Court of Common Pleas of Philadelphia County Trial Division

For Prothonotary Use Only (Docket Number)

Civil Cover Sheet

PLAINTIFF'S NAME

E-Filing Number:

1103039016

DEFENDANT'S NAME

SARAH E. BAKER
PLAINTIFF'S ADDRESS

DEUTSCHE BANK NATIONAL TRUST COMPANY

DEFENDANT'S ADDRESS

6370 DEL HAVEN ROAD BANGOR PA 18013

PLAINTIFF'S NAME

4828 LOOP CENTRAL DRIVE HOUSTON TX 77081-2226

DEFENDANT'S NAME

ERIC G. BAKER
PLAINTIFF'S ADDRESS

PHELAN HALLINAN & SCHMIEG, LLP

DEFENDANT'S ADDRESS

6370 DEL HAVEN ROAD BANGOR PA 18013

PLAINTIFF'S NAME

1617 JOHN F. KENNEDY BLVD. SUITE 1400 PHILADELPHIA PA 19103-1814

DEFENDANT'S NAME

PLAINTIFF'S ADDRESS

DEFENDANT'S ADDRESS

TOTAL NUMBER OF PLAINTIFFS

TOTAL NUMBER OF DEFENDANTS

COMMENCEMENT OF ACTION

2
AMOUNT IN CONTROVERSY COURT PROGRAMS

2
Arbitration X Jury Non-Jury Other:

Complaint X Writ of Summons

Petition Action Transfer From Other Jurisdictions

Notice of Appeal

$50,000.00 or less X More than $50,000.00

CASE TYPE AND CODE

Mass Tort Savings Action Petition

Commerce Minor Court Appeal Statutory Appeals

Settlement Minors W/D/Survival

2E - WRONGFUL USE OF CIVIL PROCESS

STATUTORY BASIS FOR CAUSE OF ACTION

RELATED PENDING CASES (LIST BY CASE CAPTION AND DOCKET NUMBER)

IS CASE SUBJECT TO COORDINATION ORDER? YES

NO

MAR 22 2011
J. MURPHY
TO THE PROTHONOTARY: Kindly enter my appearance on behalf of Plaintiff/Petitioner/Appellant: SARAH E BAKER , ERIC G BAKER Papers may be served at the address set forth below.
NAME OF PLAINTIFF'S/PETITIONER'S/APPELLANT'S ATTORNEY ADDRESS

MICHAEL D. DONOVAN
PHONE NUMBER FAX NUMBER

(215)732-6067
SUPREME COURT IDENTIFICATION NO.

(215)732-8060

DONOVAN SEARLES, LLC 1845 WALNUT ST SUITE 1100 PHILADELPHIA PA 19103

E-MAIL ADDRESS

51895
SIGNATURE OF FILING ATTORNEY OR PARTY

mdonovan@donovansearles.com
DATE SUBMITTED

MICHAEL DONOVAN

Tuesday, March 22, 2011, 04:17 pm

FINAL COPY (Approved by the Prothonotary Clerk)

DONOVAN SEARLES & AXLER, LLC MICHAEL D. DONOVAN, ESQUIRE Attorney I.D. No. 51895 1845 Walnut Street, Suite 1100 Philadelphia, PA 19103 Telephone: (215) 732 6067 Facsimile: (215) 732 8060 ATTORNEY FOR PLAINTIFFS SARAH E. BAKER and ERIC G. BAKER, Plaintiffs, v. DEUTSCHE BANK NATIONAL TRUST COMPANY and PHELAN, HALLINAN & SCHMIEG, LLP. Defendants.

