IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

AMIE SIMPSON, )

)

Plaintiff, )

vs. )

) 12cv1101

BANK OF AMERICA, N.A., ) Judge Matthew F. Kennelly

successor by merger to ) Magistrate Judge Susan E. Cox

BAC HOME LOANS SERVICING, LP; )

SETERUS, INC.; )

and JOHN DOE, )

)

Defendants. )

FIRST AMENDED COMPLAINT

INTRODUCTION

1. Plaintiff brings this action to secure redress from unlawful mortgage

servicing practices engaged in by defendants, Bank of America, N.A., BAC Home Loan

Servicing , LP (collectively “Bank of America”), and Seterus, Inc. (“Seterus”). Plaintiff alleges

violation of the Cranston-Gonzales amendments to the Real Estate Settlement Procedures Act,

12 U.S.C. §2601 et seq. (“RESPA”), the Fair Debt Collection Practices Act, 15 U.S.C. 1692 et

seq. (“FDCPA”), breach of contract, and violation of the Illinois Consumer Fraud Act, 815 ILCS

505/2.

JURISDICTION AND VENUE

2. This Court has jurisdiction under 28 U.S.C. §§ 1331, 1337 and 1367, 12

U.S.C. §2605, and 15 U.S.C. §1692k.

3. Venue in this District is proper because each defendant does or transacts

business in this District.

1
PARTIES

4. Plaintiff Amie Simpson resides in a home which she owns in Plainfield, 

Illinois. 

5. Defendant Bank of America, N.A., successor by merger to BAC Home

Loans Servicing, LP (“BAC”) is a federally chartered corporation with offices at 135 S. LaSalle

Street, Chicago, Illinois 60603.

6. Defendant Bank of America, N.A. is engaged in the residential mortgage

servicing business, servicing millions of dollars of residential mortgages.

7. Defendant Seterus, Inc., formerly known as IBM Lender Business Process

Services, Inc., is a Delaware corporation with its principal offices at 14523 SW Millikan Way,

Suite 200, Beaverton, OR 97005. It does business in Illinois. Its registered agent and office is

CT Corporation System, 208 S. LaSalle Street, Suite 814, Chicago, IL 60604. 

8. Defendant Seterus, Inc. is engaged in the residential mortgage servicing

business, servicing millions of dollars of residential mortgages.

9. Defendant Seterus, Inc. regularly acquires servicing of loans which are

actually or allegedly delinquent at the time of acquisition.

10. Defendant John Doe is the owner of plaintiff’s loan. The identity of John

Doe is not known to plaintiff.

FACTS

11. In 2009, plaintiff requested a loan modification for her residential

mortgage loan from BAC Home Loans Servicing, LP, which was then servicing it. Although it

was often a struggle, plaintiff never missed a mortgage payment prior to applying for the loan

2
modification.

12. BAC approved plaintiff for a temporary loan modification pursuant to the

HAMP program which began in January 2010. Plaintiff made all three required trial payments,

and continued to make timely trial payments until she was approved for a permanent loan

modification.

13. The permanent loan modification was finally signed in April 2010. A

copy of the permanent loan modification is attached as Exhibit A. The mortgage and note being

modified, which were obtained in August 2006, are attached as Exhibit B.

14. Exhibit A provided for a new loan balance of $299,912.74, and that all

past due interest, servicing expenses, and escrow paid to third parties and $2,940.02 in escrow

advances were added to that principal balance. Plaintiff had never missed a mortgage payment

at that point, and thus should not have had a past due balance.

15. Exhibit A also provided that, “Your total monthly payments will be due on

the 1st of the month starting May 1, 2010.” Plaintiff therefore made her next mortgage payment

on or about April 29, 2010 via telephone, in order to comply with BAC’s deadline.

16. Unbeknownst to plaintiff, instead of applying plaintiff’s payment to the

payment due on May 1, 2010, defendant BAC, instead applied the payment to either a suspense

account and/or an alleged past due balance, despite the fact that the alleged past due balance was

included in the loan modification principal balance, and the fact that Ms. Simpson had never

missed a mortgage payment. This resulted in it appearing that the May payment had not been

made.

17. Thereafter, BAC treated all of plaintiff’s payments as delinquent, even

3
though plaintiff never missed a payment and made each and every payment in a timely manner.

Because of the alleged “past due” status which resulted from this mistake, plaintiff was forced to

pay her mortgage by phone every month and had to endure lengthy waits on the phone each time

she made a payment.

18. Plaintiff complained to BAC’s representatives by phone about the

misapplied payment on numerous occasions, including in October, November and December of

2010, and in March and May of 2011. The representatives informed her that BAC had made an

error and was working to fix it, but they were very “backed up” due to the number of people

experiencing this type of problem. The BAC representatives counseled plaintiff to be patient

because the problem would eventually be fixed.

19. Plaintiff continued to pay her mortgage on time every month, either by

phone or in person at a Bank of America branch. She made her October 2011 payment by

telephone on September 30, 2011.

20. BAC merged with Bank of America in July 2011. Bank of America, N.A.

then transferred servicing of plaintiff’s loan to Seterus, Inc., effective October 1, 2011. Bank of

America, N.A. did not inform plaintiff of the transfer of her loan, nor did it correct its prior

mistake before transferring the loan.

21. Neither Bank of America nor Seterus notified Ms. Simpson of the transfer

of servicing until on or around October 12, 2011, after Ms. Simpson made her October mortgage

payment to Bank of America. Plaintiff’s Transfer of Servicing Notice is attached as Exhibit C. 

If plaintiff had been informed of the servicing transfer in a timely manner, she would have made

the payment to Seterus and not to Bank of America.

4
22. Seterus, Inc. treated plaintiff’s loan as delinquent at the time servicing was

transferred to it.

23. Ms. Simpson began receiving calls from Seterus in early October 2011

informing her that her payment was overdue. When she informed them she had already made

the payment to Bank of America, they said they would contact Bank of America about the

payment, however, they continued to call her about the missing payment, sometimes multiple

times a day.

24. On October 23, 2011, plaintiff sent Seterus, Inc. the letter attached as 

Exhibit D, complaining that Seterus, Inc. was erroneously treating her loan as delinquent and

demanding that she make an additional payment.

25. On November 6, 2011, Seterus, Inc. sent plaintiff the letter attached as

Exhibit E. 

26. On November 15, 2011, Seterus, Inc. sent plaintiff the letter attached as 

Exhibit F, refusing to correct the misapplication of payments on April 30, 2010.

27. Exhibit F claims that BAC / Bank of America did not implement the

modification on its books until June 9, 2010, that “any funds received prior to the

implementation of the modification terms were eligible for credit toward the delinquent balance

of the loan,” and that the funds received on April 30, 2010 were “credited to your suspense

account.” Exhibit F claims that plaintiff had to make an additional monthly payment to have her

loan considered current.

28. This explanation is frivolous and not in good faith, in that (a) the

modification required plaintiff to make a payment no later than May 1, 2010, (b) plaintiff could

5
be expected to transfer funds one day early to make sure the payment was on time, (c) plaintiff

had no control over whether BAC/ Bank of America implemented the modification on its books

on June 9, 2010 or some other date, (d) had plaintiff waited until June 9, 2010 to make her May

1, 2010 modification payment, she would have been in breach, (e) plaintiff never missed a

mortgage payment and thus should not have had a “delinquent balance,” and (e) plaintiff’s note

and mortgage do not authorize a “suspense account.”

29. Since plaintiff’s loan was transferred to Seterus, plaintiff has received

multiple collection calls claiming that her loan is still delinquent. The calls have continued after

Ms. Simpson sent the October 23, 2011 letter, and when Ms. Simpson asked that the calls be

stopped until the inquiry was resolved, Seterus’s employees told Ms. Simpson that they would

not stop the calls. The calls were extremely upsetting to Ms. Simpson, and often brought her to

tears.

30. For example, on Saturday, November 26, 2011, plaintiff received four

collection calls from Seterus.

31. Because the dispute has not been resolved, plaintiff has been forced to

spend time every month paying her mortgage by phone, because the internet payment system

would only allow her to pay the alleged missing payment along with the current payment, and

she was told if she paid by mail, the payment would be applied to the alleged missing payment,

which would result in her account continuing to appear as past due. Ms. Simpson believes that

she has paid a fee for doing so on at least one occasion, although Seterus sometimes waived the

fee.

32. After receiving the letter from Ms. Simpson’s counsel, Seterus made it

6
even more inconvenient for Ms. Simpson to make her mortgage payments. When Ms. Simpson

called to make her payments, she was informed that she could not make a payment until it was

approved by a supervisor. Ms. Simpson was then forced to wait a lengthy period until a

supervisor becomes available to approve the transaction.

33. Plaintiff has been damaged by defendants’ conduct, in that she has

suffered emotional distress due to the continued harassment and aggravation, in that her

mortgage has wrongfully been treated as delinquent, in that she has wrongfully been assessed

late fees and/or additional interest and charges, and in that her credit score has been negatively

affected.

34. Defendants’ conduct has been willful and irresponsible.

35. The Bank of America defendants have been accused in a whistle blower

action of deliberately mishandling loan modification applications, including deliberately failing

to properly post payments made pursuant to loan modifications and making misrepresentations

to borrowers about loan modifications. (E.D.N.Y., No. 1:11-cv-3270) Exhibit G The whistle

blower case also alleges that Bank of America deliberately delayed implementation of permanent

HAMP loan modifications, and that many of Bank of America’s customer service

representatives did not have the ability to resolve customer complaints, but instead were charged

with processing and “closing” complaints in order to give the illusion to government regulators

that Bank of America was responsive to its customers.

36. The Bank of America defendants have been repeatedly sued for damaging

homeowner’s credit in connection with their mortgage loan servicing and loan modification

procedures, and for mishandling loan modifications and qualified written requests from

7
borrowers. These suits include Bradshaw v. BAC Home Loans Servicing, L.P., 2011 U.S.Dist.

Lexis 110781 (D.Or. Sep. 27, 2011), and an MDL involving over twenty consolidated class

actions pending in Massachusetts (D.Mass. Case No. 1:10-md-2193-RWZ). In addition, Bank of

America was one of the defendants in a recently settled enforcement action brought by the

United State and 49 state attorney’s general, which accused Bank of America of various abusive

practices in connection with mortgage servicing. 

37. At no time have defendants notified plaintiff of the name of their 

principal.

38. Defendants were therefore acting as agents of an undisclosed principal.

COUNT I – CRANSTON GONZALES ACT

39. Plaintiff incorporates paragraphs 1-38.

40. This claim is against Seterus, Inc.

41. Exhibit D is a “qualified written request” as defined in the

Cranston-Gonzales amendment to RESPA, 12 U.S.C. §2605(e).

42. In violation of its obligations under the Cranston-Gonzales amendment,

defendant Seterus, Inc. (a) failed to take corrective action and (b) continued to treat plaintiff’s

loan as delinquent.

43. Defendant Seterus, Inc. has a pattern and practice of ignoring qualified 

written requests.

WHEREFORE, plaintiff requests that the Court enter judgment in favor of the 

plaintiff and against defendant Seterus, Inc. for:

(1) Actual damages;

8
(2) Statutory damages; 

(3) Attorney’s fees, litigation expenses and costs of suit;

(4) Such other or further relief as the Court deems proper.

COUNT II- CRANSTON GONZALES ACT

44. Plaintiff incorporates paragraphs 1-38.

45. This claim is against Bank of America, N.A. and BAC Home Loan

Servicing, LP.

46. In violation of its obligations under 12 U.S.C. §2605(b)-(c), Bank of

America failed to provide notice of transfer of service of plaintiff’s mortgage at the time of the

transfer.

47. 15 U.S.C. §2605(b)-(c) provides: 

(b) Notice by transferor or loan servicing at time of transfer.

 (1) Notice requirement. Each servicer of any federally related

mortgage loan shall notify the borrower in writing of any assignment,

sale, or transfer of the servicing of the loan to any other person.

(2) Time of notice.

 (A) In general. Except as provided under subparagraphs (B) and

(C), the notice required under paragraph (1) shall be made to the

borrower not less than 15 days before the effective date of transfer of

the servicing of the mortgage loan (with respect to which such notice

is made).

 (B) Exception for certain proceedings. The notice required under

paragraph (1) shall be made to the borrower not more than 30 days

after the effective date of assignment, sale, or transfer of the servicing

of the mortgage loan (with respect to which such notice is made) in

any case in which the assignment, sale, or transfer of the servicing of

the mortgage loan is preceded by--

 (I) termination of the contract for servicing the loan for cause;

9
 (ii) commencement of proceedings for bankruptcy of the

servicer; or

 (iii) commencement of proceedings by the Federal Deposit

Insurance Corporation or the Resolution Trust Corporation for

conservatorship or receivership of the servicer (or an entity by which

the servicer is owned or controlled).

 (C) Exception for notice provided at closing. The provisions of

subparagraphs (A) and (B) shall not apply to any assignment, sale, or

transfer of the servicing of any mortgage loan if the person who

makes the loan provides to the borrower, at settlement (with respect

to the property for which the mortgage loan is made), written notice

under paragraph (3) of such transfer.

 (3) Contents of notice. The notice required under paragraph (1)

shall include the following information:

 (A) The effective date of transfer of the servicing described in such

paragraph.

 (B) The name, address, and toll-free or collect call telephone

number of the transferee servicer.

 (C) A toll-free or collect call telephone number for (I) an

individual employed by the transferor servicer, or (ii) the department

of the transferor servicer, that can be contacted by the borrower to

answer inquiries relating to the transfer of servicing.

 (D) The name and toll-free or collect call telephone number for (I)

an individual employed by the transferee servicer, or (ii) the

department of the transferee servicer, that can be contacted by the

borrower to answer inquiries relating to the transfer of servicing.

 (E) The date on which the transferor servicer who is servicing the

mortgage loan before the assignment, sale, or transfer will cease to

accept payments relating to the loan and the date on which the

transferee servicer will begin to accept such payments.

 (F) Any information concerning the effect the transfer may have,

if any, on the terms of or the continued availability of mortgage life or

disability insurance or an other type of optional insurance and what

action, if any, the borrower must take to maintain coverage.

10
 (G) A statement that the assignment, sale, or transfer of the

servicing of the mortgage loan does not affect any term or condition of

the security instruments other than terms directly related to the

servicing of such loan.

(c) Notice by transferee or loan servicing at time of transfer.

 (1) Notice requirement. Each transferee servicer to whom the

servicing of an federally related mortgage loan is assigned, sold, or

transferred shall notify the borrower of any such assignment, sale, or

transfer.

 (2) Time of notice.

 (A) In general. Except as provided in subparagraphs (B) and (C),

the notice required under paragraph (1) shall be made to the

borrower not more than 15 days after the effective date of transfer of

the servicing of the mortgage loan (with respect to which such notice

is made).

 (B) Exception for certain proceedings. The notice required under

paragraph (1) shall be made to the borrower not more than 30 days

after the effective date of assignment, sale, or transfer of the servicing

of the mortgage loan (with respect to which such notice is made) in

any case in which the assignment, sale, or transfer of the servicing of

the mortgage loan is preceded by--

 (I) termination of the contract for servicing the loan for cause;

 (ii) commencement of proceedings for bankruptcy of the

servicer; or

 (iii) commencement of proceedings by the Federal Deposit

Insurance Corporation or the Resolution Trust Corporation for

conservatorship or receivership of the servicer (or an entity by which

the servicer is owned or controlled).

 (C) Exception for notice provided at closing. The provisions of

subparagraphs (A) and (B) shall not apply to any assignment, sale, or

transfer of the servicing of any mortgage loan if the person who

makes the loan provides to the borrower, at settlement (with respect

to the property for which the mortgage loan is made), written notice

under paragraph (3) of such transfer.

11
 (3) Contents of notice. Any notice required under paragraph (1) shall

include the information described in subsection (b)(3).

WHEREFORE, plaintiff requests that the Court enter judgment in favor of the 

plaintiff and against the Bank of America defendants for:

(1) Actual damages;

(2) Statutory damages; 

(3) Attorney’s fees, litigation expenses and costs of suit;

(4) Such other or further relief as the Court deems proper.

COUNT III – FAIR DEBT COLLECTION PRACTICES ACT

48. Plaintiff incorporates paragraphs 1-38.

49. This claim is against Seterus, Inc.

50. Defendant Seterus, Inc. has violated 15 U.S.C. §§1692e, 1692e(2),

1692e(10), 1692f and 1692f(1) by repeatedly representing that plaintiff’s loan is delinquent,

when it is not, attempting to collect an additional monthly payment, which was not owed, and

continuing to make collection calls after being requested to stop.

51. Section 1692e provides:

§ 1692e. False or misleading representations [Section 807 of

P.L.]

A debt collector may not use any false, deceptive, or misleading

representation or means in connection with the collection of any debt. 

Without limiting the general application of the foregoing, the following

conduct is a violation of this section: . . .

(2) The false representation of--

 

(A) the character, amount, or legal status of any debt; . . .

(10) The use of any false representation or deceptive means to

12
collect or attempt to collect any debt or to obtain information

concerning a consumer. . . .

52. Section 1692f provides:

 

§ 1692f. Unfair practices [Section 808 of P.L.] 

A debt collector may not use unfair or unconscionable means to

collect or attempt to collect any debt. Without limiting the general

application of the foregoing, the following conduct is a violation of this

section:

(1) The collection of any amount (including any interest, fee,

charge, or expense incidental to the principal obligation) unless such

amount is expressly authorized by the agreement creating the debt or

permitted by law. . . .

WHEREFORE, plaintiff requests that the Court enter judgment in favor of the 

plaintiff and against defendant Seterus, Inc. for:

(1) Actual damages;

(2) Statutory damages; 

(3) Attorney’s fees, litigation expenses and costs of suit;

(4) Such other or further relief as the Court deems proper.

COUNT IV – BREACH OF CONTRACT

53. Plaintiff incorporates paragraphs 1-38.

54. This claim is against all defendants.

55. Defendants breached their contract (note, mortgage and modification) by

misapplying plaintiff’s May 2010 mortgage payment and by treating plaintiff’s loan as being in

default when it was not, despite the fact that the mortgage modification contract clearly provided

that the first payment was due on May 1, 2010, and despite the fact that the loan modification

document provided that all past due amounts had been added to the loan modification balance. 

13
Defendants also breached the mortgage contract by imposing late charges, when Ms. Simpson’s

payments were not late.

56. In addition, every contract contains an implied covenant of good faith and

fair dealing. Defendants breached the covenant of good faith and fair dealing when they refused

to properly apply Ms. Simpson’s May 1, 2010 mortgage payment, and instead treated plaintiff’s

mortgage as if it were in default.

WHEREFORE, plaintiff requests that the Court enter judgment in favor of the 

plaintiff and against defendants for:

(1) Actual damages;

(2) An order requiring defendants to correct the misapplication

of plaintiff’s payment;

(3) Costs of suit;

(4) Such other or further relief as the Court deems proper.

COUNT V – VIOLATION OF ILLINOIS CONSUMER FRAUD ACT

57. Plaintiff incorporates paragraphs 1 - 38.

58. This claim is against Bank of America, N.A. and BAC Home Loan

Servicing, LP.

59. Bank of America engaged in unfair and deceptive acts and practices, in

violation of 815 ILCS 505/2, when it unilaterally decided to apply her May 1, 2010 mortgage

payment to a suspense account and/or an alleged past due balance (which had already been

incorporated into the new principal balance pursuant to the loan modification, if it even existed),

and then began treating plaintiff’s mortgage as delinquent and imposing monthly late charges.

14
60. Bank of America made an affirmative misrepresentation and engaged in

an unfair practice when it (1) informed plaintiff that her loan modification was effective May 1,

2010, and that her first payment under the modification was due by May 1, 2010, when it in fact

treated the modification as if it started in June 2010, (2) applied the May payment to a suspense

account and/or an alleged past due balance which had already been incorporated into the loan

modification principal balance, if it even existed, and (3) refused to properly credit the May

payment despite repeated requests by plaintiff.

61. The fact that a payment made on April 29, 2010 would not be applied to

the May mortgage payment, but would instead be applied to a suspense account and/or an

alleged past due balance which had already been incorporated into the loan modification

principal balance, was a material fact which should have been disclosed to Ms. Simpson.

62. Based on comments made to Ms. Simpson by Bank of America’s

representatives, and allegations made in Exhibit G, Bank of America appears to have a pattern of

misapplying payments made by borrowers with loan modifications.

63. What happened to Ms. Simpson was not an isolated incident. Bank of

America has a pattern and practice of abusive practices in connection with its mortgage servicing

operations. A recently filed whistle blower suit accuses Bank of America of deliberately

mishandling loan modification applications and making misrepresentations to homeowners

regarding loan modifications. The whistle blower case accuses Bank of America of, among

other things, failing to properly credit payments made by borrowers with loan modifications,

delaying implementation of permanent loan modifications and failing to respond to customer

complaints. Exhibit G In addition, Bank of America has been sued repeatedly for ignoring

15
borrower’s disputes regarding its mortgage servicing, loan modification and credit reporting

practices. Bank of America is also a party to a recent settlement of an enforcement action

brought by the United States and 49 state attorney’s generals in which Bank of America was

accused of various abusive mortgage servicing practices.

64. Bank of America engaged in such conduct in the course of trade and

commerce. 

65. Bank of America engaged in such conduct knowing that it would injure

Ms. Simpson, and Ms. Simpson did indeed suffer monetary damages as a result of BAC’s

conduct, because Bank of America has imposed late charges on her account and required her to

pay fees in order to pay by phone. In addition, if Bank of America did not adjust the loan

modification principal balance when it applied the loan modification payment to the alleged past

due balance (which was already incorporated into the loan modification principal balance, if it

even existed), plaintiff is being forced to pay additional interest. Finally, Bank of America

damaged Ms. Simpson’s credit.

WHEREFORE, the Court should enter judgment in favor of Ms. Simpson and

against defendants:

(1) Awarding compensatory and punitive damages;

(2) Awarding attorney’s fees, litigation expenses and costs;

(3) Awarding such other and further relief as the Court deems

proper.

s/Daniel A. Edelman

Daniel A. Edelman

16
Daniel A. Edelman

Cathleen M. Combs

James O. Latturner

Tara L. Goodwin

Rupali R. Shah

EDELMAN, COMBS, LATTURNER

& GOODWIN, LLC

120 S. LaSalle Street, 18th Floor

Chicago, Illinois 60603

(312) 739-4200

(312) 419-0379 (FAX)

JURY DEMAND

Plaintiff demands trial by jury.

s/Daniel A. Edelman

Daniel A. Edelman

17
EXHIBIT A
BankofAmerica Home Loans

May 6, 2010

AMIE SIMPSON

Loan Number:......

Dear AMIE SIMPSON:

Thank you for complying with the terms ofthe Home Affordable Modification Trial Period Plan by providing your financial Information

and making your trial payments. You are now eligible for a permanent modificatIon.

The enclosed Home Affordable Modification Agreement ("Modification Agreement' reflects the new terms ofyour modified mongage

that wll1 go into effect at the end ofthe Trial Period and once you complete and return the enclosed documentation.

How to AcceptThls Offer:

To accept this modification offer, you mustsign, In front of anotary, two ofthe enclosed copIes ofthe Modification Agreement and

return themto us by May 16, 2010. Please keep the third copy ofthe ModificatIon Agreement for your records. The Modlficatlan

Agreement must be signed by all borrowers.

We are personally delivering the Modification Agreement to you with a mobile notary who can notarize your signature at no additlonal

charge, ensure that your documents are executed correctly and return the documents to us. Please provide both signed copies ofthe

documents to the notary, who will return the documents to us for processing.

The modification of your loan will be effective on May 1,2010. This means that your first payment under your permanent modification

also will be due on that date. In orderto have enough time to process your modification after we received your final trial period

payment, we have extended your trial period by one month and the effective date reflects this extension. You are not required to make

another trial period payment during the extension month. However, if you do not make a trial period payment during the extension

month, please be aware that you will not accrue the monthly Incentive for that month, and you wlllincrease the amount of delinquent

interest that will be capitalized as part of your modification. You can refer to the enclosed Summary for more information on the

Incentive and capItalization terms.

To better understand the proposed terms of your modlfled mortgage, please read the attached summary ofyour modified mortgage

and the Modification Agreement carefully. If you have any questions, please call us at 1.877.422.1761,

We appreciate your cooperation and look forward to taking the final steps to provIding you with more affordable mortgage payments.

Sincerely,

loan ModificatIon Team

Bank ofAmerica Home Loans Servicing, LP

HELPING YOU STAY IN YOUR HOME.

Mortgages funded and admInIstered by an Gl Equal Housing lender.

o Protm your personallnfOllllaUon before recycling this document.

/.Y/."'"~

MAKING

HOME

AFFORDABLE
BAC Home Loans Servicing, LP

Attn: Home Retention Division

4500 Amon Carter Blvd

Fort Worth, TX 76155

BankofAmerica Home Loans

Loan Modification

CLARITY COMMITMENT TM

Property Address:

AMIE SIMPSON

Notice Date: 5/6/2010

Loan NO'::~~I1!1~ Please Return the Enclosed Documents By: 5/16/2010

!

r------------,'L j

j:---------,

Thank you for working with BAC Home Loans Servicing, LP, a subsidiary of Bank of America, N.A, on your current

mortgage needs and for making your triai period mortgage payments. This summary is intended to be a clear and

simple description of the final loan modification that we are pleased to offer you. Once you sign and return the

enclosed Home Affordable Modification Agreement, you will have agreed to the new permanent loan modification.

Please thoroughly review all the materials in the enclosed package to ensure you understand the details of this new

agreement.

ISummary of Your Modified Loan

Your new loan balance is $299,912.74. Past due interest, servicln9 expenses paid to third parties and

escrow advances of $2,940.02 have been added to your principal balance to calculate this new loan balance.

Unpaid late fees are not included In this amount and will be waived when your loan modification is finalized.

Your new interest rate that will be In effect for the first 5 years of your modified loan is 2.000%. This rate will

annually increase by one percent a year thereafter until it reaches 5.000%. To further lower your monthly payment

we have extended the length of your loan to 36 years. Your new final payment date and your new maturity date is

4/01/2046.

Each month you make on-time payments, you may be eligible for incentive payments under the Home Affordable

Modification Pr09ram to be applied to your principal balance on the 1st-5th anniversaries of the Trial Period Plan

Effective Date, provided your loan does not become 90 days delinquent at any time.

/Your New Mortgage Payments

Your new total modified monthly mortgage payments of $2,167.20 are made up of principal and interest of

$974.46, and an initial escrow amount of $1,192.74. Escrow payments are collected for payment of Items such as

property taxes and insurance and may change. We will notify you of any adjustments to the total monthly payment.

Your total monthly payments will be due on the 1st of the month starting May 1, 2010.

Your interest rate will adjust to slowly bring your rate to 5% and your total monthly payments to $2,609.20,

as shown in the schedule below. The amount of these payments will change if your escrow payment amount

changes.

• Years 1-5, beginning 5/01/2010 the Interest rate will be 2.000% with a total monthly payment of $2,167.20

• Years 6, beginning 5/01/2015, the interest rate will be 3.000% with a tolal monthly payment of $2,308.42

• Years 7, beginning 5/01/2016, the interest rate will be 4.000% with a total monthly payment of $2,456.12

• Years 8-36, beginning 5/01/2017, thllinterest rate will be 5.000% with a total monthly payment of $2,609.20

If you have questions regarding the Modification Agreement or the steps you must take to complete

this process, please contact us at 1.877.422.1761 to speak with one of our home retention associates.

5
Section 2a: Home Affordable Modificatfon Agreement

(ServicerCopy 1)

Investor loan ##~••!!!!!!~

After Recording Return To:

Home Retention Group

9700 Blssonnet Street

Suite 1500

Houston, TX 77036

This document was prepared by Home Retention Services

______________[Space Above This Line For Recording Data)

BankofAmerica Home loans

HOME AFFORDABLE MODIFICATION AGREEMENT

(Step Two of Two-Step Documentation Process)

Borrower ("I")'; AMIE SIMPSON

lender or Servicer ("lender'~: BAC Home loans Servicing, LP

Dale of first lIe.:;;n.mllo~rtig.aigef:' deed oftrusl, or security deed ("Mortgage") and Note ("Note"): Augusl25, 2006

loan Number"

Property Add;'e~s [and Legal Description Ifrecordation Is necessary) C'Property"); .'

MERS: 7

"MERS" Is Mortgage Electronic Registration Systems, Inc. MERS Is a separate corporation that Is acting solely as a nominee

for Lender anrf Lendar's successors and assigns. MERS Is o,yan/zed and existing under the laws of Delaware, and has an

address and telephone number ofP.O. Box 2026, Flint, M148501-2026, (888) 679-MERS.

If my representations In Seclion 1 continue to be Irue in all material respecls, Ihen this Home Affordable Modification

Agreement ("Agreement") will, as set forth in Section 3, amend and supplement (1) the Mortgage or Deed of Trust

("Mortgage") on the Property, and (2) Ihe Note secured by the Mortgage. The Mortgage and Nole together, as they may

previously have been amended, are referred to as the "Loan Documents." Capitalized terms used in this Agreement and not

defined have the meaning given 10 lhem in loan Documents.

I understand Ihat after I sign and return two caples of Ihis Agreement 10 Ihe lender, Ihe lender will send me a signed copy of

this AgreemenL This Agreement will nol take effect unless the preconditions set forth in Section 2 have been satisfied.

1. My Representations. I certify, represent to Lender and agree:

A. I am experiencing a financial hardship, and as a result, (I) I am in default under the loan Documents, and (II)

) do not have sufficient income or access to sutlicientliquid assets 10 make the monthly mortgage payments

now or in lhe near future;

B. I live In the Properly as my principal residence, and the Properly has not been condemned;

C. There has been no change in the ownership of the Property since I signed the Loan Documents;

D. i have provided documentation for all Income that I receive (and) understand that) am not required to

disclose any child support or alimony thai I receive, unless i wish to have such income considered to qualify

for the Home Affordable Modification program ("Program"»;

1 If there Is more than one Borrower or Mortgagor executing thIs dOt::ument, each Is raCerted to as -I". For purposes of this document words sIgnifying the

sIngular (such as "I") shall Include the pluro!il (such as "We") and Vice versa whero appropriate. .

MULl/STATE HOMEAFFORDABLE MQ01FICA,T10N AGREEMENT· SIngle Family. Fannlo MlI.(I1Fredtlio Mac: UNIFORM INSTRUMENT Fenn 3,1S7 3109 (rev,llI'09)0Jage 1of6~

II 1111I11111111 11I\1\11111
E. Under penalty of pe~ury, all documents and information I have provided to Lender In connection with this

Agreement, inciudlng the documants and informaUon regarding my eligibility for the program, are true and correct;

F. If Lender requires me to obtain credit counseling in connection with the Program, I wiil do so; and

G. i have made or wiil make ali payments reqUired under a Trial Period Plan or Loan Workout Pian.

2. Acknowledgements and Precondltlons to Modification. I understand and acknowledge that:

A. If prior to the Modification Effective Date as set forth in Section 3 the Lender determines that any of my

representations in Section 1 are no longer trua and correct, the Loan Documents will not be modified and this

Agreement will terminate. In this event, the Lender wiil have ali of the rights and remedies provided by the Loan

Documents;and' ,

B. I understand that the Loan Documents will not be modified unless and until (i) I receive from the Lender a copy of

this Agreement signed by the Lander, and (i1) the Modification Effective Da\e (as defined in Section 3) has

occurred. I further understand and agree thai the Lender wiil not be obligated or bound to make any modification of

the Loan Documents if I fali to meet anyone of the requirements under this Agreement.

