IN THE COURT OF COMMON PLEAS OF WASHINGTON COUNTY,
PENNSYLVANIA

Civil Division

COUNTY OF WASHINGTON,
PENNSYLVANIA, on behalf of itself and all
other similarly situated Pennsylvania Counties,
Plaintiff,

vs.

U.S. BANK NATIONAL ASSOCIATION,
Defendant.

BRIEF IN OPPOSITION TO THE
PRELIMINARY OBJECTIONS OF U.S.
BANK NATIONAL ASSOCIATION TO
PLAINTIFF’S SECOND AMENDED
COMPLAINT

I. INTRODUCTION

Defendant U.S. Bank National Association (“U.S. Bank”) has lodged preliminary
objections in this class action against it brought by the County of Washington, Pennsylvania, (the
“County”), on its own behalf and on behalf of and all other similarly situated Pennsylvania
Counties (collectively, the “Counties”). The essence of the County’s case is simple: U.S. Bank
must record mortgage assignments when mortgage notes are conveyed to it in the securitization
process because Pennsylvania statutory and equitable law require it.

Pennsylvania statutory law requires Defendant to record mortgage assignments in the
securitization process. Under the conspicuous heading “NECESSITY OF RECORDING AND
COMPULSORY RECORDING,” 21 Pa. Stat. § 351 states that “all . . . conveyances . . . shall be
recorded in the [relevant] office for the recording of deeds.” The Pennsylvania Supreme Court has
said that a mortgage assignment is a conveyance that must be recorded. Pines v. Farrell, 577 Pa.
564, 576 (Pa. 2003). The Eastern District of Pennsylvania just months ago found that there is a
statutory duty to record as well, rejecting identical arguments to the contrary presented by
Defendant here. See Montgomery County Recorder of Deeds v. MERSCORP, —F. Supp. 2d—,
No. 11-6968, 2012 WL 5199361 (E.D. Pa. Oct. 19, 2012). Defendant acts as trustee for
residential mortgage backed security (“RMBS”) trusts in which it has represented that all rights to
mortgage loans have been conveyed to it. Yet, Defendant has not recorded, or caused to be
recorded, mortgage assignments for such loans on mortgaged properties in Washington County
and throughout the Commonwealth of Pennsylvania. U.S. Bank is in plain violation of the law,
must make corrective recordations of mortgage assignments, and pay the County the necessary
recording fees.

The law of equity also requires Defendant to record the mortgage assignments. U.S. Bank
at the time its RMBS trusts were created did not hold perfected mortgages, yet represented that it
possessed all the rights to certain mortgage loans attached to the properties deposited in the trust,
free and clear of any encumbrance. With these representations, it attracted investors to its RMBS
trusts because it could claim that its mortgages have priority over other competing liens on the
mortgaged properties, the right to foreclose on non-performing mortgages, favorable tax treatment,
insulation from the bankruptcy of other entities in the mortgage loans’ chain of title, and other
benefits. U.S Bank, however, did not record, or cause to be recorded, all mortgage assignments at
the time the trusts were created, nor did it pay the accompanying fees, which is to say, U.S. Bank
failed to perfect its interest in these mortgages and misled its investors about the perfection of these
mortgages. Rather, U.S. Bank merely transferred notes to the trusts it administered and recorded
the change in note ownership only in the records of Mortgage Electronic Registration Systems, Inc.
(“MERS”), a private corporation created for the express purpose of circumventing the payment of
mortgage assignment fees to county governments. Transfers within the MERS system are
insufficient to perfect the mortgage for the transferee. Absent a recording of a mortgage’s
assignment with the County Recorder of Deeds, the mortgage is unperfected in the hands of the
transferee.

In short, U.S. Bank failed to use the County’s recording services for the assignments
necessary for the securitization, yet it represented to the public and to RMBS investors that the
RMBS trusts had the benefit of perfected mortgages, a benefit that could only be obtained by using
the County’s services for recording assignment. U.S. Bank has greatly profited by falsely claiming
that it has obtained a benefit that only the County can provide; the County is willing to grant U.S.
Bank that benefit, but requires that U.S. Bank follow Pennsylvania law and pay for it like any other
citizen. Because it has not, U.S. Bank has unjustly received a benefit that it should not be allowed
to retain. See Montgomery County, 2012 WL 5199361, at * 12 (finding claim stated for unjust
enrichment); See Walker County, Ala. v. U.S. Bank Nat’l Ass’n, No. 2012-000046.00 (Cir. Ct. of
Walker County, Alabama) (Aug. 27, 2012), attached hereto as Exhibit 1 (denying Defendant’s
motion to dismiss nearly identical complaint that contained unjust enrichment claim).

[…]

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