Filed and Attested by PROTHONOTARY 22 APR 2011 11:02 am P. MARTIN

) ) ) ) ) ) ) ) ) ) ) ) ) ) )

COURT OF COMMON PLEAS OF PHILADELPHIA COUNTY MARCH TERM, 2011 NO. 02291 JURY TRIAL DEMANDED

COMPLAINT I. 1. NATURE OF THE ACTION

Plaintiffs Sarah E. Baker and Eric G. Baker (collectively, Plaintiffs or the

Bakers) bring this action on their own behalf for damages arising out of Defendants violations of the Dragonetti Act, for wrongful use of civil proceedings, 42 Pa. C.S. 8351 et seq., and for abuse of process. 2. The Bakers were named defendants in a foreclosure action filed and prosecuted

by the Defendants named herein, which action the Defendants voluntarily discontinued on May 19, 2010, after the trial court denied summary judgment of foreclosure, thus conclusively resolving the matter in favor of the Bakers.

Case ID: 110302291

3.

Defendants herein procured, initiated or continued the foreclosure action for the

improper purpose of interfering with the Bakers quiet enjoyment of their sole residence their home casting a cloud on their title, impeding their ability to use and enjoy their property, materially threatening the Bakers with the posting of a Sheriffs sale and the loss of virtually all of their wealth and their only home, and destroying the Bakers credit and their ability to obtain financing, jobs, credit and other related benefits of good credit. 4. As detailed below, Defendants lacked any probable cause or reasonable belief,

and were grossly negligent, in alleging that Deutsche Bank owned or continued to own any legal right to an alleged Loan and Mortgage on the Bakers property when Defendants knew or were reckless in not knowing that Deutsche Bank had sold the alleged Loan and Mortgage back to the originator, WMC Mortgage Corp., weeks before the foreclosure action was even filed. 5. Defendants also knew or recklessly disregarded the fact that the alleged Loan and

Mortgage had been rescinded by the Bakers within three (3) business days of the loan closing as provided by the Truth in Lending Act, 15 U.S.C. 1635, meaning that Defendants not only lacked any standing to pursue the alleged foreclosure but also lacked any legitimate claim for foreclosure or to continue the foreclosure case on a transaction that was rescinded and a mortgage that was void as a matter of law, which is why the trial court had denied summary judgment in the underlying foreclosure case. 6. As a direct and proximate result of Defendants wrongful use of civil proceedings

and their abuse of process, the Bakers have suffered extensive damages and are entitled to an award of punitive and other actual and exemplary damages.

Case ID: 110302291

II. 7.

THE PARTIES

Plaintiffs Sarah E. Baker and Eric G. Baker are adult individuals and citizens of

the Commonwealth of Pennsylvania, residing at 6370 Del Haven Road, Bangor, Pennsylvania. 8. Defendant Deutsche Bank National Trust Company, NA (Deutsche Bank) is a

national banking association chartered and supervised by the Office of the Comptroller of the Currency with headquarters in New York, NY, Los Angeles, CA, and Houston, TX. Deutsche Bank regularly engages in continuous and substantial business in the Commonwealth of Pennsylvania and in Philadelphia County. 9. Defendant Phelan, Hallinan and Schmieg, LLC (Phelan) is a law firm with its

primary office located at 1617 JFK Boulevard, Suite 1400, in Philadelphia, Pennsylvania, 19103. III. 10. 11. VENUE

Defendants do substantial business in Philadelphia County. Defendant Deutsche Bank holds the mortgages and mortgage debts on scores of

homes throughout Philadelphia County and pursues mortgage foreclosure actions as a partyPlaintiff in Philadelphia County. 12. Defendant Deutsche Bank has acted as Trustee/Servicer for not fewer than 5,139

mortgage and/or debt collection cases filed or prosecuted in Philadelphia County. 13. Defendant Phelan represents mortgage loan servicers and/or trustees across

Pennsylvania, and its primary office is located in Philadelphia County. IV. 14. FACTUAL ALLEGATIONS

On June 3, 2005, the Bakers entered into a residential mortgage loan transaction

to refinance their home mortgage (Loan). The Loan closing occurred in the Bakers home, and