3. The Modification. If my representations In Section 1 continue to be true in all material respects and all

preconditions to the modification set forth in Section 2 have been met, the Loan Documents will automaticaUy become

modified on May 1, 2010 (the "Modificalion Effective Date") and aU unpaid late charges thpt remain unpaid wiil be waived. I

understand that if I have failed to make any payments as a precondition to this modification under a workout plan or trial

period plan, this modification will not take effect. The first modified payment will ba due on May 1, 2010.

A The new Maturity Date will be: April 1, 2046.

B. The modified Principal balance of my Note will include all amounts and arrearages that will be past due as of the

Modification Effactive Date (inciudlng unpaid and deferred Interest, fees, escrOw advances and other costs, but

excluding unpaid late charges, collectively. "Unpaid Amounts") less any amounts paid to the Lender but not

previously credited to my Loan. The new principal balance of my Note wlli be ,$299,912.74 (the "New Principai

Balance"). I understand that by agreeing to add the Unpeld Amounts to the oiJtstandlng principal balance, Ihe

added Unpaid Amounts accrue Interest based on the interest rate in effe9t under this Agreement. I also

understand that this means Interest wlll now accrue on the unpaid Interest thai Is added to tha outstanding

principai balance, which would not happen without this Agreement. '

C. Interest at the rate of 2.000% will begin 10 accrue on the New Principal Balam;e as of April 1, 2010 and the first

new monthly payment on the New Principal Balance will be due on May 1, 2010. My payment schedule for the

modified Loan Is as foliows: .

Yoars InterGS! [ntorest Rata Monlhly PrinciPill EsUmaltd Monthly Tolal Monthly Pllymenl Number of

ReI. Chango Dale and Interasl escrow Paymonl Payment' Begins On Monthly

lPaymenl Amounl Vunount- Paymellts

,., 2.000% IAprR 1,2010 974.46 $1,192.74, may adjusl $2,167.20, may adjust May 1, 2010 60

poriodlcallV porlodlcally

3.000% April 1, 2015 51,115.66 May atlJust periodically May adjust periodically May 1. 2015 12

7 4.000% Pril1,2016 $1,263.36 May adjust perIodicallY' May adJust periodically May 1, 2016 12

8-35 5.000% prll1,2017 $1,416.46 y adjUst periodicallY' May adJt.lst periodically May 1, 2017 '" 'The escrow payments may be adjusted periodically in accordance with applicable law and therefore my total

monthiy payment may change accordingly.

MUI..TISTATE HOMEAFFOROABt.E MOD1FJCA1JON AGREEMENT· Slnlll. Famllv. FannIe MallFrellrllhMoc UNIFORM INS1RUMENT Fonn 3157 3tO§ rDltOO 2d6/l,1Oll~1

11I11111111111I111I11I1111I11111I1111111

a;
The above terms in this Section 3.C. shall supersede any provisions to the contrary In the Loan Documents,

including but not limited to, provisions for an adjustable or step Interest rate.

I understand that, if I have a pay option adjustable rate mortgage loan, upon modification, the minimum monthly

payment option, the Interest-only or any other payment options will no longer be offered and that the monthly

payments described in the above payment schedule for my modified loan will be the minimum payment that will

be due each month for the remaining term of the loan. My modified loan will not have a negative amortization

feature that would allow me to pay less than the Inlerest due resulting in any unpaid Interest to be added to the

outslending principal balance.

THiS LOAN IS PAYABLE IN FULL AT MATURITY. YOU MUST REPAY THE ENTIRE PRINCIPAL BALANCE OF

THE LOAN AND UNPAID INTEREST THEN DUE. THE LENDER IS UNDER NO OBLIGATION TO REFINANCE

THE LOAN AT THAT TIME. YOU WILL, THEREFORE, BE REQUIRED TO MAKE PAYMENT OUT OF OTHER

ASSETS THAT YOU MAY OWN, OR YOU WILL HAVE TO FIND A LENDER, WHICH MAY BE THE LENDER

YOU HAVE THIS LOAN WITH, WILLING TO LEND YOU THE MONEY. IF YOU REFINANCE THIS LOAN AT

MATURITY, YOU MAY HAVE TO PAY SOME OR ALL OFTHE CLOSING COSTS NORMALLY ASSOCIATED

WITH A NEW LOAN EVEN IF YOU OBTAIN REFINANCING FROM THE SAME LENDER. .

D. I will be in default If I do not comply with the terms of the Loan Documents, as modified by this Agreement.

E. If a default rate of Interest Is permitted under the Loan Documents, then In the event of default under Ihe Loan

Documents, as amended, Ihe Interest thai will be due will be the rale sel forth in Seclion 3.C.

4. Additional Agreemenls, I agree to the following:

A. That all persons who signed the Loan Documents or their aulhorized representatlve{s) have signed this

Agreement, unless (i) a borrower or co-borrower Is deceased; (Ii) the borrower and co-borrower are divorced and

the property has been tnansferred to one spouse In the divorce decree, the spouse who no longer has an interest

in the properly need not sign this Agreement (although the non-slgnlng spouse may continue 10 be held liable for

the obllgallon underIhe Loan Documents); or (iii) the Lender has waived this requirement In writing.

B. That this Agreement shall supersede the terms of any modification, forbearance, Trial Penod Plan or Workout

Plan that I previously entered Into wllh Lender.

C. To comply, except to the extent that they are modified by this Agreement, with all covenants, agreements, and

requirements of Loan Documents Including my agreement to make all payments of taxes, insurance premiums,

assessments, Escrow items, impounds, and all other payments, the amount of which may change periodically

over the term of my Loan.

D. That this Agreement constitutes notice that the Lender's waiver as to payment of Escrow Items, if any. has been

revoked, and I have been advised of the amount needed to fully fund my Escrow Account.

Funds for Escrow \lems. i will pay to Lender on the day payments are due under the Loan Documents as

amended by this Agreement, unlll the Loan is paid in full, a sum (the "Funds") to provide for payment of

amounts due for: (a) taxes and assessments and other items which can alialn priority over the Morlgage as

a lien or encumbrance on the Properly; (b) leasehold payments or ground rents on the Property, if any; (c)

premiums for any and all insurance required by Lender under the Loan Documents; (d) mortgage insurance

premiums, if any, or any sums payable to Lender In lieu of the payment of mortgage insurance premiums in

accordance with the Loan Documents; and (e) any communily association dues, fees, and assessments

that Lender requires to be escrowed. These items are called "Escrow Items." I shall promptly furnish to

Lender all notices of amounts to be paid under this Section 4.0. I shall pay Lender the Funds for Escrow

Items unless Lender weives my obligation to pay the Funds for any or all Escrow Items. Lender may waive

my obligation to pay to Lender Funds for any or all Escrow Items at any time. Any such waiver may only be

In writing. In the event of such waiver, I shall pay directly, when and where payable, the amounts due for any

Escrow Items for which payment of Funds has been waived by Lender and, if Lender requires. shall fumish

to Lender receipts evidencing such payment within such time period as Lender may require.

MUI.TISTATE HOMeAFFOROABLE MODIFICATlO}l AGRE£MENT· SlnllloFlImlly· Filnnle Mulfroddill Mal: UNIFORM INSTRUMENT Form3157 3/09 fixlgo3ol6pagr:s}

II 11111111I1111111111111I1111111111111 111111I11111I11I11I1I1II1II1I11111I III 111I1IIIIIIIIIIII1IWII 111111 1111 4!!J1
My obligation to make such payments and to provide receipts shall for all purposes be deemed to be a

covenant and agreement conta(ned in the Loan Documents, as the phrase "covenant and agreementOl is

used In the Loan Documents. If I am obligated to pay Escrow Items directly, pursuant to a waiver. and I fail

10 pay the amount due for an Escrow Item, Lender may exercise its rights under the Loan Documents and

this Agreement and pay such amount and I shall then be obligated to repay to Lender any such amount.

Lender may revoke the waiver as to any or aJl Escrow Items at any time by a notice given In accordance

with the Loan Documents, and, upon SUch revocation, I shall pay 10 Lender all Funds, and in such amounts,

thaI are then required under this Section 4.0.

Lender may, at any time, collect and hold Funds In an amount (a) sufficient to permit Lender to apply Ihe

Funds at the time specified under the Real Estate Seltlement Procedures Acl ("RESPA"), and (b) not to

exceed the maximum amount a lender can require under RESPA. Lender shall estimate Ihe amount of .

Funds due on the basis of current data and reasonable estimates of expenditures of future Escrow Items or

othelWise In accordance with applicable law.

The Funds shall be held In an Institution whose deposits are insured by a federal agency, Instrumentality, or

entity (Including Lender, if Lender Is an institution whose deposits are so insured) or in any Federal Home

Loan Bank. Lender shall apply the Funds to pay the Escrow Items no later than the time specified under

RESPA. Lender shall not charge me for holding and applying the Funds, annually analyzing the escrow

account, or verifying the Escrow Items, unless Lender pays me interest on the Funds and applicable law

permits Lender to make such a charge. Unless an agreement is made in Writing or applicabie law requires

Interest to be paid on the Funds, Lender shall not be required to pay me any Interest or earnings on the

Funds. Lender and I can agree In wriling, however, that interest shall be paid on the Funds. Lender shall

prOVide me. without charge, an annual accounting of the Funds as required by RESPA.

Ifthere Is a surplUS of Funds heid in escrow, as defined under RESPA, Lender shaJl account to me for the

excess funds in accordance with RESPA. If Ihere is a shortage of Funds held In escrow, as defined under

RESPA, Lender shaJl notify me as required by RESPA, and I shall pay to Lender the amount necessary 10

make up Ihe shortage In accordance with RESPA, but in no more than 12 monthly payments. If Ihere is e

deficiency of Funds heid in escrow, as defined under RESPA, Lender shaJl notify me as required by

RESPA, and I shall pay to Lender the amounl necessary to make up Ihe deficiency in accordence with

RESPA, but in no more than 12 monlhly payments.

Upon payment In full of aJl sums secured by the Loan Documents, Lender shaJl promptly refund 10 me any

Funds held by Lender.

E. That the Loan Documents are composed of dUly valid, binding agreemenls, enforceabie In accordance with their

terms and are hereby reaftinmed.

F. That all terms and provisions of the Loan Documents, except as expressly modified by this Agreement, remain In

fuli force and effect; nothing In this Agreement shall be understood or construed to be a satisfaction or release in

whole or in part of the obligations contained In Ihe Loan Documents: and that except as otherwise specifically

provided in, and as expressly modified by, this Agreement, the Lender and I will be bound by, and will comply

with, all of the lerms and conditions of the Loan Documents.

G. That, as of the Modification Effective Date. notwithstanding any other provision of the Loan Documents, I agree as

follows: If aJl or any part of the Properly or any interest In it Is sold or transferred without Lende~s prior written

consent, Lender may. at Its option, require Immediate payment In fuJI of aJl sums secured by Ihe Mortgage.

However, Lender shall not exercise this option If state or federal law, rules or regulations prohibit the exercise of

such option as of the date of such sale or transfer. If Lender exercises this option, Lender shall give me notice of

acceleralion. The notice shall provide a period of not less than 30 days from the date the notice is delivered or

mailed within which I must pay all sums secured by the Mortgage. If I fall to pay these sums prior to the expiration

of this period, Lender may invoke ,my remedies permitted by the Mortgage without further notice or demand on

me.

H. That, as of the Modification Effective Date, I understand that the Lender will only allow the transfer and assumption

of Ihe Loan, InclUding this Agreement, to a transferee of my property as permitted under the Gam Sl. Germain

Act, 12 U.S.C. Section 1701j-3. A buyer or transferee of the Properly will nOl be permitted, under any other

circumstance, to assume the Loan. Except as noted herein, this Agreement may not be assigned to, or assumed

by, a buyer or transferee of the Property.

MULTISTATE HOMEAFFOROA9LE MOOlFICAliON AGReeMENT. SlnglvF/lmlly. Fannl~ MalllFretfdl1l MDt UNIFoRM lNSTRUMENi form31S7 3109 (Iwge .;cl6p;1fJes)

11111I In111I11111111111I111I11I1111111I 11I111I 11I1 1ll!mWJ11111 11111
I. That, as of the Modification Effective Date, if any provision in the Note or in any addendum or amendment 10 the

Note aliowed for the assessment of a penalty for fuli or partial prepaymenl of the Note, such provision is null and

void.

J. That, I will cooperate fUliy with Lender In obtaining any tille endorsement(s), or similar tille insurance product(s),

andlor subordination agreement(s) that are necessary Or required by the Lender's procedures to ensure lhat the

modified mortgage ioan is in first lien posilion and/or is fully enforceable upon modification and that if, under any

circumstance and notwifhslandlng anything else to the contrary in this Agreement, the Lender does not receive

such title endorsement(s), title insurance product(s) and/or subordination agreement(s), then the terms of this

Agreement will not become effective on the Modification Effective Date and the Agreement will be nuli and void.

K. That I will exeoute suoh other documents as may be reasonably neoessary to either (I) consummate the terms and

conditions of this Agreement; or (Ii) oorreot the terms and oondltlons of this Plan if an error Is detected aller

execution of this Agreement. I understand that a corrected Agreement will be provided to me and this Agreement

will be void and of no legal effect upon notioe of such error. If I elect not to sign any such corrected Agreemenl, the

terms ofthe original Loan Documents shall continue in full force and effect, such terms will not be modified by this

Agreement, and I will not be eligible for a modification under the Home Affordable Modificalion program.

L. Mortgage Electronic Registnstion Systems, Inc. ("MERS") is a separate corporation organized and existing under

the laws of Delaware and has an address and telephone number of P.O. Box 2026, Flint, MI48501-2026, (888) 679-

MERS. In cases where the loan h~s been registered with MERS who has only legal title to the interests granted by

the borrower in the mortgage and who is acting sofely as nomInee for Lender and Lender's successors and assigns,

MERS has the right to exercise any or all of those Interests,lncludlng, but not limited to, the right to foreclose and

seli the Property; and to take any action required of Lender inclUding, but not limited to, releasing and canceling the

mortgage loan.

M. That Lender will coliect and record personal information, including, bul not limited to, my name, address, telephone

number, social security number. credit score. income, payment history, government monitoring information, and

Information aboul account balances and activity. In addition, I understand and consent to the disclosure of my

personal Information and the terms of the Trial Period Plan and this Modification Agreement by Lender to (a) the

U.S. Department of the Treasury, (b) Fannie Mae and Freddie Mac In conneclion wilh their responsibilities under

the Home Affordabllity and Stabll1ty Plan; (c) any Investor, insurer, guarantor or servicer that owns, insures,

guarantees or services my first lien or subordinate lien (if applicable) mortgageloan(s); (d) companies that perform

support services for the Home Affordable Modification Program and the Second Lien Modification Program; and (e>

any HUD certified housing counselor.

N. I agree that if any document related to the Loan Documents and/or this Agreement is lost, misplaced, misstated,

inaccurately reflects the true and correct terms and conditions of the loan as modified, or is otherwise missing, I will

comply with the Lender's request to execute, acknowledge, initial and deliver to the Lender any documentation the

Lender deems necassary. lithe orlglnat promissory note Is replaced, the Lender hereby Indemnifies me against any

loss associated with a demand on the original note. Ail documents the Lender requests of me under this Seclion

4.N. shall ba referred to as "Documents." .1 agree to deliver the Documents wllhin ten (10) days after I receive the

Lender's written request lor such replacemenl

O. I understand that the mortgage Insurance premiums on my toan may Increase as a result of the capitalization

whioh will result in a higher monthly payment. Furthermore, the date on which I may request cancelalion of

mortgage insurance may change as a result of the higher unpaid principal balance.

/

MULTISTATE HOME AfFORDABLE MODIFiCATION AGREEMENT • S'U191eF;lm~y· FannIa Mae/Freddie Ma= UNIFORM INS,TROMENT Form31S7 3109 (p3gf 5o/G~es)

11111111 \1111111111I1111I11111111111111 1II11111111J.1l1l11J!!!!!!IIIIIIIIII
The Lender and I have executed this Agreement,

Mortgage Electronic Registration Sy'stems. Ino, - Nominee for BAC Homel-oans Servicing, LP

By:

Date

::< ;~'" SEAL

.' .... ~'" _ ANAEDLER

'.- .' ~" ~·STArEOFI~

/),} d .•:2':',_·r"rxPIRES:I1!M'

__[Space Below This Line ForACknOWledgemenll~_a" U

~5j;/i5QiO

MULTISTATE HOtAe AfFOROABLEltODlFICATION AGREEMENT ~Slnpl! F~mllv. Fannlo t.bolFrtlddla Mac UNIFORM INSTRUMENT FOml3157 3109 f/l.)O(lGrJG llo'lPl?A'1

1111111111I111111111111I11 11I1111 1mII 1111I11111111111I1111I111111 III III III11111 IJIIUJ!I11lI11II1I
EXHIBITB
. ~,

"

After Recording Return To: COUNTR~DE HOME LOANS, tNC.

MS SV-79 DOCUMENT PROCESStNG

P.O.BOl< 10423

Van NUys, CA 91410-0423

Prepared By:

TARA PASCH

COUNTRYWIDE BDME LOANS, INC.

2 MID AMERICA SUITE R450

OAKBROOK TERRACE

XL 60181

LRURIE NCPHILLIPS 16P R2006150971

Will County Reco~der Page 1 g' 16

JAD Date 09/08/2006 Time 10'37'20

RecorcUng F~es: • .

IL Rental Hang SUjlPo~l P~og, 3

106.75 .00

----------(SpaceAbGve'IblsLincForRecordingDl\ln) ----------

MIN 4._----- . l£sal:oll!Closinq,1

MORTGAGE

[Doc. 10 11

DEFlNlTlONS

Wordt; used in multiple sections of this document nrc defined below and orner words are defined in Seclions 3,

II, 13, 18. 20 and 21. Certain rules regarding !lIe usage of words used in this document are also provided in

Section 16.

(A) "Security Jnstrnmen1.fI means this document, which is dated AUGUST 25 r 2006

with all Riders (0 this document.

ILUNOIS • Slngl& Famlly - Fanqfe Mae/FreddIe Mal: UNIFORM INSTRUMENT WITH MEAS

Pllgo 1 of 16

...6A{11.) {0010).OZ CHL (08l0S)(d) VMP Mortgage 5tI1UltDIlS, Inc. (8DO)~1-7291 .. CONVNA

