FAITHLESS IN

FORECLOSURE
HOW 14 JUDGES

TOOK MY HOME
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 TABLE OF CONTENTS

Page

Statement of the Case -- My Story........................ 3

A. 14 Judges............................................................................ 10

B. Unfair Foreclosures............................................................ 13

C. Legal ................................................................................. 15

D. Issue................................................................................... 18

E. The Facts............................................................................. 19

F. The Law............................................................................... 21

G. Cases Across U.S. .............................................................. 33

H. Constitutional ‘Standing’ ................................................. 40

I. Personal Property.............................................................. 43

J. Appendix............................................................................ 44

No Hope for Homeowners..........................53

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 MY STORY--Faithless in Foreclosure

Or How I Learned to Love Fairway Commercial

Mortgage Company.

I have been the proud owner of the M.E. Blanton House, on the
National Register of Historic Places, for over twenty (20) years.
My parents are Swedish immigrants. Me? I am a veteran
paratrooper with graduations hanging on the wall.

WHERE IT ALL BEGAN

My ‘Troubles’ started ten years ago when I tried to save the M.E.
Blanton House from the wrecking ball. You see, the County
wanted part of it for a street widening program. I fell onto hard
times in the two year struggle against ‘county-hall’ of which I was
only partially successful.

Then I decided to become a whistleblower. That set me at odds

with another governmental agency, a local federal judge and put
me deeper in debt. This venture eventually took away my right
to earn a living.

I am an educated consumer. That did not prevent me from

succumbing to a predatory loan in 2005. Happily, I am not
‘underwater’. The siren song of retirement whispered to me that
this loan was O.K. because I was going to sell the historic
property anyway in a year or two, then pay off this horrible
12.5% loan. (The closing costs were over $25,000.) It didn’t
happen that way. I put the property up for sale in 2006, but
asked too much. In 2007 I had a failed sale. I was still asking
too much.

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I have since found out that this lender is not regulated by any
state or federal agency. So, then the predatory loan came due at
the inopportune time that I became unemployed.

THE DEFAULT

Being a good man, I went directly to my lender in February 2008

when I knew I was going into default after two years of regular
payments. We worked on a “forbearance agreement” where I
would be worse off than before and I would have to give up all
my legal rights and the loan payments. Back to the drawing
boards. Further negotiations disclosed this stark fact: -- The
lender wanted to make a second profit on the new deal AND
make me pay the old predatory deal, in full, plus penalties. The
devil is in all those ‘extra’ charges. Don’t kid yourself.

A FALSE RESCUE

Oh, Happy Days! A buyer of the property came along which

would have paid off the predatory loan in full. All was solved.
Not so fast Philo! My lender told me these unhappy facts:

My lender had failed to tell HIS lenders that I was in default.

Therefore, he could not afford to have a closing on my property
because he would have to tell His secondary lender that he
FAILED to advise them months ago that I had stopped paying on
my loan. The buyers were as disappointed as was I because they
wanted to turn the historic property into a High-Tea restaurant
which would suit the property perfectly.

If you are counting, these are TWO voluntary resolutions of the

dilemma that have now gone by the wayside. First, I would
restructure the loan, but that failed because they wanted a
second profit on that agreement, PLUS they wanted me to give
up all my known or unknown defenses on the predatory loan.
(By that time the creditor had ALREADY made their fatal mistake
of splitting the security from the Note. More on that below.)
Second, a sale would make the lender whole, but they had a case

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of internal fraud as to why they would not agree to a half million
dollar sale that would make everybody (?) happy.

LOOKING FOR HELP….

……..in all the wrong places. The timing was ideal. Because of
the September 2008 financial meltdown there were all sorts of
new rescue vehicles for troubled homeowners like me:

• Hope for Homeowners

• Hope Now Alliance
• National Fair Housing Alliance
• Making Home Affordable
• Veteran’s Home Loan Program (State and Federal)
• National Trust for Historic Preservation
• U.S. Department of Housing and Urban Development
(HUD)
• U.S. Department of Treasury Homeowners Preservation
Office
• State Department of Housing and Community Services
• Consumer Federation of America
• Fannie Mae Home Affordable Refinance
• Freddie Mac Relief Refinance Mortgage and Home
Affordable Modification
• Obama Mortgage Modification Conversion Drive
Office of Homeownership Preservation
• State Historic Preservation League
• Acorn Housing Corporation
• National Community Reinvestment Coalition
• African American Alliance for Homeownership
• Local Banks
• Other Financial Institutions
• Neighborhood Assistance Corporation of America
• Home Affordable Modification Program (HAMP)
• Citizens for Responsible Lending

Beginning in January 2009, I went to them all either in person, by

computer, by telephone or by gosh and by golly. It is possible to

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summarize the results of this effort with these metaphors. The
State Veterans Home Loan program advised me that since I had
been a veteran for more than thirty years, I was not eligible for
their home loan programs. (Huh, I didn’t know one could lose
their veteran status.) Acorn’s office was closed on Good Friday.
All the banks said that their programs weren’t fully developed yet.
The federal websites put you in a screen tree that is fireproof
from ever getting to a human being. That is when I went straight
to the local HUD office in person where they told me I was not
eligible for ANY program. “BUT”, they asked, “HAD I TRIED
COUNSELING??”

THE BANKRUPTCY

On to bankruptcy, the rescue club! At first blush, one would think

that this is where debtors like me achieve succor of some sort.
Stay with me.

It is now a year after I missed my first payment. I had even

made a payment on that forbearance agreement where they
wanted me to give up all of my other rights--even if they
committed fraud! For a debtor in bankruptcy court there are
some startling realities:

• Counseling -- Many of us may feel we are too good for this,

but I have found, now having undergone three (3, count
‘em) counseling sessions, that they are all worthwhile.
Really. Unfortunately, there is no tie between all the good
counseling information and a rescue loan.
• Up Front Money -- I had to pay for the counseling, pay a
huge retainer to my bankruptcy attorney, pay for the U.S.
Trustee’s fee, pay to get my taxes current (they were), and
so on. Wait a minute, I thought it was the debtor who
sought PROTECTION for the limited funds the debtor had
left?!?
• There is no succor in bankruptcy -- the deal was that I had
to sell to make the lender whole and sell we did. Once

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 again, grace had shown my way a cash buyer on half the
property with no conditions. Now, we are getting
somewhere.

Those counseling sessions had disclosed a significant rescue

vehicle for me because I am a SENIOR. However, no one
but me figured it out. I AM ELIGIBLE FOR A REVERSE
MORTGAGE. I did my due diligence on reverse mortgages.
I read everything in sight. AARP has good publications on
the subject. But more than anything, Jeremy at Open Door
Counseling gave almost four (4) hours of his sophisticated
knowledge to an attentive customer. THERE IS NO DOWN
SIDE TO REVERSE MORTGAGES, even in dire circumstances
like mine. Really.

PROBLEM SOLVED?

All problems solved? Yep. The money from the cash buyer (of
part of the property), combined with the funds from the reverse
mortgage would more than pay off the underlying predatory loan
in question.

Again Not So Fast Philo (ANSFP) -- Unbeknowst to me, while we

put together the cash/reverse mortgage deal in Bankruptcy
Court, the lender had foreclosed my property out from
underneath me, outside the Bankruptcy proceedings, without
notice to me. Suddenly, I didn’t own these properties anymore
according to my lender and he promptly advised the buyers and
my reverse mortgage agent of this fact. The buyers went away
as did the reverse mortgage broker.

So, each day, I gazed out of my window (a wavy historic frosted

window) and wondered if the foreclosure swat team is going to
show up in my driveway to put my stuff out into the street. And
it is getting cold outside.

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Eventually, they came, locked my doors and threw me out into
the street. And they took all my stuff. At age 66, after working
58 years, if you count picking strawberries at age 8 and
thereafter; I am homeless.

Is there no True Rescue Vehicle (TRV) out there? Who am I? I

am Everyman. Please contact me if you relate to what happened
here or would like more information. Or just want to complain.

Lauren Paulson
3980 SW 170th Ave
Aloha, Or 97007

laurenjpaulson@yahoo.com
bulletinsfromaloha.org

DEFINITIONS for further reading

The Law

COMMON LAW -- Law developed by judicial decisions. This is the Anglo-

American legal tradition which adheres to the principle of stare decisis (“let
the decision stand”). This doctrine holds that judges must look to past
judicial decisions or Man-made legislated laws to answer the case before them
presenting identical or similar questions. Kermit L. Hall, ed., The Oxford
Guide to the Supreme Court, Page 197 (2005)

NATURAL LAW -- This is the philosophical doctrine holding that there is a

certain order in nature that provides norms for human conduct. It proposes
that people can grasp certain principles through practical reason divined by
nature and God. If a judge makes decisions based on instincts and subjective
reasoning then the philosopher George Santayana would call that Man’s
imitation of divinity. Will Durant, The Story of Philosophy, Page 493
(1926-1961)

Real Estate Concepts

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 Later, I ask you to cry for those in this hellish foreclosure predicament.
Now, however I am just sick to my stomach. Sick because I have stepped back
from my personal situation; and even further back from others as I
contemplate explaining necessary legal real estate concepts of the whole.