Case ID: 110302291

the escrow agent for the lender, WMC Mortgage Corporation, provided the Bakers with a Notice of Right to Cancel. See Exh. A, hereto (Tr. Trsc. 2/9/11 pp.160-62). 15. In accordance with the Notice of Right to Cancel, on June 7, 2005, the Bakers

cancelled and rescinded the Loan. See id. See also Exh. B, hereto (Notice of Right to Cancel). 16. The Loan originator, WMC Mortgage Corporation, received the signed

cancellation form and has admitted that it is in the loan file for the transaction. See Exh. C, hereto (Tr. Trsc. 2/8/11 90:418). 17. WMC Mortgage Corporation disregarded the Bakers rescission and instead sold

the purported Loan to a Goldman Sachs securitization trust, known as GSAMP Trust 2005WMC on July 29, 2005, as to which Deutsche Bank was the securitization trustee. WMC Mortgage Corporation was paid $159,999.47 by the GSAMP Trust. See Exh. D (Tr. Trsc. 2/8/11 154:24); see also Exh. E (Tr. Trsc. 2/8/11 106:25; 107:16), hereto. 18. Having rescinded the transaction, the Bakers did not make any payments on the

Loan and, instead, offered to return the un-cashed checks that the originators escrow agent and title insurer had sent to them. See Exh. F (Tr. Trsc. 2/9/11 pp. 164-65); see also Exh. G (Tr. Trsc. 2/9/11 176:812), hereto. 19. Because the Bakers did not make the first or any payment on the rescinded Loan,

by the terms of the Pooling and Servicing Agreement for the securitization trust, the Bakers Loan was repurchased by WMC Mortgage Corporation on April 22, 2006. WMC Mortgage Corporation paid Deutsche Bank $164,985.57 on that date for the alleged Loan and mortgage. See Exh. H, hereto (Tr. Trans. 2/8/11 pp. 108-09 (Testimony of WMC Mortgage Corporation Senior Vice President Diane Taylor)).

Case ID: 110302291

20.

Thus, despite having been fully compensated for the Baker Loan and no longer

owning that Loan or the alleged mortgage securing that rescinded indebtedness, on May 1, 2006, Defendants filed a mortgage foreclosure action (hereinafter Foreclosure Action) in the Court of Common Pleas of Northampton County, Pennsylvania, at No. C-48-CV-2006-3235, captioned Deutsche Bank National Trust Company as Trustee under the Pooling & Servicing Agreement Dated as of Sept. 1, 2005 v. Sarah E. Baker & Eric G. Baker, Exh. I, hereto. 21. The Foreclosure Action alleged that the Bakers had not made any payments on

the alleged mortgage debt. See id. 22. The Foreclosure Action further alleged that the mortgage was in default because

monthly payments of principal and interest upon said mortgage due 08/01/2005 and each month thereafter are due and unpaid . . . . Foreclosure Action at 3. 23. The Foreclosure Action further alleged that the Bakers owed $167,107.49 on

the mortgage when, in fact, Deutsche Bank and the GSAMP Trust had been paid $164,955.59 for the same alleged debt on April 22, 2006. 24. The Foreclosure Action further alleged that Deutsche Bank is now the legal

owner of the mortgage and is in the process of formalizing an assignment of same. Foreclosure Action at 3. This allegation was incorrect and false. 25. In fact, in an action filed in the United States District Court for the Eastern

District of Pennsylvania on June 28, 2010, and captioned WMC Mortgage LLC v. Sarah E. Baker & Eric G. Baker, No. 5:10-3118-JS (E.D. Pa.), the plaintiff WMC Mortgage alleged, contended and presented evidence that it owned the alleged Loan and Mortgage and that the Bakers owed money to it. It presented evidence to the federal trial court that Deutsche Bank and the GSAMP Trust were paid $164,955.59 in return for the alleged debt by WMC Mortgage Corp. on April 22,

Case ID: 110302291

2006.