•together

Form 3014 1JD1

II ·Qt

~~~i~ U~~ ~~~ il~i~~~ ~ I ~~i~~ ~~i
"

"

(B) "Borrower" is

AMIE SIMPSON

DOC ID ~:"•••••••t"

Borrower isthe mortgagor under this Security Instrument.

(C) IIMERS" isMongage ElectronicRegisliation System.~,lnc. MERS is aseparate corporation that is'

acting solely as a nominee for Lender and Lender's successors and assigns. MERS is the mortgagee under

this Security Instrument. MERS is otganized and existing under tbe laws of Delaware. find has an address

and telephone number of P.O. Box 2026, Flint. Ml 48501·2026, tel. (888) 619-MERS.

(D) ''Lenderu is

COUNlR~NIDE HOME LOANS, INC.

Lender is a CORFORATION

organized and existing under the law.~ of N~W ):"ORK

Lendot" address is

4500 Park Granada MSNt SVB-3141 Calabasas, CA 91302-1613

(E) uNDlell meanS the promissory note signed by Borrower and dated AUGUST 25, 2006 . The

Note Slates that B()rrower owes Lender .

lHREE HUNDRED EIGHT THOUSAND' SEVEN HUNDRED FIFl~ and 00/100

DoUars (U.S. $ 308,750. DO ) plus interesl. Borrower has promised (0 pay this debt in regular

Periodic Paym,nL' and (0 pay Ihe debl in fuJI not I.tenhnn SEPlEMBE~ 01, 2036 .

(F) "Propct'1y" Jneans lite properlY that is described below under the heading "Transfer of Rights in the:

ProperlY."

(G) IILoanl

• means the debt evidenced by the Note. plUS interest, any prepayment charges and late charges

due under the Note, and all sums duc under this Security Instrument. plusintercsl

(H) "Riders" means aU Riders to this. Security .lnslrUrnent that are executed by Borrower. The rOlJawing

Riders arc to be executed by Barlower [check box 8S applicable]:

BAdjuslabl, Rate Rider

Balloon Rider

o VA Rider

o Condominium Rider

o PlODned UXlit Development Rider

o BiweeklyPayment Rider

8 Second Home Rider

14 Family Rider

o Otber(s) [specify]

(I) IIAppIicoble Law" means all conlroHing applicable fedcrol. sUite and Ineal SL1lu1.eS, regulalions.

ordinances and administrative rules and orders (that have (he effect of Jaw) as well as aU applicable final.

non.appcaJable judicial opinions.

(J) nCommunily AssDciation Dues, Fees, and Assessmcntsll means all dlles. feeS, assessments and other

charges dial are imposed on Borrower or the Property by a condominium assocluLion, homeowners association

or similar organization.

(K) "Electronic Funds Transrer" means nny transfer of funds. oilier tllan a transaction originated by check.

draft, Of similar paper instrument. which is initiated through an eJectronic lenninal, telephonic instrument.

computer, or magnetic lape so as to ordert instruct, Or authorize a financial institution (0 debit or credit an

account. Such term includes. but is not Jimited to, pojnt~of-snJe transfers. a.utomated teller mnchine

transactions, transfers initiated by telephone. wire transfern. and automated clearinghouse transfers.

(L) "Escrow I1cmsll means those ilem5 that (tIe described in SecLion '3.

(M) ltMisceUaneous Proceeds"' means any compeJlsation~ settlement, award ofdamages. Or proceeds paid by

an)' third party (other tflnn insurance proceeds paid under the coverages described in Section 5) for: (i)

~-6A(ILJ(DOlO).O' CHL (66105) Pago2of 16 Form 3014 1/01
WILL

(Name ofRccordl1l2 Juri$dietionl

..

DOC ID it: ..

damage to~ O£ destruction ofl the Property; (ii) condemnation or other taking of aU or any part of theProperty;

(iii) conveyance in lieu of condemnation; or (iv) misrepresentations of. or omissions as to7 the value and/or

eondiUon ofthe Property. .

.(N) "Mortgllge Insurance-II means insurance protecting Lender against the nonpayment of. or default ani the

Loan.

(0) "Periowc Payment" mean, the regularly scheduled amount due for 0J principal and interest under the

Note, plus (ii) any arnounls under Seelion 3 of this Security Instrument.

(P) "RESPA" means Ihe Real a'tate Setllernent Procedures Act (12 U.S.C. Section 2601 et seq.) and its

implementing regulation, Regulation X (24 C.P.R. Part 3500), as liley might be ameoded from time 10 lime, or

any additional or successor legislation or regulation that governs the same subject matter. As used in 'this

Security Instrument, "RBSPA" refers to all rcquiremcnls and reslrlctions that arc imposed in regard co a

"federally related mortgage loan" even if the Loan docs not qualify as a "fedemlly related mortgage Joanu

under RBSPA.

(Q) "Successor in Interest ofBarrower" means any party that has taken title to the Property. whother or not

that party has assumed Borrower's Obligations under the Note and/or this Security Instrument.

TRANSFER OF RIGIITS IN THE PROPERTY

This Security Instrument secures to Lender: (i) the repayment "of tbe Loan. and all renewals, eXlensions and

modifications of the Note: and (ii) the performance of Borrower's CDvenant~ and agreements under this

Security In.'trument and the Note. For this pUlJlose, Borrower does hereby mongage, grant and

convey to MERS (solely as nominee for Lender and Lender's SUct:cssors and assign.f) anti to the successors:

and assigus of MERS, the following described propeny localed in Ihe

COUNTY of

(Type ofRecording JurisdlcliOJl)

Parcel ID Numbe,",••••-::::.••••III•••••lIlw:hich currently has the nd~ress of

ISlrnclJCilyj

••••!!!I••("Projlerly Address"):

lZlpCodcl

TOGETHER WITH all the improvements now or hereafter.erected on the pro~rty. and all easement~,

appurtenances. and fixtures nOw or hereafter a part of the property. AU replacements and additions shall also

be covered by this Security Instrument. All of the foregoing is referred to in this Security lnsuument as the

"Property." Borrower understands ond agrees that MERS hoids only legol litle to the interests granted by

Borrower io this Security instrument. but, if necessary"to comply with law or custom, MERS (ilS nominee for

Lender and Lender's successors and assigns) hus tho right: to exercise any or all of those interests, i'!1cluding,

-6A(IL)(OOl 0)." CHL (08105' Fann 3014 1/01
DOC ID t: tI!!!~.---.. but not limited to, the right to foreclose and sell the Property; and to take any aelion required of Lender

including. but nOl limited to. releasing and canceling this Security Instrument .

BORROWER COVENANTS thatBorrower is lawfully seised ofthe estate hereby conveyed and has Ibe

right to mortgage, grant and convey the Property and that the Propetty is unencumbered. except for

eneumbrances nf record. Borrower warrant' and will defend genellllly the litle 10 the Property ageingt all

claims and demands. SUbject to any encumbrances of record.

THIS SECURITY INSTRUMENT combines unifonn covenants for nationaJ use and non-uniform

covenanlS with Jimited varialionl) by jurisdiction to constitute a unifonn security instrument covering rcal

properly.

UNIFORM COVENANTS. Borrowerand Lender covcnant ncd agrce asfollows:

.1. PaymentofPrincipalt Interest, Es~row lteI11sJ Prepayment Clung~ and"Late Charges. Borrower

shall pay when due lbe principal of, and interest' on, Ibe debt eyideneed by lbe Notc and any prepayment

charges and late charges due under the Note. Borrower sholl also pay funds for Escrow Items pursuant 10

Section 3. Payments due under the Note Bnd tiUs Security Instrument shall be made in U.S. currency.

However. if any check or other jllsltument received by Lender 8S payment under the Nole or tbis Security

Instmment js returned to Lender unpaid. Lender may require that any or all subsequent payments due undel'

the Note and this Secudty Instnlment be made in one or more of the following fonns, as selt(:ted by Lender:

<a) cash; (b) money order; <c) cenified cheek, bank ehook, treasurer's chook or e..,hier's eheck, provided any

such check is drawn upon an institution whose deposils are insured by a federal agency. 3nstromentaIity, or

entity; or (d) Electronic Fund:;Transfer.

Payments are deemed received by Lender when received at the location desigpated in the Note or at sucll

olhcr location as may be designated by Lender in accordance wHIt Ihe notice provisions in Section 15. Lender

may return any payment or partial payment if the payment or pulia] payments are insufficient to bring the

Loan ·current. Lender may accept any payment or partial payment insufficient to bring the: Loan current,

wi'lhout waiver of any rights h~eunder or prejUdice co its tights 10 refuse such payment or partial payments in

the future. but Lender is not obligated to apply sucb payments at the time such payment,,; are accepted. If each

Periodic Payment is applied as of it') scheduled due date. then Lender nced not pay interest on unnpplied

funds. Lender may hold such unapplied funds until Borrower make.t.; payment to bring the Loan current. If

Borrower does not do so within a reaSDnable period Df time, Lender shaJl eilher apply such funds or relum

(hem to Borrower. If not applied earlier, such funds will be applied to the outstanding principal balance under

the Note immediately prior 10 foreclosure. No offset or claim which Borrowcr might hnve nOw or in the fUlure

against Lender shall relieve Borrower from making payments due under the NOle and this Security Instromem

or perfonning the covenants WId agreement') secured by this Security Instrument.

2. Application or Payments Or Proceeds. Exccpt as otherwise described in this Section 2. all paymenL';

accepted and approed by Lender shall be applied in the following order of priority: <a) interest due cnder the

Note; (b) principal due under the NOle; (c) amounts due under Section 3. Such payments shall be applied'to

each Periodic Payment in the order in which it became due. Any remaining amOunt,; shan be applied first to

late charges. sec.ond to nny other amounls due undcr this Security Instrument. and then to reduce the principal

balance of the NoIc.

If Lender receives a payment from Borrower for a delinquent Periodic Payment which includes a

suffieitmt amounl to pay any latc charge dUc, the payment may be applied to the delinquent payment and the

Jale charge. If more than one Periodic Payment is outstanding. Lender may apply any paymenC received from

Borrower to the repayment of Ute Periodic Payments if. and to the extenlthat, each payment can be paid in

full. To the extent thnt 3J1.y excess exists after the payment is applied to the fun paymenl of one or mote

Periodic Payments, ouch excess may be applied to any laIC charges due. Voluntary prepayments shall be

applied finlt to ncy prepayment charges and then as dc",cribed in Ihe Note,

I

!

i

·6A(lt)(0D10I.o2 CHL (Oal05) Page'" 0116 Fonn 3014 11D1

I

I·

I
DOC ID j/: _iII .,

Any application of payments, insurance proceeds, or Miscellaneous Proceeds to principal due under the

Note shall not extend or postpone the due date, or change the amount, afthePeriodic Payments.

3. FlInds for Escrow Items, Borrower .9hnll pay to Lender on the day Periodic Payments are due under

tne NOle, until Ihe NUle is paid in full, a sum (the "Funds") 10 provide for payment of arnounl9 due for: (a)

taxes and assessments and other items which can attain priority over this Securit'y Instrument as a lien or

eneumbmnce on Ihe Property; (b) leasehold payments or ground rents on the Froperly, i! any; (c) premiums

for any and all insurance required by Lender under Section 5; and (d)'MOIIgage insorauce premiums, if any, or

any sums payable by Borrower to Lender in lieu of the paymenl of Mortgage Insurance premiwn., in

accordance with the provisions of Section 10. These item') lU'C called "Escrow Items." At origination or at any

time during the lenn of the Loan, Lender may require that Communily Association Dues, Fees, and

Assessments, if any. be escrowed by Borrower, and such dUes, fees and nssessmenLt> shall be an Escrow Item.

Borrower .,>hall promptly furnish toLender aU notices of amounts to be paid l,Ulder this Section. BOrIower shall

pay Lender !he Funds for Escrow Items unless Lender waives Borrower's obligation 10 pay the Funds for any

or all E.~crow Items. Lender may waive Borrower's obligation to pay to Lender Funds for 'any or all Escrow

Items at any time. Any such waiver rnay only be in w"riting. In the event of such wniver, Borrower shall pay

directly, wben and where payable, the arnounl9 due for any Escrow Items for wbich payment of Funds h""

been waived by Leoder and, if Lender ·requires, shnJI fumish to Lender receipL9 evidencing such payment

within such time period .,9 Lender may require. Borrower's obligation to make such payments and to provide

teeeipL~ shall for all purposes be deemed to be a covenant and agreement contained in (his Security

Instrument. as the phra~e "covenant and agreement" is used in Section 9. H BOITower is obligated to pay

Escrow Items directly, pursuant 10 a waiver, and Borrower fails to pay the amount due for an Escrow Item,

Lender may exercise its rights under Section 9 and pay such amount and Borrower shall then be obligated

under Section 9 to repay to Lender any such amount, Lender may revoke the waiver as to any or all E.~crow

Items at any time by a notice given in accordance with Section 15 and, upon such revocation, BorlOwer shall

pay to Lender all Funds, and in such amounL~ that are then required under this Section 3.

Lender may, at any time, collecl and hold Funds in.n amounl <a) soflicieDllo permit Lender to apply the

Fundl~ at the time specified under RESPA. and (b) not to exceed the maximum amount a lender Dan require

under RESPA. Lender shall estimate the amount of Funds due on the basis of current data and reasonable

estimates of expenditures offuture Escrow Items or othelWise in accordance with Applicable Law.

. The Funds .~han ~e held in an institution whose deposits are insured by a federal agency, instrumentality,

or entity (including Lender, if Lender is an institution whose deposits are so insured) Dr in any Federal Home

Loan Bank. Lender sllaIl apply the Funds to pay the Escrow IIems no laler Iban Ihe time specified under

RESPA. Lendershall nol charge llon'ower for holding and applying tbe Fonds, annoally analyzing Ihe e,crow

account, or verifying the Escrow Ilems, unless Lender pays Borrower interest on the Funds and Applicable

Law pennits Lender to make such a charge. Unless an agreement js made in writing or Applicable Law

requires interest to be paid on the Funds, Lender shall not be required to pay Borrower any' interest or earnings

on the Funds. BOIrower and Lender can agree in writing, however, that interest shan be paid on the Funds.

Lender shall give to Borrower. without charg~. nn annual accounting of the Funds as required by RESPA.

If there is a surplus of Funds held in escrow. as defined under RBSPA, Lender shall account to Borrower

for the excess fund' in accordence witb RESPA. If there is a snortage of Funds held in c.gerow, .., defined

onder RBSPA, Lender sllnll notify Borrower"" required by RESPA, and Borrower shall pay to Lender the

amount necessal)' to make up the shortage in accordance with RESPA, but in no more than 12 monthly

paymenl'. If there is a deficiency of Fund' held in eserow, M defined under RESPA, Lender shall notify

Borrower as required by RESPA, and Borrower shall pay to Lender the amount necessary to make up the

deficiency in accordance with RESPA, but in no more than J2 monthly payments.

Upon payment in full of all ,oms secured by this Security Instrument, Lender shall promptly refond to

Borrower any Funds held by Lender.

-SA(IL) (0010).02 CHL (08105) PageSof16 F!3'rm 3014 1/01
DOC ID f::Ii ... 4. Charges; Liens. Borrower shall pay all taxes, assessments. charges. fine-li, and impositions

attributable 10 the Property which can attain priority over this Security Inslturnent, Icasehold paymenls or

ground renlS on tbe Property, if any, and Community Association Dues, Fees, and Asse..ments, if any. To

the extent that these items are Escrow Ilemst Bonower shall pay them in the maoner provided in Sec.tion 3.

'Borrower shall promptly discharge any lien which has priority over I.his Secnrity Insltument unless

Borrower: (a) agrees in writing to the payment ofthc obligation secured by tile lien in a manner acceptable

to Lender, but only so long as Borroweris perfonning such egroemen~ (b) conlesL. the lien in good faith by,

.nr defends againsl enforcement of the lien in, legai proceedings which in Lende(s opinion ope.t1lte to prevent

Ihe enforcement of tile licn while those proceedings are pending, bUI only until ,,"ch proceedings are

concluded; or (c) secures from lhe holder of tile lien an agrcemenl satisfaclory to Lender subordinaling Ihe

lien 10 this Security InstrumenL IfLender determines that any part of tile Property is subj..tlo a lien which

can attain priority over this Security Instrument) Lender may give Borrower a notice identifying the lien.

Within 10 days of the. date on which that notice is given. Borrower shall satisfy the lien or take one or morc

of the actionsset forth- above in this Section 4.

Lender may requireBorrower 10 pay aane--time charge for areal esmle tax verificalion and/or reporting

service used by Lender in connection willi this Loan.

S. Property Insurance. Borrower shall keep the improvements now existing or hereafter erecled on the

Properly insUred against loss by fire. hazards included within the tenn "extended coverage," and any other

hazards including. but not limited to. earthquakes and floods, for which Lender requires insurance. This

insurance shall be maintained in the amounlS (including deductible levels) and for'lbe periods lbat Lender

requires. What Lender requir•• pnrsuant to lhe preceding sentenees can change during the leon of the Loan,

The insuOlnce carrier prOViding the insurance shall be chosen by Borrower subject to Lende(s right to

disapprove BoItOweI's choice, which right shall nOt be exercised unre8.'l:onably. Lender may require

Borrower to pay, in connection with Ihis Loan, either: (a) a one-time charge for flood zone determlnalion.

certification and tracking services; or (b) a one-time charge for flood ZOne delennination and certification

services Dnd subsequent charges each time remapping8 or similar changes occur which reasonably might

affect stich determination or certification. Borrower shall also be re..~ponsible for the payment of any fees

imposed by the Pedeml Emergency Management Agency in connection with the review of any flood zone

detcnnination resulting Crom an objection by Borrower. .

If Boftower fails to maintain any of lhe coverages described above, Lender may oblOin insurance

coverage, at Lenfler's option and Borrower's expense. Lender is under no obligation to purchase any

particular type or amount of coverage. Therefore, such coverage shall cover Lender. but might or might not

protect Borrower, Borrower's equity in lhe Prop~ny, or the contents of the PropertyI against any risk, hazard .

or liability and might provide greater or lesser coverage than wns previously in effect. Borrower

acknowledges that the cost of Ibe insurance coverage so obtained might significnnUy cxceed me cost of

insurance that Borrower could have obtained. Any amo.nts disbursed by Lendcr under this Seetion 5 shall

become additional debt of Borrower secured by this Security Instrument. These amounts shaIrbear interest

at the Note rale from the dale of disbursement and shall be payable, with such interest, upon notice from

Lender to Borrower requesting payment.

AJI insurance policies requited by Lender and renewals oC such policies shall be subject to !,.ender's

right to disapprove such policies, shall include a standard mortgage clause, and shall name Lender as

mortgagee and/or as an addiUonallo,s payee. Lender shall h.wc Ibe right 10 hold the policies and renewal

certificales. If Lender requires, Borrower shall promptly give to Lender all receipts of paid premiums and

renewal notices.lfBorrower obtains any form of insurance cOl/erage, not otherwise required by Lender, for

damage 10, or desltuction of, lhe Property, such policy shall ioeludc a standard mortgage clause and shall

name Lender as mortgagee and/or as an additional Joss payee.

-6A(ILllOO1 0).02 cHL (08105) Page6ol16 Form 3014 1101
--_.- -.

DOC Ie I:.'!!i....II!I•••t:-

In the. event ofloss, BOlTOwcr shall give prompt notice to the insurance cartier'and Lender. Lender may

make proof of loss if not made promptly by Borrower. Unless Lender and Borrower otherwise agree in

writing, any insurance proceeds, whether or not the underlying insumnce was required by Lender, shall be

applied 10 resloration or repair of the Properly, jf the restoration or repair is economically feasible and

Lender's security is not lessened. During such I"pair and restoration period, Lender shall have the right to

hold such insurance proceeds until Lender hns had an opportonity to inspeel such Property 10 ensure the

work has heen compleled to Lender's satisfaction, provided that such inspection shall be undertaken

prompUy. Lender may disburse procccds for Ihe repairs and r.S\Dration in a single payment or in..series of

progress payment' as the wOIk is completed. Unless an ngreemenl is made in writing or Applicable Low

requires interest to be paid on such insurance proceeds. Lender shan nol be required to pay Borrower any

intereM or earnings on such pzoceeds. Pees fot' pUblic adjusters, or other third parties, retained by Borrower

shall not be paid out or the insurance proceeds and sball be the sole obligaUon orBorrower. Ifthe restoration

or repair is nol economically feasible or Lender's security would be lessened, the insurance proceeds shall be

applied to the $1)T.llS secured by this Security Instrument.- whether or not then due, with lhe excess, if any.

paid 10 Borrower. Such insurance proceeds shall be applied in the order prOVided for in Section 2.

If Borrower abandons !hI: PropenYt Lender" may file, negotiate and settle any available insurance claim

and related matters. If13orrower does nOl respond within 30 days to a notice from Lender lhal the insurance

carrier has offered to setUe a claim. then Lender may negotiate and sollIe the claim. The 30·day periOd will

begin when the nolice is given. In eilher event. or jf Lender acquires (he Property under Scction 22 or

otherwise, Borrower hereby a<migns to Lender (a) Borrower's right'; to any insurance proceeds in an amount

nol to exceed the amounts unpaid under the Note or this Security Instrumen~ and (b) any alher of Borrower's

rights (olher than Ihe right to any rerund of unearned premiums paid by BOllowcr) uoder all insornnce

policies covering the Property. insofar as such rights are applicable to the coverage of Ihe Property. Lender

may usc mc insurance proceeds either to repair or restore the Property or to pay amounts unpaid under the

Note or this Security InstIUment, whelber or nol then due.

6. Occupnncy. Borrower shall oecupy, establish, llnd use the Property as Borrowefs principal

residence within 60 days after the execution of this Security Instrument and shnll continue to occupy the

Property as Borrower's principal residence for at lea.~t one year after the date of occtlpancy. unless Lender

othenvise agrees in writing, which conSCDt shall not be unreasonably withheld, or unless. extenuating

circumstnJlces exist which are beyond Borrower's COntrol.

7. Prcservatlon, Muinlenance and Protection of lbe Property; Inspections. Borrower shall not

destroy, damage or impair lhe PropertYl allow the Property to dctedorate. Dr commit waste on the Property.

Whether or not Borrower is residj~g in the Properly. Borrower shall mainlain the Property in order to

prevent the Propercy from deteriorating or decreosing in value due to it.CJ condition. Unless it is detennlned

pursuant 10 Section '5 tbatrepair or restoration is not economically feasible, Borrower shall promptly repair

the Property if damaged to avoid (urther deterioration or damage. Jf insurance or condemnation proceeds arc

paid in connection wirh damage to, or the laking of. the Property, Borrower shall be re.~ponsibJe for repairing

or restoring the Property only ir Lender hns releosed proceeds ror such purposes. Lender may disburse

proceeds for tbe repairs and restoration in a single payment or in a scric.~ of progress payments, as the work is

completed. If the insurance or condemnation proceeds"'@IC: not sufficient to repair or restore the Property.

Borrower is not relieved ofBorrowe.r's obligation for the complelion ofsuch repair Or restoration.

Lender or its agent may make reasonable cntric,') upon and inspcctions of the Property. If it ha.~

reasonable cam:e. Lender may inspect the intcrior of the improvements on the Property. Lender shall give

Borrower nouce at the lim~ ofor prior to such an interior inspection specifying such re8.')()nable cause.

i

-6A(14 tOOlO).C2 CHL (OS105l Pagcr7011S Form 3014 1/01
DOC ID ~:

8. Borrower's Loan Applicll(iem. Botrower shall be in defaultifI during the Loan application process,

Borrower or any persons or entities acting at the direction of Borrower or with Borrower's knowledge or

consent gave ma.letia))y faIse. misleading, or inaccurate informalion or statements to Lender (or failed to

provide Lender with material information) in connection with the Loan. Material representations include, but

are not limited la, representations concerning Borrowet's occupancy of the Prope.rly as Barlowe/s principal

residence.

9. Protection ofLender's Inter..t in the Properly and Rights Under this Security lnslrument If

(a) Borrower fails to perfonn'the cuvenents and agreemenls contained in this Security Instrument, (b) there

is a legal proceeding that might significantly affect Lendels interest in the Property andlor rights under lhis

Securl1¥ Instrument (such ns a proceeding in bankruptcy, probate, for condemnation or forfeilure, for

enforcement of a lien which may' attain priority over this Security Instrument or [0 enforce laws or

regulations), or (c) Borrower h"" abandoned the Property, then Lender may do and pay for whatever is

reasonable or appropriate to proeeet Lende~s interes, in Ihe Property and right. under this Securi!)'

Instrument, including protecting and/or ao;,r;essing Lbo value of tbe Property, and securing and/or repairing

the Property, Lender's actions can include, but are not limited to: (a) paying eny sums secured by a lien

which h"" priority over this Security Instrument; (b) appearing in court; and (c) paying reasonable attorneys'

tees to protect its interest in the Property and/or rights under this Security Instrument, including its secured

position in a bankruptcy proceeding. Securing the Property includes, but is not limited to, entering the

Property (0 make repairs, change Jocks, replace or board up doors and windows, drain water from pipc,o;.

eliminate building or oilier code violations or dangerous conditions, and hove utilities turned on or off.

Although Lender may take action under this Sechon 9. Lender does not have to do so and is not under any

duty or obligation to do so. It is agreed that Lender inours no liability for not taking any or all actions

authorized under this Section 9. .

Any amounL' disbursed by Lender under this Sec,ion 9 shall become additional debl of Borrower

secured by this Security Instrument. These amount.~ shall bear interest at the Note rate from Ute date of

disbursement and shall be payable, with such interest, uJlon notice from Lender to Borrower requesting

payment. .

If l1tis Security Instrument is on 8 Jeasehold. Borrower shall comply with all the provisions of the lease.

If Borrower acquirc.1i fee title to Ole Propcrty. the leasehold and the fee title shall not merge unless Lender

agrees to the merger in writing.

10, MOI1gnge Insunmee, If Lender required Mortgage Insornnce as a condition of making the Loan,

Borrower shall pay the premiums required to maintain the Mo.ngage Insurance it! effect. If, for any rea.o;on,

the Mortgage lnsurance coverage required by Lender ceases to be available from the mortgage insurer thn!

previously provided such insurance and Borrower was reqUired to make separately dc,lijgnnted payments

toward !he premiums for Mortgage Insurance, Borrower shall pay the premiums required to obtain coverage

substantially equivalent to the Mortgage Insurenee previously in effect, at a cost substantially equivalenl to

"the cost to Borrower of the Mortgage In.'lumnce previously in effect, from an alternate mortgage insurer

selected by Lender. Ifsubstantially equivalent Mortgage Insurance coverage is nOl available, Borrower shall

continue to pay to Lender the amount of the separately designated payments that were due when the

inswance coverage eea.-;ed to be in effect. Lender will accept. use and retain these payment.1i: as a

non-refundable loss reserve in lieu of Mortgage Insurance. Such Jos~ reserve shall be non·rcfundable.

•notwithstanding the fact that the Loan is ultimately paid in full, and Lender shan not be required to pay

Borrower any interest or earnings on such loss reserve. Lender coo no longer require 108s reserve payments if

Mortgage Insurance coverage (in the amount and for the period that Lender requires) provided by a.n in~urer'

selected by Lender again becomes available, is Obtained. and Lender requires separately designated

paymenLli toward the premiums for Mortgage Insurance. If Lender required. Mortgage Insurance as 8

••A('L) (0010),02 cHL (OSI05) Pago8of16 Form 3014 1/01
poe ID H: ••••••••

condition of making the!,.oan and Borrower was required 10 make separnteIy designaled payments toward

Ihe premiums for Mortgage Insurance, Borrower shall pay the premiums required to mainlain Mortgage

Insurance in effcct, or to provide a non·refundable loss resczvc, until Lenders requirement for Mortgage

Insurance ends in accordance with any written agreement between Borrower and Lender providing for such

termination oruntil tennination is required by Applicable Law. Nothing in this Seetlon 10 affects Borrower's

obligation to pay interest at the ralc provided in rhe Notc.

Mortgage Insurance reimburses Lender (or any entity that purchases the N'ote) for certain Josses il may

incur ifBorrower doe:;; not repay the Loan as agreed. BOlTowet is not a party to the Mortgage Insurance.

. Mortgage insurers evaluate their total n.1ik on all such insurance in force from time to time, and may

entcr into agrcemenls with other parties that share or modify their .risk, or reduce Josses. 'These agreements

are On terms and conditions Ihal are salisfaclory to lho mortgage insurer and the olher parly (or parties) to

these agreements. 'I"hese agreements may require the mortgage insurer to make paymcnls using any sour~

of ronds thaI the mortgage insurer may heve available (which may include funUs obtained from Morlgage

Insurance premium.'>').

As a result of Ihese agreements, Lender, any purchaser of Ute NOle, another insurer. Bny reinsurer, any

other entlly. or any affiliate of any of the foregoing, may receive (directlY or indirectly) amounts that derive

from (or might be characterized as) a portion of Borrower's payments for Mortgage Insurance.. in exchange

for sharing or modifying the mortgage insurer's risk, or reducing ]os:;c,,;. Ifsuch agreoment provides that an

affiliate 9f umder lakes a share of tho insurer's risk in exchange for a share of the premiums paid to Ihe

insurer. the arrangement is often tcnned "captive reinsurance." Further:

(a) Any such agreements wiD nol affect ilie amounts iliat Borrower bas agreed 10 pay for

Mortgage Insurance, or any otlter terms of the Loan~ Sucb agreements will not increase the amount

Borrower Will ow41 fDr Mortgage Insurance, and they will nGt entitlo Borrower to any refund.

(b) Any such agreements will nol alfec! ilie rights Borrower ha5 • if any. witb respect 10 the

Mortgage Insurance under the Homeownen Protection Ad or 1998 or any oUter law~ These rights

may include the right 10 receive eerLain disclosures, to request and obtain cancellation of tbeMortgage

Insurance, to have Ule Mortgage Insurance terminated automatically, and/or to receive a refund of

any Mortgage lmurance premiums tbat were unearned at the time of such cancellation or

terminatiDn.

1L Assigrunenl of Mlsc~Daneous Proeeeds; Forfeiture. All Miscellaneous Proceeds am hereby

a.,igned to and shall be paid 10 Lender.

If the Property is damaged, such Miscellaneous Proceeds shall be applied to restoration or repair of the

Property, if the re.c;;tomlion or repair is economically feasible and Lenderls security is not lessened. During

sueh repair and restoration period, Lender shall have the right to hold such Miscellaneous Proceeds until

Lender has had an opportunity to inlipcct such Properly to .ensure Ihe work ha.~ been compJeted to Lender's

satisfaclion, provided thaI such inspection shall be undertaken promp~y. Lender may pay ror the repairs nnd

restoration in a single disbursement or in a serie.~ of progress payments as the work i8 completed. Unless an

agreemenl is made in writing or Applicable Law requires inlerest to be paid- on such Miscellaneous

Proceedli, Lender shall not be required to pay Borrower any interest or earnings on'such Miscellaneous

Proceeds. If the restoration or rep~ir is'not cconomicaJly feasible or Lender's security would be le.'isened, the

Miscellaneous Proceeds shall be applied to Ihe sums secured by this Security Instrument, whether or not

then due, with the excess, if any, paid to Borrower. Such MisceJlaneous Proceeds sball be applied in the

order provided for in Section 2,

In the event of a ~ora) taking, deSlrUcrioD, Dr loss in value of the Property, the Miscellancou,lj' Proceeds

shall be applied 10 the sums secured by this SeeorilY lnslrumen~ whether or nol then duc. with the excess. if

any, paid to Borrower. . .

i·

'6A(IL) (0010).02 CHL (0B/05) Page 9 of 16 Form 3014 1/01
. DOC 10 I' .

In the event of a partial laking, destruction, or loss in value of the Propeny in whioh the fair market

value of the Property immediately before the partial taking. destruction, or loss in value is equal to or greater

than the amount of the sums secured by this Security Ins~menl immediately before the partial taking,

destruction, or loss in value, unless Borrower and Lender otherwise agree in writing, the sums s,cured by

Ibis Security Instrument sball be reduced by Ihe amount of the Miscellaneous Proceeds Il\ultipllcd by the

following mction: (aJ the lotal amounl of the sums secured immedialely before the partial laking,

destruotion, or loss in value divided by (b) the fair market value of the Propeny immedialely before the

partial taking, destruction, or lossin value. Any bnJancc shall bepaid to' Borrower.

In the evenl of a partial laking, destruction, or loss in value of the Propeny in which Ihe fair market

yaIue of the Property iouuedialcly before the partial taking, destruc!ioo, or loss in value is les., thun the

amounl of the sums secured immediately before the paniaJ taking, destruction, or loss in value, unless

Borrowe' and Lender otherwise agree in writing, the Miscellaneous Proeeeds shall be applied 10 lhe sums

secured by this Security Instrument whether or not rhe sums are then due.

If the Property is abandoned by Borrower, or if, after notice by Lender 10 Borrower that the Opposing

Pony (as defined in lbe next sentence) offers 10 make an award to sellie a claim for dt!mages, Borrower fails

to re..l;pond to Lender within 30 days after the date the notice is given. Lender is authorized to collect and

apply the Miscellaneous Proceed~ either tQ reJ;toralion or tepair of the Property or to the sums secured by

this Security Instrumenl, whether or nOI Ihen due. "Opposing Pony" means Ibe third pony that owes

Borrower Miscellaneous Proceed.~ Of the party against whom Borrower has a tight of action in regard to

MiscellaneousProceeds.

Borrower shall be in default if any action or proceeding. whether civil or criminal, is begun that, in

Lender'sjudgmcnl. could result in forfeiture ofthe Property or other material impairment orLender's intere,l)t

in ~e Property or rights under this Security Instrument. Borrower enn cure such a default and, ifacceleration

has occurred, reinstate as provided in Section 19, by causing (he action or proceeding to be dismissed with a

ruling Chat, in Lender's judgment, precludes forfeiture of the Property or other material impainnent of

Lender'sinterest in the. Property or rights under this Security Instrument. The proceeds of any award or claim

for damage.~ that are attributable lo the impairment of Lender's interest in the Properly are hereby assigned

and shall be paid to Lender.

All Miscellaneous Proceeds that are not applied to restoranon or repair of the Property shan be applied

in the order provided for in Section 2. .

