unless the servicer has determined, in its discretion, to indemnify the Trust Fund against any taxes imposed on the REMIC as a result thereof. G. No Modifications, Waivers or Amendments. The servicer agrees to protect the interests of the Trust Fund as it would protect its interests in its own mortgage portfolio and agreed not to make or permit any modification, waiver or amendment of any applicable mortgage loan which would cause the REMIC to fail to qualify as a REMIC or result in the imposition of any tax under Section 860F(a) or Section 860G(d) of the IRC. H. Management of Foreclosure Property. The servicer is required to dispose of any mortgage property acquired by the Trust Fund with respect to a default or imminent default prior to three years after the end of the calendar year of such acquisition unless an opinion of counsel is furnished by the servicer to the trustee to the effect that the holding by the Trust Fund of such mortgage property subsequent to such 3-year period will not result in the imposition of taxes on Prohibited Transactions or cause the REMIC to fail to qualify as a REMIC at any time that any Certificates are outstanding or unless the servicer applied for, prior to the expiration of such three-year period, an extension of such 3-year period in accordance with IRC 856(e)(3). In addition, the servicer is restricted from renting (or allowing to continue to be rented) any mortgage property acquired by foreclosure or otherwise using such property for the production of income in such a manner or pursuant to any terms that would (i) cause such property to fail to qualify as Foreclosure Property or (ii) subject the REMIC to the imposition of any federal, state or local income taxes on the income earned from such property unless the servicer agrees to indemnify the Trust Fund with respect to the imposition of any such taxes. In general, a breach by the servicer of any of the relevant REMIC provisions, as those stated above, that results in a loss of the REMICs status or imposition of taxes on the REMIC would be the responsibility of the servicer, which can be a significant risk to a servicer depending on the severity of such breach and the results thereof. In general, a breach by the servicer of any of the relevant REMIC provisions, as those stated above, that results in a loss of the REMICs status or imposition of taxes on the REMIC would be the responsibility of the servicer, which can be a significant risk to a servicer depending on the severity of such breach and the results thereof.

4 Copyright 2006 Akerman Sentertt. All Rights Reserved.

V.

Conclusions.

REMICs have made it relatively easy for sponsors of mortgage-backed securitizations and the investors of securities issued by legal vehicles qualifying as REMICs to benefit from the tax advantages afforded by the IRC. As the U.S. mortgage market continues to grow, REMICs will continue to play a significant role in the securitization of pools of mortgage loans in the U.S. However, strict compliance with the REMIC Provisions is required to take advantage of the tax benefits afforded by such rules. Non-compliance can be fatal and costly for the REMIC, the servicer and the investors of the related mortgage-backed securities.

5 Copyright 2006 Akerman Sentertt. All Rights Reserved.

Schedule A DEFINITIONS Cash Flow Investments means any investment of amounts received under Qualified Mortgages for a temporary period not to exceed 13 months before distributing the holders of interests in the REMIC. Certificate means the mortgage-backed pass-through certificates purchased by investors under a Pooling and Servicing Agreement. Clean-up Call means the redemption of a class of Regular Interests when, by reason of prior payments with respect to those interests, the administrative costs associated with servicing that class outweigh the benefits of maintaining the class. Factors to consider in making this determination include the number of holders of that class of Regular Interests, the frequency of payments to holders of that class, the effect the redemption will have on the yield of that class of Regular Interests, the outstanding principal balance of that class, and the percentage of the original principal balance of that class still outstanding. The notion being that the cash flows produced by the mortgage pool are insufficient to cover the expenses of the continued administration of the trust. A Clean-up Call is not a Prohibited Transaction. Defective Qualified Mortgage means a Qualified Mortgage that (i) is in default or in imminent default, (ii) was fraudulently obtained, (iii) breached a seller representation or warranty as to the characteristics of the mortgage or (iv) does not fall within the Principally Secured definition. Defective Qualified Mortgages must be disposed of from a REMIC within 90 days of discovering its defect. Disqualified Organizations means the U.S., any state or its political subdivisions, foreign governments, international organizations, agency or instrumentality of the foregoing, any tax-exempt organization unless it is subject to unrelated business tax, and any energy or telephone cooperatives. Foreclosure Property means any real property (including interests in real property) and any personal property incident to real property acquired as a result of a foreclosure sale or having otherwise reduced such property to ownership or possession by agreement or process of law after there was a default or imminent default of a Qualified Mortgage held by the REMIC or on an indebtedness which such property secured, in each case, subject to a 3-year grace period which period can be extended further with special approval of the Secretary of the Treasury. Issue Price means the issue price of any Regular Interest or Residual Interest in a REMIC as determined by under Section 1273(b) of the IRC in the same manner as if such interest were a debt instrument; except that if the interests is issued for property, Section 1273(b)(3) of the IRC would apply to whether or not the requirements of such section are met. Permitted Investments means any Cash Flow Investment, Qualified Reserve Asset or Foreclosure Property.6 Copyright 2006 Akerman Sentertt. All Rights Reserved.