It filed suit against the Bakers only after the Defendants herein had dismissed the

Foreclosure Action against the Bakers on May 10, 2010. Thus, Defendants herein knew or were reckless in not knowing that they procured, initiated and continued the Foreclosure Action against the Bakers when they had no standing and no legitimate claim, because a different entity, WMC Mortgage Corp., owned any alleged claim and because the Bakers had served a timely rescission on WMC Mortgage Corp. In other words, Defendants herein pursued a wrongful Foreclosure Action against the Bakers for over four years. 26. In WMC Mortgage LLC v. Baker, WMC witness Diane Taylor specifically

testified, based on the business records of WMC Mortgage Corp., that WMC repurchased the [Baker] loan on April 22, 2006 from the GSAMP Trust, paying 164,985.57, on that date. See Exh. J, hereto (Tr. Trs. 2/8/11 pp. 108:25 109:1-5); see also Exh. K, hereto (Tr.Trs. 2/8/11 pp. 106-108 (describing initial sale to GSAMP Trust)). 27. Thus, contrary to the allegations of the Foreclosure Action, Defendant Deutsche

Bank was not the legal owner of the alleged debt. In fact, they had been fully compensated by WMC Mortgage Corp. for the alleged debt before the Foreclosure Action was filed. See Exh. D, hereto (Tr. Trsc. 2/8/11 154:24); see also Exh. E, hereto (Tr. Trsc. 2/8/11 106:25; 107:16). 28. No explanation was provided as to why Deutsche Bank filed the Foreclosure

Action against the Bakers on May 1, 2006, if WMC Mortgage Corp. had, in fact, repurchased the Loan on April 22, 2006. Nor is there any record explanation for the Foreclosure Action

proceeding for over four (4) years if the GSAMP Trust no longer owned the Loan and Mortgage. 29. Also significantly, WMC Mortgage witness Diane Taylor testified, based on the

business records of WMC Mortgage, that on June 2, 2006, WMC Mortgage Corp. sold the

Case ID: 110302291

alleged Baker Loan and mortgage to GMAC Rescap for $156,705. See Exh. L, hereto (Tr. Trsc. 2/8/11 p.162:7-16). 30. Defendants herein never advised the Court of Common Pleas, the Bakers or

anyone else during the course of the underlying Foreclosure Action that parties other than Deutsche Bank actually owned the alleged Baker Loan and Mortgage. 31. Furthermore, it is undisputed that the Bakers timely rescinded the Loan, which

immediately rendered the mortgage void as a matter of law under the mandatory terms of 15 U.S.C. 1635(b). WMC Mortgage admitted that it had received the signed Notice of Right to Cancel sometime after June 7, 2005. See Exh. M, hereto (Donovan Decl. (Plaintiffs Responses to Requests to Admit)). 32. Instead of honoring Plaintiffs rescission of the Loan, Defendant Deutsche Bank

wrongfully attempted to collect payment of the rescinded Loan and then commenced the Foreclosure Action against the Plaintiffs when it no longer owned the Loan and the mortgage was void as a matter of law. See generally Foreclosure Action. 33. The Foreclosure Action was verified by Francis S. Hallinan, Esquire, of the firm

Phelan Hallinan & Schmieg, LLP. Foreclosure Action at 6. 34. Although the Verification purported to verify that the statements made in the

foregoing Civil Action in Mortgage Foreclosure are based upon information supplied by Plaintiff and are true and correct to the best of his knowledge, information and belief, this was a falsity, as Deutsche Bank knew or recklessly disregarded the fact that it had sold the alleged Loan and mortgage back to WMC Mortgage Corp. on April 22, 2006 and, therefore, had no standing to pursue the Foreclosure Action against the Bakers and their home. Deutsche Bank also knew or