The Front Load: Here is what is really going on. The lawyers and the
bankers have front loaded a simple residential loan and sale with so much
complicated paperwork that even a sophisticated consumer does not
understand what is happening. Nor does anybody read these documents.
The Back Load Dump: On the other hand, lawyers and bankers have
simplified their ability to get your home through nonjudicial foreclosure to the
point of denying consumers basic constitutional due process. Let me explain.
Here are the real estate concepts you MUST understand.

1. The Sheepskin -- The ‘Sheepskin’ is what I call ‘legal title’. When a

seller conveys a residential home to the buyer the former usually transfers
the ‘Sheepskin’ to the latter. The bank gets a lien usually called a
mortgage.
2. The Complication -- There are ‘lien theory’ states and there are ‘title
theory’ states. In lien theory states the buyer (consumer) holds the
‘Sheepskin’. The bank simply has a lien. In title theory states the bank gets
the ‘Sheepskin’ and the consumer simply has an ‘equity’ interest in their
home subject to what they owe. In lien theory states usually the consumer
gets due process, at least in theory, because a bank has to go through the
courts to foreclose. In title theory states nonjudicial foreclosure is the
norm. There are few due process protections in nonjudicial foreclosures.

3. Trust Deeds -- This is where they slipped the consumers a ‘Mickey Finn’. I
maintain a Trust Deed is NOT a deed at all. It is a mortgage. It is a security
interest. It is NOT the ‘Sheepskin’. The theory behind a trust deed is that a
straw person (not to confused with the ‘nominee‘ concept developed in
MERS issues), called a trustee is an unknown fictitious person out there that
can slip and slide to the courthouse steps and sell your home in a nonjudicial
foreclosure sale without you getting due process. In short, the banks have
devised a scheme where you, the consumer, have given the banks a
‘power of sale‘ to this unknown (trustee) person so they don’t have to do
the right thing by you nor have a judge looking over their shoulder while
they are placing you in the foreclosure shaft to homelessness.

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 THE FIERCE STORMS OF LITIGATION Arrive Along With My

14 JUDGES

Aquinas conceives of what is known as the laws of nature. The Laws of

Nature are different from Man-made laws such as statutes and case law. Judges are

required to follow the latter not the former. Judges are required to follow Man-

made laws which are known as The Rules of Law. We are supposed to be a

country subject to The Rules of Law. Laws of Nature are different. When judges

follow the Laws of Nature they are being “free agents”. They are not applying nor

following the Laws of Man. Therefore, they are not following Common Law.

They are not following the Law of Precedents otherwise known as stare decisis.

STARE DECISIS Lat. "to stand by that which is decided." The principal is that

the precedent (previous) decisions are to be followed by the courts. It is only

through this predictability can lawyers knowledgeably advise their clients. Stare

Decisis is missing in action in our present legal system. We are not a country

subject to The Rule of Law when judges follow the laws of nature or do whatever

they want when they want.

Laws of Nature should be left to those who discovered them in the first

place: scientists. Laws of Nature should be left to those who discovered them in

the first place: philosophers. Laws of human conduct ie., Man-made laws or

statutory laws are made by legislatures. Laws of Nature are discovered by

scientists and philosophers. Man-made Laws are supposed to be discovered and

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applied by judges based on decisions in previous cases. Once so discovered and

applied, these laws are supposed to be followed by subsequent judicial rulings as

precedent. The public cannot possibly know how to conduct themselves in the

field of human affairs unless they can rely on judge-made law or Common Law

from previous judicial decisions. This is also known as Case Law. Case law is the

law enunciated by cases decided by judges in our highest courts.

“Aquinas conceives the Laws of Nature which the scientist discovers as laws

implanted in the very nature of things at their creation by God.” Mortimer Adler,

Great Ideas, The Lexicon of Western Thought, Macmillan Publishing Company,

Page 417(1952, 1992)

The problem is that the judiciary has decided that it is free to follow the

Laws of Nature; that is the laws divined by God, rather than the Common Law. In

a word, judges have decided they are Gods and may follow their own instincts and

do not have to follow Man-made law. This is a case in point. It is why 14 different

judges have fallen into a black hole of decision making.

All the while, the Common Law is clear under the facts found here. First, a

lender may not assign a security instrument (a mortgage or deed of trust) without

also assigning the debt instrument (the Promissory Note). Second, banks (and all

lenders) must maintain a clear chain of title. It is just like ownership of a car. If

banks assign the security instrument without also assigning the Promissory Note

they make a fatal mistake. This is what has been happening all around the United

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States. The media loves the concept of ‘robo signatures’, but that is not the new

tsunami already sweeping across the Country. Lenders’ failure to properly assign

the Promissory Note is a much more fundamental problem for the banks, yet this

concept is little understood by the media.

Once these two documents (the deed of trust and the Promissory Note) are

separated in subsequent transfers on the way to the securitization process, each

controlled as they are by two separate areas of the law; the lender cannot enforce

the security instrument. Humpty Dumpty, once fallen and broken cannot be put

back together again. Simple eh? None of the 14 judges, in three years of litigation

have taken notice of these simple principles of Man-made law in existence for

about two hundred (200) years in the United States. Why have they not had a

refresher course in this problem at ‘Judge Camp’? Judge camps are the lavish

‘conferences’ judges have all over town, all over the state, all over the world all the

time. The Ninth Circuit had theirs in Maui, Hawaii in 2010.

The New York State courts recognized this problem as early as 2004. Where

has everybody else been all this time?

None of the 14 judges here have taken notice of this aspect of Common Law

even though Paulson has repeatedly raised the issue formally in his motions and

pleadings. The judges here have just ignored this issue; this articulated legal

standard under the Common Law. Not a word have they said about this area of

the Common Law. Rather, they, all 14 of them, have divined themselves free to

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make any decision they want to make eschewing clear Man-made law; eschewing

the federal Common Law, eschewing Oregon statutes and state Common Law all

over the United States. The problem is the judges are not Gods, therefore they are

constrained not to follow their biases and their own personal view of Natural Law.

In other words, judges may not make any decision they want, motivated as to how

they feel that day. They may not make any decision they want whether they like

the merchant class party in front of them nor whether they like or dislike the lonely

unrepresented and unwashed single digit party in front of them; in a word, they

may not like Paulson. It is manifest that they must follow statutes and Case (or

Common) Law anyway. They must follow precedent. See, Appendix for specifics

how each judge has assiduously diverted from the Common Law to the Natural

Law in their considerations of this case.

UNFAIR FORECLOSURES IN THE REAL WORLD

(Or How I Learned to Love my 14 judges in a Simple, Single Asset

Bankruptcy)

Morton J. Horwitz, (sic) in his book, Transformation of American Law, 1870

to (Present), tells us that early law was chiefly for the benefit of the merchants. So,

it is now. It was chilling in my recent appearance in Bankruptcy Court to learn that

the overriding standard for the entire bankruptcy process is “...for the paramount

interests of the creditors”. Because I did not know that, my Bankruptcy Judge,

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Randall Dunn, told me at my last hearing before him that, “I had a pure heart, but

an empty head.”

Thus admonished, I now see the process as it really is. You, as the debtor,

are nothing more than a fly on the wall. The only way that the public will have a

chance against the merchants is to unite.

My website search tells me that could happen, but is not happening now, but

there are some early signs it is beginning to happen (See, for example,

Stopforeclosurefraud.com). But, my research tells me more. It is essential that

debtors, know what banks have been doing wrong. This knowledge is the ultimate

effective power in the hands of debtors. It is the end of the world for the financial

institutions (banks and mortgage brokers) who have been doing it wrong. It has to

do with CONSTITUTIONAL STANDING. **WARNING** ---

Hundreds of thousands of foreclosures must be reexamined to

determine if nonjudicial or judicial foreclosures have occurred illegally

because the Promissory Note had been separated from the mortgage, but the

debtor was not aware of the issue. In Oregon alone this means that ALL of the

over 20,000 foreclosures that occurred in 2010 must be reexamined carefully,

whether the foreclosure is completed or not. Across the United States it means

over one million foreclosures need to be reviewed to see if all parties made the

same mistake as in Natache’s case (see below) and here.

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 More probably, this means that a class action will call for all

foreclosures in the last ten (10) years be reexamined to determine if the lender

made this fatal mistake that will cost them legal standing.

LEGAL STANDING

Judges have a remarkably full tool kit to dispatch disfavored debtors to the

dust bin. In some states that is exactly what judges have been doing since at least

2004. However, now that this tsunami is about to engulf the financial industry,

there is nothing the judges can do to improperly favor the merchants. That is

because of the formidable legal concept of Constitutional Standing. There is

nothing judges can do about it except rule in favor of the debtors. Creditors either

have Standing and they win, or they don’t and they lose. There are few areas of the

law that are this black or white. This is one of them. You will have to read further

to see how powerful the concept of Standing is for debtors. You will have to read

my story. It is a sad tale of predatory practices, judicial incompetence and fraud.