. 12. Borrower Not Released; ForbearoDce By Lender Not a Waiver. Extension of the time for

payment or modification of amortization of the sums secured by this Security Instrument granted by Lender

to Borrower or any Successor in Interest ofBortOwer shall not operate to relea.~e the liability ofBorrower or

any Successors in Interest of Borrower. Lender shaH nol be req~rcd to commence proceedings against any

Successor in Interest of Borrower or to refuse to ex.tend time for payment or otherwise modify nmortizaUon

of the sums scoured by this Security Instrument by reason of any demand made by the original Borrower or

any Successors in Interest of Borrower. Any forbearance by Lender in exercising any right or remedy

including, wHhout limitation, Lender's acceptance of payments from third persons, entitie~ or Successors in

]ntercst of Borrower or in amounlS Jess lhan the amount then due. shall not be a waiver of or preclude the

exercjs~ of any right or remedy.

13. Joint and Several Liability; Co·signers; Successors and Assigns Bound. Borrower covenants

and ngrees that Borrower's obligations and liability shall be joint and several. However, any Borrower who

c04signs this Securily ]nstrument but does not execute the Note. (a ·'co·signer"): (a) is co-signing this

Security Instrument only to mongage. grant and convey the co-signer's interest in the. Property under the

,emlS of this Secnrity Instroment; (b) is not personally obligaled lu pay the .,nms senured by thL, Security

Instrument; and (c) agrees that Lender and any other Borrower can agree to extend. modify. forbear or make

any accommodations with regard to the temlS of this Security Instnlment or lhe Note without the co-signer',~

consent.

i.

I

-GA(lL) (0010).02 CHL (0B/05) Page 10 0116 Form 3014 1/01
DOC ID t, .,

Subject to the provisions ofSection 18, any Successor in Interest of Borrower who assumes Borrower's

obligations under Ibis Security Instrument in writing, BJld is approved by Lender. sball obtain all of

Borrower's rights and benefits under this Security InstrumenL Borrower shall not be released from

Borrower's obligations BJld liabilily under this Security Instrument unless Lender agrees to sucb release in

writing. The covenants and agreements of this Security Instrumcntshall bind (except lIS provided in Section

20) and benefit thc successors and assigns ofLender.

14. Loan Charges. Lender may charge· Borcower fees for services performed in connection with

Borrower's default, for the purpose of protecting Lender's interest in the Property and righlS under this

Security InslnIment. including, but not limited to, attorneys' fees. property inspection and valuation fees. In

regard 10 any other fcc.ll. the absence of express authority in this Security In:litrument to charge a·specific fcc

to Borrower sball not be construed a.~ a probibition on tbe cbarging ofsucb fee. Lender may not cbarge fees

tha, are expressly probibited by this Security Instrument or by Applicable Law.

If the Loan is subject to a law which set.~ maximum loan charges, pnd tha.t law is finally interpreted so

that the. interest Or other loan charges collected or to be collected in connection with the Loan exceed the

penniUed limits, then: (a) any such loan charge shall be reduced by the amount necessary to reduce the

charge to tbe pennilled limj~ and (b) any sums already collected from Borrower which exceeded permitted

limits will be refunded to Borrower. Lender may choose to make this refund by reducing the principal owed

under the Note or by making a direct payment to Borrower. ]f arefund reduces principal, the reduction will

be treated as a partial prepayment without any prepayment cbarge (wbether or not a prepayment charge is

prOVided for under the Note). Borrower's acceptance of any sucb refund made by direct paymen' 10

Borrower wUl constitute awaiver of any right of action Borrower might have arising Out ofsuch overcharge.

15. Notices. All notices given by Borrower or LCnder in connection with this Security Instrument must·

be in writing. Any notice to Borrower in connection with this Security InstIllment shall be deemed to have

been given to Borrower when mailed by first class mail or when actually delivered to Borrower's nOlice

address ifsent by other means. NOtice to anyone Borrower shaH constitute nOlice 10 an Borrowers unless

Applicable Law expressly requites otherwise. The notice address shall be the Property Address unless

Borrower hus design.'ed a substitute notice eddrcss by no'ice '0 Lender. Borrower sball promptly notify

Lender of Borrower's change of addres.s. IfLender specifies a procedure for reporting Borrower's change of

address, tlJen Borrower shall only report a change of address through thatspecified procedure. There may be

only one designated notice address under ,bis Security Instrument at any oae ,ime. Any nOlice 10 4nder

shall be given by delivering it or by mailing it by first class mail to Lender's address stated herein unles!i

Lender hall designated anolher addre.l;js by nOlice (0 Borrower. Any notice in connection with this Security

Instrumentsball not be deemed to bave been given '0 Lender unUlacmally receivc~ by Lender. If any nOlice

required by this Security Instrument is also required under Applicable Law, the Applicable Law requirement

wiJI satisfy the corresponding requirement under this Security Instrument.

16. Governing Law; Severability; Rulfs of Construction. This Security Instrumentshall be governed

by federal law and 'be law of 'he jurisdiction in wbich tbc Properly is localed. All rights and obligations

contained if! (his Sccurity Inslrument are subject 10 any rcquirement.lf and limilations of Applicable Law.

Applicable Law might explicitly or implicitly allow the parties to agJ:l;e by contract or il might be silentl but

such silence shall not be construed as a prohibition against sgreemenl by contract. In the event that any

provision or clause of thi.l;j Security InSlnIment or the Note COnfliCLl;j with Applicable Law, such conflictshall

not affect other provisions of Ibis Security Instrument or Uie Note which can be given effect without the

conflicting provision.

As used in this Security Instrument: (a) words of the masculine gender shall mean and include

corresponding neuter words or words of the feminine gen4er; (b) words in the ,')ingular shall mean and

include the plural and vice versa; and (e) the word "may"gives sale discretion without MY obligation La take

any action.

q ·M(lL) (OOlO).U' CHL (DIl/OS) PagD 11 0116 Form 3014 1101 I

I. I
DOC ID II, .•••••••••

17.Borrower's Copy. B·orrowershall be given one copy ofthe Note and of this Security Inslrumen~

18. Transfer of the Property or a Beneficial Inferest in Borrower. As used in this Seclion 18,

Itlnterest in the Property" means any legal or beneficial interest in the Property, including, but not limited to,

those beneficial interests transferred in a bond for deed, contract for dee~ installment sales contract or

escrow agreement,the intent ofwhich is the IIaJlsfer of tiUe by Borrower at a fUlure date 10 a purchaser.

If an or any pan of lbe Property or any Interest in the PropertY i. sold or tran.ferred (or if Borroweri.

not a natura! person and a beneficial interest in Borrower i••old or tran.ferred) without Lender's prior

wrinen consent, Lender may require immediate payment in full of all sums secured by this Securily

InslrUment. However, lhi' option shall not be exercised by Lender if snch exercise i. prohibited by

Applicable Law. .

If Lender exercises this option, Lender shall give Borrower notice of acceleration', 'The notice shall

prOVide a period of nOl1ess than 30 days from the dale the nouce is given in accordance wilh Section 15

within which Borrower must pay all sums secured by this Security IIls\.n1mcnt. lfBorrower fails to pay these

sums prior to (he e::c.piration of this peJiod, Lender may invoke any remedies permitted by this Security

InslIUmcnt withoutfurther noliceor demand on Borrower.

19. Borrower's Right to Reinstate After Acceleration. If Borrower meets certain conditions,

Borrowershall have the right to have enforcement olthi. Security Instrument discontinued at any lime prior

to the earliest of: (a) five days before sale of lb. Property purnuant to Section 22 of Ibis Security Instrnmenl;

(b) such other period as Applicable Law ntightspecifY for the termination olBorrower's right to reinstate; or

(c) entry of a judgment enforcing this Security In.trnmen~ Those conditions are that BorlOwer: (a) pay.

Lender all sums which then would be due under this Security Instrument Vlld the Note as if no Dcceleration

had occurredi (b) cures any default of any other covenants or agreement.~ (e) pays. all expenses incurred in

enforcing this Security Iilstroment. including. but not limited to. reasonable auorneys' fees. property

inspection and valuation fees. and other fec.~ incurred for lite purpose of protecting Lender's interest in lhc

Property and right' under this Security Instrument; and (d) lakes sneh aelion as Lender may rea.,.nably

require to assure that Lender's interest in Ute Property and rights under this Security InSlrument, a.nd

Borrower's obligation to pay the sums secured by this Security Instrument. sholl continue unchanged unless

as otherwise provided under Applicable Law. Lender may require that Borrower pay such reinstatement

.Iums and expense. in one or more of the following form., as .elected by Lender: (a) cash; (b) money order;

(c) certified check, bank check, lreawrcr's check or cashier's check, provided any such check is drawn upon

an institution whose deposlL~ are insured by a federal agency, instrumentality or entity; or (d) Electronic

Funds Transfer. Upon reinstatement by Borrower, this Security In.trnmcnt and obligations secured hereby

shalJ remain fully effective a.., iroo acceleration had occurred. However, this right to reinstate shall not a.pply

in the case of acceleration under Section 18. .

20. Sale of Note; Change ofLoan Servicer; Notice of Grievance. The NOle or apartial interest in the

NOle (together with cbis Security Instrument) can be sold one or more times without prior notice to

Borrower. A sale might result in a change in the entity (known as the "Loan Servicec") that collects Periodic

Payments due under the Note and this Security InslIUmenl nnd performs other mortgage loan servicing

obligations under the Note. this Security Instrument, and Applicable Law. There 8]50 might be one or more

changes of the Loan Servicer"unrelated [Q a sale of the Note. If there is a change of the Loan Servicer.

Borrower will be given written notice of the change which. will state UU} name and address of the new Loan

Servicer, the address to which payments should be made and any other infonnalion RESPA requires in

connection with a nOlice of transfer ofservicing. If the NOle is sold and thereafter the Loan is serviced by a

Loan ~e.rvicer other than the purchaser of the NOlc. the mortgage loan. servicing obJigations to Borrower will

remain with the Loan Servicer or be transferred (0 a successor Loan Servicer and are not o.~sumed by the

Note purchaser unle.~s otherwise provided by lhe Note purcha~er.

·.A(I~) (0010).02 CHL (OBlllS) PaglJ 12 0116 Fcnn 3014 1101
DOC ID til ..

Neither Borrower nor Lender may commences join, or be joined to any judicial action (as either an

individual litigant or the member of a class) that arises from rhe other party's actions pursuant to tbis

Security InslrUment or th.t alleges that the olher party hoa hreached any provision of, or any duty owed by

reason of, tliis Secinily Instrumen~ nntil such Borrower or Lender has notif'ted the other party (with such

notiee given in compliance with the requirements of Section IS) of snch.aneged breach and afforded the

other party hereto, reasonable period after the giving ofsuch notice to take corrective action. IfApplicable

Law provides a time period which must elapse before certain action can be takenl that time period will be

. deemed to be reasonable for purposes of this paragraph. The notice of acceleration and opportunity to cure

given to Borrower pursuant to Section 22 and the notice of acceleration given to Borrower pursuant to

Section 18 shaU be deemed to satisfy the notice and opportunity to take corrective action provisions of this

Section 20. .

21. Hazardons Subsfances. As "Used in this Section 21: (a) "Hazanlous Substances" are those

substances defined as toxic or hazardous substance." pollutants, or wn.~tcs by Environmental Lnw and the

following substances: gasoline. kerosene. other flammable or toxic petroleum products. toxic pesticides and

herbicides. volatile so)venL~. materials containing asbeslos or fonnaldehyde. and radioactive matcrial1i; (b)

"Environmental Law" means federal laws and laws of lhe jUrisdiction where the Property is located that

relate (0 hea1lh\ safety or environmental protection; (c) "'Environmenlnl ClcDnuptt includes any response

action. remedial action, or removal netion. as defined in Environmental Law; and (d) an "Environmentol

Condition" means a condition that can cause, contribute to, or otherwise trigger an Environmental Cleanup.

BOIJOwer shall not cause or permit (he presem;e. use. disposal, storage. or teJC&ore 9f any Hazardous

Sub.~tance.'l, or threaten to release any Hazardous Substances, on or in the Property. Borrower shalt not do.

nor allow anyone else to do. anything affecting the Property (a) that" is in violation of any Environmental

Law. (b) which creates an Environmental Condition, or (c) w.hich. due to the presence. use, or release of a

Htlzudous Substance, creates acondition that adversely affects tbe value of the Property. The preceding two

sentence... shall not apply to rhe presence, 'Use, or storage on tbe Property of small quantitie.~ of Hazardous

.Substm1c~l) that are generally recognized to be appropriate to nonnal residentia.l uses and to maintenance of

the Property (including, but not limited 10. hazardous .r;ubsIMces in consumerproduclS).

Borrower shall promptly gi,:,e Lender written notice of(a) any investigation, claim. demand, lawsuit or

.other action by any governmental or regulatory agency or private party involving the Property and nny

Hazardou,r; Substance or Environmental Law of which Banower hal; aCl:ual knowledge, (b) any

Environmental Condition. including bUI not Jjmiled 10. any spiIJing, leaking, di.~charge. release Or tJueat of

releuse of any Hazardous Substance. and (c) any condition caused by the presence. usc or release of a

Hazardous Substance which adversely affects the valile of the Properly. IfBorrower Jearns. or is notified by

any governmental or regulatory aULhority. or any private party, that My removal or other remediation of any

Hazardeus Substance ,ffecdng the Properly is neec&,ary, Borrower shail promptly take nil necessary

remedial actions in accordance wilh Environmental Law. Nothing herein shan create 3ny obligation tln

Lender foran Environmental CJCBYlUp.

NON·UNIFORM COVENANTS. BorrowcrandLender further covenant and agree .., foilows:

22. Acceleration; Remedies. Lender shall give notice 10 Borrower prior 10 acceleration following

Borrower's breach of any covenant or agreement in this Security Inslrwnenl (but not prior 10

Dcceleration undel' Seclion 18 unless Applicable Law provides otherwise). The nolice shall spcciry~ (a)

11m dar,all; (b) the aelion required (0 cure !he default; (c) a datA>, notless than 30 days Irom !he date

the notice is given to Borrower, by which the default mus1 be cured; and (d) that faUure 10 cure the

default on or before the date specified in the notice may result ih acceleration of the sums secured by

this Security Instrument, foreclosure by judicial proceeding and sale of the Properly. The notice '''011

.6A(IL)(0010).02 C~L (aB/oS) Page 13 of 16 Fonn 3014 1(01
-------.- --- - -----------

DOC ID t: • 110-

further inform Borrower of the right to reinstate artcr acceleration and the right to assert in the

foreclosure proceeding the non-existence ora default orany other defense ofBorrower to a""cleration

and Coreclosure. H die default is DOt cured on or before the dat.e specified in the notice, Lender at its

option may require inunediate paymenl in full of all sumssecured by this Security Instrument without

forther demand and'may foreclose Ibis Security Instrument by Judicial proceeding. Lender shall he

entitled to collect an expenses incurred in pursuing the remedies provided in this Section 2Z, including,

but not limited to, reas(lnable attorneys' fees Ilnd costs of title evidence. .

23. Rclease. Upon payment of all sum, seenred by this Security Instrumcnt, Lender shall release this

Security Instrument. llorrower shall pay any recordation costs. Lender may charge Borrower a fee for

relea,ing this Security Instrument, bUI only if lhe fee is paid to a third party for services tendered and the

charging oflhe fee is permitted under Applicable Law.·

24. Waiver of Homestead. In accordance with Illinois law, the Borrower hereby releases and waj"ves

oIl rights under ond by virroe of Ihe !IIinois homestead exemption laws. .

25. Plaeement of Collateral Protection Insurance. Unless Borrower provides Lender with evidence

of the insurance coverage required by Borrower's agreement with Lender. Lender may 'purchas~e insurance at

Borrower's expense to protect Lender'.~ interests: in Borrower's paJJateroJ. This insurance may, but need not.

protect Borrower's interests. The coverage that Lender purchases may not pay any claim that Borrower

makes or any claim that is made against Borrower in connection with th~ collateral. Borrower may latcr

cancel any insurance purcha.'lcd by Lender, but only after providing Lender with evidence that Borrower hal)

obtained insurance as required by Borrower's and Lender's ngreement. IfLender purcha.'ro'J insurance for the

collateral, Borrower will be responsible for the costs of that insurance, including interest and any other

charges Lender may impose in connection with Ute placement of the insurance. until the effective date of the

cancellation or expiration of the insurance. The COsL~ of the insurance may be added to Borrower's [0181

outstanding balance or obliga.tion. The. costs of the insurance ml:!-Y be more than the cost of insurance

Borrower may be able lo obtain cn its bwn, .

.SA(IL)(OO10).D2 CHL (D0I05) Page 14 of lB Fonn 3014 1/01
_. - --- .,

,DOt: ID ,: '

BY SIGNING BELOW, Borrower accepts and agrees to the lcnns and covenants conlained in Ihis

Security Instrument and in any Riderexeculed by Borrower and recorded with it. .

_--,- (Sco1)

·BOROwcr

-6A(ILj(0010).02 CHL(OB'05) Page 15 of 16 Form 3014 1/D1
i' .'

, t

DOC ID I 'r:tl4•••I1!!!!••• STATE O!il!];-LlNOIS, 11 r {)IN/ County ss,

I.:-tL~/=h~;.;r,-70.:.:::,.,--:;u:'=':'?:O~~''-'~,,"];1.!rc:..,- ' aNotary Public in and forsDid county

and stale do hereby certify that..,..,,.- ,,.. ,--,...-,,-,--r-,-;:---:;;;:-__

.4?~e-c sg;;~ "s" "L ","d Ro,fph If. S:>"""'SO'I W !2¥ Alf,;.e... ILL S"htA,o.:s"I:>£.\ a~r ;11 ~c+ I "

-p:::"",=o::n::oJ""jy::-;:kn=ow=n::-;:to::-:m=.=t=o";:be:":th:-e-sa=m=e'-p=ersC:::o=n'"Cs'):::w:;:h=os::.-n:':a-m::."'Cs')-SU-'bs~cr:;'ib:-e:-;d:-l=o-:lh;:-e:-;::fo=re::g::O-;:in=g'-;i=n.:::Slnl-m::e=n~

appeared before m. this day in person. and acknowledged thaI helshe/they signed and delivered the said

inslrUmenl a~ hislher/the1r free and voluntmy ac~ for the uses and porposesjherein set forlh. I'

. Given under my hand and official seal, this '2-5' day of ~'tl en'7-, .z.oe '"

My Commission Expi~es:

"OFFICIAL SBAL"

ALBERTO COLIN JR.

Hclari Pobllc, Siaia of Illinois

My Commission Expire, 4121110

NClary Public. .f

W-~--~

.OA(IL) (0010).02 C~L (oa'os) Pago 16 0115 Form 3014 1/01

!

.j
.,

.. .1', • "I.

LAURIE MCPHILLIPS 2P R·2006102840

Will County Recorder ·Page 1 or 2

Time 16:03:2~

24.75

Prog. 10.00

DET Date ~6/21/2006

Recording Fees: I~ Rental Hsng Support

WHEN RECORDED, MAIL AND RETURN TO:

HSBC

577 LAMONT ROAD

ELMHURST, IL 60126

Recordin~ requested by Countryw~de Home Loans, Inc.

Slhell IccoJ:aeQ mil i' to·

1800 Tape eal~ en Rgad

Simi lalley. en 93 Q 63

AtLn. Bee~8~t Control

.

P.:r;,): -i-=-=-"-'-""-~------------

CORPORATION ASSIGNMENT OF MORTGAGE

Doc. :r:n# commit~entlf ____

For value received. the undersigned 1 Countrywide Home-Loans, Inc., 1800

Tapo Canyon Road, Simi Valley, CA 93063, hereby grants, assigns and

transfers to:

HO'''eb'''d F1nanreCoc:po13Ucm 1II m , amon' ad Fh.."lu'gt," 60128

Al ~ts ~nter~s un er a certa~n ortgage a e 03, execu b .

AMIE SIMPSON/~ortgago~s per MORTGAGE recorded as Instrument No . ..--.:.. on f-r-o in Book Page of official r~n the County ecorder's Office of WILL County, ILLXNotS. ~aJ;C pa1rcel ::;I • $ X, WILL COUNTY- TREASURER I6":Dr~g~na Mortgage 60, ODO, 00

tJ>D' ; ,

(See page attached hereto for Legal Descri~tion)

Together with the Note or Notes therein descr1bed or referred to, the . money due and to become due thereon with interest, and all rights accrued

or co accxue under said Mortgage.

Dated: 06/17/2005 Countrywide Home Loans, Xnc.

ByMar~bel Ledezma, col{#[Gera! Frocessong Officer-Treasury'Ban , N.A. as attorney in fact for

Countrywide Home Loans, INC.

State of California

county of Ventura

On oa/17/2005 before me, Jose Juarez I personally appeared Maribel Ledezma , ~ersonally known te me (or proved to me on the basis of satisfactory ev~dence) to be the person(s} whose name(s) is/are subscribed to the . within instrument and acknowledged to me that he/she/they executed the

same in his/her/their dUly authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) I or the entity

upon behalf of which the persons acted, executea the instrument. Witness

my hand and official seal.

Signature: ose Juarez

prepared by: Maribel Ledezma

1800 Tape Canyon Road SV-20

Simi Valley, CA 93063

Phone": (605) 577-6039

see ATTACHED l.EGI\l. DESCRIPTION

P!lJl REt> s>:,

/(I'''' E,uY,(,SKc:!@'JE } 1577 LAMONT RD..... .-" OS JUAREZ

ELMHURST,IL 6012E§1 • ' ... COMM, #1473585 ::E ~~:zooo ~,.. NOTARY PUBUC. CALFORNIA a::

.; VENTURA COUNTY 0

( .• WComm',f'i'''J.latcll~20081
. ,.

LEGAL OESORIPTIOt-J

wneN RECORDED, MAil AHD RETURN Tq:

HSBC

577 LAMONT ROAD

4#~.

\

...."

". . :": . .. ' ",". • < .. I:

0" ;~.

.' .' ~-. ':'~.~. -,,', M II ~.: •

'" '.~ '.. ';...

... ..:

..

·:. - .~.- · ." I

!

I

'.. · ,." ..... ," .'

'.

.,- :

.. :. "

.:.

. ;

'.

"" -'. T"

i

,

!

I

I

I.
·~ ....""

lRURtE MCPHIllIPS 2P R200615369B

Will Coun'y Recorder Page 1 .r 2

cAl( Dah 09/12/2006 Time 15:27:36

Recording Fees: 25.75

IL Ren'al Hsng Suppor' Prog: 10.00

ABOVE SPACE FOR RECORDER'S USE ONLY

RELEASE OF MORTGAGE ORmUSTDEED BY CORPORATION

Docm

KNOW ALL MEN BY THESE PRESENTS

Th.t Mortgage Electronic Registration Systems, Inc. ofthe County ofMARICOPA andSt.te ofARIZONA, for and

in consideration ofone dollar, and for other good and valuable considerations, the receipt whcreofis hereby

acknowledged, do hereby remise, release, convey and quit-claim unto:

N.mc(.) : AMIE SIMPSON

Property P.I.N.

Address :

heir, legal representatives and assigns, aIt the rIght, title interest, claim, or demand whatsoever it may have acquired

in, through, or by a certain mortgage bearing the date 08/0312005 and recorded in the Recorder's Ollice of WILL

e.ounty, in the State ofllJinois in BookN/A ofOllicial Records Page N/A a. DocumentNumbe" , to

the premises therein described as situated in the County ofWILL, State oflllinois, to wit together with all the

appurtenances and privilegesthereunto belong or appertaining.

WITNESS my hand this 30 day ofAugust, 2006.

Electronic Registration Systems, Ine.

Peter Lopez

Assistant Secretary

•
• I. ,""-

STATE OF AR1ZONA

COUNTY OF MARlCOPA

I, Ryan J. Riddell a notary public in and for the said County, In the slate aforesaid, DO HEREBY CERTiFY tbat

Peter Lopez, personalJyknown to me (orproved to me on tbe basis ofsatisfactory evidence) to be the same person

whose name subscribed to the foregoing instrument, appeared before me this day in person, and acknowledged that

be signed, sealed and dellvered the said instrument as a free and voluntary act, fOTthe uses and purposes therein sel

fortb.

Given under my hand and official soa1, !his 30 day ofAugust, 2006.

•

OFFICIAl. SEAl.

.~ RYAN J. RIDDELL ~- NOTARYPUBl,lC-ARIZONA ". MARICOPA CQUN1Y

,,' M,;Y",CaSim;;~;;",",,,' .."',,'SiN.,',,".,"S -~:.... ·'S;OO~.:.IJ'

FOR THE PROTECTION OF THE OWNER, THIS RELEASE SHALLBEFILED WITH THE RECORDER OF

DEEDS IN WHOSE OFFICE THE MORTGAGE OR DEED OF TRUST WAS FiLED.

Mail Recorded Satisfaction To:

Prepared By: Steven W. Galiano

ReconTrust Company, N.A.

1330 W. Soutbern Ave.

MS: TPSA-88

Tempe. AZ 85282-4545

. (800) 540-2684

AMIESIMFSON

j
EXHIBITC
SETERUS, INC. WELCOMES YOU AS AVALUED CUSTOMER : seterus ,

Dear Homeowner,

Welcome to Seterus, Inc., your new mortgage seNicing company. As one ofthe nation's leading loan seNicing companies, we look

forward to working with you to make paying for your home easier than ever.

We think you will be pleased with our many il)novative customer seNice features, including 24-hour account access through our

website, multiple payment options, and'a toiHtee customer seNice line with automated account information. Our goal is to

provide abroad range of personalized touch points for you now that we are seNicing your loan.

HERE IS SOME IMPORTANT CONTACT INFORMATION YOU WILL WANT TO KEEP ON HAND:

~~

VISIT OUR WEBSITE FOR MORE INFORMATION ABOUT THE TRANSFER OF YOUR LOAN.

Additionally, in this Welcome Packet you will find the following information and helpful documents:

•Official Transfer of Servicing Notice ...................................................................................................................- , , .

.:.~~~~~~~~'.~.~~~~~...~~.~~~.~~.~~ ...~~.I.~~~~ ..~~..:.~~:. ..~,~~~............................................................................................................ I

•How to Read Your Monthly Statement ·:·A~t~ ..·P~y..A~th·~·~·i~~ti~~ ..Ag~~~~~~t' · ·..· · ,.,::; .

Remember, if you have questions or issues with your mortgage, we want to help you, if we can. If you fall behind on payments or

think you might soon, please don't hesitate to contact us. We pride ourselves on being fiexible and understanding in providing

solutions. We look forward to working with you1.

Visit www.seterus.com for more information
seteruSTM

October 12, 20II

Seterus, Inc. Loan No.:'.~::"L Prior ServicerLoan No.:

PhysIcal Address

14523 SW Millikan Way. Suite 200; Beaverton, OR 97005

Business Hours (Pacific Time)

Mon-Thu 5:00am to 9:00pm; Fri 5:00am to 6:00pm

SaI6;QO,m to 12;QOpm; Sun 9:00am 10 5:00pm

Payments

PO Box 7162; Pasadena, CA 91109-7162

Correspondence

PO Box 4121; Beaverton, OR 97076·4121

Phone

S66.570.52n

Fax

866.578.52n

Website

WNW.seterus.com

.~

Transfer of Semcing Notice

The servicing ofyour mortgage loan, that is the right to collect payments from you, is being transferred from Bank ofAmerica,

N.A. to Seterus, Inc. effective October 01, 2011 (the "Transfer Date").

The assignment, sale or transfer ofthe servicing ofthe mortgage loan does not affect any term or condition ofthe mortgage

instrnments, other than terms directly related to the servicing ofyour loan.

Except in limited circumstances, the law requires that your present servicersend you this notice at least 15 days before tbe

effective date oftransfer, or at closing. Your new servicer must also send you tbis notice no laterthan IS days after this effective

date or at closing.

Ifyou bave any questions relating to lhe transfer oflhe servicing prior 10 the Transfer Date, callBank ofAmerica, N.A. loll-free

aI800.669.6607, Monday Monday-Friday 7 a.m. 10 p.m., local time. As offue Transfer Date, questions may be directed to

Seterus, Inc. Customer Service toll-free at 866.570.5277. On the Transfer Date, Bank ofAmerica, N.A. will stop accepting

pa)'IUents from you. Seterus, Inc. will accept paymentsfrom you as ofthe Transfer Date. Send all payments due on or after Illat

date to your new servicer.

As ofthe Transfer Date, any mortgage, life, disability, or any other type ofoptional insorance offered to you by your prior 8eIVicer was cancelled. !fyou wish to maintain the coverage, please contact the insurance carrier directly.

Please note that this cancellation of optional insurance does not impact your existing hazard or homeowner's insurance

coverage.

You should be aware ofthe following information, which is set out in more detail in Section 6 ofthe Real Estate Settlement

Procedures Act (RESPA). During the 60-day period following the effecllve date ofthe transfer ofthe loan servicing, a loan

payment received by yonr old servicer before its due date may not be treated by Seterus, Inc. as late, and a late ree may not be

imposed on you.

Section 6 ofRESPA gives you certain consumer rights. Ifyou send a "qualified written request" to Seterus, lnc.concerning the

servicing ofyonr loan, Seterus,lnc. must provide you with a written acknowledgementwithin 20 Business Days ofreceipt of

your request. A "qualified written request" is awriUen correspondence, other than notice on apayment coupon or other

paymentmedium supplied by Selems, Inc., wbich includes your name and accoun( number and your reasonsfor the request.

(Continued)

L02SF

I.

,
SIMPSON, AMIE

LoanNo.:_•• Page 2

October 12, 2011

Not laterthan 60 Business Days after receiving your request,Seterus, Inc. must make aU)' appropriate corrections to your

account and must provide you with a written clarification regarding any dispute. During this 60-Business Day period, Setems,

Inc. may not provide information to a consumer reporting agency concerning an)' overdue payment related to such period or

qualified written request. However, this does not prevent Setems, Inc. from initiating foreclosure ifproper grounds exist under ~m~~~Mc=~ffi. .

A Business Day is a day on which the offices of Setems, Inc. are open to the public for carrying on substantially all ofits

business functions.

Section 6 ofRESPA also providesfor damages and costsfor individuals and classes ofindividualsin circumstances where

servieers are shown to have violated the requirements ofthat Section. You should seek legal advice ifyou believe )'Our rights

have been violated. .

Please know that ifyou are currently participating in, or being considered for a loss mitigation solution (Home Affordable

Modification Program, forbearance agreemen~ shortsale, refinance, or deed-in-lieu offoreclosure), we expect your

doc=entation to be forwarded from Bank ofAmerica, N.A.. As ofthe Transfer Date, you should send your payments to us

(e.g., trial period plan payments underHome Affordable Modification Program) until such time that we provide additional

direction in writing..We will notify you ofyour decision regarding qualification. Please note that this transfer may extend the

time needed for a final decision.

Sincerely,

Selerus, Inc.

!.02SF
IOOIF

IMPORTANT CONSUMER NOTICES

YOUR RIGHTS UNDER THE FEDERAL FAIR DEBT COLLECTION PRACTICES ACT

Ifyou do not notif'y us within 30 days after receiving this notice that you· dispute the validity ofthis debt or any

portion thereot: the debt will be assumed to be valid by the debt collector. Ifyou notify us in writing within 30

days that the debt or any portion thereof is disputed, or if you request the name and address of the original

with

creditor,

the name

we will

and

obtain

address

verification

ofthe original

ofthe

creditor.

debt orjudgment against you and mail a copy to you and provide you m

Ifyou notify us that you wish not to be contacted by telephone at your place of employment, we will not contact

you there. If you notify us in writing that you refuse to pay the debt or that you wish us to cease further

communication with you, we will not communicate with you except to advise you that our efforts are being

termlnated, that we may invoke specific remedies ordinarily invoked by collection agencies; and if, applicable,

that we intend to take a specific remedy permitted by law.

TIllS COMMUNICATION IS FROM A DEBT COLLECTOR AS WE SOMETIMES ACT AS A DEBT

COLLECTOR. WE ARE ATTEMPTING TO COLLECT A DEBT AND ANY INFORMATION

OBTAINED WILL BE USED FOR 1HAT PURPOSE. HOWEVER, IF YOU ARE IN BANKRUPTCY OR

RECEIVED A BANKRUPTCY DISCHARGE OF THIS DEBT, THIS LETTER IS NOT AN ATTEMPT TO

COLLECT THE DEBT, BUT NOTICE OF POSSIBLE ENFORCEMENT OF OUR LIEN AGAINST THE

COLLATERAL PROPERTY.

FEDERAL FAIR CREDIT REPORrING ACT I The FACT ACT

We may report infonnation about your account to credit bureaus. Late payments, missed payments, or other

defaults on your account may be reflected in your c.redit report.

IMPORTANT NOTICE OF CONCERNING PRIVATE MORTGAGE INSURANCE

If your residential mortgage loan has private mortgage insurance (pMI), federal or state law may give you the

right to cancel this insurance under some circumstances. Please contact our Customer Service Department for

more infonnation.

STATE DISCLOSURES

Setems, Inc. is located at 14523 SW Millikan Way, Beaverton, OR. Our address for payments, however, is

specified on page one ofthis notice.

CALIFORNIA: The state Rosenthal Fair Debt Collection Practices Act and ilie federal Fair Debt Collection

Practices Act require that, except under unusual circumstances, collectors may nct contact you before 8 a.m. or

after 9 'p.m. They may not harass you by using threats of violence or arrest or by using obscene language.

Collectors may not use false or misleading statements or call you at work ifthey know or have reason to know

that you may not receive personal calls at work. . For the most part, collectors may not tell another person, other

than your attorney or spouse, about your deht. Collectors may contact another person to confirm ·your location

or enforce a judgment. For more infonnation about debt collection activities, you may contact the Federal Trade

Commission at 877.FTC.HELP (877.382.4357) orwww.ftc.gov.

CALIFORNIA: La Ley de Justa Recaudaci6n de Deudas de Rosenthal estatal y la Ley de Justa Recaudaci6n

de Deudas federal requieren que, a excepci6n de circunstancias inusuales, los cobradores no pueden ponerse en

contacto con usted antes de las 8 de la maiiana ni despues de las 9 de la noche. No pueden acosarle mediante el

uso de amenazas de violencia 0 de arresto ni con el usa de palabras ofensivas. Los cobradores no pueden utilizar

declaraciones falsas ni engaiiosas, asi como tampoco pueden llamarle al trabajo si saben a tienen raz6n para

saber que usted no puede recibir llamadas personales. En general, los cobradores no pueden infonnarle a otra

persona, con la excepci6n de su abogado 0 c6nyuge, sobre su deuda. Los cobradores pueden coutactar a otra

persona para confirmar su ubicad6n 0 hacer cumpHr un fallo. Para obtener mas informacion sobre las

actividades de los cobradores de dead.s, puede ponerse en contacto con la Comisi6n Federal de Comercio al

877.FTC.HELP (877.382.4357) 0 al sitio web www.ftc.gov.

(STATE DISCLOSURES CONTINUED ON THE BACK OF THIS PAGE)

i

I

I.

I

i
IMPORTANT CONSUMER NOTICES

STATE DISCLOSURES, CONTINUED:

COLORADO: Colorado law requires we provide you with the following notice: A CONSUMER HAS TIfE

RIGHT TO REQUEST IN WRITING THAT A DEBT COLLECTOR OR COLLECTION AGENCY CEASE

FURTIfER COMMUNICATION WITII THE CONSUMER. A WRITTEN REQUEST TO CEASE

COMMUNICATION· WILL NOT PROIDBIT TIfE DEBT COLLECTOR OR COLLECTION AGENCY

FROM TAKING ANY OlliER ACTION AUTIIORlZED BY LAW TO COLLECT THE DEBT. FOR

INFORMATION ABOUT TIfE COLORADO FAIR DEBT COLLECTION PRACTICES ACT, SEE

WWW.COLORADOATTORNEYGENERAL.GOV/CA.Setems.Inc.maintains a local office at 355 Union

Boulevard, Suite 302, Lakewood, CO 80228. The office's phone number is 888.738.5576.

HAWAII: Hawaii law requires we disclose to you that Seterus, Inc. is liceused in the State of Hawaii.

Complaints regarding Seterus, Inc. can be directed to the Hawaii Commissioner of Financial Institutions by mail

at PO Box 2054, Honolulu, HI 96805 or online at htto://hawaii.gov/dccaldfi/consumers help/comolaint/file-a

-complaint,html'and follow the instructions listed on the site. .

ILLINOIS: The primary regulator for Setems, Inc. is the'Federai Trade Commission, Washington, DC 20580.

MINNESOTA: This collection agency is licensed by the Minnesota Depariment ofCommerce.

MONTANA: Complaints regarding the servicing ofyoll! mortgage should be sent to the Division ofBanking

and Financial Institutions, by mail at PO Box 200546, Helena, MT 59620-0546, by phone at 406.841.2920 or

