PNC's Dorothy Thomas Affidavit - For an investor to acquire the right to foreclose, IT MUST obtain and record an assignment


PNC’s Dorothy Thomas Affidavit – For an investor to acquire the right to foreclose, IT MUST obtain and record an assignment

PNC’s Dorothy Thomas Affidavit – For an investor to acquire the right to foreclose, IT MUST obtain and record an assignment



PNC Bank, National Association, et al.


Peter K. Newman, et al.

I, Dorothy Thomas, being first duly sworn, state that the following facts are true based upon
my personal knowledge and information I have learned through a review of PNC Bank, National
Association’s business records:

1. I am of the age of majority and am competent to testify with respect to the
following matters.

2. I am Mortgage Officer of PNC Mortgage, a division of PNC Bank, National
Association (“PNC”), successor by merger to National City Bank, successor by merger to
National City Mortgage Co (“NCMC). I am authorized to make this Affidavit on behalf of PNC.
I have responsibility for, and knowledge of, the files and documents related to the above captioned
matter and of the procedures involved in foreclosures of loans originated by PNC or its
predecessors that are sold to Federal Home Loan Mortgage Corporation (“Freddie Mac”) as an

3. I am familiar with and have access to the records of PNC with respect to the loan
referenced herein. These records are kept in the course of PNC’s regularly conducted loan
administration activities and it is the regular practice of PNC to keep these records. I have
personally reviewed the documents, records, and other data relied on to make the statements in
this Affidavit.

4. In general, when a loan originated by one of PNC’s predecessors, such as NCMC,
was sold to an investor, unless the particular investor required assignment and physical transfer
of the mortgage note, the note remained in the possession of the originator and the originator was
responsible for its servicing. Servicing involves collecting and crediting payments from the
borrower, administering the loan, handling escrow, maintaining loan paperwork, etc. A servicer
keeps a percentage of the mortgage payments it collects from the borrowers as its servicing fee
and sends the rest of the funds to the investor. The servicer’s obligations concerning what to do
if the note went into default would be described in the particular investor’s servicing guide or in
the servicer’s contract with the investor. Unless the loan is sold with servicing rights (i.e.
servicing rights are also released to the investor upon sale of the loan), the investor gains only the
right to receive income from the mortgage.

5. With respect to loans purchased by Freddie Mac, when it purchases a loan from
the originator, it does not normally take physical possession of the mortgage note and does not
normally record an assignment of the mortgage note. With respect to loans sold by NCMC to
Freddie Mac, NCMC would historically keep physical possession of the notes evidencing
borrower obligations on those loans and would act as servicers for Freddie Mac.

6. Freddie Mac’s servicing guide, relevant portion of which is attached here as
Exhibit A (Chapter 66: Foreclosure), expressly requires servicers of its loans to initiate and
complete foreclosures on the loans in which Freddie Mac invests. (See Section 66.1 stating “The
Servicer must initiate foreclosure. . . Freddie Mac requires the Servicer to manage the
foreclosure process to acquire clear and marketable title to the property in a cost-effective,
expeditious and efficient manner”; Section 66.2 at diagram titled “Process for all Mortgages that
are delinquent or in default” indicating that Servicer must initiate and complete foreclosures).

7. On the loans it purchases, Freddie Mac never itself initiates foreclosures and does
not otherwise seek to enforce mortgage notes securing borrowers’ obligations on the loans,
unless a written assignment of the particular note and mortgage is executed by the loan originator
assigning the note and mortgage to Freddie Mac. Once an assignment is made, only the party to
whom the note and mortgage are assigned can enforce them.

8. Once the obligations under a mortgage note are enforced by foreclosing on the
mortgage securing the debt evidence by the note, the note is cancelled and can no longer be
enforced by any other entity.

9. With respect to Susan and Peter Newman’s (the “Newmans”) loan, it was
originated by NCMC when the Newmans gave NCMC a Note dated May 16, 2003 for $300,000
that was secured by the Mortgage, also date May 16,2003, on the property located at 594 Garden
Road, Dayton, OH 45419 (the “Property”).

10. On August 3, 2003, sold the Newman’s loan to Freddie Mac, but the Note and
Mortgage remained in NCMC’s possession and were never assigned to Freddie Mac. NCMC
remained the holder and servicer of the Note and Mortgage.

11. With respect to the Newmans’ loan, Freddie Mac bought fromNCMC (a) the
right to receive income from the payments on the Note actually collected by NCMC and (b) in
case of Newmans’ default, the right to receive the proceeds from the foreclosure sale. (See
Exhibit A at Section 66.61). Because no assignment of the Note and Mortgage took place,
Freddie Mac did not buy from NCMC any rights to pursue the Newmans in any way for their
failure to make payments under the Note.

12. On November 9, 2009, through its merger with National City Bank, PNC
acquired all assets and obligations of NCMC, including all of its rights and obligations to service
and enforce the Note. Freddie Mac remained having only the right to receive income from the
payments made by the Newmans under the Note and proceeds of the foreclosure sale in case of
the Newmans’ default.

13. When PNC initiated these proceedings to enforce the Newmans’ obligations
under the Note by foreclosing on the Mortgage, it was both the servicer and holder of the Note.
PNC is the only party that can enforce the terms of the Note and Mortgage because of (1) its
contractual obligation to Freddie Mac to carry out the foreclosure on the Newmans’ Mortgage
and (2) its status as holder of the Note. Once the foreclosure is completed and a judgment is
entered in this case, the Note evidencing the Newmans’ loan obligation will be cancelled and no
other party will be able to enforce it.


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