Outright fraud. That is what those 50 state attorney generals better be

examining on behalf of innocent (homeless) consumers.

LEGAL MEMORANDUM

It became known to Paulson, by virtue of Federal Judge Garr King’s October

6, 2010 ruling in Natache Rinegard-Guirma’s case, cited below, that FHLF, LLC

has no standing before any of the forums mentioned below. The issue of whether a

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party has standing cannot be waived. ‘Constitutional Standing’ is a “threshold

jurisdictional requirement, and cannot be waived”. Pershing Park Villas

Homeowners Assoc. v. Unified Pac. Ins. Co., 219 F3d 895, 899-900 (9th Cir 2000).

PRELIMINARY

The Plaintiff, Lauren Paulson, was represented by Attorney Matt Arbaugh

during the bankruptcy proceedings from April 2009 until May 2010 and

throughout, from Chapter 11, Chapter 7 until the bankruptcy appeal.

Notwithstanding that this is a simple, single asset case; apparently no one in any of

the antecedent proceedings considered this glaring defect: FHLF, LLC has no

standing before any of these forums because they were not the ‘Holder’ of the

Promissory Note. Thus, FHLF, LLC had no standing to file a proof of claim,

obtain relief from stay, appear as a party of interest in any forum, file any motions

herein, much less a motion for summary judgment, nor conduct a nonjudicial

foreclosure. This is because FHLF, LLC has no ‘skin’ in the game. It is as simple

as that.

FHLF, LLC as the assignee of the trust deeds from Fairway Commercial

Mortgage Corporation (Fairway), the lender, did not ever come into possession of

the underlying Promissory Notes. The lender, Fairway Commercial Mortgage

Corporation, did not assign, endorse nor transfer possession of the underlying

Promissory Notes to FHLF, LLC. Therefore, FHLF, LLC had no standing before

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any of the courts including this court because it never held the debt instrument. It

doesn’t have any pecuniary interest in these proceedings at all.

Such failure is fatal to FHLF, LLC’s ability to appear as a party in any

litigation. It is fatal to their ability to assert the debt in the bankruptcy forum or

foreclose under the law in Oregon and under the law across the United States.

They have no legal standing to file any pleadings in any court

PROCEDURAL POSTURE

(Judicial Notice of all Cases Requested)

This matter has been before fourteen (14) judges in six (6) separate judicial

forums involving eight (8) lawyers not to mention a filing by Paulson with the

Oregon Attorney General’s Office (that has been completely ignored. All the

media hype about the state attorney general’s activity is just that).

It began in August 2008. It presently pends in the Washington County

Circuit Court, the Oregon Court of Appeals, the U.S. Bankruptcy Appellate Panel

for the Ninth Circuit, the Oregon Federal District Court, Portland Division and the

U.S Court of Appeals, Ninth Circuit as follows:

1. Oregon Bankruptcy Case No. 09-32439rd11/7

2.Washington County Circuit Court Case No. C 100084

3.Washington County Circuit Court Case No. C 100085

4.Washington County Circuit Court Case No. C 100086

5.Oregon Court of Appeals Case No. A14569

6.Oregon Court of Appeals Case No. A14570

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 7.Oregon Court of Appeals Case No A14671

8.United States Bankruptcy Appellate Panel Case No. BAP OR-10-1173

9.Oregon District Court Case No. 3:10-cv-00048-MO

10.United States Court of Appeals Ninth Circuit Case No. 10-35745

11.Oregon District Court Case No. cv-08982-ST/PK

ISSUE

Does FHLF, LLC have legal standing before any of the forums on any of the

pending matters?

ANSWER

No. State law requires that when mortgages (here deeds of trust) are

assigned that the Promissory Note be transferred to or endorsed to the assignee,

FHLF, LLC. That wasn’t done. This means that the security instruments were

separated from the Promissory Notes between two companies. Fairway held the

Promissory Notes and FHLF, LLC held the deeds of trust. The Rinegard

(Natache’s) case in Oregon and the law across the United States says that when the

security instruments (deeds of trust or the mortgage) are separated from the debt

obligation, (the Promissory Notes) by such a defective assignment, the security

instruments become ineffective. The debt obligations (the Promissory Notes) are

no longer secured. (See cases below)

This means that FHLF, LLC, which was only assigned the security

instruments, not the Promissory Notes, had no standing in these forums nor had a

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right to foreclose because they did not possess nor have an interest in the debt

instruments—i.e., the Promissory Notes.

THE FACTS

At issue here are two 2005 trust deed transactions with two Promissory

Notes between Paulson and Fairway Commercial Mortgage Corporation (Fairway).

Fairway Commercial Mortgage Corporation subsequently morphed into variously

described new organizations such as one yclept “Fairway America”, or one nka

(now known as) Skylands Investment Corporation, or one called Fairway America,

LLC or one called Fairway Commercial Corporation and so on. Matthew (Matt)

W. Burk is apparently involved in all the creditor entities (Fairway Commercial

Mortgage Corporation, Fairway Commercial Mortgage, Fairway America, Fairway

America, LLC, FHLF, LLC, and Skylands Investment Corporation, Manager of

FHLF, LLC) mentioned here. The 2005 loan transaction with Paulson only

involved Fairway Commercial Mortgage Corporation. The 2005 transaction

involved none of the other entities.

Huber-Wheeler Crossing, LLC (with Paulson as the sole member) is the

borrower on one Note and Lauren Paulson, Trustee of his testamentary (will) trust

is the borrower on the other Note. Paulson was represented by attorney Matt

Arbaugh for the bankruptcy proceedings. On Mr. Arbaugh’s instructions and

without objection by Fairway Commercial Mortgage Corporation, the four land

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parcels (lots) were quitclaimed to Lauren Paulson as an individual to facilitate the

bankruptcy reorganization. Paulson had gone out of business as a lawyer in 2006

and Huber-Wheeler Crossing, LLC had become inactive the same year.

The original lender, Fairway Commercial Mortgage Corporation, assigned

their deeds of trust to FHLF, LLC on February 6, 2006, but failed to assign,

endorse nor deliver the underlying Promissory Notes to FHLF, LLC. Fairway

Commercial Mortgage Corporation remained the lender and ‘Holder’ on the

Promissory Notes following this ineffective assignment. It should be noted that

neither Fairway nor FHLF, LLC gave the debtor notice of the 2006 deed of

trust assignment.

FHLF, LLC’s current attorney, Craig Russillo, also represents Fairway

America, Fairway American LLC, Fairway Commercial Mortgage and Fairway

Commercial Mortgage Corporation, Matt Burk and Wells Fargo Foothills. Mr.

Russillo was the attorney for FHLF, LLC in the FED eviction state court cases and

was the attorney for FHLF, LLC in the bankruptcy proceedings. In addition, Mr.

Russillo was formally designated as the agent for Joel Parker, the successor trustee

at the nonjudicial foreclosure sale. In this agency capacity, Mr. Russillo conducted

the nonjudicial foreclosure sale of September, 25, 2010 with Fairway’s corporate

attorney, Greg Blair, in tow.

FHLF, LLC, through Schwabe attorney Joel Parker, as successor trustee, and

Schwabe attorney Craig Russillo, as his agent; conducted that nonjudicial

20
foreclosure on September 25, 2009 at the courthouse steps. This nonjudicial

foreclosure sale was done on that date without notice to Paulson. This foreclosure

was defective due to multiple other mistakes made by FHLF, LLC and their

counsel, but those defects are addressed elsewhere.

THE LAW

Absolute Assignment

FHLF, LLC’s attorney, Mr. Russillo, has asserted the notion that the

‘Absolute Assignment’ in 2006 of the deeds of trust does the job for them. They

say this because there is general ‘Note’ transfer language found in that document.

In other words, FHLF, LLC would say that the language in the deeds of trust

assignment is enough to include the Promissory Notes in that assignment. This

notion is refuted by the Rinegard (Natache’s) case discussed below among all the

other judicial decisions that have ruled on this issue across the country. An attempt

to assert a general transfer of a Promissory Note in the mortgage (deeds of trust)

assignment was an issue in Bellistri v. Ocwen Loan Servicing, LLC 284 SW 3rd

619, 623 (Mo Ct App 2009). The court found as it did in Rinegard, that ‘blanket

mortgage assignment language’ in an attempt to include the Promissory Note is of

no force because no actual transfer of possession of the Promissory Note occurs as

required by the law.

But, even if such an assignment were enough (which it is not because how

the Promissory Note is transferred is governed by the Uniform Commercial Code

21
(UCC), as is discussed below; NOT by the law of assignments) there are specific

requirements under the law of absolute assignments which must be followed:

• The entire debt must be assigned. That did not happen here.

• The assignment must be in writing.

• The intention of the parties must be clear.

• Written notice of the assignment must be given to the debtor.

That did not happen here. Failure to provide Paulson with notice of

the alleged Promissory Note assignment renders it void under the law

of assignments. Condor Asset Management Ltd v. Excelsior Eastern

Ltd., NSWSC 1139, (2005)

• Then, under an ‘absolute assignment’ the assignor, Fairway, must be

joined in any foreclosure and that was not done here.