by the on-line Website Complaint Fonn at bttp'l/banlsing rot gpylCQIDplajntfonnIDefllJllt aspx.

NEW YORK: New York law requires we disclose to you thatSeterus, Inc. is licensed in the State ofNew York. .

Complaints regarding Setems, Inc. can be directed to the New York State Banking Department You may obtain

further infonnation from the New York State Banking Department by calling the Department's Consumer Help

Unit at 877.BANK.NYS (877.226.5697) or by visiting the Department's website at www.banking.state.ny.us. If

you have questions, please contact Seterus, Inc. Customer Service toll-free at 866.570.5277, or in writing at PO

Box 4121, Beaverton, OR 97076-4121.

NEW YORK CITV: 1331537, 1340663, 1340148.

NORTH CAROLINA: North Carolina law requires we disclose to you that Setems, Inc. is licensed in the State

of North Carolina. Complaints regarding Setems, Inc. can be directed to the North Carolina Commissioner of

Banks by phone at 919.733.3016 or online at http://www.nccob.orglNCCOBandfollowing instructions listed at

the site.

TENNESSEE: This collection agency is licensed by the Collection Service Board, State Department of

Commerce and Insurance.

TEXAS: COMPLAINTS REGARDING TIfE SERVICING OF YOUR MORTGAGE SHOULD BE SENT

TO THE DEPARTMENT OF SAVINGS AND MORTGAGE LENDING, 2601 N LAMAR, SUITE 201,

AUSTIN, TX 78705. A TOLL-FREE CONSUMER HOTLINE IS AVAILABLE AT 877.276.5550.

UTAH: As required by Utah law, you are hereby notified that a negative credit report reflecting on your credit

record may be submitted to a credit-reporting agency ifyou fail to fulfill the tenns of your credit obligations. .

WISCONSIN: This collection agency is licensed by the Administrator ofthe Division of Banking, PO Box

7876, Madison, WI 53707.

IOOlF
seteruSTM

October 12, 2011

RE: Setem.. Inc. Loan No.:

Prior SeIVicer Loan No.: . Property: __

Payment Schedule Letter

Setem.. Inc. is the seIVicer ofthe above-referenced loan; which transferred from Bank ofAmerica, N.A. on October I, 2011.

Below is your paymentschedule for the next three months:

Next Due Date Total Payment Amount" Mail Payments to:

Setems, Inc.

11/01/2011 $2203.75 PO Box 7162

Pasadena, CA 91109-7162

Setems, Inc.

12/0112011 $2203.75 PO Box 7162

Pasadena, CA91109-7162

Setems, Inc. . 01/0112012 - $2203.75 PO Box 7162

Pasadena, CA 91109-7162

"In the following circumstances we are Wlable to predict precise amounts and your payment mal' be different:

I. Ifyou do not see a Total Payment Amount in the schedule, you have an adjustable rate mortgage and will need to refer

to the federal change notice that will be sent under separate cover.

2. IfSetems, Inc. completes an escrow analysis on your loan, a noticewill be sent to you notifying you ofthe payment

change.

3. Your payment amount may vary due to a Bankruptcy plan, loan modification, orstipulatIon agreement.

4. If your loan has been accelerated, this paymentschedule may not apply as your loan is already due in full.

5. Ifyour loa~ is deliuquent, further payments iu addition to those listed in the payment-schedule may be due.

We are regulated by the Federal Trade Corrunission, who are located at 600 Pennsylvania Avenue NW, Washington, DC

20580.

Ifyou have any questions, please contact us at 866.570.5277.

Sincerely,

Setems, lac.

T0160
I

seteruSTM

SIMPSON, AMIE

This temporary mortgage coupon may be used/oryourfirst payment to Seterus. Inc. A remittance envelope is a/so enclosed.

lfyou have both aflrst and secondmortgage, please send onty the payment requiredfor the loan identified in Ihis /eller.

Selems, Inc.

SIMPSON, AMlE

Selerus, Inc. Loan No.:'.III!I••

TotalAmoUllt Enclosed

Solems, Inc.

PO Box 7162

Pasadena, CA 91109-7162

1045

i

.\

!.

{
EXHIBITD
AmieM. Simpson .£

5

Sunday, October 23,2011

SENT VIA FAX to SETERUS (877-371-7799)

Re: 'Account No.

To whom it may concern:

I spoke with Jessica Davis, your representative, via telephone on Friday, October 21,

2011, and she advised me to send this letter. Ms. Davis advised me that Seterus' records show

that my account is delinquent. This is not in fact the case, and Ms. Davis assured me that by

writing this letter, I am authorizing Seterus to contact Bank ofAmerica and obtain all

information related to my previous payments. Such information will show that Bank ofAmerica

made various errors in processing my payments over the last two years, and that my account is in

fact not delinquent. Bank ofAmerica should therefore release my most recent payment, made

.September 30, 2011, to Seterus, at which time my account with Seterus should be up to date.

Ms. Davis suggested I give a briefsummary ofthe history ofmy account with Bank of

America I can provide Seterus with additional specific documentation as requested. The

importsnt thing to note, however, is that at no time have I missed a payment or made a late

payment in the history of my mortgage on this propertv.

In February of2009, my husband lost his job as a union sprinklerfitter. His income was

effectively cut in half. As a result, we initially used savings and other meansto continue to make

our mortgage payments. We did so on time, every month. Then, we began to inquire about

modifYing our loan. We applied for a modification in the summer of2009, but at that time there

was apparently much confusion among the Bank ofAmerica representatives about the

modification process. We continued to pursue a modification, and were eventually approved in

late 2009. At that time, we received a trial modification and were instructed about when

modification payments were due. I actually made one trial modification payment early, but the

rest were made on the dates specified. After some time, we were approved for a permanent I

modification, to be effective May of20l0. I made my first modification payment on 4/29/2011,

as I understood my payment was due May 1. (I will need to check the documentation at my
office to ensure these dates are correct.) That, apparently created the problem that continuesto

date.

I began receiving notices that my payments were past due, despite the fact that I had

made timely payments each and every month. As a result ofmy "past due" status, I could not

make payments in any other way than by telephone, which resulted in enormous inconvenience

each month, because BA'stelephone wait times were so long. On 10/1/2010, when I made a

monthly payment, I spoke with BA representative Trent Eban. He informed me that there had

been an error in processing one ofmy payments, and that he would have a supervisor contact me.

I did not hearfrom anyone. On 11/1/2010, I made my payment and the representative I spoke

with at that time assured me that they were working on the issue and that someone would call

me. No one ever did. On 12/1/2010, I spoke with BA representative Jessica when I made my

payment. She said she would research the issue and get back with me. She did in fact send me

an email confirming that what had happened was that my 4/29/2010 payment had been applied to

myoId loan (pre-modification) which was in error. She forwarded me the email which she sent

to her supervisor on the issue, and asked that I be included in any foIlow up. I received no

response. I continued to make my monthly payments on time, each month, either via telephone

o.r at BA branches. On 3/1/2011, during the process ofmaking one ofmy payments, I spoke to a

Jamie Jackson in the BA modifications department. I was told that the error was being fixed,

and the process would take 7 to 10 days. I never heard back. When I made my May 1, 2011

payment, another representative read over my notes and told me that a number ofpeople were

having the same problem, and that BA was very backed up trying to fix it all. I asked her if!

needed to take any action. She told me that I should just wait and be patient.

Since that time, as throughout the course ofmy loan, I have made my payments EVERY

month, ON TIME. When I made my payment for October, I was not aware that my loan had

been transferred to Seterus. I made my payment via telephone on September 30, 2011, at 4:16

p.m. At that time, the BA phone representative confirmed that my payment would be effective

as ofthat date. The payment did not actually post to my account until October 3, 2011, Ms.

Davis, your representative, informed me that BA has not passed that payment on to Seterus. She

also informed me that I had accrued late fees from May 2011 to September 2011 on my BA

account. Again, I have never made ANY late payments, and I have always been assured by the

BA reps with whom I have made my payments that the payments were being applied to my

mortgage, and that they were trying to fix the underlying problem with my account.

I am relieved that Seterus wiIl be looking into this issue, ~d I am also relieved to no

longer be working with Bank ofAmerica. It is my hope that this problem can be resolved

quickly, so thatI can continue to make my mortgage payments in a timely fashion to Seterus

without receiving coIlection cans like the one from Ms. Davis on Friday. I win be happy to

supply Seterusrepresentatives with any and all documentation necessary. I may be reached via
email a~ 2 or by phone on my cell at I look forward

to enjoying a good working relationship with Seterus. Until I am told otherwise, I will make my

payments via mail with the coupon book provided in my Seterus packet. Ifthis is not the correct

approach, please notify me as soon as possible. Again, thank you for any and all assistance you

are able to provide in this matter.

Sincerely,

Arnie M. Simpson

Attorney at Law
EXHIBITE
seterUSTh'

November 6,2011

SIMPSON, AMIE

RE: Loan No.:••"

Seterus, Inc. is the servicer ofthe above~referenced loan.

PhysIcal Address

14523 sWMilh"kan Way: Suite 200; Beaverton. OR 97005

Business Hours (Pacific Time}

Mon·Thu 5:00am to 9:00pm; Fri 5:00am to 6:00pm

Sa16;ODam to 12:00pm; Sun 9:00am to 5:00pm

Payments

PO Box 7162; PaS<ldena. CA 91109-7162

Correspondence

PO Box 4121; Beaverton, DR 97076-4121

Phone

866.570.5277

Fax

866.578,5277

WebsIte

www.se!erus.com

We are writing regarding your request to research a payment(s). OUf research has resulted in the following:

Chccl< NumbCl' or Wire Date Amount Resolution

N1A 913012011 $2,203.75 The funds were posted to the loan bY'your

prior servicer before the loan was

transferred to Seterus.

Ifyou have any questions, please contact us at our tall-free number above.

Sincerely,

Seterus, Inc.

nus COMMUNICATION IS FROM A DEBT COl.LECTOR AS WE SOMETIMES ACJ' AS A DEBT COLLECTOR. WE ARE ATTEMPTING TO COLLECT A DEBT

AND ANY !l'lFORMATION OBTAINED WILL BE USED FOR THAT PURPOSE. HOWE.VER. IF YOU ARE IN BANKRUPTCY OR RECEIVED A BANKRUPTCY

DISCHARGE OF THIS DEBT, THIS LETTER IS NOT AN ATIEMPT TO COLLECT THE DEBT, BUT NOTICE Of POSSIBl.E ENFORCEMENT OF OUR LIEN

AGAINST THE COLLATERAL PROPERTY. COLORADO; FOR INFORMATION ABOUT THE COLORADO FAIR DEBT COLLECTION PRACTICES ACT. SEe

WWW.CQlQRADOATfORNEYGENERALGOv/CA.Setenls.Ine.mainlainsalocaloffiecnI355UnionBoulevard.Suite302.Lakewood.CO 80228. The office's phone

nnlllber is 8&8.138.5516. NEW YORK CITI': 1331537. 1340663, 1340148. TENNESSEE: This tOlleclion agency ;s licensed b)' 111e Collection Service Board of the

Dcpnnmenl orCommerce Dnd Insurance. SetenlS. Inc. is licensed lodo bllsinessfll JolS23 SW Millikan Way. Beaverton, OR.
EXHIBITF
seteruSm

November 15, 2011

Amie Simpson

==---

RE: Loan No.:1I.••_

Dear Ms. Simpson:

Physical Address

14523 SW MlIllkan Way, Suite 200; Beaverton, OR 97005

Business Hours (Pacific Time)

Mon·Thu 5:00am to 9:00pm; Fri 5:00am to 6;OOpm

Sat 6:00am to 12:00pm: Sun 9:00am to 5:00pm

Payments

PO Box 7162; Pasadena, CA 91109·7162

Correspondence

PO Box 4121; Beaverton, OR 97076-4121

Phone

866.570.5277

Fax

866.578.5277

Website

lM'M'.seterus.com

On behalfofSeterns, Inc., I amresponding to your correspondence received October 25, 2011 regarding the abovereferenced loan.

Records from your priorservicer, Bank ofAmerica, reflect that funds received on April 30, 2010 in the amount of

$2,654.38 were credited to yoursuspense account. Allerloan adjustments weremade during the implementation of

yourloanmodification on June 9, 2010, yourloanwas duefortheMay 1, 2010 inslll1lment

Records from Bank ofAmerica also reflect thetthey declined to reverse any payments thet were received priorto the

implementationofyourloanmodification and credited to yourloanduring the implementation on June 9, 2010.

While you may have thought that the funds would be applied to a future loan installment, any funds received

prior to implementation ofthe modification terms were eligible for credit toward the delinquent balance ofthe

loan.

The only way to re-applY these funds would be to cancel the modification. We respectfully decline to do this, as such

actionwould cause the accountto become seriously delinquent and eligible for Foreclosure action.

Your payment historywithBank ofAmerica reflectsthat funds received by them on September 30, 2011 in the

amount of$2,203.75 were credited to satisfY the September I, 2011 installment Yourloan transferred to us on

October I, 2011 due for the October I, 2011 inslathnent. We received funds in the amount of$2,203.75 onNovember

1, 2011 and these funds were credited to satisfYthe October 1, 2011 installment. As ofthe dale ofthis letter, your loan

is due for theNovember 1, 2011 insta1lmentin the amount of2,203.75.

Ifyou have any questions, please contactus at our toll-free number above.

Sincerely,

Christine Eshelman

Correspondence ResponseTeam

Setems, Inc.

THIS COMMUNICATION IS FROM ADEBTCOLLECTOR AS WE SOMETIMES Acr AS ADEBTCOLLEcrOR. WE ARE ATIEMPTlNG TO COLLEcr A DEBT

AND ANY INFORMATION OBTAl'NED WILL BE USED FOR THAT PURPOSE. HOWEVER, lFYOU ARE IN BANKRUPTCY OR RECEIVED A BANKRUPTCY

DISCHARGE OF THIS DEBT, THIS LEITER IS NOT AN ATTEMPT TO COLLECT THE DEBT, Bur NOTICE OF POSSIBLE ENFORCEMENT OF OUR LIEN

AGAINST THE COLt.ATERAL PROPERTY. COLORADO: FOR INFORMATiON ABour THE COLORADO FAIR DEBT COLLEcrlON PRAcrlCES Acr, SEE

WWW.cOIDRADQATIORNEYGENERALGOVICA.Seterus.Inc.maintainslllacaloffice:at3SSUnionBoulevard.Suite302.lakewood.CO 80228. The office's pl1ol1e

number is 888.738.5576. NEW YORK CITY: 1331537, 1340663, 1340148. TENNESSEE: 'This collection agency is licensed by the Collection Service Board of the

Department ofCommcroe and Insurance. Seterus. mc. is licensed to do business at 14523 SW Millikan Way, Beaverton, OR.
EXHIBITG
Case 1:11-cv-03270-SLT-RLM Document 1 Filed 07/07/11 Page 1 of 59 PagelD #: 1

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF NEW YORK

--------------------------------- x

UNITED STATES OF AMERICA, ex reI.

[UNDER SEAL],

No.

Plaintiff,

V.

[UNDER SEAL],

Defendants.

--------------------------------- x

COMPLAINT FOR VIOLATIONS OF

THE FALSE CLAIMS ACT

Filed Under Seal Pursuant to

31 U.S,C. § 3730(b)(2)

[FILED IN CAMERA AND UNDER SEAL]

ORIGINAL

006183-11 457264 VI
Case 1:11-cv-03270-SLT-RLM Document 1 Filed 07/07/11 Page 2 of 59 PagelD #: 2

Shayne C. Stevenson (pro hac vice pending)

HAGENS BERMAN SOBOL SHAPIRO LLP

1918 Eighth Avenue, Suite 3300

Seattle, Washington 98101

Telephone: (206) 268-9340

Facsimile: (206) 623-0594

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF NEW YORK

--------------------------------- x

UNITED STATES OF AMERICA, ex rei.

GREGORY MACKLER,

No.

Plaintiff,

v.

BANK OF AMERICA, N.A. and BAC HOME

LOANS SERVICING,LP,

Defendants.

--------------------------------- x

006183-11 457264 VI

COMPLAINT FOR VIOLATIONS OF

THE FALSE CLAIMS ACT

Filed Under Seal Pursuant to

31 U.S.C. § 3730(b)(2)
Case 1:11-cv-03270-SLT-RLM Document 1 Filed 07/07/11 Page 3 of 59 PagelD #: 3

TABLE OF CONTENTS

Page

1. INTRODUCTION 1

II. JURISDICTION AND VENUE .4

III. PARTIES .5

IV. BACKGROUND 5

A. The Taxpayer Bailout ofBank ofAmerica .5

B. The Home Affordable Modification Program (HAMP) 7

I. HAMP Eligibility Requirements 8

C. Treasury's HAMP Servicer Participation Agreement with Bank ofAmerica I I

I. The Agreement.. 11

a. . The Financial Instrument 13

b. The Annual Certification 14

c. Treasury's Supplemental Directives and Handbook. 15

2. Bank ofAmerica and other servicers' performance : .19

V. ALLEGATIONS 20

A. Bank ofAmerica Violates its Agreement with Treasury by Fraudulently

Handling Homeowner HAMP Submissions, Inquiries and Complaints 20

I. BoA outsources HAMP work to Urban Lending Solutions 22

2. Relator witnesses and challenges systemic HAMP fraud 24

a. Relator begins as a "customer advocate" for BoA 26

b. Relator becomes a subject matter expert .31

c. Relator is hired as a QC 36

d. Relator begins work on the "Root Cause" project. .41

e. Root Cause project is dissolved and Relator is terminated 50

B. Bank ofAmerica Violates the False Claims Act 50

VI. CONCLUSION 53

- i -
Case 1:11-cv-03270-SLT-RLM Document 1 Filed 07/07/11 Page 4 of 59 PagelD #: 4

I. INTRODUCTION

I. Plaintiffand Relator Gregory P. Mackler, on behalf ofthe United States, brings

this qui tam action to recover treble damages and civil penalties under the False Claims Act, 31

U.S.C. § 3729 et seq., arising from false and fraudulent records, and false statements material to

false and fraudulent claims, made, used and caused to be made, used and presented by

defendants Bank ofAmerica, N.A. and its subsidiary BAC Home Loans Servicing, LP

(collectively "BoA"), to the United States Government under the Home Mfordable Modification

Program ("HAMP").

2. In late 2008 and early 2009, the United States Government provided a total of $45

billion to Bank ofAmerica pursuant to the Troubled Asset ReliefProgram ("TARP"). It also

extended to BoA an additional guarantee of over $100 billion. Having concluded that the costs

ofallowing BoA to fail were too high, the Government decided that taxpayers would save the

life ofthis Bank, and they did.

3. Because the stated purpose ofthe financial bailout was to help the American

people, and homeowners in particular, HAMP was implemented in March of 2009 to assist the

millions ofAmerican homeowners facing foreclosure.

4. Knowing all eyes were upon it, and the billions of dollars it had been given by the

Government, Bank ofAmerica (the nation's largest mortgage servicer), on April 17, 2009,

signed a "Servicer Participation Agreement" (the "Agreement") with Treasury (through its agent

Fannie Mae) requiring it to, inter alia, use "reasonable efforts" to "effectuate any modification of

a mortgage loan under the [HAMP]."

5. This consideration owed the Government by BoA was in exchange for a

commitment by the Government to provide BoA potentially hundreds ofmillions oftaxpayer

dollars for its promise and obligation to comprehensively provide HAMP screening for all

homeowners serviced by BoA, to extend HAMP Trial Period Plan offers to all such eligible

- I -

006183-11 457264 V1
Case 1:11-cv-03270-SLT-RLM Document 1 Filed 07/07/11 Page 5 of 59 PagelD #: 5

homeowners, and to extend permanent RAMP modifications to all eligible homeowners whose

. . I mortgages It services.

6. Knowing that every successful HAMP modification for a homeowner would

negatively impact its bottom line, BoA never entered into the Agreement in good faith. Though

mindful it needed to permit some number ofRAMP modifications to avoid Government action

against it, BoA developed an elaborate scheme to force down the number ofsuccessful RAMP

modifications. It has done so by deliberately and unlawfully denying scores of otherwise

qualified homeowners the ability to successfully qualifY for RAMP modifications, while lying to

those homeowners persistent enough to escalate complaints and to the regulatory bodies

inquiring on behalfofhomeowners.

7. BoA concluded that it was far more lucrative to deliberately force otherwise

qualified homeowners outside ofHAMP so that it could either profit from foreclosure

proceedings, force the homeowner into a more costly proprietary mortgage "modification" than

RAMP would permit, or otherwise profit from continuing to service the defaulting and defaulted

mortgages.

8. As Relator Mackler directly and independently observed, Bank ofAmerica has

accomplished this fraud since the inception ofRAMP, in knowing violation ofthe Agreement

and express terms ofthe RAMP "Program Documentation" incorporated therein, through a

variety ofmechanisms, including the folIowing: (a) developing and maintaining a fraudulently

concealed document image repository of homeowner HAMP documentation so that BoA or its

agents could falsely deny receiving homeowner documents or claim incompleteness even after

satisfactory receipt ofthem; (b) deliberately deceiving homeowners who complain about BoA's

handling oftheir RAMP inquiries and submissions, with efforts to keep them from RAMP

eligibility; (c) intentionally forcing homeowners to wait months before a response to RAMP

I United States Department of Treasury, Troubled Asset ReliefProgram Transactions Report

for Period Ending March 8, 2011, March 8,201 I at 27. Available at

http://www.treasury.gov/initiatives/financial-stabilitylbriefing-roomlreports/tarptransactionslDocumentsTARPTransactions/3-10-

Il%20Transactions%20Report%20as%200f"/o203-8-II.pdf("Treasury Transaction Report").

-2-

006183·1 J 457264 VI
Case 1:11-cv-03270-SLT-RLM Document 1 Filed 07/07111 Page 6 of 59 PagelD #: 6

eligibility detenninations (such delay resulting in HAMP "ineligibility") and failing, by design,

to communicate HAMP concerns to homeowners, including deadlines, purportedly incomplete

records, modification status, risk oflosing eligible status, or other eligibility concerns;

(d) unlawfully proceeding with foreclosure actions (under "dual track" protocols) while

homeowners are reviewed for RAMP eligibility or during a payment period; (e) failing to

properly credit homeowner HAMP payments during the Trial Period, resulting in improper·

denials ofpennanent HAMP modifications and other improper costs to homeowners; (f) failing

to properly "waterfall" homeowners under RAMP requirements, including by pushing

proprietary modifications on homeowners as a predatory foist; (g) failing to properly convert

eligible HAMP homeowners from Trial Period status to pennanent modification status; (h)

failing to properly and in good faith evaluate homeowners for RAMP, including failing, by

design, to develop and maintain a proper quality control operation as required by the Agreement;

and (i) failing to give actual authority to BoA employees and contractors to properly resolve

escalated complaints. Each ofthese practices violates BoA's Agreement, the binding tenns of

participation and conditions for federal Government payments under RAMP.

9. These mechanisms offraud were and are interconnected and directly observed by

Relator Mackler, who worked with various BoA executives while at Urban Lending Solutions

("Urban") beginning in April of2010. BoA outsources various RAMP obligations to Urban.2

Upon witnessing the unlawful, fraudulent practices listed above, among others, Mackler brought

his concerns to the highest levels ofUrban and to executives at Bank ofAmerica. Eventually,

his objections to these practices led to his termination on March 17,2011.

10. Because a condition ofpayment under the terms ofthe Agreement was and is the

requirement that Bam: ofAmerica service HAMP modification submissions, inquiries and

homeowner complaints in good faith, in an effort to assist homeowners in their HAMP

modification efforts, BoA's intentional and deliberate efforts to fraudulently operate its RAMP

2 RAMP is the centerpiece of various homeowner assistance efforts under the umbrella

Making Rome Affordable ("MHA") program. BoA and Urban typically refer to MHA rather

than RAMP, though the latter is the most important component ofthe fonner.

- 3 -

006183-11 457264 VI
Case 1:11-cv-03270-SLT-RLM Document 1 Filed 07/07/11 Page 7 of 59 PagelD #: 7

program renders it ineligible for federal payments and obligated to retwn the payments it has

improperly received and concealed since it signed its Agreement with Treasury in April 2009.3

I I. Qui tam Relator Mackler seeks through this action to recover damages and civil

penalties arising from Defendants' making or causing to be made false or fraudulent records,

statements and claims in connection with Defendants knowing and material breach ofits

Agreement with the Department ofTreasury and its unlawful violation ofthe False Claims Act.

Defendants knew and continue to know that their false and fraudulent HAMP modification

program has caused the submission offalse claims not eligible for Government payment.

II. JURISDICTION AND VENUE

12. This Court has jurisdiction over the subject matter ofthis action pursuant to 28

U.S.C. § 1331 and 31 U.S.C. § 3732, the latter ofwhich specifically confersjurisdiction on this

Court for actions brought pursuant to 31 U.S.C. §§ 3729 and 3730. Plaintiff-Relator establishes

subject matter jurisdiction under 28 U.S.C. § 3730(b).

13. Under 31 U.S.C. § 3730(e), there has been no statutorily relevant public

disclosure ofthe "allegations or transactions" in this Complaint with respect to which Relator

Mackler is not an "original source," and all material information relevant to his allegations was

provided to the United States Government prior to filing his Complaint, in satisfaction of31

U.S.C. § 3730(e)(4)(B).

14. This Court has personal jurisdiction over the Defendants and is a proper venue

pursuant to 28 U.S.C. § 1391(b) and 31 U.S.C. § 3732(a) because those sections authorize

nationwide service ofprocess and because the Defendants have minimum contacts with the

United States. Moreover, the Defendants can be found in, reside, transact, or have transacted

business in the Eastern District ofNew York. At all times relevant, Defendants regularly

3 Martin, Andrew, "Big Banks Penalized for Performance in Mortgage Modification

Program," New York Times (on-line), June 9, 201 I, available at

http://www.nytimes.com/2011/06/l0/business/lOhamp.htmI?J=I (reporting on the Treasury

Department's announcement June 9, 201 I, that it would withhold incentive payments to Bank of

America under RAMP based upon BoA's poor performance).

-4-

006183-11 457264 VI
Case 1:11-cv-03270-SLT-RLM Document 1 Filed 07/07/11 Page 8 of 59 PagelD #: 8

conducted substantial business within and made significant revenue within the Eastern District of

New York.

III. PARTIES

15. Plaintiff-Relator Gregory Mackler is a resident ofLongmont, Colorado. From

April 30, 2010, when he began work at Urban as a temporary contractor, through July 26,2010,

when he became a full-time employee, and until Match 17,2011, when he was unlawfully

tenninated, Mackler witnessed firsthand the fraud that is alleged in this Complaint and is the

original source ofthis infonnation.

16. Defendant Bank ofAmerica, N.A. is a Delawate corporation, with its principal

offices located at 101 S. Tryon Street, in Chatlotte, North Catolina.

17. Defendant BAC Home Loans Servicing, LP is a subsidiary ofBank ofAmerica,

NA., located at 4500 Park Granada, in Calabasas, California.

IV. BACKGROUND

A. The Taxpayer Bailout ofBank of America

18. In the fall of2008 the United States Government responded to a serious crisis in

financial matket conditions. Beat Stearns and Lehman Brothers folded. Unemployment rose to

6.2 percent by September, the same month that the Treasury Department took Fannie Mae and

Freddie Mac into conservatorship, the Federal Reserve began an $85 billion taxpayer-funded

rescue ofAmerican International Group, FDIC took Washington Mutual (the nation's Jatgest

savings and loan bank) into receivership, and the S&P 500 index lost another 10% ofits already

declining value. The biggest player in the then-worsening housing market crash, Countrywide

Financial Corp., was bought out by Bank ofAmerica (now a costly albatross for the Bank). The

housing matket crash itself gave rise to the specter ofmillions ofAmericans on a path to losing

their homes, and rising mortgage payment delinquencies.

19. The Government responded to this crisis on October 3,2008, with passage ofthe

Emergency Economic Stabilization Act of2008 ("ESSA"), which created (among other things)

the Troubled Asset ReliefProgram. ESSA, through the establishment ofTARP, granted the

- 5 -

006183·11 457264 VI
Case 1:11-cv-03270-SLT-RLM Document 1 Filed 07/07111 Page 9 of 59 PagelD #: 9

Treasury Department unprecedented authority to spend billions of dollars to "restore liquidity

and stability to the financial system ofthe United States." The Final Report ofthe TARP

Congressional Oversight Panel estimates the program will ultimately cost taxpayers $25 billion.4

20. As the Panel put it, "almost overnight" U.S. taxpayers, via TARP, provided to

several large financial institutions an infusion of over $200 billion. This massive bailout was the

butfor cause ofthe continued existence ofseveral institutions including Bank ofAmerica.

21. On October 28, 2008, BoA received $15 billion in taxpayer funds through TARP

in a Government purchase ofits preferred stock.5

22. In December ofthat year the Treasury used taxpayer funds to purchase an

additional $20 billion ofBoA's preferred shares through a unique Targeted Investment Program

made available only to BoA and Citigroup.6

23. In January of2009, Treasury announced that through the Asset Guarantee

Program (like TARP, a program created with the passage ofESSA) the Government would offer

an additional guarantee agains.t losses of$118 billion to BoA. This contract was never finalized,

but helped BoA assure investors and the broader market that it could absorb unexpected losses.7

24. That same month, on January 9, 2009, TARP provided another $10 billion to BoA

through an additional purchase ofits preferred stock.8

25. According to the Panel's Final Report, the total federal Government exposure for

BoA topped $336 billion in 2009, second only to Citigroup and well more than twice the

4 Congressional Oversight Panel, The Final Report ofthe Congressional Oversight Panel,

March 16,2011 at 9. Originally available at http://cop.senate.govlreportsllibrary/report-100909-

cop.cfm, now available at

http://cybercemetery.unt.edu/archivelcop/201l 0401223133/http://cop.senate.gov/reportsllibrary/r

eport-03l6ll-cop.cfm ("Final Report").

5 Treasury Transaction Report at L

6Final Report at 23.

7 Final Report at 24.

8 Treasury Transaction Report at 4.

- 6 -

006183-11 457264 V1
Case 1:11-cv-03270-SLT-RLM Document 1 Filed 07/07/11 Page 10 of 59 PagelD #: 10

exposure to any other institution.9 These mammoth investments and exposures oftaxpayer

dollars to BoA unquestionably prevented its collapse and allowed the bank to return to profit.

B. The Home Affordable Modification Program (HAMP)

26. The U.S. housing market reached a new apex earlier this decade and then began a

precipitous slide in 2006. In the months and years that followed, millions ofAmericans have

faced the sudden and unprecedented prospect offoreclosure.

27. It is generally agreed that policymakers overestimated the extent to which natural

market forces, through private modification efforts, would address the growing numbers of

foreclosures and delinquencies. 10 For this reason, the broader economic risks associated with a

deluge of non-performing mortgages were only just beginning to be realized in 2006.

. 28. In 2007 and 2008, the federal Government made efforts to combat the foreclosure

problem, with the FHA Secure foreclosure mitigation program, HOPE for Homeowners, and an

FDIC IndyMac loan modification program, but none ofthese programs sufficiently addressed the

crisis and the problem continued to worsen. I I

29. In furtherance ofthe foreclosure prevention mandate articulated by Congress in

the ESSA, and with the slated goal ofpreventing three to four million foreclosures, the Treasury

Department rolled out the Home Affordable Modification Program in March of2009:

HAMP is designed to provide a path to modifYing mortgages and

provides subsidies to lenders, servicers, and homeowners to

encourage such modifications. Once approved for assistance

through HAMP, a borrower must successfully complete a trial

period, typically three months, during which the borrower makes

payments on the modified mortgage. A borrower who remains

current through the trial period becomes eligible for a permanent

modification, under which the terms ofthe trial period remain in

effect for a period offive years. After the five-year term is up, the

interest rate on the loan can increase by a maximum of I percent

9 Final Report at 36.

10 Congressional Oversight Panel, A Review ofTreasury's Foreclosure Prevention Programs,

December 14,2010 at 13 ("December Report"). Originally available at

http://cop.senate.gov/reportslIibrary/report-121410-cop.cfm, now availahle at

http://cybercemetery.unt.eduiarchive/cop/20110401232915/.

II December Report at 10-13.

-7-

006183-11 457264 VI
Case 1:11-cv-03270-SLT-RLM Document 1 Filed 07/07/11 Page 11 of 59 PagelD #: 11

per year until it rea~hes the prevailing Freddie Mac average

mterest rate at the tIme the RAMP modification was made. 12

30. RAMP was initially given $50 billion in federal funding. J3 With those funds,

Treasury has provided financial incentives for mortgage servicers to assist homeowners in

keeping their homes by way ofHAMP modifications. RAMP was implemented with clear intent

that institutions like Bank ofAmerica and other TARP recipients would need to participate in the

program, even for non-government-sponsored-enterprise portfolios.

1. RAMP Eligibility Requirements

31. Once a mortgage servicer, such as BoA, signs the Servicer Participation

Agreement it is obligated to determine who among the homeowners whose mortgages it services

may be eligible for HAMP, and to extend the opportunity for all homeowners to apply for, and, if

qualified, to participate in HAMP. The servicer must identify eligible homeowners and assist in

their efforts to secure HAMP modification oftheir loans. Servicers such as BoA are obligated to

identify those loans subject to modification both through self-initiated investigation oftheir

mortgage service portfolios,14 and in response to inquiries and modification requests from

individual homeowners or regulators acting on their behalf.ls

32. As discussed "below, the RAMP requirements for servicers are set forth in the

Servicer Participation Agreement and the Program Documentation incorporated by and into that

Agreement. A series of Treasury Department Supplemental Directives are part ofthat Program

Documentation, as well as a regularly updated Handbook provided by the Treasury Department

through Fannie Mae. Each ofthese documents places strict compliance requirements on

servicers under the terms oftheir respective Agreements with Treasury.

12 Final Report at 91 n.286.

13 December Report at 16 n.23.

14 Making Home Affordable Program "Handbook for Servicers ofNon-GSE Mortgages,"

Version 3.0, effective December 2,2010 at 47 ("Handbook"). A new Version 3.1 ofthe

Handbook was issued on May 2,2011 and is available at

https://www.hmpadmin.com/portal/programs/servicerjsp.

15 December Report at 14.

- 8 -

006183·11 457264 VI
Case 1:11-cv-03270-SLT-RLM Document 1 Filed 07/07/11 Page 12 of 59 PagelD #: 12

33. Where a servicer identifies a qualified homeowner, the lender must reduce that

homeowner's montWy payments until they amount to no more than 38% ofhis or her gross

montWy income (i.e., a mortgage debt-to-income ratio of38%). The Treasury Department then

matches dollar for dollar any further reductions necessary to bring the montWy payments down

to 31 %.16 Treasury also provides an up-front payment to servicers for each eligible homeowner

who enters a permanent modification. That amount is subject to annual supplementation by

Treasury under certain conditions for each eligible borrower being serviced.

34. In addition to more specific requirements set forth in further Supplemental

Directives and the Treasury Handbook, in order to qualifY under HAMP a homeowner17 must

satisfY these basic requirements:

a. The home must be owner-occupied, not vacant or

condemned;

b. The remaining balance on a single-unit home cannot

exceed $729,750;

c. The borrower must actually be delinquent, or default must

be reasonably foreseeable, and able to demonstrate

financial hardship, including that the borrower has

insufficient liquid assets to make the now-required monthly

payments; and

