SUMMARY

1. This action originally requested the Court to order an immediate accounting of

two trusts known as CWALT 2005-6CB and CWALT 2006-6CB. These trusts hold

residential mortgage loans for the benefit of investors such as Plaintiff. The original

Complaint was not directed at the Defendant Trustee, but information obtained after the

filing of the Complaint demonstrates that the Defendant Trustee has violated its

contractual and other obligations to Plaintiff. Accordingly, Plaintiff seeks to hold the

Defendant Trustee liable for Plaintiff’s damages in all of the following trusts ….

BACKGROUND – DEFENDANT’S FAILURE TO ACQUIRE THE TRUST CORPUS

36. Based on the following allegations, it is apparent that the Defendant knowingly

failed in its obligation to receive, process, maintain, and hold all or part of the Mortgage

Files as required under the PSA. As a consequence, Plaintiff did not acquire residential

mortgage-backed securities, but instead acquired securities backed by nothing at all.

37. In a case styled Kemp v. Countrywide Home Loans, Inc., 440 B.R. 624 (D.N.J.

Bankr. 2010), the Master Servicer, identifying itself as the servicer for Defendant, filed a

secured claim in the bankruptcy of homeowner and debtor Kemp. Kemp filed an

adversary complaint against the Master Servicer asserting that “the Bank of New York

cannot enforce the underlying obligation.” Id. at 626.

38. At trial, a supervisor and operational team leader for the Litigation Management

Department for the Master Servicer testified that “to her knowledge, the original note

never left the possession of Countrywide, and that the original note appears to have been

transferred to Countrywide’s foreclosure unit, as evidenced by internal FedEx tracking

numbers. She also confirmed that the new allonge had not been attached or otherwise

affixed to the note. She testified further that it was customary for Countrywide to

maintain possession of the original note and related loan documents.” Id. at 628.

39. Summarizing the record, the New Jersey Bankruptcy Court found that:

[W]e have established on this record that at the time of the filing of the proof of

claim, the debtor’s mortgage had been assigned to the Bank of New York, but that

Countrywide did not transfer possession of the associated note to the Bank.

Shortly before trial in this matter, the defendant executed an allonge to transfer

the note to the Bank of New York; however, the allonge was not initially affixed

to the original note, and possession of the note never actually changed. The

Pooling and Servicing Agreement required an indorsement and transfer of the

note to the Trustee, but this was not accomplished prior to the filing of the proof

of claim. The defendant has now produced the original note and has apparently

affixed the new allonge to it, but the original note and allonge still have not been

transferred to the possession of the Bank of New York. Countrywide, the

originator of the loan, filed the proof of claim on behalf of the Bank of New York

as Trustee, claiming that it was the servicer for the loan. Pursuant to the PSA,

Countrywide Servicing, and not Countrywide, Inc., was the master servicer for

the transferred loans. At all relevant times, the original note appears to have been

either in the possession of Countrywide or Countrywide Servicing.

Id. at 629.

40. “With this factual backdrop”, the New Jersey Bankruptcy Court turned “to the

issue of whether the challenge to the proof of claim filed on behalf of the Bank of New

York, by its servicer Countrywide, can be sustained”, and found that:

Countrywide’s claim here must be disallowed, because it is unenforceable under

New Jersey law on two grounds. First, under New Jersey’s Uniform Commercial

Code (“UCC”) provisions, the fact that the owner of the note, the Bank of New

York, never had possession of the note, is fatal to its enforcement. Second, upon

the sale of the note and mortgage to the Bank of New York, the fact that the note

was not properly indorsed to the new owner also defeats the enforceability of the

note.

Id. at 629-630.