The Uniform Commercial Code

Before one can legally own a car, a person must physically come into title.

One may not legally transfer ownership of a car to another without signing off on

the title first. One cannot expect money from the transfer of car ownership without

having first been in title and then legally transferring one’s interest in that legal

instrument. In other words, one cannot legally enforce a car sale if that person

didn’t legally own the car in the first place. FHLF, LLC can’t enforce the debt

alleged to be owed to them by Paulson without legally owning the Promissory

22
Notes first. One cannot refer to ‘other documents’; the endorsements (signatures)

must be on the title document itself or permanently attached. Fairway never signed

over the Promissory Notes nor delivered possession of the Promissory Notes to

FHLF, LLC as required by law. Thus, FHLF, LLC has no skin in the game because

not only do they not have a penny involved in the alleged assignment, Fairway

never transferred possession of the Promissory Notes to FHLF, LLC.

1. Negotiation and Transfer of Promissory Notes: -- The Uniform

Commercial Code (UCC), with state-specific variations, has been adopted as law

by all 50 states and governs a major portion of the law regarding deeds of trust and

accompanying Promissory Notes. Article 3 applies to the negotiation and transfer

of Promissory Notes as they are ‘negotiable instruments’ as defined in that section

of the UCC. Article 9 of the UCC governs the sale of Promissory Notes. Oregon’s

UCC law is identical to all UCC references here.

2. Enforcement of Promissory Notes Requires Delivery: -- A negotiable

Promissory Note is transferred when it is “delivered” for the purpose of giving the

transferee (the receiving entity) the right to enforce the note. [See UCC Section

3-203(a), ORS 73.0203(1)] Fairway never ‘delivered’ the Promissory Notes to

FHLF, LLC. Under the UCC if an entity never came into possession of the Note

then they are not entitled to enforce the Promissory Note. [UCC Section 3-301]

Because FHLF, LLC never came into possession of Paulson’s Promissory Notes,

they are not entitled to enforce the Promissory Notes. [ORS 73.0301] Therefore,

23
FHLF, LLC had no Constitutional Standing to appear in the bankruptcy

proceedings, nor to file a proof of claim, nor to obtain a relief from stay, nor to file

motions, nor to foreclose. (See the Kemp case cited and discussed below)

3. Delivery Requires Endorsement: -- Moreover, ‘delivery’ requires

endorsement on the Promissory Note or on an ‘allonge’ (a separate paper

permanently attached to the Promissory Note, used in case all the other

endorsement spaces are taken up) by the ‘Holder’, Fairway, to FHLF, LLC. Actual

endorsement on the Promissory Note document is required so FHLF, LLC can

prove it didn’t just come into possession -- by stealing the negotiable instrument

(the Promissory Note), to use an extreme example. Here, there was no

endorsement of Paulson’s Promissory Notes by Fairway to FHLF, LLC which is a

complete obstacle to FHLF, LLC becoming a ‘Holder’ of the Promissory Notes.

4. Thus, FHLF, LLC is not the ‘Holder’ of the Promissory Notes: -- To

enforce a Promissory Note against the borrower, a person must prove that one is a

“Holder” or it is a transferee with the rights of a ‘Holder’. [ORS 73-0301]

Fairway Commercial Mortgage Corporation is the only ‘Holder’ of these

Promissory Notes. FHLF, LLC has never been the Holder of the Promissory

Notes, therefore, any claim asserted by FHLF, LLC in these matters is

unenforceable against Paulson and his property under Oregon law.

The underlying Promissory Notes are negotiable instruments under Oregon’s

version of the Uniform Commercial Code [ORS 73.0104] and according to the

24
specific language of these loan documents. A party is entitled to enforce a

negotiable instrument if they are (A) the ‘Holder’ of the Note or (B) under certain

circumstances when they are a ‘nonholder’ in possession with the rights of a

‘Holder’, or (C) a person not in possession, but who is entitled to enforce the note

when it is, for example, lost or stolen.

A. Holder—This is the person in possession of the note if payable to that

identified person. Since FHLF, LLC was never in physical possession of

the note, it cannot qualify as the ‘Holder’ of the note.

B. Nonholder in possession -- FHLF, LLC could otherwise qualify under

the UCC under certain circumstances if it had ever come in possession of

the Note before foreclosure. Since FHLF, LLC never came into

possession of the Promissory Notes, it cannot qualify under this rule.

C. Nonholder not in possession -- This applies, among other things, to lost

or stolen Promissory Notes and is inapplicable here. [See ORS

73.0301]

Thus, clearly FHLF, LLC was never the ‘Holder’ of Plaintiff’s

Promissory Notes under the Uniform Commercial Code (UCC) applicable here.

Attorney Craig Russillo has written a recent E-mail that purports to anoint

‘Holder’ status for both Fairway Commercial Mortgage Corporation and

FHLF,LLC simultaneously. That is impossible under the law of physics, under

statutory law (the UCC) and the Common Law. Mr. Russillo states:

25
 • “FHLF, LLC appointed Fairway Commercial Mortgage Corporation
as its servicer and held the note and trust deeds on behalf of FHLF,
LLC”. (emphasis supplied)
• “Bottom line, FHLF held both the trust deeds and the
indebtedness…” (emphasis supplied)
• “Here, there was no separation of those estates, as FHLF holds both
the note and trust deeds.” (emphasis supplied)

Under Mr. Russillo’s representations he would have BOTH Fairway and

FHLF, LLC be a ‘Holder’ at the same time. That is silly. There was no

negotiation. There was no transfer. There was no delivery. There was no

endorsement. FHLF, LLC has no Promissory Notes in their possession on this

matter. The proof is in the pudding.

A check of the recorded chain of title found in Washington County reflects

an assignment of the mortgage, but not an assignment of the Promissory Notes.

Attorney Russillo provides no proof of his assertions of who is the ‘Holder’ and

Mr. Russillo has said specifically he will not allow inspection of his original

documents. Proof is essential to establish a chain of title. Proof is essential here to

establish Constitutional Standing.

All lender billings for payments due have been by Fairway. Only Fairway

has sent income tax information to Paulson. Only Fairway has to account for the

monthly payments sent to them by Paulson which clearly reflects that as of 2008

Fairway Commercial Mortgage Corporation calls itself the ‘lender’ on the

transaction. Moreover, Fairway America (or more properly Fairway America,

LLC) as successor in interest to Fairway Commercial Mortgage Corporation is

26
being actively represented as the servicer and lender in these forums by their

General Counsel, Greg Blair through and including April 2010. Therefore,

Fairway Commercial Mortgage Corporation cum Fairway America, LLC are the

lender and the servicer of Paulson’s loan to this date, not FHLF, LLC who has no

role in the debt aspect of this matter at all.

5. The Deeds of Trust follow the Promissory Notes, Not the Other Way

Around:

-- The law across the United States and the common law for centuries is: “The

mortgage (here deeds of trust) follows the Promissory Note.” This means that if a

Promissory Note is assigned, that the security interest (deeds of trust) follows the

Promissory Note. The converse is NOT true. The Promissory Note DOES NOT

follow the mortgage (here deeds of trust). Thus, an assignment of the mortgage

without the concomitant assignment of the Promissory Notes is a nonevent. One

can enforce the bare Promissory Notes, but one cannot enforce the bare security

interests.

There is a purpose behind these stringent requirements in the UCC. A debtor

is only required to pay money to the ‘Holder’ of the Note, so he/she does not have

to worry about multiple and conflicting claims against the debtor.

27
 Conflicting Creditor Claims

At least four or five of Matt Burk’s corporations have variously and

inconsistently asserted a creditor’s interest in this matter:

A. Fairway Commercial Mortgage Corporation: -- This is the only

company that Paulson dealt with in the 2005 loan transactions and with

whom Paulson ‘contracted’. (Even this part of the transaction has been

bungled by Fairway. Apparently, there does not exist a ‘loan agreement’,

that has been signed by Fairway. Mr. Seidenwurm for whom there is a

signature space, is no longer with the company and did not sign in the

signature space for Fairway on the loan agreement. Thus, there is no

loan agreement signed by both parties.)

It is only Fairway Commercial Mortgage Corporation that

issued the 11/25/2008 “Notice of Default and Election to Sell”.

FHLF, LLC is not mentioned in this recorded document. The

inconsistency is obvious. Why would Fairway Commercial Mortgage

Corporation be issuing a 2008 ‘Notice’ in this matter if they assigned

their financial interest to FHLF,LLC in 2006? Why would Fairway

Commercial Mortgage Corporation be doing anything in 2008 when

Fairway America, LLC or Skylands Investment Corporation is the

replacement corporation as variously asserted by Matt Burk’s entities and

28
 as variously asserted by Craig Russillo, their variously asserted attorney

and agent?

B. FHLF, LLC: -- Following Paulson’s filing of Chapter 11 bankruptcy in

April 2009 the next pleading filed in the bankruptcy matter is by FHLF,

LLC through their attorney, Craig Russillo on April 22, 2009.