d. The borrower must have a monthly "front-end" debt-toincome ratio ofmore than 31% (i. e., the borrower's

montWy mortgage payment must be gryater than 31% of

the borrower's gross montWy income). 18

16 December Report at 14.

17 MHA and HAMP documents can refer to "homeowners" or "borrowers" or "customers."

For purposes ofthis complaint, the terms are interchangeable.

18 U.S. Department ofTreasury, Introduction ofthe Home Affordable Modification Program,

Supplemental Directive 09-01, at 6, April 6, 2009. Available at

www.hmpadmin.com/portal/programsidocslhamp-servicerlsd0901.pd£

"Monthly payment" refers not only to the mortgage payment itself, but also applicable taxes,

hazard and flood insurance, and homeowner association fees. "Front-end" refers to the ratio of

monthly mortgage payment to montWy income. By contrast, a "back-end" debt-to-income ratio

compares all debt service payments made by the borrower (e.g., car payments, credit card

payments) to income. Until June 2010, verification ofborrower income was not required for

RAMP eligibility.

-9-

006183-11 457264 VI
Case 1:11-cv-03270-SLT-RLM Document 1 Filed 07/07/11 Page 13 of 59 PagelD #: 13

35. If each requirement is satisfied, BoA and other servicers must then apply the

Treasury's Net·Present Value ("NPV") algorithm to the homeowner's situation. This model

determines the NPV ofthe expected income from the mortgage under a modification and

compares it with the NPV anticipated with no modification (typically foreclosure or sale at a

loss). Ifthe value ofthe mortgage is greater with modification, the mortgage is ''NPV positive"

and the servicer is required to offer a HAMP modification. 19

36. The next step required ofservicers under HAMP is the mandatory "waterfall"

analysis to determine what specific type ofmodification must be applied given the homeowner's

situation. First, the servicer must decide whether lowering the interest rate would drive the

monthly front-end debt-to-income ratio under 31%. If not, step two requires analysis whether

extending the period ofthe loan (even up to 40 years) would suffice to drive the number below

31%. Finally, ifthe debt~to-income ratio under both scenarios still exceeds 31%, principal

forbearance is required. Only after full consideration and proper rejection of a homeowner for

RAMP maya servicer consider extending a proprietary modification offer.

37. Once approved for HAMP modification, a homeowner who agrees to participate

typically begins a three-month Trial Period during which mortgage payments are made under the

terms ofthe modification. Iftimely payments are made during those three months (i.e., not more

than 30 days overdue during any month), the homeowner must be offered a permanent

modification, with the terms in effect during the Trial Period extended for 5 years.

20

38. In its December 2010 Report, the Panel observed a wide range of conversion rates

(that is, the rate of converting Trial Period modifications into permanentmodifications) for

various servicers, noting in particular that Wachovia Mortgage had a conversion rate of 89% vs.

BoA's rate near 30%.21

19 December Report at 15.

20 December Report at IS.

21 December Report at 22. Through March of201 I, BoA remained the worst performing

servicer in terms of converting homeowners from Trial Plans to permanent RAMP

modifications. See, Making Home Affordable: Program Performance Report Through March

- 10 -

006183-11 457264 VI
Case 1:11-cv-03270-SLT-RLM Document 1 Filed 07/07/11 Page 14 of 59 PagelD #: 14

39. After a homeowner completes a period of 5 years under the terms ofthe

modification, lenders may increase the interest rate on the loan by I% annually up to the

prevailing Freddie Mac interest rate at the time the modification was made.22

40. Though $30 billion is available for this homeowner protection program, less than.

$1 billion had been spent under HAMP through 2010.23 According to the Congressional Panel,

current projections suggest that far fewer than the four million homeowners initially targeted to

benefit will in fact benefit from HAMP, a program that depends for its success upon the good

faith efforts ofservicers like BoA.24

c. Treasury's HAMP Servicer Participation Agreement with Bank ofAmerica

1. The Agreement

41. As noted above, HAMP participation by mortgage servicing companies such as

Bank ofAmerica was effectuated by the signing of a "Servicer Participation Agreement," which

BoA signed on April 17, 2009. As a condition of participation and payment under the Program,

once consummated, the Agreement demands "adherence to the Program standards ... for all the

servicer's loans.,,25

42. BoA's Agreement requires that:

Servicer shall perform the loan modification and other foreclosure

prevention services described in (i) the Financial Instrument

attached hereto...(ii) the Program guidelines and procedures issued

by the Treasury, including, without limitation, the net present value

assessment requirements ofthe Program...and (iii) any

supplemental· documentation, instructions, bulletins, letters,

directives, or other comrnunications...issued by the Treasury,

Fannie Mae, or Freddie Mac in order to change, or further describe

or clarifY the scope of, the rights and duties ofthe Participating

2011," March 5, 201 I, at I, United States Department ofthe Treasury. Available at

http://www.treasury.gov/initiatives/fmancial-stability/results/MHA-Reports/Pages/default.aspx.

22 December Report at 14.

23 December Report at 16 n.23. An additional Principal Reduction Alternative program,

under HAMP, began in October of20l 0 to provide servicers the option to reduce principal

balances (rather than simply reduce interest rates) for borrowers with loan-to-value ratios of

more than 115% (i. e., borrowers significantly "underwater" on their mortgages). Id. at 16.

24 Final Report at 93.

25 December Report at 14.

- II -

006183·11 457264 VI
Case 1:11-cv-03270-SLT-RLM Document 1 Filed 07/07/11 Page 15 of 59 PagelD #: 15

Servicers in connection with the Program (the "Supplemental

Directives" and together with the Program Guidelines, the

"Program Documentation,,).26

Servicer's representations and warranties, and acknowledgment of

and agreement to fulfill or satisfy certain duties and obligations,

with respect to its participation in the Program and under the

Agreement are set forth in the Financial Instrument. Servicer's

certification as to its continuing compliance with, and the truth and

accuracy of, the representations and warranties set forth in the

Financial Instrument will be provided annually in the form

attached hereto .,. (the"Annual Certification") beginning on

June 1,2010 and again on June I of each year thereafter... 27

43. Importantly, the Agreement demands that BoA "shall perform the Services for all

mortgage loans it services, whether it services such mortgage loans for its own account or for the

account of another party," and "shall use reasonable efforts to remove all prohibitions or

impediments to its authority, and use reasonable efforts to obtain all third-party consents and

waivers that are required, by contract or in law, in order to effectuate any modification of a

mortgage loan under the Program.,,28

44. "[l)n consideration for" promise ofpayment to BoA by the Treasury under the

provisions ofHAMP, BoA is required to perform in accordance with the terms ofthe

Agreement. "The conditions precedent to the payment by Fannie Mae ofthe Purchase Price"

include "the performance by the Servicer ofthe Services described in the Agreement, in

26 Commitment to Purchase Finane/a/Instrument and Servicer Provider Agreementfor the

Home Affordable Modification Program under the Emergency Economic Stabilization Act of

2008, signed by Steve Bailey on behalf ofBank of America, N.A. on April 17, 2009

("Agreement") at Sec.1.A. Attached here as Appendix 1.

Bank ofAmerica, N.A. and BAC Home Loan Servicing, LP signed "Amended and Restated"

RAMP Servicer Participation Agreements and Financial Instruments on January 25, 2010,

signed by Jack Schakett (former Executive Managing Director at Countrywide, then President

and CEO ofBAC and Senior VP ofBoA, N.A.) on behalf of both entities. BoA also,

memorialized as "Exhibit A" appended to the "Restated" Agreement, agreed in 20 I0 to

participation in the Second Lien Modification Program, the FHA-HAMP program, the

Treasury/FHA-Second Lien Program, and the Rural Housing Service RAMP program.

Available at http://www.treasury.gov/initiatives/financial-stability/housingprograms/mha/Pages/default.aspx.

27 Agreement, Sec. I.B.

28 Agreement, Sec. 2.A.

- 12-

006183·11 457264 VI
Case 1:11-cv-03270-SLT-RLM Document 1 Filed 07/07/11 Page 16 of 59 PagelD #: 16

accordance with the tenns and conditions thereof ... " and "the satisfaction by Servicer ofsuch

other obligations as are set forth in the Agreement.,,29

a. The Financial Instrument

45. The Financial Instrument also signed by BoA on April 17, 2009, and incorporated

into the Agreement, specifies additional material requirements for satisfaction ofthe Agreement.

Among other things, BoA and other servicers "shall develop, enforce and review on a quarterly

basis for effectiveness an internal control program designed to (i) ensure effective delivery of

Services in connection with the Program and compliance with the Program documentation;

(ii) effectively monitor and detect loan modification fraud; and (iii) effectively monitor

compliance with applicable consumer protection and fair lending laws:,30

46. Additionally, the Instrument memorializes BoA's "representations, warranti'es and

covenants" to the Government, including that the "servicer is in compliance with, and covenants

that all Services will be perfonned in compliance with, all applicable Federal, state and local

laws, regulations, regulatory guidance, statutes, ordinances, codes and requirements ....,,31

47. Specifically, BoA "covenants that it will: (i) perfonn the Services required under

the Program Documentation and the Agreement in accordance with the practices, high

professional standards of care, and degree of attention used in a well-managed operation, and no

less than that which the Servicer exercises for itselfunder similar circumstances; and (ii) use

qualified individuals with suitable training, education, experience and skills to perfonn the

Services.,,32

29 Agreement, Sec. 4.A. As detailed above, the "Purchase Price" refers to the Government's

commitment to pay BoA, through the Government's agent Fannie Mae, initially up to

$798,000,000, and later adjusted to several billion dollars, for the perfonnance ofits obligations

under the Agreement. See Agreement, Sec. 4.D.

30 Financial Instrument, Exh. A to the Agreement, Sec. 4(a). Attached here as Appendix I,

Exh.A.

31 Financial Instrument, Secs. 5; 5(b).

32 Financial Instrument, Sec. 5(d).

- 13 -

006183-11 457264 VI
Case 1:11-cv-03270-SLT-RLM Document 1 Filed 07/07/11 Page 17 of 59 PagelD #: 17

48. BoA also "acknowledges" in this Instrument that providing "false or misleading

information" to the Government "in connection with the Program or pursuant to the Agreement

may constitute a violation of: (a) Federal criminal law ... or (b) the civil False Claims Ace33 In

order to protect the "reputational interests" ofthe Government in "monitoring the Program,"

BoA "cove!)ants to disclose to Fannie Mae and Freddie Mac any facts or information that [the

Government] should reasonably expect to know about Servicer and its contractors... :>34

49. With regard to "Use ofContractors," the Instrument provides that BoA "is

responsible for the supervision and management ofany contractor that assists in the performance

ofServices in connection with the Program," such that it "shall ensure that all ofits contractors

comply with the terms and provisions ofthe Agreement" with knowledge that BoA "shall be

responsible for the acts and omissions ofits contractors as ifthe acts and omissions were by the

Servicer.,,35

b. The Annual Certification

50. These requirements, and others, are also contained in the "Annual Certification"

filed by BoA in June of2010 and again on June 1,2011. The Certification, incorporated into

and attached to the Agreement, includes certifications that the "[s]ervicer has performed its

obligations in accordance with the Agreement ..." including that "all mortgage modifications and

all trial period modifications have been offered by Servicer to borrowers,jUlly documented and

serviced by Servicer in accordance with the Program Documentation.,,36

51. Also certified is the statement included in Sec. 5(d) ofthe Agreement, that BoA

performed all services under the Agreement in accordance with the highest level ofprofessional

33 Financial Instrument, Sec. 5(t).

34 Financial Instrument, Sec. 5(g).

35 Financial Instrument, Sec. 6.

36 Annual Certification, Exh. B to the Agreement, Sec. 3 (emphasis added). Attached here as

Appendix I, Exh. B. The "Updated and Restated" Annual Certification amends this language to

read - "all Services have been offered by Servicer to borrowers, fully documented and serviced

by Servicer in accordance with the applicable Program Documentation." Updated and Restated

Certification, at C-I, Sec. 3. See "Annual Servicer Certification," available at

https:l/www.hmpadmin.com/portal/programs/servicer.jsp.

- 14 -

006183-11 457264 VI
Case 1:11-cv-03270-SLT-RLM Document 1 Filed 07/07/11 Page 18 of 59 PagelD #: 18

care, using qualified individuals, and that all relevant infonnation the Government should

reasonably expect to know about contractors and their perfonnance has been disclosed to the

Government.37

52. In these Certifications, BoA and other servicers also "acknowledgeD that the

provision offalse or misleading infonnation ... in connection with the Programs or pursuant to

the Agreement may constitute a violation of: (a) Federal criminal law...; or the. civil False

Claims Act ....,,38

c. Treasury's Supplemental Directives and Handbook

53. Treasury's first Supplemental Directive was issued in April 2009 and set forth in

greater detail the specific obligations servicers must satisfy under the Agreements they signed.

54. As the Directive makes plain, servicers must evaluate the eligibility of every

borrower within their portfolios first by detennining if a borrower is either in imminent default

or is already delinquent, and then by applying the NPV test for eligibility. If "the servicer .

concludes a current borrower is in danger ofimminent default, the servicer must consider HAMP

modification," and further "[i]fthe NPV result for the modification scenario is greater than the

NPV result for no modification, the result is deemed 'positive' and the servicer MUST offer the

modification." 39

55. Under the 2009 Directive, where a borrower provides verbal financial infonnation

to a servicer such as Bank ofAmerica, the servicer must send an initially qualifymg borrower a

solicitation for the HAMP and an offer of a Trial Period Plan. When the borrower returns those

documents the servicer "must review them to verify the borrower's financial infonnation and

eligibility - except that documentation ofincome may not be more than 90 days old as ofthe

determination of eligibility.''''o

37 Annual Certification, Secs. 4; 7.

38 Annual Certification, Sec. 6.

39 Supplemental Directive 09-01, at 13; 3-4 (April 6, 2009) ("Directive 09-01") (emphasis in

original). Available at www.hppinc.org/_uls/resources/Supplemental_Directive_09-0.pdf.

40 Directive 09-01 at 5.

- 15 -

006183-1 J 457264 VI
Case 1:11-cv-03270-SLT-RLM Document 1 Filed 07/07/11 Page 19 of 59 PagelD #: 19

56. Servicers are directed to assist borrowers by "provid[ing) tbe borrower with

infonnation designed to help tbem [sic] understand tbe modification tenns tbat are being offered

and tbe modification process," including "clear and understandable written infonnation about tbe

material tenns, costs, and risks oftbe modified mortgage loan ....,,41

57. To this end, "servicers must have adequate staffing, resources, and facilities for

receiving and processing tbe HAMP documents and any requested infonnation that is submitted

by borrowers," as well as "procedures and systems" that ensure "inquiries and complaints are

provided fair consideration, and timely and appropriate responses and resolution.,,42

58. For the protection of homeowners and tbe integrity ofHAMP, elaborate document

retention policies are mandated for servicers. This includes retention of "all documents and

infonnation received during tbe process of detennining borrower eligibility," including "detailed

records of borrower solicitations or borrower-initiated inquiries regarding tbe HAMP, tbe

outcome oftbe evaluation for modification under tbe HAMP and specific justification witb

supporting details ifthe request for modification .tinder tbe HAMP was denied.,,43

59. Records must also be accurately "retained to document the reason(s) for a trial

modification failure.,,44 Where application oftbe NPV calculus leads to a "decline" for HAMP

eligibility, "tbe servicer must document its consideration of other foreclosure prevention

options.,,45 All required documentation must be retained for a "period ofseven years from tbe

date ofthe document collection.'''6

60. Servicers must also make "reasonable efforts to contact borrowers facing

foreclosures to detennine tbeir eligibility for HAMP" and suspend all foreclosure proceedings

41 Directive 09-01 at 13.

42 Directive 09-01 at 13.

43 Directive 09-01 at 13.

44 Directive 09-01 at 13-14..

45 Directive 09-01 at 14.

46 Directive 09-01 at 14.

- 16-

006183-11 457264 VI
Case 1:11-cv-03270-SLT-RLM Document 1 Filed 07/07/11 Page 20 of 59 PagelD #: 20

where the borrower has not been "evaluated for the program, and, if eligible, an offer to

participate in the HAMP has been made.,,47

61. The Directive explains the steps servicers must take to assist borrowers in

completing first a Trial Period Plan and then the agreement outlining tenns ofthe final

modification plan. Additionally, "[i]fthe borrower's submission is incomplete, the servicer

should work with the borrower to complete the Trial Period Plan submission.,,48 Where it is

determined that the borrower fails to meet RAMP eligibility criteria "the servicer should explore

other foreclosure prevention alternatives prior to resuming or initiating foreclosure.,,49

62. All administrative costs associated with processing the RAMP materials are borne

by the servicer, and any late charge, penalties, stop-payment fees or other similar fees "must be

waived upon successful completion ofthe trial period.,,50 Servicers may not charge or assess

other associated fees to the borrower.

63. This Directive instructs that servicers "must comply with the RAMP requirements

and must document the execution ofioan evaluation, loan modification and accounting

processes" and "develop and execute a quality assurance program that includes either a

statistically based (with a 95% confidence level) or a ten percent stratified sample ofloans

modified ....,,51

64. Treasury has issued several Supplemental Directives since its initial April 2009

directive, each ofthem refining further the requirements that servicers must meet in order to

comply with the Agreements they have signed and to remain eligible for Government payments.

All Supplemental Directives, reinforce the fundamental obligation ofservicers to proactively and

in good faith determine the eligibility of every homeowner for a RAMP modification, and to

process applications for eligibility and con"ersion ofRAMP Trial Period homeowners to

47 Directive 09-0 I at 14.

48 Directive 09-01 at 15.

49 Directive 09-01 at 18.

50 Directive 09-01 at 22.

51 Directive 09-01 at 25.

- 17 -

006183-1 J 457264 VI
Case 1:11-cv-03270-SLT-RLM Document 1 Filed 07/07/11 Page 21 of 59 PagelD #: 21

pennanent HAMP modifications in good faith, conforming to the highest professional standards.

Again, these Directives are part ofthe Program Documentation incorporated into the Agreement.

65. Servicer obligations are now memorialized and detailed most comprehensively in

the "Handbook for Servicers ofNon-GSE Mortgages," incorporated as part ofthe Program

Documentation binding on servicers through the Agreement signed with Treasury. The

Handbook is "intended to provide a consolidated resource for programmatic guidance related to

the MHA program for [non-GSE] loans," and "incorporates and supersedes" prior Supplemental

Directives, FAQs, and waivers.52

66. Among other things, the Handbook reinforces the obligation ofservicers to assist

"escalated cases" (i.e., homeowner complaints) responsibly and comprehensively. Those cases

designated as "escalated" include complaints alleging the "servicer did not assess the borrower

... according to program guidelines," "inquiries regarding inappropriate program denials or the

content of a Non-Approval Notice," the "initiation or continuation offoreclosure actions" in

violation ofthe program requirements, and cases referred from outside sources including

Government sources.53

67. To assist such borrowers in "escalated" cases, servicers are required to "designate

one or more persons to comply with the requirements" ofthe Program "and to handle inquiries

that rise to the level ofan Escalated case." Servicers must sufficiently staffto "manage the

escalation case load" in accordance with time restrictions ofthe Program and the staff "must be

trained on the servicer's case escalation procedures, knowledgeable about [the HAMP program]

gU!'deI'mes and possess the auth' onty necessary to ach'leve a case resoIut'IOn ...,,54

68. Also outlined in detail in the Handbook are the procedures and timetables

servicers like BoA must follow in providing Borrower Notices to "every borrower that has been

evaluated for HAMP, but is not offered a Trial Period Plan, is not offered a pennanent

52 Handbook at II.

53 Handbook at 38.

54 Handbook at 38.

- 18 -

006183-11 457264 VI
Case 1:11-cv-03270-SLT-RLM Document 1 Filed 07/07/11 Page 22 of 59 PagelD #: 22

modification, or is at risk oflosing eligibility for HAMP because they have failed to provide

required financial information.,,55

2. Bank ofAmerica and other servicers' performance

69. At the end of201 0, BoA was responsible for approximately halfofthe backlog of

RAMP modification trials awaiting a determination of conversion into permanent status.56 BoA

has the lowest conversion rate amongst all servicers for moving homeowners from Trial Plan to

Permanent Modification.57 For homeowners whose HAMP Trial Plans have been cancelled, by

far the largest group among those serviced by BoA were placed in propnetary, non-HAMPcompliant, modifications.58 The second largest group has experienced foreclosure Starts.59 Of

those BoA-serviced homeowners denied HAMP Trial Period Plan participation in the first

instance, the largest group ofhomeowners among them has also been placed into proprietary

modifications, followed closely by those homeowners experiencing foreclosure starts. 60

70. The requirement ofthe Agreement that BoA "adhere to all program standards"

through good-faith efforts to assist homeowners with HAMP modification and modification

eligibility determinations is in tension with BoA's interests, as a servicer, to maximize its profits.

These tensions have been examined and commented on by the Oversight Panel.61

71. RAMP aims to counteract those incentives that lead to foreclosures and less

favorable modifications for homeowners. Among those countermeasures are the Govemment

payments made to servicers to encourage qualification ofhomeowners and to directly subsidize

the interest rate reductions on RAMP-modified mortgages.

55 Handbook at 49-53.

56 December Report at 22.

57 Making Home Affordable Program, Servicer Performance Report through April 2011, at 9

("April 2011 Servicer Report"). Available at https://www.hmpadmin.com/portal/news/press.jsp.

58 April 2011 Servicer Report at 10.

59 ld.

60ld. at II,

61 These tensions derive from the anti-HAMP-modification economic incentives that drive

servicers like BoA. December Report at 17; 59; Final Report at 87 n.277.

- 19 -

006183-11 457264 VI
Case 1:11-cv-03270-SLT-RLM Document 1 Filed 07/07/11 Page 23 of 59 PagelD #: 23

72. Through October of20 I0, servicers cancelled over half a million trial

modifications, with "incomplete requests" (meaning purported failure ofthe homeowner to

provide the needed documentation) as the single largest reason given to Treasury for the

cancellations by BoA and other servicers.62 Between 15-20% ofthose failed modifications have

resulted in initiation or resumption offoreclosure proceedings and scores ofthose homes have

been foreclosed upon. Another 40% ofhomeowners have received "alternative" proprietary

modifications on terms dictated by the servicer and not conforming to HAMP guidelines.63

73. The Congressional Panel noted that since the inception ofHAMP in 2009, there

had been (through October of201O) approximately 4.4 million foreclosure starts while less than

500,000 homeowners had been placed in active permanent modifications under HAMP.64 Since

October, barely 100,000 homeowners have been added to the number of active permanent

modifications, while foreclosure numbers have continued to rise.65

74. According to the Treasury Department, for the HAMP modifications it has

granted through May 31 ofthis year the Defendants have received over $75 million in so-called

incentive payments from taxpayers under BoA's HAMP Servicer Participation Agreement.66

V. ALLEGATIONS

A. Bank of America Violates its Agreement with Treasury by Fraudulently Handling

Homeowner HAMP Submissions, Inquiries and Complaints

75. Since its Agreement with the Treasury Department was signed in April of2009,

BoA has been aware that honest business practices conforming to the requirements ofthat

Agreement, an Agreement intended to maximize the number of homeowners participating in

HAMP, would cost the bank millions of dollars.

62 December Report at 29-30.

63 December Report at 30-3 I .

64 December Report at 46.

65 April 20I I Servicer Report at 2.

66 Supplemental Information - Home Affordable Modification Program, Non-GSE Incentive

Payments (through May 201 I), at I. Available at http://www.treasury.gov/initiatives/financialstabilitylbriefmg-room/reports/tarp-transactions/Pages/default.aspx.

- 20-

006183-11 457264 Vi
Case 1:11-cv-03270-SLT-RLM Document 1 Filed 07/07/11 Page 24 of 59 PagelD #: 24

76. For that reason, instead ofhonoring its contract with the Government to, in good

faith, help as many distressed homeowners as possible, it made a calculated decision. It would

permit just enough RAMP modifications to occur to create a defense (however untenable)

against Government agencies, Congressional skeptics and the public that it was making best

efforts to comply with its Agreement. Simultaneously, however, it would develop business

practices designed to intentionally prevent scores of eligible homeowners from becoming

eligible or staying eligible for a permanent HAMP modification.

77. Even more self-serving, BoA has intentionally failed eligible homeowners from

the HAMP modification process, often forcing them into predatory "modification" programs

designed to cost the homeowner more money. This despite the fact that the Agreement requires

BoA to "evaluate borrowers for and (assuming criteria are met) provide them with a HAMP

modification first, ensuring a set affordability standard, and only consider a proprietary

modification, the terms ofwhich are determined completely by the servicer, after it has been

determined that HAMP is not an option.,,67

78. As for homeowner complaints and the RAMP requirement that servicersproperly

and promptly respond to and resolve such complaints, BoA has failed to comply by design. BoA

and its agents never properly hired, trained, or equipped a workforce to genuinely address the

scores ofhomeowner complaints and regulatory inquiries, and instead developed systems and

procedures that deliberately obfuscate, mislead, and otherwise deceive those homeowners and

regulators, resulting in ineligibility through no fault ofthe homeowner.

79. Despite this concealed fraud, BoA has collected tens ofmillions of dollars from

the federal Government for the comparatively small percentage ofpermanent HAMP

modifications it has permitted. In other words, BoA has had it both ways. BoA has continued to

maximize the value ofits mortgage portfolio with anti-HAMP-modification practices and

managed to make money by committing fraud on homeowners and the United States

Government.

67 December Report at 35.

- 21 -

006183-11 457264 VI
Case 1:11-cv-03270-SLT-RLM Document 1 Filed 07/07/11 Page 25 of 59 PagelD #: 25

80. The false statements, claims and certifications made to Treasury in the context of

its Agreement (including its 2010 and 2011 "Annual Certification[s)" required by the

Agreement) were and are material to, and conditions precedent for, the payment ofmillions of

taxpayer dollars to Bank ofAmerica.

1. BoA outsources RAMP work to Urban Lending Solutions

81. After acquiring Countrywide Financial in January of 2008, BoA's corporate

structure became ever more complex. Acting under Bank ofAmerica CEO Brian Moynihan,

Barbara Desoer, former President at Countrywide Financial Corp., now President ofBank of

America Home Loans and Insurance ("HL&I"), oversees the Mortgage Servicing operations of

Bank ofAmerica, including its Home Retention Division ("HRD"). Kenneth Scheller, former

Managing Director ofCountrywide Home Loans, is a BoA Senior Vice President managing·

HRD. Separate from HRD, under the Servicing umbrella, exists the Executive Customer

Relations ("ECR") group historically handling highest-level homeowner and regulatory inquiries

and complaints. Also highly relevant, the Strategy, Governance, and Controls ("SGC") group

has principals intermixed within the HL&I corporate structure.

82. The ECR group within BoA contracted with companies, particularly Urban

Lending Solutions, to handle a variety ofservices relating to its participation in HAMP under the

Servicer Provider Agreement.

83. Urban is a privately held company based in Pittsburgh, Pennsylvania with a

presence in Broomfield, Colorado, providing private label services to the mortgage industry. On

its website, Urban describes itselfprominently as the "Premier and volume leader for home

retention (loan modification) analytics and fulfillment to the mortgage servicing industry for over

2 years" and notes that it has recently been named to Inc. 500's list offastest growing private

.. Am . 68 companIes ill enca.

68 Available at http://www.urbansettlement.com.

- 22-

006183-1 J 457264 VI
Case 1:11-cv-03270-SLT-RLM Document 1 Filed 07/07/11 Page 26 of 59 pagelD #: 26

84. Urban claims that its home retention work for mortgage servicers has made it "an

industry leader in helping families keep their homes, processing nearly 1 million home retention

transactions since 2007.,,69

85. In addition, while many companies have struggled in the wake ofthe housing

crisis, Urban has ramped up its workforce. Urban's CEO credited this "hiring mode" with the

company's '''preferred vendor'" relationship with banking giant Bank ofAmerica, which relies

on Urban [ ] to provide title, appraisal and loan closing assistance.,,70

86. In addition to past business, after signing its Agreement with Treasury, Bank of

America outsourced a significant part ofits Servicer Agreement obligations to Urban. Given

that BoA is the largest servicer in the country, this method of outsourcing is not surprising and

was anticipated by conditions placed on BoA in its HAMP Agreement. According to BoA,

thousands ofworkers (including Urban employees) are now involved in the loan default

program. 71

87. Urban's "home retention" operations have now handled Bank ofAmerica's

HAMP loan modification obligations for scores of homeowners. In particular, Urban has been

delegated part ofthe HAMP requirement to respond to regulatory inquiries and homeowner

complaints about BoA's handling of homeowner RAMP inquiries, document submissions, and

eligibility determinations. As described further below, Urban assists BoA in violating its

obligations to Treasury, and to homeowners, by systematically preventing homeowners from

mandated opportunities to qualifY for or remain in the HAMP, failing to advocate for

homeowners, and failing to genuinely attempt proper resolution of escalated complaints. All of

this is done at BoA's direction with the goal ofmaxirnizing its revenue.

69 Available at http://www.urbansettlement.comlcompanylindex.htm.

70 Dan Fitzpatrick, "Mortgage Woes Lead to Loss ofJobs Here," Post-Gazette.com,

January 30, 2008, available at http://www.post-gazette.comlpg/08030/853212-28.sttn.

71 Aldo Svaldi, "Broomfield's Urban Lending Solutions Grows Quickly Amid Stressful

Environment," denverpost.com, January 30, 20 I I, available at

http://www.denverpost.comlbusiness/ci_I7234l6l ("Denver Post Article").

- 23-

006183-11 457264 VI
Case 1:11-cv-03270-SLT-RLM Document 1 Filed 07/07/11 Page 27 of 59 PagelD #: 27

88. Urban consists oftwo worksites relevant to its BoA-contracted RAMP activities.

Urban's so-called "390" group (so named because then-located at 390 InterLocken Crescent in

Broomfield, CO) received and scanned incoming RAMP financial documentation and other

paperwork from homeowners serviced by BoA and stored documents in what became the Urban

Portal digital imaging repository. BoA outsourced to Urban this document retention operation

mandated by the terms ofthe RAMP Agreement.

89. BoA has solicited and directed homeowners to return documents, via FedEx, to

this Urban location, which has received hundreds ofthousands ofFedEx packages from

prospective 'HAMP participants. Urban hired scores of employees at 390 to accept and scan

millions ofpages of original documents, including homeowner financials, saved on the Urban

Portal. Unfortunately for homeowners, as explained further below, this repository was designed

as a black hole for their documents.

90. Another Urban Broomfield location, at 11802 Ridge Parkway, housed Urban's

Outsourced Services unit, offering comprehensive vendor services custom-tailored for clients

such as BoA. This location was responsible for handling, among other things, BoA regulatory

responses and escalated homeowner complaints concerning the HAMP. BoA committed to

making Urban a Tier 1 vendor in exchange for working with it to meet Bank goals, goals

diametrically opposed to the intent and purpose ofRAMP. This status offered Urban the

prospect ofhundreds ofmillions in revenue for years to come.

91. The Outsourced Services unit functioned initially within BoA's ECR group, with

temp workers and Urban employees given BoA titles within BoA's Office ofthe CEO and

President. To the outside world ofhomeowners and regulators, Urban's workforce appeared

indistinguishable from BoA's own employees.

2. Relator witnesses and challenges systemic RAMP fraud

92. On April 30, 2010, Mackler began work at Urban as a temporary contractor. For

three weeks, Mackler and several dozen other temporary workers were trained in the job function

6fCustomer Advocate for Bank ofAmerica's Office ofthe CEO and President. This training

- 24-

006183-1l 457264 VI
Case 1:11-cv-03270-SLT-RLM Document 1 Filed 07/07/11 Page 28 of 59 PagelD #: 28

was led by "in-classrooin" BoA officers, as well as a contingent ofon-site "out-of-classroom"

BoA executives. Additionally Urban employees Sean Jefferson and Lisa Reichert facilitated

training for the first week. Mackler and the others were to begin thereafter as Customer

Advocates in Urban's Outsourced Services Division. Virtually none ofthe trainees were

remotely qualified for the positions they then filled, nor were they given adequate training for the

job. Mackler observed that those persons with more talent, intellect, and qualifications did not

last long, but were often fired or encouraged to quit.

93. Mackler was instructed by the trainers that the job ofCustomer Advocate was to

advocate for individual homeowners in response to a regulatory inquiry on their behalf, or

following an executive complaint received by Bank ofAmerica. It was emphasized that two

categories ofhomeowners existed: those in the "default" sphere and those in the "non-default"

sphere.72 Those in the default sphere are ofrelevance here. Within that sphere are homeowners