Case ID: 110302291

recklessly disregarded the fact that the mortgage was void as a matter of law under the Truth in Lending Act. 35. Continuing with the wrongful use of civil proceedings and engaging in a further

abuse of process, Defendants herein then threatened a Sheriff sale and posted a Sheriff Sale notice on the Bakers home. The menacing and embarrassing Sheriffs Notice, posted on the Bakers home on July 31, 2006, threatened the Bakers based on a real debt that was owed on their real estate property. See Exh. N (Sheriffs Notice), hereto. 36. Despite knowing or recklessly disregarding their complete lack of standing and

lack of any ground to foreclose on a void mortgage, Defendants pursued the Foreclosure Action for over four (4) years, causing substantial expense, stress, trauma, anxiety, aggravation and harm to Plaintiffs herein. 37. Defendant Deutsche Bank moved for summary judgment in the Foreclosure

Action, and on April 23, 2009, the Court denied its motion. In this connection, the Bakers opposed the defendants wrongful and threatening motion based on the rescission notice the Bakers had delivered to the Loan originator, WMC Mortgage. Defendants herein disregarded such proof and never advised the trial court, the Bakers or their foreclosure counsel that the Loan and Mortgage had been repurchased by WMC Mortgage and never moved to intervene a correct real party in interest, as required by the Pennsylvania Rules of Civil Procedure. 38. Defendants never advised the Bakers or the Court of Common Pleas that they

lacked any standing to pursue the claims. Instead, they submitted to the Court and filed with the Northampton Recorder of Deeds a false assignment of mortgage . . . together with the Note and indebtedness therein mentioned dated May 23, 2006 and purportedly signed by the Mortgage Electronic Recording Service, Inc. (MERS), representing that the Loan and

Case ID: 110302291

Mortgage had been assigned to Deutsche Bank as trustee for the GSAMP Trust 2005-WMC when, in fact, these entities had sold both the Loan and the Mortgage back to WMC Mortgage Corp. on April 22, 2006. In other words, Defendants herein procured, initiated and continued the Foreclosure Action based on false evidence they obtained from or had created by MERS to portray an aggrieved status when, in fact, such was not the case. 39. On or about May 19, 2010, Defendants voluntarily discontinued and dismissed

the Foreclosure Action. 40. Defendant Deutsche Bank knowingly or recklessly disregarded the fact that it had

no claim against Plaintiffs in pursuing an action for an alleged debt. Defendants disregarded Plaintiffs rescission of the loan and commenced the Foreclosure Action against Plaintiffs without probable cause or reasonable belief in the merit of the claim or with gross negligence as to the important rights of Plaintiffs herein. 41. On information and belief, Defendants herein intentionally or recklessly failed to

investigate whether the Defendants had any cause to commence the Foreclosure Action against the Plaintiffs. 42. Defendants failed to investigate whether the alleged Loan and mortgage were in

fact valid and not rescinded. 43. Defendants failed to investigate whether the GSAMP Trust 2005-WMC still in

fact owned the alleged Loan and mortgage. 44. Defendants failed to communicate with WMC Mortgage Corporation as to

whether the alleged Loan was valid and not rescinded.

Case ID: 110302291

45.

Defendants failed to communicate with WMC Mortgage Corporation as to

whether it had repurchased the alleged Loan and mortgage in accordance with the Pooling and Servicing Agreement. 46. Defendants failed to investigate whether Deutsche Bank was in fact owed any

money relating to the alleged Loan and mortgage or whether it had, in fact, received $164,985.57 on April 22, 2006 for the alleged Loan and mortgage, which fully compensated it for any and all claims it allegedly might have had related to the rescinded Loan and void mortgage. 47. Defendants persisted in pursuing the Foreclosure Action against Plaintiffs despite

having failed to reasonably investigate the basis for the exact claims listed in the Foreclosure Action. Defendants nonetheless persisted in pursuing the Foreclosure Action claims even after being advised that the Loan had been rescinded and the mortgage was void as a matter of law. 48. Defendants filed and prosecuted the Foreclosure Action against Plaintiffs herein

despite knowing or recklessly disregarding the fact that they lacked any standing whatsoever to pursue the claims, and furthermore, were not aggrieved and had also in fact been fully compensated for any and all claims arguably arising from the rescinded Loan. 49. The Foreclosure Action was terminated in favor of the Plaintiffs herein. V. COUNT ONE

Wrongful Use of Civil Proceedings, 42 Pa. C.S. 8351 et seq. 50. Plaintiffs incorporate by reference each preceding and succeeding paragraph as

though more fully set forth at length herein. 51. Plaintiffs were wrongly harassed by Defendants Deutsche Bank and Phelan and

have suffered ascertainable losses as a result of Defendants unlawful conduct as detailed herein.