C. Fairway America: -- There is an undated memorandum on ‘Fairway

America’ letterhead signed by Matthew W. Burk as President of

Skylands Investment Corporation assigning “the rights and interest in

the Assignment of Leases and Rents …to FHLF, an Oregon limited

liability company” This undated memo states: “Fairway America, LLC

successor in interest to Fairway Commercial Mortgage

Corporation.”(sic) If Fairway America or Fairway America, LLC

became a successor in interest to Fairway Commercial Mortgage

Corporation sometime in 2006 why is Fairway Commercial Mortgage

Corporation still filing documents in this case in 2008, 2009 and 2010?

The initial ‘demand to cure’ letter to the Plaintiff came on

August 12, 2008, from Attorney Joel Parker representing “Fairway

America”. On April 27, 2010, Attorney Craig Russillo acting on behalf

of “Fairway America” filed FHLF, LLC’s Memorandum in bankruptcy

court in support of the Trustee’s alleged intent to settle the Paulson’s

federal court predatory lending lawsuit against the various Fairway

29
 entities. The April 27, 2010 Memorandum is supported by a declaration

signed by Fairway America’s General Counsel Greg Blair.

Yet in a pleading filed by Attorney Craig Russillo in the United

States Court of Appeals for the Ninth Circuit on January 5, 2011, Mr.

Russillo states:

“(Paulson) incorrectly names Fairway America

Corporation as a defendant-respondent in this appeal. No
such entity exists to the best of defendants-respondents’
knowledge. The entity that Plaintiff presumably intended
to name is Fairway Commercial Mortgage Corporation,
nka Skylands Investment Corporation.”

However, in the same pleading he provides another Declaration

by Greg Blair as “…general counsel for Fairway America, successor in

interest to the business of Fairway Commercial Mortgage Corporation

(Fairway).”

D. Skylands, Who?: -- Throughout the debtor’s 2005 loan transactions

with Fairway, there was no mention of Skyland’s Investment

Corporation. Skylands is first mentioned in 2008 when a curious

document is found in the “chain of title” recorded in Washington

County’s Taxation and Assessment Department. In this 2008 document,

“Fairway Commercial Mortgage Corporation” is listed as “Grantor” (the

debtor entity ‘granting’ a security interest to another) of the deed of trust

assignment. They probably meant to put Huber-Wheeler Crossing, LLC

30
 as the actual Grantor of the deeds of trust. This document appoints a

successor trustee, Joel Parker, who is an attorney for Schwabe law firm.

This document is signed by “Matthew W. Burk, President” of “Skylands

Investment Corporation, an Oregon corporation, Manager”. To this day,

the Paulson has no idea who Skylands Investment Corporation is nor

what role they have in any of the transactions encompassed here. Yet,

Skylands signs as Manager of FHLF, LLC, another entity that Paulson

has never dealt with in any of the loan proceedings???

E. Fairway America, LLC -- This is the entity that registered with

Oregon’s Corporation Division on December 6, 2007. It is the entity that

should have been identified as the successor corporation to Fairway

Commercial Mortgage Corporation instead of the entity that does not

exist --- ‘Fairway America’----, referred to often as the successor. It is

not known nor explained anywhere how Fairway America, LLC fits in

with Fairway Commercial Mortgage Corporation and Skylands

Investment Corporation. Nor is it explained anywhere where these three

entities fit in with FHLF, LLC other than the deed of trust assignment by

Fairway Commercial Mortgage Corporation to them. That assignment

does not explain the relationship between these entities as they bear on

the original loan.

31
 However, Paulson previously provided the Court with a

signature page by Mr. Russillo dated March 20th, 2009 where he signs

himself as the attorney for “Fairway America Corporation”. There is no

such company. However, Matthew W. Burk does own “Fairway

Commercial Mortgage”. Then as recently as April 10, 2010, Mr. Russillo

signs himself as the attorney for “Fairway America, the entity that also

does not exist as pointed out above. Confused? In summary, along with

the contracting Fairway entity: -- Fairway Commercial Mortgage

Corporation, the actual lender has variously used the names Fairway

America LLC, Fairway America Corporation, Fairway Commercial

Mortgage and just plain Fairway America. The Oregon Business

Registry identifies the probable proper successor entity as “Fairway

America, LLC”.

Causing further confusion is the fact that in the same current

pleading Craig Russillo states that, “Fairway Commercial Mortgage

Corporation” is now known as “Skylands Investment Corporation”. On

the other hand, Greg Blair states in his declaration that “Fairway

America, LLC” is the successor in interest to the “…business of Fairway

Commercial Mortgage Corporation” to this current day.

Finally, “Fairway America” (not “Fairway America, LLC”

which is the actual entity registered with the State of Oregon”. “Fairway

32
 America” is NOT registered with the State of Oregon) is the only entity

designation on all of Fairway’s ‘letterhead’ communications.

On the Motion for Summary Judgment filed in the instant case,

Mr. Russillo signed as the attorney for “Fairway America Corporation”.

There was testimony in a court proceeding by Attorney Joel Parker that

there are individual investors on Paulson’s loan. These investors lent

funds to Fairway to finance Paulson’s loan and to whom Fairway may

owe about $200,000. These individuals may have an additional interest

in these matters.

Thus, there are at least four to five creditors who are asserting

claims against the Plaintiff since 2005; Fairway Commercial Mortgage

Corporation, Fairway Commercial Mortgage, Fairway America, FHLF,

LLC and Skylands Investment Corporation. Even the bankruptcy judge,

Judge Dunn, was confused. He thought the dispute in the bankruptcy

proceedings was between Paulson and “Fairway” when in truth and in

fact, the only matters before Judge Dunn in the bankruptcy proceeding

were the claims of FHLF, LLC.

Cases Across The United States

The current economic meltdown has disclosed that financial institutions across

the country have made the same mistake Fairway and FHLF, LLC made here:

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• Kemp v. Countrywide, USDC of New Jersey, Case No 08-18700- JHW

(11/16/10) {The debtor successfully expunged the proof of claim in

bankruptcy adversary proceeding because the Note was neither endorsed to

transferee nor put in transferee’s possession}

• Schwend v. US Bank, N.A, et al., USDC of Missouri, Case No 4:10 CV

1590 CDP (12/3/10) { A debtor successfully resisted a Motion to Dismiss

her claim for wrongful foreclosure citing Missouri law that a foreclosure is

invalid if the person causing the foreclosure does not actually hold title to

the Note}

• Cogswell v. CitiFinancial Mortgage Company, Incorporated, US Court of

Appeals, 7th Circuit, No 08-2153 (10/5/10) {Debtor successfully avoided

foreclosure when CitiFinancial assigned its interest in a mortgage but never

delivered the Note to the assignees. Citing Illinois law, the Court stated that

only the ‘Holder’ of the Note may foreclose}

• Servido v. US Bank N.A. et al., District Court of Appeal for State of Florida,

Fourth District, Case No 4DE10-1898 (10/27/10) {Holding that the party

seeking foreclosure must present evidence that it owns and holds the note

and mortgage in question}

• BAC Home Loans Servicing, LP fka Countrywide v. White, Court of Civil

Appeals of Oklahoma, Case No 108,736, (12/3/10) {Court holds that a

mortgage is merely an incident and accessory to the Note. Under Oklahoma

34
 law an assignment of the mortgage to one other than the holder of the note is

of no effect}

• Fawn Ridge Partners, LP v. BAC Home Loans Servicing, LP, U.S.

Bankruptcy Appellate Panel of the Ninth Circuit, Bk. No 09-15088-TD,

BAP No. CC-09-1396-HPDu , before Dunn and Perris, Bankruptcy Judges,

(3/29/10) { Countrywide, the lender, has a practice of retaining the original

Promissory Notes. Because Countrywide did not endorse and transfer the

Note to BAC, the latter had no standing to request a relief from stay. 11

USC Section 362(d) Court holds that Constitutional standing is a ‘threshold

jurisdictional requirement, and cannot be waived (citing cases)’” Under

California law, to qualify as a ‘Holder’, one must be in possession of the

instrument, and the instrument must be properly endorsed.}

• LNV CORP v, Madison Real Estate, Supreme Court of New York, Index No.

103576/2010, (12/09/2010) {Under New York law a party foreclosing must

show that they are the owner of the Note as well as the mortgage at the time

the action is commenced. Absent an effective transfer of the debt as well as

the note, the assignment of the mortgage is void and the party may not

foreclose. That party has no standing.}

• HSBC v. Thompson, et al., Court of Appeals of Ohio, Trial Court Case No.