not current on mortgage payments or facing imminent default, and in need ofloan modification.

Treasury requires BoA to determine whether each and every such homeowner might be eligible

for a RAMP modification.

94. Mackler and other trainees were given a crash course on Making Homes

Affordable and the HAMP guidelines. Mackler was told, with the others, that the advocates

were being hired to handle the influx of complaints resulting from the HAMP commitments.

95. These Customer Advocate trainees, including Mackler, were told they would be

advocating at the highest level ofauthorization "acting fully on behalf ofthe CEO and President"

when inquiring and advocating on behalf of a given homeowner within the Bank. In truth, the

trainees were not remotely qualified to intelligently advocate or seek proper resolution for

homeowners, which, as Mackler soon discovered, is precisely what BoA desired. Furthermore,

BoA developed numerous protocols and procedures to prevent Customer Advocates from

properly researching and resolving HAMP inquiries and complaints.

72 For purposes here, "non-default" complaints refer to any complaints not addressing loan

defaults or modifications.

- 25 -

006183-11 457264 VI
Case 1:11-cv-03270-SLT-RLM Document 1 Filed 07/07/11 Page 29 of 59 PagelD #: 29

a. Relator begins as a "customer advocate" for BoA

96. On or about May 24,2010, Mackler began work on the floor as a Customer

Advocate - answering the phone, "Thank you for calling Bank ofAmerica's Office ofthe CEO

and President, this is Gregory Mackler. How may I help you?" At that point, Mackler was not

aware of any fraudulent activity and was looking forward to advocating on behalf ofstruggling

homeowners and helping to correct what was being characterized as an enormous volume of

HAMP "errors" within the Bank's multiple lines of business.

97. Two weeks prior to Mackler's training, approximately 150 temporary workers

were trained as Customer Advocates and began in that role at Urban. Mackler immediately

began assisting dozens ofthese advocates on the floor with "on the job training" despite being

part ofthe latter, smaller trainee pool. The marginal relevant industry experience the temp

workforce had, if any, did not translate to the Customer Advocate position, which was primarily

an operations position. Immediately Mackler became aware of an unusually high turnover rate

within the temp workforce and amongst the managers that were Urban employees. Mackler

began to acquire systems knowledge, and informally .began inquiring about the general business

practices "on the floor."

98. In short order, Mackler learned that homeowners were not being advocated for, as

the majority ofthe temporary workers had absolutely no idea how to begin to perform their job

responsibilities, nor how to use and access the tools necessary for effective homeowner

advocacy. In fact, Mackler discovered that many ofthe tools necessary to properly research and

resolve inquiries received from regulatory authorities and homeowner complaints were not being

made available to the Urban Advocates. Advocates could not and were not trained to access the

necessary BoA computer systems, neither did they have any means to contact the relevant BoA

associates that were working on HAMP applications corresponding to regulatory inquiries or

homeowner complaints.

99. Advocates were told that it was a "downstream process" and that they did not

need to communicate with the line ofbusiness for effective advocacy on HAMP complaints.

- 26-

006183-11 457264 VI
Case 1:11-cv-03270-SLT-RLM Document 1 Filed 07/07/11 Page 30 of 59 PagelD #: 30

Many temp workers quit the job out offrustration and a fear that they would be terminated

because oftheir perceived incompetence, though in fact (as it became clear) BoA had

orchestrated it that way. As Mackler continued to discover, BoA was not looking for employees

to actually advocate and escalate matters to assist homeowners in entering the HAMP process,

but was merely attempting to create that impression. Instead, the entire focus ofthe operation

was on "closing" issues.

100. Urban employees, known as Team Leads (or Team Managers) and Assistant

Team Leads/Quality Control ("QCs"), ostensibly supervised "the floor" ofCustomer Advocates

and provided quality checks on their advocacy. For every 10 or so advocates, a Team Lead was

formally in charge. As Mackler soon realized, however, these Team Leads and QCs (though they

became Urban employees) almost entirely came through temp agencies and were themselves no

more qualified for their positions than the Advocates, having experienced the same training.

101. Mackler also began to learn that the BoA architecture for handling HAMP

mortgage modification complaints was rooted in fraud. One ofMackler's first homeowner

complaints that he handled as a Customer Advocate came from a person we will refer to as

Mrs. E., a resident ofFlorida. In 2008, Mrs. E. and her husband sought a modification from BoA

as a result ofthe husband's loss ofincome. On numerous occasions she had contacted BoA

attempting to learn the current status ofher request, now outstanding well into the time period

that the Agreement required BoA to consider her for a HAMP modification, and to learn the

status ofthe documentation she had provided to BoA numerous times.

102. As the "single point of contact" Customer Advocate, Mackler escalated

throughout the Bank ofAmerica corporate hierarchy, in a good-faith effort to address the

homeowner's concerns.73 Mackler learned that a BoA "workout negotiator" (a BoA employee

73 HAMP requires servicers to create a "single point of contact" for homeowners. Though

designed to prevent homeowners from being subject to the confusion ofmultiple contacts with

various departments, BoA uses the "single contact" requirement perversely. By preventing

homeowners from going anywhere but to the single point of contact responsible for addressing

their concerns, BoA simply prevents that single contact from effectively advancing a given

homeowner toward consideration ofHAMP eligibility - there being no one else for the

homeowner to turn to.

- 27-

006183-1 I 457264 VI
Case 1:11-cv-03270-SLT-RLM Document 1 Filed 07/07/11 Page 31 of 59 PagelD #: 31

named Robin at HRD) had solicited Mrs. E., offering that ifshe voluntarily cancelled her HAMP

request, BoA would provide her with a pennanent proprietary modification within two weeks.

This was a plain violation ofHAMP requirements. In an effort to push her toward proprietary

modification of her loan, Mrs. E. was also told that it would take "over a year" to complete a

proper HAMP review (another violation ofHAMP requirements).

103. Mackler reached out to HRD to detennine the genuine status ofMrs. E.'s

modification review and to resolve apparent confusion about BoA's handling ofthe matter and

alleged solicitation. After repeat emails from Mackler to various BoA personnel attempting to

get a response, Mackler continued to escalate.

104. Mackler asked if any modification review was under way for Mrs. E. and her

husband. The SVP refused to accommodate any request for infonnation, and redirected Mackler

back to her uncooperative reports. Mackler then escalated within Urban, to John Beranich (VP

ofOutsourced Services at Urban) complaining ofBoA's treatment ofMrs. Eo's complaint, and

the lack of any cooperation for the Office ofthe CEO and President.

105. Beranich reached out to Tom Reilly, a BoA executive who fulfills a variety of

roles within ECR and SGC, and the person integrating the contractors into the ECR model for

Default Servicing. Reilly at that time was BoA's relationship manager with Urban. Reilly told

Mackler to call BoA executive Ken Scheller, and related that all ofHRD reported up to him. At

this time Mr. Scheller was in the role of SVP ofRisk Management for BoA. Mackler called

Scheller and left a message, but hearing no response, he contacted several high-level executives,

both above and below Scheller.

106. Scheller eventually returned the call to Mackler, though not fully understanding

that Mackler was merely a Customer Advocate at an outsourced company, rather than an

Executive within BoA, or even a principal with the outsourced company. Scheller quickly

reminded Mackler that BoA and HRD was "not of course interested" in faithfully reviewing

RAMP modification requests, and that he should "back off' the issue. This was stated as ifit

were common knowledge ofwhich Mackler should have heen well aware. Scheller repeatedly

- 28-

006183-11 457264 VI
Case 1:11-cv-03270-SLT-RLM Document 1 Filed 07/07/11 Page 32 of 59 PagelD #: 32

expressed frustration that he thought everyone "at the Bank" was "on the same page" in tenns of

not really working to legitimately review homeowners for HAMP, and thought the ECR group

fully understood this as well. Mackler, unbeknownst to Scheller, was not a principal ofBoA's

ECRgroup.

107. Scheller continued to express frustration as to why ECR Customer Advocates

would be calling to bother his HRD Associates regarding individual homeowner HAMP

modification reviews and complaints, and escalating through his Division on their behalf.

Scheller described that this compromised the HRD Associates' efforts to follow executive

direction to decrease HAMP participation. Scheller stated that advocating on a homeowner's

behalf by escalating throughout HRD, when the HRD Associates were just following direction,

was going to complicate HRD operations. Mackler told Scheller that he should speak with

Beranich regarding these concerns, and considering that Beranich had previously had oversight

over the Urban "390" HAMP documentation project for HRD, they might find cornmon ground,

now that Beranich was directing the ECR advocacy project for Urban.

108. Mackler disclosed his conversation to Beranich, both verbally and via email.

Mackler was asked by Beranich to send him and only him an email describing this conversation

with Scheller. Beranich brought Mackler to his office, where Mackler learned that Reilly was

listening in via conference call.

109. Reilly asked Beranich a series of questions to understand exactly what Scheller

had revealed in his conversation with Mackler. Reilly directed Beranich to ensure that Mackler

be given direction not to tell anyone, at either Urban or BoA, that the conversation with Scheller

had ever occurred. Beranich infonned Mackler that he was a "rising star" and would soon be

hired as a QC, and demanded again that Mackler keep this infonnation strictly confidential.

110. Mackler soon learned that BoA had given direction that the BoA Subject Matter

Experts ("SME"s) (Anna Corder and Susan Park, AVP Operations Specialists at BoA and

Kristina Raisley, a BoA Advocate) staffed on location at Urban were no longer available to

answer questions about how to perfonn the job function, or about how to respond to regulatory

- 29-

006183·11 457264 VI
Case 1:11-cv-03270-SLT-RLM Document 1 Filed 07/07/11 Page 33 of 59 PagelD #: 33

inquiries or executive complaints. Urban temporary workers were given direction not to interact

with them at all. Given the fact that QCs and Team Leads themselves had no more training than

Advocates, and were charged with supervising and assisting Advocates to handle regulatory

inquiries and customer complaints, both Team Leads and Advocates had nowhere to turn:

Amidst these changes there was mounting pressure from BoA executives and from Urban

Executives to "close" more Service Records (or "SRs," as the homeowner cases were termed) to

meet daily and weekly "goals."

Ill. While attempting to advocate for homeowners, Mackler continued to encounter a

"Chinese wall" within BoA's HRD Division which made it impossible to research any

resolution, or learn accurate information on behalf of homeowners regarding HAMP

modifications. Scheller had specifically alluded to this one-way communication channel as

being established by design. Even basic questions whether a HAMP modification review was

currently being conducted for a homeowner, like Mrs. E., were not to be answered.

112. Associates in HRD, so-called "Workout Negotiators," were trained to

communicate that they were not a part ofthe MHAIHAMP process, that the caller had reached

the "wrong department," and that the HAMP process was a "downstream process." This did not

reconcile with internal systems that documented who the designated Workout NegotiatorlHAMP

Monitor was as the "point of contact." As such, no information could be made available as there

was no "point of contact" even for an Advocate in the Office ofthe CEO and President acting on

a regulatory inquiry with purported "full authority" to resolve a regulatory concern.

113. Mackler experienced this situation time and time again as a Customer Advocate.

Mackler witnessed scores of other Advocates experience the same stonewall, while either

coaching or training them, and observed countless homeowner requests for loan modification

assistance closed by Advocates who failed to properly resolve homeowner inquiries after being

shut down by BoA in their efforts to address HAMP concerns. This was done out of pressure by

BoA to close files even where the line ofbusiness (i.e., HRD) was itself obstructing the process

by refusing to verify what should have been readily ascertainable information about the status of

- 30-

006183·11 457264 VI
Case 1:11-cv-03270-SLT-RLM Document 1 Filed 07/07/11 Page 34 of 59 PagelD #: 34

documents or a RAMP eligibility detennination. This failure to verify any infonnation was

established by BoA and a symptom of keeping Advocates from learning the infonnation they

needed in order to be Advocates.

b. Relator becomes a subject matter expert

114. In June 2010, around the same time as his conversation with Scheller, Mackler

was promoted to the position ofinternal Subject Matter Expert for Urban, one offour selected

for that position. The purpose ofthe role was to cascade infonnation to the other Customer

Advocates regarding the proper way to close SRs, research regulatory and executive complaints,

and resolve homeowner concerns. This was now a defined resource for Advocates "on the

floor," whereas Mackler previously, but infonnally, did much the same work.

115. ,In the position, Mackler was ostensibly asked to enable and assist the Advocates

on the floor, to define and verify BoA guidelines to ensure proper advocacy for homeowners.

Given his frustration as an Advocate, Mackler thought he might have more authority to properly

investigate, review, research, and resolve regulatory inquiries and executive homeowner

complaints in this role. He immediately learned he was not pennitted to do so, and was stopped

at every tum. Mackler was told that the only goal was to "close" the SRs, and that Urban's

Outsourced Services group would only survive by meeting the client goals.

116. Mackler continued to press for hard answers regarding Mrs. E., as her complaint

continued to be unresolved despite repeat escalation. Urban pressured Mackler to simply "close"

the SR. In over two months, Mackler had been unable to detennine even whether Mrs. E. still

had an actual open RAMP modification review underway. Associates within HRD still

categorically refused to tell Mackler whether Mrs. E. was under review, and ifso, what kind of

modification review.

117. Mackler documented this long trail of obstruction and obfuscation by numerous

BoA personnel in the Siebel system ofrecord (a legacy holdover complaint tracking system from

Countrywide) as well as with seemingly countless emails. At one point a National Servicing

Executive communicated to Mackler that "behind the RAMP curtain" one Morgan Raijduk (a

- 31 -

006183-11 457264 VI
Case 1:11-cv-03270-SLT-RLM Document 1 Filed 07/07/11 Page 35 of 59 PagelD #: 35

Workflow Coordinator for BoA) could provide the infonnation. Mackler contacted Haijduk,

who stated that his number should not have been given out, that he should not be contacted, and

that the HAMP process was orchestrated to be a "downstream process" only. Haijduk continued

to obstruct Mackler's efforts at research and resolution.

118. Eventually, Vinesh Reddy (BoA AVP ofAdvocacy/Exclusions in HRD) and

Haijduk participated in a conference call with Mackler to discuss the MHAIHAMP process, and

specifically Mrs. E.'s concerns of a predatory foist. Reddy told Mackler that Mrs. E. was "on

hold," as were all BoA homeowners that had requested HAMP modification assistance.

119. Reddy and Haijduk explained to Mackler that BoA had instructed that there be a

de facto lockdown, stalling all HAMP modification reviews, and keeping all homeowner

inquiries in abeyance. This delay, communicated by Reddy and Haijduk, effectively allowed

BoA to eliminate a large backlog of applications and inquiries from HAMP eligibility. This was

to be justified based upon a novel interpretation of a Supplemental Directive requiring

documents to be submitted by homeowners within 30 days, and completely reviewed 30 days

after receipt. BoA's "interpretation" was to hold all modification reviews until June 1,2010

after which time HAMP eligibility for these homeowners would be pennanently eliminated by

BoA's manipulation ofthe new 30/30 directive.74

120. Mackler pressed and Reddy confinned this was the instruction received directly

"from the top" of HRD, HL&I and Corporate (meaning Desoer and Moynihan). Mackler asked

whether such a protocol would not be transparently fraudulent. Reddy stated that executives had

directed that some defmed number of homeowners would be pennitted to "slip through" in order

to create the appearance of a legitimate HAMP review process.

121. Both Reddy and Haijduk continned that this was common knowledge within the

executive. channel, and had been directed in unambiguous tenns. Mrs. E., Reddy made clear,

74 In June of2010, a new requirement that homeowners provide additional income~related

documents in order to establish HAMP eligibility was imposed. Handbook at 56, 59. Mackler

learned that BoA, knowing ofthis change well in advance, improperly held scores ofreviews in

abeyance in violation ofthen-existing requirements, so that it could render them "ineligible" for

HAMP due to failure to provide documents never required at the time.

- 32-

006183·11 457264 VI
Case 1:11-cv-03270-SLT-RLM Document 1 Filed 07/07/11 Page 36 of 59 PagelD #: 36

was part ofthe group that would be improperly delayed and ultimately sent an "adverse letter"

denying her a HAMP modification under the pretense ofthe new 30/30 rule for complete

documentation and review.

122. Mackler continued to challenge this effort. He inquired about instances of "Bank

Error" where there was documented proofthat a Bank Associate adversely advised a homeowner

in a manner that prevented him or her from meeting the Bank's requirements for documentation

or successfully completing the next step in the HAMP process. Mackler observed numerous

instances where the BoA advocates charged with answering homeowner questions regarding

HAMP modifications were providing blatantly incorrect information. Mackler in fact identified

that Mrs. E.'s paperwork was falsely recorded as "not received" even though a FedEx tracking

number showed obvious receipt. HRD had falsely documented its records to the contrary, as

Mackler came to see in scores of cases.

123. Reddy and Haijduk stated that even where there existed a documented Bank

Error, there was no provision allowing for a homeowner to challenge or appeal the permanent

loss ofHAMP eligibility. Mackler continued to challenge this point, piecing together the manner

in which this had been orchestrated.

124. Mackler observed that HRD's system ofrecord was regularly populated with

scripted comments for a homeowner undergoing HAMP review, to the effect that documents

were alleged to be "missing" or "incomplete," and that calls were not to be transferred. Efforts

were simply not being made to communicate this inforni.ation to homeowners. Mackler

questioned the practice whereby homeowners were then informed that no new information on

their modification review was currently available, that they remained "under review" but that

someone would call them within 60 days, which was outside the 30/30 clock. Meanwhile, ECR

was directing that homeowners be advised Trial Periods were expected to take six months or

longer. Reddy and Haijduk acknowledged the incongruity ofthis practice, but Haijduk then

became so distressed about what was being revealed in the call that he hung up.

- 33 -

006183-11 457264 VI
Case 1:11-cv-03270-SLT-RLM Document 1 Filed 07/07/11 Page 37 of 59 PagelD #: 37

125. Mackler and Reddy continued to talk about MHAlHAMP operations. Mackler

stated that it would not be acceptable for Mrs. E. to be included in the "adverse response" group

as it was improper and there was heightened litigation risk with this homeowner. Mr. E was an

Underwriter with AlG, and the homeowner had been documenting all the Bank errors and

improprieties of her Modification review that had originated with an initial inquiry in 2008.

Reddy acknowledged that he would personally "get involved" to help get the homeowner file

"through QC" instead of being rejected with the rest ofthe homeowners. Ultimately Mackler

was able to get Mr. and Mrs. E. a permanent HAMP modification, although it was not made

permanent until several months later.

126. As a Subject Matter Expert, Mackler continued to witness the same improprieties

he observed as a Customer Advocate, e.g., homeowners being told they were "currently under

review" for RAMP modification when several months had passed and there was no evidence of

any such review. Instead, system documentation directed that calls not be transferred and that

documents were missing or incomplete: This despite evidence that all materials had been sent

repeatedly (uSing the Bank-provided FedEx mailers no less).

127. Among other practices, Mackler reviewed several complaints where BoA had

classified a home as "vacant" or having been leased, (i. e., not "owner-occupied") in order to

disqualify an oilierwise qualified homeowner from HAMP eligibility. These "drive-by"

assessments of vacancy occurred even in cases where homeowners sent photographs oftheir

occupied homes, wel1-kept gardens, and other obvious indicia of owner occupation, and stated

that they never left their homes for more than a few hours. Mackler observed that some

homeowners were repeatedly forced to submit documents challenging these "vacancy"-based

denials.

128. In July, Mackler was temporarily reassigned, as part of his Subject Matter Expert

responsibilities, to assist in the training of new Customer Advocates for their three-week training

period. At that time, Mackler was informed by Joe Bosse (Mackler's Team Lead) and Elizabeth

Farmer (formerly a QC, now the Team Manager ofthe QCs) that he would soon become a QC

- 34-

006J83·!l 457264 Vl
Case 1:11-cv-03270-SLT-RLM Document 1 Filed 07/07/11 Page 38 of 59 PagelD #: 38

himself (as Beranich had promised). At that point he would no longer be a temp but would be

hired by Urban as a full-time salaried employee.

129. During the training, Darius Alexander (one of Urban's Assistant Training

Managers) emphasized repeatedly to the new Customer Advocate trainees that how they were

being trained may be different from how they were expected to perform their job function "on

the floor." Alexander repeatedly established that ifthe trainees were told to do something

different once "on the floor," they should do what their Team Lead directs, not what they recall

from training. He established that the workforce was under contract with Bank ofAmerica, and

that the client dictated how Urban performed its job function and the quality guidelines ofthe

positions. Alexander established for the temps that they would have the most success by doing

as they were instructed by 'ream Lead and Bank relationship managers, not by adhering to the

"right way to do things."

130. Urban had experienced extreme levels of employee turnover, understood

internally as "churn." BoA was dictating terminations ofCustomer Advocates en masse and

other Advocates were quitting under the pressure ofimpossible production expectations that the

Bank had established. In this environment, it was emphasized to trainees that even ifthe HAMP

guidelines suggested that something else should be done in response to a complaint or regulatory

inquiry, an Advocate always needed to do what they were told "on the floor" by their Team

Lead. It was established that "we" only all had jobs ifUrban as a whole met the production

expectation BoA had established. Doing things the "right way" individually could translate into

temps no longer being needed, and everyone "losing their jobs."

131. It was made plain in the training that Team Leads emphasized closing the files,

not following specific BoA ECR quality protocols. This emphasis on deviating from formal

guidelines and protocols led an appreciable number oftrainees to actually drop out ofthe

training during each session. Mackler observed a population oftrainees that would articulate a

clear understanding oftheir personal culpability in what they were being asked to do, who would

·35 -

006183-11 457264 VI
Case 1:11-cv-03270-SLT-RLM Document 1 Filed 07/07/11 Page 39 of 59 PagelD #: 39

then have interactions with Trainers or BoA executives that resulted in their voluntarily quitting,

or subsequently being pulled offthe temp assignment by their staffing agency.

c. Relator is hired as a QC

132. On July 26,2010, Mackler accepted an offer offull-time employment as a QC

(Quality Control) at Urban. In that capacity, Mackler reviewed the (a) [mal draft "Response

Letters" written by Customer Advocates to be sent to the regulatory entity or to the homeowner,

(b) the process by which the Advocate addressed the stated concerns, (c) the documents provided

by the complaining homeowner, and (d) the system documentation that resulted from the

research and resolution. Additionally, Mackler was assigned to evaluate the work ofthe other

QCs as part of a "second QC" process. In looking at this larger sample of SRs it became clear to

Mackler that homeowners' "original" documents were seemingly never accessible to HRD

during the homeowner's HAMP review, nor to any Customer Advocate or QC investigating a

regulatory or executive complaint. The Advocates and QCs only saw whatever materials the

homeowner sent in again and in furtherance ofhis or her complaint itself, after they had

escalated to the highest office within BoA, or after they had contacted a regulatory agency.

133. Mackler evaluated Customer Advocates' handling of homeowner complaints once

they were submitted for closure, under the auspice ofhaving been brought to resolution. In that

role, Mackler was specifically instructed not to audit whether Customer Advocates, HRD

advocates at BoA (who initially review HAMP applications), or others had falsified information

on the system ofrecord for a given homeowner's account. This direction was repeated on

national conference calls with BoA ECR quality led by BoA employee Shawn Pierce. Such

falsifications typically included falsely documenting that homeowners had not satisfactorily

submitted their financial documentation necessary for HAMP eligibility determination, when in

fact it was abundantly clear that homeowners had sent in these requirements multiple times

within the necessary deadlines. Often those homeowners provided certified mail or FedEx

tracking numbers. In other instances, Customer Advocates or HRD associates would falsify

- 36-

006183·11 457264 VI
Case 1:11-cv-03270-SLT-RLM Docume.nt 1 Filed 07/07/11 Page 40 of 59 PagelD #: 40

research or comments, to allow closure to meet suffocating "production goals" the Bank

demanded.

134. Mackler encountered hundreds ofhomeowners that showed convincing evidence

of document submission. Mackler saw the incongruity between HRD's documenting of

financials as "missing" or "incomplete" Without specificity, and the manner in which Customer

Advocates were documenting the system ofrecord to "close" without proper resolution. Mackler

was given specific direction not to investigate or inquire about what Customer Advocates were

documenting onto BoA systems, even when it became clear that a business practice "on the

floor" was in place to fabricate any research to substantiate closure, even though the homeowner

would ultimately suffer adverse consequences, including foreclosure, and even though the

regulatory responses were being fraudulently authored. These practices were known as routine

and observed by Mackler.

135. Mackler also observed in this capacity that several homeowners were required by

BoA to enter a "Special Forbearance" program before HAMP eligibility was determined. This

forbearance program, however, functioned to increase a homeowner's debt and overall

obligation to the lender. This resulted often in an "excessive forbearance" determination. By

virtue ofthis, several homeowners were disqualified under the NPV calculation from

participating in HAMP, just as BoA intended.

136. Other homeowners were required to make payments to BoA that were either

never credited properly toward Trial Period payments or credited against their principal, but

instead parked in a "partial account." At other times these payments were not applied in a timely

manner so as to render the payment "late." By not applying the payment in a timely manner,

BoA could disqualify otherwise qualified homeowners from securing a permanent RAMP

modification. Mackler at times demanded that a homeowner's payment be immediately applied

to his Trial Period balance, but encountered obfuscation. Mackler inquired why payments held

in "partial" accounts would often equal or exceed a note payment, but would not be properly

- 37-

006183-11 457264 VI
Case 1:11-cv-03270-SLT-RLM Document 1 Filed 07/07/11 Page 41 of 59 PagelD #: 41

applied. He learned that HRD held offuntil a modification review was "complete" or

"permanent" before any crediting, an obvious violation ofHAMP requirements.

137. Mackler's efforts to diligently follow-up on complaints he reviewed was not

appreciated or valued. He was told to stop inquiring about payment irregularities and other

improprieties. During Mackler's first week as a QC, Farmer (Team Manager ofQuality at

. Urban) informed him that already he needed to increase his production by "passing" more of his

reviews, or SRs. Mackler responded that his "real" production was very high, and that even

though the SRs being submitted to him did not meet BoA ECR Quality guidelines, he was

reviewing more than other QCs. The vast majority ofthese reviews consisted ofCustomer

Advocates' draft letters informing regulatory agencies or homeowners that a HAMP review was

"pending" or currently under way, when it was actually documented no such review was pending

at all or that review was derailed by "missing" or "incomplete" documents, none ofwhich was

told to the homeowner.

138. The practice ofmerely responding that a review was "pending" was born of a

BoA ECR business practice known as "forward progress" - as long as a review was currently

underway, the Customer Advocate was not responsible for properly researching and reviewing

the regulatory or homeowner concerns. Mackler would not agree to pass or approve such

untruthful "forward progress" closings where an actual review was not active.

139. Farmer reminded Mackler that he, and other QCs, only get "credit" when they

pass or approve a given review. BoA and Urban did not give credit for properly identifYing

where an SR closure did not meet BoA ECR Quality guidelines. The requirement was to pass a

fixed number ofreviews per day, and Mackler was not meeting that arbitrary quota. Farmer

explained further that by failing to pass SR reviews, the number of complaints "closed" by Urban

was not meeting the requirements ofBoA. Mackler told Farmer that he would not

indiscriminately "pass things through" to satisfY arbitrary production metrics that fraudulently

corrupted the HAMP process. Mackler stated that his reviews of other QCs SR closures revealed

that they were never properly reviewed.

- 38-

006]83·]] 457264 V]
Case 1:11-cv-03270-SLT-RLM Document 1 Filed 07/07/11 Page 42 of 59 PagelD #: 42·

140. Most direct, Fanner told Mackler that files should be passed even ifthey did not

properly meet guidelines, as "everyone was at risk oflosing theirjobs." Fanner directed that

BoA was threatening to shut down Urban's ECR project on a daily basis ifmore SRs were not

closed to meet the daily and weekly goals. It was explained that BoA did not care ifproper

protocols were met, only that they wanted these regulatory and executive complaints "closed" at

all costs. In context, that meant "passing" SRs falsely, even ifit resulted in an eligible borrower

being further misled or wrongly denied eligibility leading to foreclosure.

141. Despite repeated threats from Fanner that Beranich would terniinate him, Mackler

made clear he would not "pass" on any files that were not properly processed for the

homeowner. The justification given, and advanced by BoA, was that any "mistake" in passing

SRs could be addressed when the homeowner initiated another complaint. In other words, the

logic was to close files as quickly as possible and worry about the errors the next time. For many

homeowners, of course, there would be no "next time" because pending foreclosure and

increased fines and penalties would commence.75

142. In or about August of 2010, Beranich called a meeting with Farmer, Betsy

McManaman (then an Urban Production Manager, to which Team Leads report) and all the QCs,

including Mackler. Beranich informed the QCs that they would ultimately report to

McManaman through Farmer and that a "Drive to Five" to reduce the complaint pipeline was

being implemented. This was a BoA effort to reduce the "pipeline" ofcomplaints. He stated

. further that Brian Moynihan himself, the CEO ofBoA, was pushing to drive down the number of

existent ECR regulatory and homeowner complaints (again, a small subset ofthe overall number

ofmodification-seeking homeowners) from roughly 12,000 to 15,000 down to 5,000 within a

75 The lag time between when a homeowner filed a complaint with the Office ofthe

Comptroller ofthe Currency, or with a state Attorney General's office, began before the

complaints were submitted to BoA. By the time a homeowner could re-escalate, iftheir previous

regulatory or executive complaint was improperly closed, it would be too late for almost all of

them. This left the vast majority ofhomeowners in the position ofhaving to accept the

solicitation ofthe proprietary (also known as "traditional" or "manual") modification. Mackler

began to identifY an orchestrated process through which BoA led a homeowner into forbearance

and default to eliminate a customer's HAMP eligibility, leaving a homeowner with no choice but

to accept a predatory foist or lose the home.

- 39-

006183·] I 457264 V]
Case 1:11-cv-03270-SLT-RLM Document 1 Filed 07/07/11 Page 43 of 59 PagelD #: 43

matter ofmonths. Again, the majority ofthese complaints were escalated claims by a regulator

or homeowner objecting to treatment by BoA in handling a particular HAMP eligibility

detennination. Jim Emerick, a BoA ECR executive, communicated that Moynihan himself was

checking in on the "pipeline" (the number of outstanding ECR complaints) daily in pursuant of

this goal.

143. Beranich emphasized that QCs and Advocates were going to need to work harder

and commit to longer hours as needed to close all ofthe complaints that could physically be

closed. He stated that everyone could potentially lose their jobs, including himself, ifthis could

not be done to accommodate BoA's production demands. No additional QCs were hired to meet

this increased demand for production. As the demand to close SRs continued, some QCs asked

ifthey could "pass" SRs to meet the production goals without putting their personal identifier in

the system ofrecord, for fear ofpersonal liability.

144. The day that the "Drive to Five" was announced, QCs, Customer Advocates and

others were directed to keep working well past the end oftheir shifts, to close as many claims as

they could physically process. From that point forward, Customer Advocates were given