10

Case ID: 110302291

52.

The conduct of the Defendants, as set forth above, constitutes a wrongful use of

civil proceedings under 42 Pa. C.S. 8351 et seq. (otherwise known as the Dragonetti Act), in that the underlying proceedings terminated in the Bakers favor; that the Defendants caused those proceedings to be instituted and continued without probable cause or reasonable belief; and finally that the proceedings were instituted for an improper purpose, namely to compel homeowners to pay a debt they did not owe to a more powerful party under the immediate threat of eviction from their home. 53. As a direct and proximate result of Defendants wrongful use of civil proceedings,

Plaintiffs have suffered ascertainable losses and are entitled to the remedies prayed for above and recapitulated in the prayer for relief below. 54. Wherefore, Plaintiffs respectfully pray for the following relief: a. That an order be entered declaring that Defendants actions as described above are in violation of law; b. Damages for pecuniary losses, emotional distress, harm to credit and title and other damages; c. Punitive damages according to 42 Pa. C.S. 8353(6); d. The costs, disbursements and attorney fees of this action; and e. Such additional and other relief as the Court may deem just and proper. VI. COUNT TWO Abuse of Process 55. Plaintiffs incorporate by reference each preceding and succeeding paragraph as

though more fully set forth at length herein.

11

Case ID: 110302291

56.

Abuse of process is defined as the use of legal process against another

primarily to accomplish a purpose for which it is not designed. Defendants (1) used a legal process against the plaintiffs, (2) primarily to accomplish a purpose for which the process was not designed, and (3) harm has been caused to the Plaintiffs. 57. Defendants wrongly initiated a civil proceeding against the Plaintiffs with the

Foreclosure Action (Exh. I), therein suing Plaintiffs for unpaid monthly payments of principal and interest upon a mortgage due 08/01/2005. Defendants, however, did not in fact own the Loan. Defendants wrongly claimed that the entire principal balance and all interest due thereon are collectible forthwith, when Defendant Deutsche Bank did not own the Loan. See Exh. I. 58. Defendants either should have known, or recklessly disregarded, the fact that they

had absolutely no legal right to initiate a civil proceeding against the Plaintiffs as they did in the Foreclosure Action. See Exh. I. As described herein, Defendants persisted in pursuing the Foreclosure Action against Plaintiffs despite having failed to reasonably investigate the basis for the exact claims listed in the Foreclosure Action. Defendants nonetheless persisted in pursuing the Foreclosure Action claims even after being advised that the Loan had been rescinded and the mortgage was void. 59. Furthermore, Defendants wrongly misused the legal process of serving a Notice

of Sheriffs Sale on Plaintiffs and posting it on their home door when, still, Defendants should have known or recklessly disregarded the fact that they had absolutely no legal right to force a sale of a home in which they had absolutely no legal interest. See Exh. I (pp. 13-15). 60. As a direct and proximate result of Defendants abuses of process, Plaintiffs are

entitled to the remedies prayed for above and recapitulated in the prayer for relief below. 61. Wherefore, Plaintiffs respectfully pray for the following relief:

12

Case ID: 110302291

Case ID: 110302291

Case ID: 110302291

Case ID: 110302291

EXHIBIT A

Case ID: 110302291

Sarah Baker - Direct 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 correct? A. Q. Yes. All right. A. here. This loan closing occurred where? At our house on the back porch -- a beautiful Friday