07-CV-9439, 2010-4158 (9/3/2010) {Trial Court decision affirmed granting

debtor summary judgment and dismissing foreclosure action because HSBC

35
 failed to establish that it was the ‘Holder’ of the Promissory Note. Without

that showing HSBC has no standing to bring the foreclosure. Standing is a

threshold issue for the courts to decide for it to proceed to adjudicate the

action. In a foreclosure action the real party in interest is the current holder

of the note and mortgage. Financial institutions, noted for insisting on their

customers’ compliance with numerous ritualistic formalities, are not

sympathetic petitioners in urging relaxation of an elementary business

practice. “For nearly a century, Ohio courts have held that whenever a

Promissory note is secured by a mortgage, the note constitutes the evidence

of the debt and the mortgage is mere incident to the obligation. Edgar v.

Haines, 109 Ohio St. 159, 164, 141 NE 837 (1923) Moreover, a financial

institution cannot cure its lack of standing by subsequently obtaining an

interest in the mortgage or Note. Accord Bank of New York v. Gindele,

Hamilton App. No. C-C090251, 2010-Ohio-542.}

• Country Place Community Association, Inc. J.P. Morgan Mortgage

Acquisition Corp, District Court of Appeal of Florida, Case No. 2D10-569,

(12/29/10) Country Place sued J.P. Morgan for attorney fee after the circuit

court dismissed J.P. Morgan’s mortgage foreclosure action. J.P. Morgan

never produced any evidence that it owned the note and mortgage that were

subject to the previous proceeding. Thus, Country Place successfully

dismissed the case on summary judgment and now seeks their attorney fees.

36
 The court agreed that without proof that it owned the note, J.P. Morgan had

no standing. The court holds that if a ruling of a trial court is not worthy of

support then J.P. Morgan should confess error.

The common law rule that ‘the mortgage follows the note’ is codified in

Article 9 of the UCC, Section 9-203(g) which states: “The attachment of a security

interest in a right to payment or performance secured by a security interest or other

lien on…real property is also attachment of a security interest in the security

interest, mortgage, or other lien.” [ORS 79.0203(7)]

As the following cases demonstrate, the mortgage note does not follow the

mortgage if there is an attempted assignment of the mortgage alone or if there is an

assignment separate from the mortgage note as happened here. Bellistri v. Ocwen

Loan Servicing, LLC 284 SW 3rd 619, 623 (Mo Ct App 2009) An assignment of

the deed of trust separate from the note has no ‘force’. Saxon Mortgage Serf. Inc

v. Hillery, No C-08-4357 EMC, 2008 WL5170180, at 4-5(ND Cal Dec 9 2008).

For there to be a valid assignment, there must be more than just an assignment of

the deed of trust alone; the Promissory Note must also be assigned. In re Wilhelm,

407 BR 392, 400-05 (Bankr D Idaho 2009). Oregon cases support the concept that

the security, here the Deed of Trust, is ‘merely an incident to the debt.’ West v.

White, 307 Or 296, 300, 766 P2d 383 (1988)

Where, as here, the Promissory Note and the trust deed are split, the

transfer of the trust deed is ineffective. Bellistri v. Ocwen Loan Servicing, LLC,

37
284 SW 3rd 619, 623-24 (Mo Ct App 2009) A putative transfer of the Promissory

Note in the trust deed assignment is ineffective because the UCC governs the

transfer of a Promissory Note. Because Fairway Commercial Mortgage

Corporation never physically transferred the Promissory Notes to FHLF, LLC, Joel

Parker as successor trustee on the security interests did not have a legally

cognizable interest in the property. Therefore, Parker had no standing to foreclose

on FHLF, LLC’s behalf. Saxon Mortg. Serv., Inc v. Hillery, No C-08-4357 EMC,

2008 WL 5170180. That Fairway Commercial Mortgage Corporation remained

the lender on the transaction is evidenced by the fact that only Fairway

Commercial Mortgage Corporation, as lender, continued to collect on and enforce

the debt following the putative execution of the Promissory Notes in 2005.

Further, only Fairway Commercial Mortgage Corporation, as beneficiary, issued

the 2008 Notice of Default and Election to Sell. This is a clear break in the ‘chain

of title’. Fairway had supposedly assigned their interests to FHLF, LLC in 2006

according to the official records. Yet in 2008 Fairway is representing itself as the

real party at interest in the trust deeds while two years earlier Fairway had assigned

their trust deed interests to FHLF, LLC. This ‘Notice’ contains no mention of

FHLF,LLC. Then, as discussed above, Fairway then morphed into Fairway

America and participated variously in these proceedings as described.

It is clear that FHLF, LLC did not have Constitutional Standing in this

Court, nor standing to either seek relief from the bankruptcy stay, seek an FED, nor

38
move forward with foreclosure because FHLF, LLC was never in possession

of the Promissory Notes. The other Fairway entities were just hopelessly

confused.

As stated above, Judge Garr King in Natasche’s Case -- Rinegard-Guirma

v. Bank of America, et al U.S. District Court, District of Oregon, Portland

Division Civil Case No 10-1065-PK decision dated October 6, 2010, Held:

that when the lender splits the trust deed from the Promissory Notes, any

foreclosure is ineffective. That is exactly what happened here. In short:

In Rinegard the lender, Mortgage Lenders Network (MLN) assigned the deed of trust to LaSalle who appointed the
successor trustee

In Paulson, the lender, Fairway Commercial Mortgage Corporation (FCMC) assigned the deed of trust to FHLF
who appointed the successor trustee

In Rinegard the lender, MLN, physically retained the Promissory Notes as well as the servicing rights to the
mortgages.

In Paulson, the lender FCMC physically retained the Promissory Notes as well as the servicing rights to the
mortgages.

In Rinegard payments were to be made to the lender, Mortgage Lenders Network, USA

In Paulson, payments were to be made to the lender, Fairway Commercial Mortgage Corporation.

Fairway Commercial Mortgage Corporation split the trust deeds from the

Promissory Notes when they made the 2006 assignments of the trust deeds to

FHLF, LLC, but did not assign nor transfer possession of the Promissory Notes to

FHLF, LLC. Therefore, all proceedings with them as a party or participant in any

forum including the foreclosure leading to the FED action was defective and void

because FHLF, LLC had no standing in any judicial forum.

39
 Constitutional Standing

The issue of standing involves both “constitutional limitations on federal

court jurisdiction and prudential limitations on its exercise”. Warth v. Seldin, 422

US 490, 498 (1975). To have constitutional standing FHLF, LLC must show that it

suffered an actual concrete and particularized injury in fact, caused by the debtor

which would result in likely redress. Lujan v. Defenders of Wildlife, 504 US 555,

559-560 (1992). Here, FHLF, LLC can show no interest in the underlying debt

instrument nor that it paid anything for this transaction. FHLF, LLC cannot show

that it was either the transferee or assignee of the Note. Therefore, FHLF, LLC

cannot demonstrate that it has been injured by the debtor’s putative default on the

loan. As such, FHLF, LLC did not have constitutional standing to file anything,

foreclose, much less for a relief from Stay or to participate in these proceedings at

all.

Prudential standing requires that FHLF, LLC assert its own claims rather

than the claims of another. Dunmore v. United States, 358 F3d 1107, 1112 (9th Cir.

2004). Clearly FHLF, LLC is nothing more than a shell company attempting to

assert the claims of Fairway. As such it has no financial interest and no standing

under any doctrine.

40
 Attorney Fees

Defendant Franki Keefe has petitioned for attorney fees in this case. FHLF,

LLC, even though they do not have standing, had advised the Court that

bankruptcy trustee Amy Mitchell took control of Paulson’s estate regarding this

litigation “...out of (his) hands as debtor-in-possession and put it into those of Ms.

Mitchell, as the trustee.” This Court so held in it’s summary judgment ruling. The

fact that Paulson pointed out just from the billing that Defendant Keefe is claiming

attorney fees to which she is not entitled (billing for attorney services in another

forum) demonstrates the need for discovery which Paulson has requested and been

refused.

Paulson realizes that Judge Papak will not rule in Paulson’s favor on

anything, not even such a fundamental right as discovery nor due process (ie.

hearing Paulson’s multiple formal Motions for a hearing on preliminary injunction

issues. For that reason, Paulson has asked that he be disqualified. Judge Aiken has

ruled on erroneous grounds and did not follow the U.S. Supreme Court standard

enunciated in Litkey v. United States , 510 US 540 (1994). The standard is

whether the judge ‘displayed deep seated and unequivocal antagonism that would

render fair judgment impossible.’ By refusing to schedule a hearing at all on

Paulson’s Motions for Preliminary Injunction demonstrates deep seated and

unequivocal antagonism against Paulson that renders fair judgment impossible. By

these Courts refusing Paulson access to his own property pertaining to this

41
litigation renders due process for him nugatory. The Oregon Supreme Court has

done the very same thing -- oddly. Why would courts allow one party to

confiscate the legal materials of the other party and not even give the latter an

opportunity to be heard?