crushing daily and weekly goals to meet - working early mornings to late evenings, working on

weekends, and forgoing breaks during the day. Customer Advocate turnover (the "churn" rate)

continued to grow as the pressure to fraudulently process unrealistic numbers remained

unreasonable, and those physically unable or unwilling to comply were routinely terminated

under fraudulent pretexts. BoA directed this process and was involved in the details of

tennination discussions, having sent a review team to examine which Advocates were not

playing ball. Team Managers and Team Leads who failed to effectively "push the numbers"

were also tenninated or demoted.

145. Farmer herselfwas later fired by order ofJim Emerick, the BoA executive at the

center ofthe convergence between BoA's SGC group and its ECR group, for failing to

sufficiently push Urban employees to drive down the backlog by closing on complaints,

regardless ofmerit. This pressure from BoA was constant and delivered in no uncertain tenns-

-40 -

006183-11 457264 VI
Case 1:11-cV-03270-SLT-RLM Document 1 Filed 07/07/11 Page 44 of 59 PagelD #: 44

Urban would lose its lucrative BoA ECR contract ifit failed to pass and close complaints utterly

irrespective ofTreasury-mandated guidelines for handling escalated complaints.

146. Customer Advocates were not allowed to leave for the day until they and "the

floor" had met their daily goal ofSR closure, and were forced to come in and work on weekends

if either they individually or "the floor" had not met the weekly goal BoA had established. At

this point BoA began distributing a "red list" ofparticular SR numbers that had been identified

by BoA ECR executives as needing to be closed without delay.

147.· Mackler at this time also noticed that the system ofrecord was being routinely

falsified. Whenever an Advocate would fail the QC process for not contacting the line of

business to properly research the involved issues, the system would be updated (often within

fifteen minutes) with fabricated emails from HRD Associates who were not even in-office to

communicate with the Advocate at those hours. QCs were given absolute direction that they

were not to investigate these improprieties, but instead to take everything submitted to the

system ofrecord at "face value." BoA personnel were observed "helping" Urban Advocates

close files, and giving direction to fraudulently alter the system ofrecord to allow closure.

148. Ultimately the "Drive to Five" was considered a "success" by BoA, though it

rendered scores of potential HAMP participants ineligible simply in order to meet an artificial

requirement imposed by BoA. 76

d. Relator begins work on the "Root Cause" project

149. In September of2010, during the week following announcement ofthe "Drive to

Five," Mackler was moved from his position as a QC into a new position as the Point Person for

a BoA Root Cause Analysis project. Beranich made it clear to Mackler that neither Urban nor

BoA knew how to make use ofhis talents, and that they "didn't know what to do with [him]"

because he had not been willing to improperly and swiftly close files as either a QC or a

Customer Advocate. He admitted that Mackler knew "too much" about the operation. Beranich

76 Denver Post Article at 3. Mackler was included in leadership channel conversations where

direction was given to fabricate cause for termination for countless employees and Team

Managers.

- 41 -

006183-11 457264 VI
Case 1:11-cv-03270-SLT-RLM Document 1 Filed 07/07/11 Page 45 of 59 PagelD #: 45

discussed Mackler's intellect, knowledge and unique skillset, as well as his unwillingness to

improperly close files, with Tom Reilly and others at BoA. Reilly, and others at BoA, directed

Beranich to move Mackler to the Root Cause project, a project outside ofECR and instead

within the realm ofBoA's SGC group.

150. The Root Cause project (later termed Root Cause-Denver) was designed by BoA

to report not through ECR, but rather through SGC as a risk analysis audit to discern what

business practices were evident or transparent to regulatory agencies and homeowners, i. e., to

determine what fraud a homeowner could detect or an outside party examining BoA's business

practices could detect looking only at internal systems. Specifically, BoA wanted to know what

information (potentially incriminating information) was transparently observable from internal

systems should it be subpoenaed.

151. In this position Mackler reported directly to Eric Marsing (former Countrywide

First VP, now BoA SVP in SGC) and no longer up through Urban. Tiffany Harrison (BoA AVP

in SGC) worked for Marsing and Mackler spoke with both she and Marsing regularly in the

months that followed. Harrison and Marsing both technically reported to Tom Trujillo (BoA)

who himselfreported to Jim Emerick. In reality the Root Cause group worked for the BoA Risk

Committee, with cross-reporting relationships throughout corporate BoA, SGC and the

respective lines of business.

152. Mackler managed the Root Cause-Denver project, including the team of

analysts77 and was deemed the Project Point Person by BoA executives for the program, until its

dissolution in March of20I2. Root Cause-Denver examined Default Servicing, working with

BoA six-Sigma engineers and BoA Process Design Consultants within Default Servicing

(referred to as "Mod Space" or modification space) as well as with ECR and Servicing Quality

Associates. Root Cause-Denver additionally looked at Financial Protection Services, Balboa

Insurance Group, as well as Sales and Fulfillment (Origination).

77 The analysts were Nikki Bakkal, Bob Truesdale, Yang Lee, Wesley White, Laquanda

Ellison, Wanda Wasielewski, Keysha Baker (who was removed from the project) and eventual

QC coordinator Paul Langer.

- 42-

006183-1 I 457264 VI
Case 1:11-cv-03270-SLT-RLM Document 1 Filed 07/07/11 Page 46 of 59 PagelD #: 46

153. The Root Cause team received a pre-selected sample of high-risk regulatory and

homeowner complaints, complaints containing allegations ofreal concern to BoA's Risk

Committee, and examined them to determine what information existed on Urban or BoA systems

to either rebut or confirm the allegations in the homeowner complaints.

154. Marsing sold this new position to Mackler on the argument that, given Mackler's

constant expression of concerns about fraud, he could now officially work to determine what

"mistakes" were being made in operation ofthe HAMP reviews, and would "work with the line

ofbusiness" to fix and correct those. In fact, as was explained later, BoA wanted to learn what

degree of exposure it was facing, particularly with respect to what Congress or Treasury might

do ifit accessed BoA's internal systems in an effort to detect wrongdoing. Marsing

acknowledged the political ramifications and reputational risk that could emerge from these

audits, thus emphasizing their importance and sensitive nature.

ISS. Mackler worked with Marsing and Harrison to manage the unique team issues

that resulted from Root Cause analysts being exposed to such a large sample ofinformation

revealing illegal and fraudulent business practices that BoA employed. BoA directed that the

nature ofthe audits that RC-Denver would be exposed to were so confidential in nature that no

one from the RC-Denver team was to discuss the results with anyone else at BoA or Urban. This

information was only to be communicated to Marsing or Harrison.

156. Roughly half ofthe audits conducted by the group (then reviewed by Mackler)

consisted of homeowner complaints, often forwarded by individual members ofCongress, or

inquiries from the Office ofthe Comptroller ofthe Currency (OCC), State Attorneys General, or

other regulatory agencies, in which a business practice was alleged that had significant

regulatory or political exposure. The other half consisted ofinternal BoA records where an

employee documented a business practice that, while accurate, created exposure for the Bank

and therefore did not follow the (fraudulent) Bank protocols. The results ofthe audits were

synthesized by Mackler into higher level observations, and then presented by Harrison and

Marsing to the BoA Risk Committee.

- 43-

006183-11 457264 VI
Case 1:11-cv-03270-SLT-RLM Document 1 Filed 07/07/11 Page 47 of 59 PagelD #: 47

157. Marsing and Harrison emphasized to Mackler and the Root Cause group that the

company was not attempting to "catch" wrongdoers at BoA. Harrison and Michelle Dean, a

BoA Default Servicing"Process Design Consultant, repeatedly emphasized that homeowner

complaints about BoA's claiin of "missing"HAMP documents (even where homeowners could

document repeatedly sending this information) should in fact be captured by Root Cause as

merely a "comniunication" failure ("fail point") or as being the fault ofthe homeowner

("Customer Adherence"). In this manner, BoA could continue to hide the wrongdoing from

internal controls, homeowners, Congress, and the Treasury Department. Thus BoA was able to

perpetrate fraud even within the group ostensibly charged with uncovering it.

158. Mackler was given repeat direction from Marsing and Harrison regarding what

was "fair game" to capture versus what the line of business wanted reported. Additionally,

Mackler was invited to substantively alter allegations offraud and overt business practices where

they had not been properly identified. Mackler gave his team of analysts direction to capture

"what they saw" as they had been initially trained. Eventually the line of business, Default

Servicing, began fraudulently changing the results ofthe RC-Denver team's audits without their

knowledge or consent, while directing them to change the "results" of certain audits that

identified falsity in the "RAMP document dialog." Mackler complained about this, and was told

by Marsing and Harrison that lines of business could determine certain things to be "off-limits"

to the Root Cause group. It was up to theBoA line ofbusiness to decide how much to cooperate.

I59. Over the course ofthe next six months, after reviewing thousands of audits by his

team and receiving constant direction from BoA executives, it became more evident to Mackler

that Root Cause was never designed to identify fraud so as to prevent it, but to identifY it so as to

remove the evidence ofthat fraud from the system records. 78 Mackler participated in high-level

78 In fact, the Siebel computer system ofrecord for regulatory and customer complaints was

amenable to ex post "correction" by Urban or BoA employees, in fact correction without

detection. In early 2011, Mackler overheard BoA relationship manager Raisley giving direction

to "scrub" or clean records from the Siebel system when evidence did not correspond to the

fraudulent manner in which an SR was closed.

- 44-

006183-11 457264 VI
Case 1:11-cv-03270-SLT-RLM Document 1 Filed 07/07/11 Page 48 of 59 PagelD #: 48

Risk conference calls with BoA executives, Six-Sigma Engineers, Process Design Consultants,79

and others in Change Management and the Root Cause Transformation Sub-Committee where it

was made even more clear that BoA's HAMP fraud was orchestrated, and entirely by design.

160. By examining each audit, Mackler observed and was able to document a number

of discrete fraudulent practices BoA had developed and maintained in contravention ofthe

HAMP requirements. These audits went back to the beginning ofthe HAMP rollout in early

2009 and directly confirmed that the fraudulent practices and protocols have been part ofBoA's

HAMP operations since its inception:

a. Mackler leamed ofthe existence ofthe Urban Portal where original financial

documents submitted by homeowners were concealed and not accessible to

HRD Associates who were reviewing the homeowners for HAMP

modification eligibility, neither were these documents available to Customer

Advocates when reviewing related concerns. Access would show that

homeowners had in fact often timely and satisfactorily complied with

submission requirements (such fraud translating into improper fees and

improper determinations ofineligibility). Mackler discovered that Urban had

been contracted to develop this seemingly redundant imaging repository;80

b. He repeatedly saw examples ofhomeowners whose complaints were

responded to in a fraudulent manner, including by failing to disclose bank

errors and misconduct, and falsely telling the regulator or homeowner that his

or her application was stilI "under review" even while simultaneously

79 BoA VP!Process Design Consultant Michelle Dean actively worked to prevent Mackler

from "capturing" fraud and having such "design" flaws presented to the BoA Risk Committee.

Dean consistently directed Mackler, both during his time at Root Cause and in his final weeks

with Urban as an In-Line Auditor, to cover-up fraudulent practices.

80 Dean informed Mackler that another contractor, Stuart, had been tasked to document in the

system ofrecord whether homeowners' RAMP documents had been received or were

incomplete, without having access to the Urban Portal. In other words, without being able to see

whether they had, or had not.

- 45-

006183·1 I 457264 VI
Case 1:11-cv-03270-SLT-RLM Document 1 Filed 07/07/11 Page 49 of 59 pagelD #: 49

documenting that the application was "incomplete or missing financials" so as

to quickly close the file and terminate the RAMP review;

c. Mackler observed the common BoA practice ofintentionally delaying either

modification reviews or responses to homeowner inquiries (with the intent

that such delay would ultimately cause RAMP ineligibility, given the time

period requirements ofthe Program). This included by "parking" HAMP

reviews under the operator IDs ofterminated or vacationing HRD employees

so as to allow them to age-out and lose RAMP eligibility. This "parking" also

often entailed improperly requiring new financials be submitted thus delaying

review further and intentionally failing to advise homeowners at risk oflosing

potential eligibility;

d. As he saw previously, Mackler reviewed numerous audits his team conducted

where homeowners were improperly proceeded against in foreclosure while

BoA was falsely telling them, or regulators, that such homeowners were under

"review" for RAMP modification;

e. As he also saw during his time as a Customer Advocate and QC, Mackler's

team audited numerous instances where homeowners provided substantial

payments, sometimes under their respective Trial Period modification, but

were not properly credited with such payments, thereby risking ineligibility,

because those payments were instead parked in a "partial account" as a partial

balance not applied to their RAMP obligations (even after the "partial

account" balance would constitute more than a full "note" payment as

required by HAMP);

f. Mackler's team audited several files highlighting homeowner complaints that

they had qualified for RAMP under the NPV algorithm and other

requirements, but were improperly placed into proprietary modifications in

- 46-

006183-11 457264 VI
Case 1:11-cv-03270-SLT-RLM Document 1 Filed 07/07/11 Page 50 of 59 pagelD #: 50

violation ofrequirements that BoA properly consider the homeowner for

HAMP eligibility in the first place; and

g. Numerous instances ofpersons deemed ineligible for permanent modification

status based upon failure to apply proper criteria for conversion from trial

status to permanent status.

161. These fraudulent practices, and Urban's exposure resulting from its participation

in them, were brought by Mackler to the attention ofUrban President Jim Smith and other top

executives at Urban in the fall of2010. Smith responded, during one meeting that included most

ofUrban's top executives, that Mackler and his Root Cause team "needed to remember who they

worked for" (meaning Urban). Smith also expressed anger that Mackler was regularly

discussing these matters with BoA executives, despite Mackler's explaining that the orders on

Root Cause required such regular contact to report to BoA on the audits, and that he was under

specific orders not to discuss the details ofthese audits.

162. In a subsequent follow-up meeting with Deborah Adams (AVP ofClient

Relations at Urban) and then another with Adams and Beranich, Mackler detailed again the

fraudulent practices he had observed and was auditing. Adams stated that the goal coming from

BoA was specifically not to help place homeowners into the HAMP modification process, but

instead, to close files by determining HAMP ineligibility. Mackler was encouraged to focus on

the fact that for Urban employees, the client was BoA, not the various homeowners. That was

the task Urban was contracted to help expeditiously complete with BoA. Beranich, who then

joined the conversation, at one point expressed curiosity whether Mackler was wearing a

recording device and recording the conversation.

. 163. In January of2011, David Stevens (whose father Glenn Stevens was at that point

General Counsel for Urban) joined the Root Cause project in the role ofTeam Lead, as part of

his rotating executive position within Urban. Mackler discussed ad nauseum with Stevens the

fraudulent practices detailed above. Stevens listened, but no action to address these practices "on

the floor" was ever taken.

- 47-

006183-11 457264 VI
Case 1:11-cv-03270-SLT-RLM Document 1 Filed 07/07/11 Page 51 of 59 PagelD #: 51

164. On January 25, 2010, Mackler met with McManaman, at that point Urban's

Production Manager for Quality and Special Projects. McManaman was under intense pressure

to facilitate increased production for both the Regulatory Response teanl (RRT-Denver) and

Business Process Outsourcing 150 (BPO-150) team, as neither were able to meet their crushing

daily or weekly BoA-established production goals while also meeting proper RAMP escalated

complaint guidelines. Beranich routinely threatened to terminate McManaman unless she

directed her Quality management team (Team Leads ofQCs, and Team Leads ofIn-Line

Auditors) to force their reporting employees to "pass through" SRs and audits. The "production"

conversation became the defining context ofthe Quality review teams, to the point that QCs and

Quality auditors were forwarded the nUlllber of QCs or audits they were assigned along with the

nUlllber of"closures" needed before anyone could go home.81

165. McManaman explained to Mackler that she had come to the realization she was

inevitably going to be fired. Mackler told McManaman she should be careful ofthe direction

that she was taking from BoA and cascading to her reports, since she could be personally at risk

for "following direction by giving direction" to close cases fraudulently, and to falsifY the system

ofrecord to obfuscate that. McManaman explained iliat everything she was doing was being

done at ilie direction ofthe Bank, communicated through BoA "handlers" or relationship'

managers Robbie Nicholson and Kristina Raisley.

166. During iliis January 25,2011, conversation, Raisley (on-site BoA relationship

manager at this point) walked in and stated iliat the daily goal had not been met, and iliat ilie

Quality standards needed to be "adjusted" to allow for closure of a significant number of SRs.

This rhetoric was a daily business practice ofBoA by iliis point. McManaman said she would no

longer go along with this. Raisley directed that she didn't have a choice and that ifMcManaman

81 As standard practice, Team Leads emailed audits ofthe day to auditors, with language

revealing that the audits "needed" to be closed before anyone could go home. Urban needed to

"find a way" to "sharpen the pencil" and "pass through" the SR closures. A significant nUlllber

of SRs were being closed based on a "manager exception," which acknowledged that the SR did

not meet proper protocols, but a manager had granted permission to close ilie regulatory or

customer complaint without proper research, resolution, or forward progress.

- 48-

006183-11 457264 VI
Case 1:11-cv-03270-SLT-RLM Document 1 Filed 07/07/11 Page 52 of 59 PagelD #: 52

did not go along with it, BoA would replace her with someone who would (as they had done on

countless other occasions). Raisley said that the Bank would bear all responsibility for these

closures and that Urban would "not be responsible" for the manner in which they were closed.

167. McManaman explained that she could no longer go along with the fraud,

emphasizing to Raisley that homeowners were being irreparably harmed by the improper HAMP

review practices, the lack ofgood faith ECR research and response, and lack ofresolution.

Raisley sarcastically retorted that ifthe homeowners were unsatisfied they could always reescalate. Unfortunately for homeowners this was not an option, especially considering the

timeline and lifecycle offoreclosure proceedings and modification reviews.

168. Raisley left the room and escalated the issue with Urban AVP Justin Svoboda.

Svoboda then came into McManaman's office and directed that whatever the client BoA wanted,

she needed to accommodate. McManaman pleaded with Svoboda that SRs that could be

properly closed were closed, and that nothing else met proper guidelines and could only be

closed by fraud. She emphasized the implications offraudulently closing SRs and falsifying the

QC and In-Line Audits, particularly for homeowners. Svoboda made clear that meeting BoA's

production goals took priority, not homeowner concerns, as that was the basis for Urban's

contract.82

169. At the end of February 2011, Mackler was infonned by Urban that the Root

Cause project was being cancelled by BoA. Urban executive Jason Taylor (SVP of Outsourced

Services) told Mackler that RC-Denver did not fit within the Urban corporate structure, and was

not part ofthe ECR contract with BoA (i.e., not covered by the vendor "Statement ofWork").

After that date, Mackler never again verbally spoke to Marsing or Harrison, or worked on Root

Cause audits.

82 Both McManaman and Mackler drafted and signed statements describing these January 25,

2011 conversations, out of concern that they needed to protect themselves. They are attached

here as Appendix II, Exhs. A-D.

- 49-

006183-11 457264 VI
Case 1:11-cv-03270-SLT-RLM Document 1 Filed 07/07/11 Page 53 of 59 PagelD #: 53

e. Root Cause project is dissolved and Relator is terminated

170. After the dissolution ofRoot Cause, Mackler was offered two low-level positions

within Urban: document chaser (which was a demotion from being a Customer Advocate) or a

Quality position as an In-line Auditor. Both ofthese positions were significant demotions for

Mackler who had held project management responsibilities, and served as a BoA project Point

Person.

171. Mackler explained to Urban principals that he could not in good conscience go

back to a floor-level position that required him to confront and acquiesce in the daily fraud

occurring for BoA at Urban. Mackler felt it was unreasonable for him to be complicit in the

fraud, based on his operational knowledge. For over a week, Mackler attempted to work as an

In-Line Auditor but became aware that retaliation against him had already commenced. He

continued, in that position, to object to the ongoing fraud.

172. On March 17, 2011, Mackler was terminated in retaliation for his complaints

about fraudulent activity surrounding BoA's HAMP operation.

B. Bank ofAmerica Violates the False Claims Act

173. BoA fraudulently entered into its Servicer Participation Agreement with BoA by

untruthfully pledging to develop and maintain a compliant HAMP operation. It has, since that

time, falsely certified its compliance with HAMP requirements, most recently on June 1,2011.

174. BoA has acted in violation of various obligations in the Agreement, such

violations contravening material conditions, and conditions precedent, to payment of claims

under the Agreement. Such violations render each and every claim for payment ofHAMP funds

both false and fraudulent.

175. Contrary to its Agreement, BoA does not and has not "adhere[d] to the Program

standards...for all the servicer's loans.,,83 Though obligated by the unequivocal terms ofthe

Agreement to follow all HAMP requirements (BoA "shall perform the loan modification and

83 December Report at 14.

- 50-

006183-11 457264 Vl
Case 1:11-cv-03270-SLT-RLM Document 1 Filed 07/07/11 Page 54 of 59 PagelD #: 54

other foreclosure prevention services described in ... the 'Program Documentation"'l4 as a

condition ofparticipation and payment, "satisfaction by Servicer" ofthese obligations has not

been honored. 85

176. BoA, in contravention ofits obligations, has failed by design to maintain an

"effective[ ] internal control program" to "ensure effective delivery ofServices" and

"compliance" with the RAMP guidelines, which explains, in part, why BoA has failed to comply

with its RAMP obligations.86 BoA has not performed HAMP services "with the practice, high

professional standards of care, and degree of attention used in a well-managed operation," much

less has it performed with the degree of care BoA "~exercisers] for itself under similar

circumstances.,,87

177. BoA has violated the RAMP requirement to "use qualified individuals with

suitable training, education, experience and skills to perform [RAMP] Services.,,88 Despite its

abysmal HAMP performance, resulting this month in suspension ofTreasury payments to it,

BoA has failed to "disclose ... any facts or information that [the Government] should reasonably

expect to know about [BoA] and its contractors.,,89 Though "responsible for the supervision and

management" ofthe contractors it engages to perform RAMP services, BoA fails and has failed

to "ensure that all ofits contractors comply with the terms and provisions ofthe Agreemenf'

despite being "responsible for the acts and omissions ofits contractors as ifthe acts and

omissions were by [BoA)" itself.9o

178. Again this year, BoA has falsely certified, as it has in each Certification, that it

has "performed its obligations in accordance with the Agreement..." and that "all Services have

84 Agreement, Sec. 2.A.

85 Agreement, Sec. 4.A.

86 Financial Instrument, Sec. 4(a).

87 Financial Instrument, Sec. 5(d).

88 Id.

89 Financial Instrument, Sec. 5(g).

90 Financial Instrument, Sec. 6.

- 51 -

006183-11 457264 VI
Case 1:11-cv-03270-SLT-RLM Document 1 Filed 07/07/11 Page 55 of 59 PagelD #: 55

been offered by Servicer to borrowers, fully documented and serviced by Servicer in accordance

with the applicable Program Documentation.,,91

179. BoA's violation ofspecific RAMP requirements, all part ofthe Program

Documentation binding on BoA under terms ofthe Agreement, is systemic and material. As

alleged, BoA continues to and has, inter alia, failed to extend invitations to RAMP participation

to scores ofpotentially qualified homeowners (often foisting predatory proprietary modifications

upon them instead); failed to review eligibility for such homeowners in good faith; failed to

properly credit RAMP payments and waive other fees;92 failed to review documentation in a

timely, good faith manner;93 failed to review and resolve homeowner "inquiries and

complaints...with fair consideration, and timely and appropriate responses and resolution;,,94

failed to accurately record and retain all records, including actual reasons for HAMP denials, and

fraudulently required multiple submissions of documents from homeowners;95 failed to suspend

foreclosure activity where required by HAMP;96 and failed to properly handle inquiries and

complaints, including "escalated" cases, in good faith.97 Each ofthese practices occurs in

obvious violation ofProgram Documentation.

180. Violation ofthese core provisions ofthe Servicer Participation Agreement and the

Program Documentation incorporated therein has resulted in violations ofthe False Claims Act

91 Annual Certification, Sec. 3, and Updated and Restated Certification at Col, Sec. 3,

available at https:llwww.hmpadmin.comiportalJprograms/servicer.jsp; Handbook at 38.

92 Handbook, Sec. 8.1 at 79; Directive 09-01 at 22.

93 See Directive 09-01 at 5, amended later by subsequent Directives imposing abbreviated

time periods for Servicer review.

94 See Directive 09-01 at 13 (including by intentionally delaying responses to homeowners

and otherwise failing to communicate with them).

95 See Directive 09-01 at 13; Handbook at 46, 52 (including by maintaining a fraudulently

concealed document image repository inaccessible to customer advocates and others).

96 See Directive 09-01 at 14; Handbook at 53. Mackler experienced the difficulty in

convincing Foreclosure Technicians with BoA to delay or halt foreclosure sales or other activity.

Customer Advocates were routinely informed by foreclosure personnel that procedures in place

prevented delaying or suspending foreclosure activity once the activity had begun.

97 Handbook at 46 ("Servicers must have written procedures and personnel in place to

provide timely and appropriate responses to borrower inquiries and complaints in connection

with RAMP within the timelines specified in this Handbook").

- 52-

006183·11 457264 VI
Case 1:11-cv-03270-SLT-RLM Document 1 Filed 07/07/11 Page 56 of 59 PagelD #: 56

by rendering BoA ineligible for Government payments under the terms ofthe Program. BoA's

violations are material to the Government's decision to make said payments, and had the

Government been aware ofBoA's conduct in violation ofits Agreement, the Government would

not have paid these monies, just as it is now suspending further payments to this offending BanIe.

VI. CONCLUSION

181. In 2010, the Congressional Oversight Panel observed:

[S]ervicers need to face 'meaningful monetary penalties" for

noncompliance with SPAs [Service Provider AgreementsD and

denial ofmodification for an unexplained reason, a breach oftheir

contractual obligations under HAMP SPAs.98

182. The Treasury Department determined last month that BoA's abysmal

performance under the RAMP Agreement is unacceptable and warranted suspension offurther

federal government payments to it.99 Evidence now provided by Relator lays bare the previously

concealed mechanisms and practices by which BoA has knowingly and willfully failed to

perform under the Agreement since its inception, and why each claim for payment under HAMP

has been a false claim.

183. As plainly stated in the Agreement, conditions precedent to Government payment

require the faithful implementation of a RAMP modification program. As Treasury has now

concluded, permitting a reduced number of eligible homeowners to take advantage of a HAMP

modification is insufficient to establish actual performance under the requirements ofthe

Agreement, particularly where, as here, BoA's performance under the Agreement is calculated to

undermine the ability ofscores of eligible borrowers to qualitY.

184. Simply put, BoA has made a mockery ofa program designed by Congress and the

Treasury Department to help millions ofstruggling American homeowners.

185. Incentive payments and any other payments to BoA under the terms ofits

Agreement have been obtained, and are retained, through fraud. Because such conduct violates

98 December Report at 50.

99 See fu.3, supra.

- 53 -

006183-11 457264 VI
Case 1:11-cv-03270-SLT-RLM Document 1 Filed 07/07/11 Page 57 of 59 PagelD #: 57

the False Claims Act, BoA is liable to the federal Government and needs to be held accountable

to the American taxpayers for its actions.

COUNT I

FEDERAL FALSE CLAIMS ACT

31 U.S.C. § 3729(a)(1)(A)

186. Relator re-alleges and incorporates by reference the allegations contained in the

preceding paragraphs ofthis Complaint.

187. This is a claim for treble damages and penalties under the False Claims Act, 31

U.S.C. § 3729, et seq., as amended.

188. Through the acts described above, since the inception ofthe RAMP in 2009,

Defendants knowingly presented or caused to be presented false or fraudulent claims, records or

other materials for payment or approval resulting in significant payments offalse claims by the

Government to Defendants.

189. Through the acts described above, Defendants knowingly made, used, or caused

to be made or used false records and statements, and omitted material facts, to induce the

Government to payor approve such false or fraudulent claims.

190. Each payment by the United States under the terms ofthe Servicer Participation

Agreement was the product ofa false claim and materially false statements made by the

Defendants. Defendants, due to their fraudulent conduct, rendered themselves ineligible for

payments under the Agreement because they, with knowledge and by design, were not and are

not in compliance with material terms ofthe Agreement that are conditions for payment.

191. The United States, unaware ofthe falsity and fraudulent nature ofDefendants

conduct as it relates to the terms ofthe Agreement, and ofthe records, statements, and claims

made or caused to be made by Defendants, has paid and may continue to pay millions ofdollars

for claims that would not be paid were the Government aware ofDefendants knowing violation

ofthe Agreement and the False Claims Act.

- 54-

006183-11 457264 VI
Case 1:11-cv-03270-SLT-RLM Document 1 Filed 07107/11 Page 58 of 59 PagelD #: 58

192. By reason ofDefendants' acts, the United States has been damaged, and continues

to be damaged, in substantial amounts to be determined at trial.

COUNT II

FEDERAL FALSE CLAIMS ACT

31 U.S.C. § 3729(a)(1)(B)

193. Relator re-a11eges and incorporates by reference the allegations contained in the

preceding paragraphs ofthis Complaint.

194. This is a claim for treble damages and penalties under the False Claims Act, 31

U.S.C. § 3729, et seq., as amended.

195. Through the acts described above, since the inception ofthe RAMP, Defendants

knowingly made, used, and caused to be made or used false records or statements material to

such false or fraudulent claims resulting in significant payments offalse claims by the

Government.

196. Through the acts described above, Defendants knowingly made, used, or caused

to be made or used false records and statements, and omitted material facts, to induce the

Government to payor approve such false or fraudulent claims.

197. Each payment by the United States under the terms ofthe Servicer Participation

Agreement was the product ofa false claim and materially false statements made by the

Defendants. Defendants, due to their fraudulent conduct, rendered themselves ineligible for

payments under the Agreement because they, with knowledge and by design, were not and are

not in compliance with material terms ofthe Agreement that are conditions for payment.

198. The Vnited States, unaware ofthe falsity and fraudulent nature Defendants

conduct as it relates to the terms ofthe Agreement, and ofthe records, statements, and claims

made or caused to be made by Defendants, has paid and may continue to pay millions of dollars

for claims that would not be paid were the Government aware ofDefendants knowing violation

ofthe Agreement and the False Claims Act.

- 55-

006183-11 457264 VI

-----" --"
Document 1 Filed 07/07/11 Page 59 of 59 PagelD #: 59

Case 1:11-cv-03270-SLT-RLM

199. By reason ofDefendants' acts, the United States has been damaged, and continues

to be damaged, in substantial amounts to be determined at trial.

PRAYER

WHEREFORE, Relator prays for judgment against Defendants as follows:

A. That Defendants cease and desist from vio'lating 31 U.S.C,. § 3729, et seq.;

B. That this Court enterjudgment against Defendants in an amount equal to three

times the amount of damages the United States has sustained because ofDefendants' actions,

plus a civil penalty of not less than $5,500 and not more than $11,000 for each violation of 31

U.S.C. § 3729;

C. That Relator be awarded the maximum amount allowed pursuant to § 3730(d) of

the False Claims Act;

D. That Relator be awarded all costs ofthis action, including attorneys' fees, costs,

and expenses pursuant to 31 U.S.C. § 3730(d); and

E. That the United States and Relator be granted all such other relief as the Court

deemsjust and proper.

DEMAND FOR JURY TRIAL

,Pursuant to Rule 38 ofthe Federal Rules ofCivil Procedure, Plaintiff-Relator hereby

demands a trial by jury.

Dated: July 6, 20 II

HAGENS BE SOBOL SHAPIRO LLP

006J83-11 457264 VI

By: ~~~~~~~2::~=- _ Shavl . enson

1918 Eighth Avenue, Suite 3300

Seattle, Washington 98101

Telephone: (206) 268-9340

Facsimile: (206) 623-0594

Attorneyfor Plaintiff7Relator Gregory Mackler

- 56-