Pooling and Servicing Agreement means an agreement entered into by and among the originator and seller of the mortgage loans, if applicable, a depositor that acquires the mortgage loans from the originator/seller and then sells them to a trust that qualifies as a REMIC and issues mortgage-backed securities, the trustee of the trust and the servicer of the mortgage loans as agent of the trust. Principally Secured means an interest in real property means that the fair market value of the property securing the obligation either: (i) was equal to or more than 80% of the adjusted issue price of the obligation at its origination date or at the time such property was contributed to the REMIC or (ii) substantially all of the obligation proceeds were used to purchase or improve or protect the property securing the obligation at origination. In the case of any obligation originated by the United States or any state (or any political subdivision, agency, or instrumentality of the United States or any state), such obligations will be Principally Secured by an interest in real property if more than fifty percent (50%) of such obligations which are transferred to, or purchased by, the REMIC are Principally Secured by an interest in real property (determined without regard hereto). Prohibited Transaction means the disposition of a Qualified Mortgage, not related to any of the following: i. ii. iii. A potential default on the regular interest where the threatened default resulted from a default on one or more Qualified Mortgage; To facilitate a Clean-up Call; Other than: (i) pursuant to a substitution of a Qualified Replacement Mortgage for a Qualified Mortgage or repurchase of a defective obligation in lieu thereof, (ii) incident to a foreclosure, default or imminent default of a mortgage, (iii) a bankruptcy or insolvency of the REMIC or (iv) a qualified liquidation; Receipt by a REMIC of income derived from any asset other than a Qualified Mortgage or a Permitted Investment; Receipt by a REMIC of fees or other compensation; or Gain from disposition of a Cash Flow Investment other than related to a qualified liquidation or unless it was necessary to prevent a default on the regular interest where the threatened default resulted from a default on one or more Qualified Mortgage.

iv. v. vi.

Qualified Mortgage means (A) any obligations (including any participation or certificate of beneficial interest therein) that are Principally Secured by an interest in real property (e.g., including stock of real property cooperatives and Qualified Replacement Mortgages) and which is (i) transferred to the REMIC on the Startup Day in exchange for Regular Interests or Residual Interests in the REMIC, (ii) is purchased by the REMIC within the 3-month period beginning on the Startup Day if related to a fixed price contract in effect on such Startup Day, or (iii) represents an increase in the principal amount under the original terms of an obligation described in clause (i) or (ii) if such increase (I) is attributable to an advance made to the obligor pursuant to the original terms of a reverse mortgage loan or other obligations, (II) occurs after the Startup Day, and (III) is purchased by the REMIC pursuant to a fixed price contract in effect on the Startup Day, (B) any Qualified Replacement Mortgage, and (C) any regular interest in another REMIC transferred to the REMIC on the Startup Day in exchange for Regular Interests or Residual Interests of the REMIC. Qualified Replacement Mortgages or defeased7 Copyright 2006 Akerman Sentertt. All Rights Reserved.