DISCOVERY

A supreme irony in this case is that three judges have denied ALL of

Paulson’s Motion to Compel Discovery. The irony is that in order for a creditor to

foreclose they must prove that they have standing as discussed above. To do this

the creditor must prove ‘chain of title’ also discussed above. Paulson has formally

requested discovery in each forum and followed with a Motion to Compel. Judge

Erwin denied Paulson’s Motion to Compel in the State Court proceedings. Judge

Papak denied Paulson discovery twice. Judge Haggerty denied Paulson’s Motion

to Compel. Both Judge Papak and Judge Haggerty represent that they have read all

the stuff in their file. Yet neither mention the Judge Garr King’s ruling in the

Rinegard case which is noted in Paulson’s last Motion to Compel. Curious. In

short, the Defendants have not been required to provide a single piece of paper in

this case. Curious when the whole issue is whether they can prove that they have

standing before this court or any court.

Conversely, these Defendants have ALL of Paulson’s stuff: viz. --

42
 PERSONAL PROPERTY

Paulson previously asked the Courts for an emergency Stay to protect

the property. In August 2010 when the Defendants were threatening to remove and

destroy all of Paulson’s personal property, Paulson again moved for an emergency

stay. None of the Courts were willing to have a hearing on these emergency

motions. A clear denial of Due Process. Now, that removal and destruction of

Paulson’s property and personal property has occurred. Paulson has no idea where

that property has been taken nor whether that property has been destroyed.

Considering the current issue of constitutional standing, Paulson is again asking

the courts to issue a preliminary injunction and stay requiring the Defendants to

return Paulson to the premises and requiring the Defendants to return Paulson’s

personal property.

This is probably the only case in history where the Court has

allowed one party to litigation to confiscate all the other party’s litigation materials,

including the computer hard drive of the adversary, while the litigation was

pending. The Defendants not only have all of Paulson’s personal property, they

also have his family irreplaceable heirlooms dating back over 100 years. That’s

not all. The Defendant’s also have over 2,000 client files and the client list of

Paulson’s for over 300 clients. In theory, one would suppose one business would

not be allowed the customer lists of another business, but that is allowed here. It

shouldn’t have been allowed.

43
 The Defendants also have confiscated three of Paulson’s vehicles

including a classic motor home.

And then there is the other computer hard drive belonging to Paulson in the

custody of Attorney Paul Berg’s paralegal who is defending Craig Russillo by the

Professional Liability Fund, Oregon’s lawyer malpractice insurance carrier. This

hard drive contains confidential client information and confidential financial

information belonging to Paulson.

All the courts have been asked to stay these proceedings and have been

asked to schedule an evidentiary hearing to determine chain of title and to

determine if the putative creditor, FHLF, LLC has constitutional standing. It

doesn’t. No judge out of the 14 and no court out of the 6 have addressed this issue.

APPENDIX -- NATURAL LAW v. THE COMMON LAW

My 14 Judges Used Natural Law

So far, this case is much like the recently maligned mortgage market: This

case has been sliced and diced, vertically and horizontally. There are mezzanine

tranches, there are state court tranches, there are federal court tranches, there are

trial courts, there are appellate courts, there are bankruptcy courts, there are non-

judicial tranches, and the list goes on.

In 1788, Alexander Hamilton suspected that some judges might not do their

duty. Thus, he stated in THE FEDERALIST PAPERS:

44
 “It has been frequently remarked, with great propriety, that a
voluminous code of laws is one of the inconveniences necessarily
connected with the advantages of a free government. To avoid an
arbitrary discretion in the courts, it is indispensable that they should
be bound down by strict rules and precedents, which serve to define
and point out their duty in every particular case that comes before them;
and it will readily be conceived from the variety of controversies which
grow out of the folly and wickedness of mankind, that the records of
those precedents must unavoidably swell to a very considerable bulk,
and must demand long and laborious study to acquire a competent
knowledge of them. Hence it is, that there can be but few men in the
society who will have sufficient skill in the laws to qualify them for the
stations of judges.” (Emphasis supplied) Alexander Hamilton, The
Federalist No. 78, (1788)

MY SIX OTHER COURTS

(JUDICIAL NOTICE)

1. U.S. Federal District Court: -- Paulson first filed his predatory loan case

against Fairway, et al., in Oregon Federal District Court on August 21,

2008 under Case No. CV 08982 ST. The case was assigned to Honorable

Magistrate Judge Janice Stewart.

Common Law -- Judge Stewart followed The Common Law and the Rules of

the Court. Then she removed herself from the case for unknown reasons and the

case was assigned to Magistrate Judge Paul Papak.

Natural Law -- Judge Papak neither followed the Common Law nor the Rules of

the Court when he refused to schedule nor hear Paulson’s emergency motions.

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Paulson appealed Judge Papak’s rulings and the case was assigned to federal court

Judge Ancer Haggerty. Judge Haggerty followed Natural Law. Judge Haggerty

generally followed the Rules of the Court, but not the Common Law as he saw

made short work of Paulson’s case. Judge Haggerty also refused to hear Paulson’s

multiple filed Motions that are required to be heard by simple due process and by

his own court rules. Judge Haggerty refused Paulson Discovery that is allowed

under court rules. Finally, he failed to read Paulson’s Motion to Compel Discovery

which pointed out the issue of constitutional standing recently discussed by his

brother Honorable Judge Garr King in the same building.

Paulson appealed Judge Haggerty’s decision to United States Court of

Appeals Ninth Circuit Case No. 10-35745 where it remains.

2. U.S. Federal Bankruptcy Court: -- Paulson filed his Chapter 11

Bankruptcy case on April 8, 2009 under Case No. 09-32439 rdl 11 after he

was formally threatened with non judicial foreclosure by the creditor

Fairway. The case was assigned to Honorable Judge Randall Dunn. Judge

Dunn neither followed the Rules of the Court nor the Common Law. This is

where the wheels fell off.

Common Law -- Bankruptcy law is Man-made law. Chapter 7 is liquidation.

Chapter 11 is reorganization so the debtor can reemerge as a healthy organization

after satisfying the debt obligations. Paulson filed for Chapter 11 reorganization.

The debt is restructured so the debtor may continue to pursue a living. This case

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was perfect for that since the single asset was worth $655,000 and the creditors

were only owed, if at all, $400,000 or thereabouts. Thus, the case was not

‘underwater’.

Natural Law -- No reorganization plan was made as called for by the Chapter 11

statutory scheme. The judge allowed an unnecessary lawsuit for eviction in State

Court times three. (Three unnecessary State Court lawsuits were filed by a

substitute creditor, FHLF, LLC who did not have constitutional standing.) The

judge allowed a nonjudicial foreclosure without the required statutory notices to

the debtor. Then for good measure, the judge allowed the false creditor to settle

the debtor’s lawsuit against the creditors for predatory loan practices against

established law. The bankruptcy trustee sided with the creditors and even sat with

them during the hearing. She was supposed to be neutral. The good judge ignored

the fact that the parties had a settlement that worked out for everybody.

3. Washington County Circuit Court, State of Oregon: -- Fairway filed three

state FED (eviction) cases on January 25, 2011 in Washington County

Circuit Court under Case Nos. C10084,85,86 EV.

Common Law -- The Oregon Constitution requires that Paulson be allowed a

Jury. Judge Erwin in eviction court suddenly decided he would render a verdict on

the case himself and took the case away from the jury’s decision. Court rules

require that Judge Erwin hold a hearing upon Paulson’s Motion for a New Trial,

but Judge Erwin decided that was not necessary. Further, under Oregon statutes,

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Paulson is entitled to a stay of Judge Erwin’s decision upon a Motion for a New

Trial, but Judge Erwin decided that Paulson didn’t need that either nor the required

hearing on the matter. Paulson requested the judge to make written finding of

facts and conclusions of law as allowed by the Man-made law. Judge Erwin

decided he didn’t have to do that either. The purpose of this rule is so consumers

can know why a judge ruled as they did. No luck here either.

Natural Law -- (Paulson filed to Remand the FED cases in Oregon District

Federal Court under No. cv 08982 ST, but was assigned a new Case No. 3:10-

cv-00048-MO and a new judge, Honorable Mosberg. Judge Mosberg followed

Natural Law. He followed neither the Rules of the Court nor the Common Law.

He made his Ruling at a “Status Conference” instead of a formal hearing.) Neither

lawyers nor the parties are prepared to argue the facts and the law nor expect a

substantive ruling by the court at a ‘status conference’. So, while under the

Common Law, any litigation involving real estate is supposed to remain in the

jurisdiction that first acquired jurisdiction (here Oregon Federal District Court)

Judge Mosberg allowed the jurisdiction to shift to State Court.

This case was then assigned to Honorable Steve Price in State Court for the

Eviction proceedings as discussed above. There are certain time lines allowed

under the Court Rules for a response. Judge Price decided Paulson did not need

that time nor did Judge Price allow Paulson’s response to the creditor’s filings.

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The trial was assigned to Honorable Andrew Erwin. Both judges followed Natural

Law. Neither followed the Rules of the Court nor the Common Law.

4. Oregon State Court of Appeals: -- Paulson timely appealed the eviction

decisions to the Oregon Court of Appeals. Oregon Court of Appeals Case

No. A14569, Oregon Court of Appeals Case No. A14570, Oregon Court of

Appeals Case No A14671 Paulson timely filed to be allowed to stay in his

home during the pendency of these proceedings and the appeal.