mortgages can also be Qualified Mortgages as long as: (i) the lien over the real property is lifted, (ii) the substitute collateral are government securities, (iii) defeasance is done pursuant to the terms of the mortgage and (iv) the defeasance is entered into after 2 years from the Startup Day. In addition, Regular Interests in other REMICs fall within the purview of the definition of a Qualified Mortgage if transferred to the REMIC on the Startup Day in exchange for the Regular Interests and Residual Interests of the REMIC. Further, Qualified Mortgages shall also include any obligations originated by the United States or any state (or any political subdivision, agency, or instrumentality of the United States or any state) if more than fifty percent (50%) of such obligations which are transferred to, or purchased by, the REMIC are Principally Secured by an interest in real property (determined without regard to this sentence). Qualified Reserve Asset means any intangible property held for investment and as part of a Qualified Reserve Fund. Qualified Reserve Fund means any reasonable required reserve to (i) provide for full payment of expenses of the REMIC or amounts due on regular interests in the event of defaults on Qualified Mortgages or lower than expected returns on Cash Flow Investments, or (ii) provide a source of funds for the purchase of obligations described in clauses (A)(ii) or (iii) of the definition of Qualified Mortgages. The aggregate fair market value of the assets held in any Qualified Reserve Fund may not exceed fifty percent (50%) of the aggregate fair market value of all of the assets of the REMIC on the Startup Day, and the amount of any such Qualified Reserve Fund shall be promptly and appropriately reduced to the extent the amount held in such Qualified Reserve Fund is no longer reasonably required for purposes specified in the foregoing clauses (i) or (ii). A reserve will not be treated as a Qualified Reserve Fund for any taxable year (and all subsequent taxable years) if more than 30 percent (30%) of the gross income from the assets in such fund for the taxable year is derived from the sale or other disposition of property held for less than three (3) months. Gain on the disposition of a Qualified Reserve Asset shall not be taken into account if the disposition giving rise to such gain is required to prevent default on a Regular Interest where the threatened default resulted from a default on 1 or more Qualified Mortgages. Qualified Replacement Mortgages means Qualified Mortgages received either in exchange for other Qualified Mortgages within 3 months after a REMICs Startup Day or in exchange for a Defective Qualified Mortgage within 2 years after a REMICs Startup Day. Qualified Reserve Fund Payment means any payment made to a Qualified Reserve Fund. Regular Interest means any interest in a REMIC which his issued at the Issue Price on the Startup Day with fixed terms and which is designated as a regular interest if: (A) such interest unconditionally entitles the holder to receive a specified principal amount (or other similar amount), and (B) interest payments (or other similar amount), if any, with respect to such interest at or before maturity (i) are payable based on a fixed rate (or to the extent provided in treasury regulations, at a variable rate), or (ii) consist of a specified portion of the interest payments on Qualified Mortgages and such portion does not vary during the period such interest is outstanding. The interest shall not fail to meet the requirements of the foregoing clause (A) merely because the timing (but not the amount) of the principal payments (or other similar amounts) may be contingent on the extent of prepayments on qualified mortgages and the amount of income from permitted investments. An interest in the REMIC8 Copyright 2006 Akerman Sentertt. All Rights Reserved.

shall not fail to qualify as a Regular Interest solely because the specified principal amount of the Regular Interest solely because the specified principal amount of the Regular Interest (or the amount of interest accrued on the Regular Interest) can be reduced as a result of the non-occurrence of 1 or more contingent payments with respect to any reverse mortgage loan held by the REMIC if, on the Startup Day for the REMIC, the sponsor of the REMIC reasonably believes that all principal and interest due under the Regular Interest will be paid at or the liquidation of the REMIC. REMIC means a Real Estate Mortgage Investment Conduit as further defined in the REMIC Provisions. REMIC Provisions means the enabling provisions of the IRC applicable to REMICs found under Sections 860A through 860G and Treasury Regulations 1.860A through 1.860G. Residual Interest means an interest in a REMIC which is issued at the Issue Price on the Startup Day, which is not a Regular Interest, and which is designated as a residual interest. Significantly Modified Obligation means an obligation subject to changes in its terms such that it is treated as an exchange other than (i) changes in the terms of the obligation occasioned by a default or imminent default, (ii) assumptions of the obligation, (iii) waivers of a due-on-sale clause or a dueon-encumbrance clause, and (iv) conversion of interest rates pursuant to the terms of a convertible mortgage. Startup Day means generally the day on which a REMIC issues all of its Regular Interests and Residual Interests. A sponsor of the REMIC may contribute property to a REMIC in exchange for Regular Interests and Residual Interests over any period of ten (10) consecutive days and the REMIC may designate any one of those 10 days as the REMICs Startup Day. Trust Fund means as it is defined in the applicable Pooling and Servicing Agreement which would include, among other things, a pool of mortgage loans.

9 Copyright 2006 Akerman Sentertt. All Rights Reserved.

The Mortgage Loan Foreclosure Mess: the Banks Gluttony; Problems with MERS and Sloppy SecuritizationsPosted: 07 Nov 2010 11:34 PM PST Yves here. This post by Linda Beale, who was involved in the tax angles of securitizations in her prior life on Wall Street, first appeared on Angry Bear and on her blog, A Taxing Matter. Its a very helpful addition to the discussion of the foreclosure crisis. Because it is also a bit technical at various junctures, Im departing from my usual practice with guest posts and adding some commentary. Lindas post follows: Yves Smith has an op-ed in the Oct. 31, 2010 New York Times on the mortgage mess. See Naked Capitalism, here, for full op-ed. As noted, the mortgage crisis goes much deeper than just bank use of robo-signers