Common Law -- As allowed by Oregon Statutes and Rules of Civil Procedure,

Paulson filed a sixteen page (16) Motion to Return Paulson to his home based on a

Constitutional issue of Standing. In support of that motion Paulson asked that new

Judge Andrew Erwin be disqualified based on a U.S. Supreme Court (Litkey v.

United States) case among other legal authorities.

Natural Law -- Referring to none of Paulson’s arguments, authorities nor even the

U.S. Supreme Court case, Judge Erwin denied the motion. The problem is that

Paulson wrote an article on judicial elections in his blog that Judge Erwin could

have taken as negative to him. Subsequently, Judge Erwin denied Paulson his

statutory right to stay in his home without a hearing even though a hearing is

required by written statutory law. No matter to Judge Erwin.

The Oregon Court of Appeals followed neither their Court Rules nor the

Common Law in denying Paulson the right to stay in his own home while these

proceedings were pending. Further, they assigned the case to Commissioner Nass

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who has never been a judge, never elected, appointed, nor anything judicial, yet

decided Paulson could not stay in his house pending the appeal even though that is

allowed by Oregon law. He not only followed Natural Law, but made up laws that

nowhere exist, then lied.

5. U.S. Bankruptcy Appellate Panel of the Ninth Circuit : -- Paulson timely

filed his Notice of Appeal of Judge Randall Dunn’s Order in the Oregon

Bankruptcy Court on May 17, 2010 to the United States Bankruptcy

Appellate Court Panel which assigned Case No. BAP No. OR-10-1173.

Common Law -- On December 19, 2010 Paulson filed his twenty-two (22) page

Motion to Expunge FHLF, LLC’s Proof of Claim in bankruptcy court. Paulson’s

Motion cited five (5) distinct legal basis for his motion. The motion cited over

twenty (20) cases and seven (7) statutory rules in support of his position. The

motion contained twenty-seven (27) pages of supporting documents as exhibits.

Natural Law -- On January 18, 2011 Bankruptcy Appellate Panel Judges Pappas

and Markell denied Paulson’s motion in a six (6) line, quarter page ORDER. The

Court’s Order cites no cases, no statutes, refers to none of Paulson’s five legal

arguments nor refers to any of his legal briefs nor any of his 27 pages of supporting

materials.

6. U. S. Court of Appeals for the Ninth Circuit: -- Because Magistrate Judge

Papak wouldn’t afford Paulson a hearing on any of the matters (six of

them) that he filed, he asked Chief Judge Ann Aiken to look into the matter

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 because that refusal seemed so unusual. She wouldn’t look into the matter

either, so Paulson asked the Ninth Circuit to forbid Fairway’s threatened

confiscation of Paulson’s personal property and to disqualify Judge Papak.

Common Law -- The law allows for a time-out if one party may suffer

irreparable harm and that party has a colorable case on the merits. It is now August

of 2010. Paulson had been asking the courts to save his irreplaceable family

heirlooms since May 2010 without a hearing. Paulson also briefed the Ninth

Circuit on the law of disqualification and pointed out how case law across the land

and in Oregon is the opposite of Chief Judge Ann Aiken’s ruling on the issue of

Judge Papak’s bias. Paulson’s brief is fifteen (15) pages long and cites eight cases

and court rules. In addition, Paulson supplies twenty-eight (28) additional pages of

supporting materials.

Natural Law -- Without referring to any of the law nor the facts recited by

Paulson, the Court denies Paulson’s motion in a one page Order. The court does

not even mention the issue of Judge Papak’s disqualification. Either Judge Aiken

is right on the law of disqualification or Paulson is right. Paulson has analyzed the

issue under the U.S. Supreme Court case of Litkey v. Supreme Court case, and no

judge has analyzed this case in terms of why or how Paulson is wrong. (Clifton,

Bybee and Ikuta) Yes, that Bybee!

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 The Playing Field Changes

The Playing Field Changed in Oregon on October 6, 2010 when Ms.

Natache Rinegard-Guirma bravely, and by herself, took on the Bank of America.

The issue is described above in detail.

Common Law -- With Natache’s case folded firmly under his arm, Paulson

supplied the new precedent to the Ninth Circuit. They were not interested.

Natural Law -- This time Paulson provided the Ninth Circuit with a brand new

brief of twenty-six (26) pages citing thirty-four (34) case or statutory rules as

precedent. Paulson also provided fifteen (15) additional new exhibits. Without

referring to a single issue nor page of Paulson’s documents nor arguments, the

Ninth Circuit said Paulson’s appeal “...is frivolous.” This Order is one and half a

page. It cites no case law. It cites no statutory law. It just doesn’t like Paulson.

(Leavy, Bybee)

The United States Supreme Court has recently reversed the Ninth Circuit for

the tenth (10) time since November 2010. The United States Supreme Court called

Ninth Circuit decisions: “inexplicable”. Long the problem child of the U.S.

Supreme Court, the Ninth Circuit Court of Appeals has Paulson in their cross-hairs

of decision-making.

CASES PENDING

In summary, this case is now pending in Washington County Circuit Court,

The Oregon Court of Appeals, The Oregon Supreme Court. This case is also

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pending before the Oregon Bankruptcy Court, the Federal Bankruptcy Court of

Appeals, the United States Court of Appeals for the Ninth Circuit.

In short, State Court Judges Knapp, Price and Erwin have only followed

Natural Law, not Man-made law. At the Oregon Court of Appeals, Commissioner

Nass and Chief Judge David Brewer have only followed Natural Law, not Court

Rules nor Common Law. And Commissioner Nass lied.

At the Federal Court level, Judge Janice Stewart is the only judge to follow

Common Law. Judges Dunn, Papak, Haggerty, Aiken, and Mosberg have only

followed Natural Law. None of these judges have followed their own Court Rules,

the Federal Rules of Civil Procedure nor have they followed The Rule of Law.

Indeed, none, except Judge Haggerty have even cited case law.

At the Ninth Circuit Court of Appeals it is no better as summarized above.

The Roiling Seas of Litigation Roil On.

THERE IS NO HOPE FOR HOMEOWNERS

There is no hope for homeowners and here is why. But, first let me define the
problem.

THE PROBLEM

A homeowner who is in present financial distress is caught in a hopeless tautology.

Here are the essential elements:

• Citizens in a financial pickle are demoralized and ashamed. Therefore, the

consumer is reluctant to reach out or deal with new or redundant paperwork.

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 • Government has encumbered their rescue vehicles with so much
bureaucracy that they sink of their own weight. There is no one agency or
nonprofit in charge. No one is in charge.

Reality -- All the lame programs purportedly providing hope for homeowners
ignore two realities about creditors and servicing agencies. The first reality is that
servicing agencies hold debtors in contempt. There will be few friendly workouts
because of how creditors view debtors. The second reality is that lenders look to
situations like these as an opportunity to make a second profit from the
unsuspecting public. Just look at the new mortgage advertisements!

The Tautology -- The tautology works like this. All programs require the debtor
to start with counseling somewhere. Fine. The problem is that none of the
counselors have any clout with lenders. I have been through three sophisticated
counseling sessions, all of which were worthwhile and none got me any closer to
resolution of my loan default. In other words, there is no hand-off or linchpin
between the counseling and a loan workout with the lender.

Further, if a consumer starts from scratch with lenders after being stymied with
their present servicer here is what happens. The consumer is already behind the
financial eight ball, so no quality lender will touch them. On the other hand, all the
original shell games continue unabated in the crisis lending situation where the
troubled debtor is likely to get ripped off again.

THE SOLUTION

The solutions are easy and have been much discussed. Our leaders are
simply too afraid (or too beholden) to confront bankers and their lobbyists to do
what everybody knows has to get done:

1. The workouts have to be mandatory requiring certain minimum standards

with Treasury, HUD and Elizabeth Warren in charge.

2. Local Mediation programs have to be given authority to engage in friendly,

forceful, but binding efforts to restructure loans with the clout of a court
mediation program or a settlement judge behind the process. Principle
reduction has to be on the table. If mediation fails then the matter should go
directly to a settlement judge who is trained and committed. There are many
judicial pretenders out there. If you look closely at the agenda of judicial
conferences as I have, you’ll fined they are wining and dining in Hawaii as

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 usual. Consumers need the ‘support’ of judicial surroundings. Judicial
surroundings is the only thing that will get the attention of reluctant lenders.

Moreover, resolution in a forced settlement forum under judicial supervision

will deny lenders what they lust for -- that second profit.

My story is the same as about three million Americans. Our story should
make you cry. Soldiers, rise up to do something beautiful.

Unite!

Elizabeth Warren’s new consumer agency is a good start. We need to clean

house in the Bankruptcy Courts then that forum would be a good place to

supplement the settlement judge’s efforts to resolve these matters responsibly. We

have miles to go before we sleep. Shills should be understood for just what they

are. The rest of us deserve an even break. Thank you.

Lauren Paulson
3980 SW 170th Ave.
Aloha, OR 97007
971 219 5859
bulletinsfromaloha.org
laurenjpaulson@yahoo.com

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