2.160

our loan back with USAA and put it the way things were before we spoke to the First Guaranty. Q. Okay. Now, the -- let me ask you this just directly. Did you at any time have a conversation with anyone at First Guaranty or WMC or any other third-party indicating that you wanted to undo your cancellation of this transaction? A. Q. Never, never, no. Okay. Did you have any conversations with your husband indicating to him or discussing with him, that you wanted -or he wanted -- to undo or rescind this cancellation? A. Q. No, not at all. Okay. After -- well, let me just get some background

evening. Q. Okay. And Mr. Lewis came with all of the papers, is that

Case ID: 110302291

Sarah Baker - Direct 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 And this notice of right-to-cancel form was included within those papers, am I right? A. Q. Yes, it was. Okay. What happened next during that weekend after the closing occurred at your home? A.

2.161

Well, we were given the package and Mr. Lewis did tell

us that -- you know -- if we wanted to take the time to look at it and make any decisions to -- you know -- go with it or if we had any questions or whatever, to take the time that weekend to do so. My husband -- Im -- Im not as good of a reader as my husband is -- but we both did talk about it and we read it and he brought out a few things to show me, cause I had never personally owned a home before. And he said, you know, gosh, look -- look whats gonna happen here after two years, this is -- this is ridiculous. And he explained to me what all that meant and so, we decided, well, this isnt a loan that wed want to enter into, you know and that -- thats crazy, the -- the terms of it were just -- you know -- not ones that we wanted to enter into. So, we decided to rescind. We just -- it was as

simple as that, you know, he said to read it, if we have any

Case ID: 110302291

Sarah Baker - Direct 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. Yes. All right. After you send the notice out to WMC, you had an questions, we did.

2.162

We decided we didnt want to enter into

it and we exercised our right to cancel. Q. A. Okay. It did not say to send it certified, it did not say to

send it next day air, it just simply said, it had to be postmarked by June 7th. Q. Okay. And thats what you did?

expectation that WMC would react within twenty calendar days, right? A. Q. Yes. Okay. And -- cause thats what said in the sentence of D-1, correct? A. Q. Right. All right. Given that expectation that you had, can you tell me what, if anything happened next in terms of your dealings with this particular transaction? A. Q. Absolutely nothing happened. Okay. But I -- I guess, what Im getting at -- let me

Case ID: 110302291

EXHIBIT B

Case ID: 110302291

Case ID: 110302291

EXHIBIT C

Case ID: 110302291

Diane Taylor - Direct 1 MR. EPSTEIN: THE COURT:

1.90

-- thats her understanding, your Honor. Very well. Overruled. Move on.

4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

BY MR. EPSTEIN: Q. Ms. Taylor, youre aware that Ms. Baker mailed the notice

of right to rescind to WMC -A. Q. A. Q. Yes. -- on -- yes -- on June 7th, 2005? Yes. Okay. And do you know when WMC received that notice of right to rescind? A. I do not have firsthand knowledge of the exact date, I -- I

dont. Q. Okay. Do you know whether it was before WMC funded the loan? A. yes. I do believe that it was prior to the funding of the loan,

Case ID: 110302291

EXHIBIT D

Case ID: 110302291

Diane Taylor - Cross 1 2 3 4 5

1.154

And so, that the date on which it was sold into the -to Goldman Sachs -- was 7/29/2005, is that right? A. Q. Thats correct. Okay. And when you sell a transaction to a -- quote/unquote -- investor, do you deliver documents to the investor reflecting the transaction? A. I believe at some point, the file is transferred to the

investor, I dont know at what point. Q. A. Q. And that would be the mortgage loan file, is that right? Yes. Okay. And did WMC Mortgage Corp., in fact, deliver the -- as part of the loan file -- the notice of cancellation that the Bakers had sent in, do you? A. Q. I do not. Okay. Do you know whether it was the policy and practice of WMC Mortgage Corp. to not deliver a loan file with a notice of cancellation? MR. EPSTEIN: Your Honor, Im going to object. Where

is this going as to the relevance of this? THE COURT:

Case ID: 110302291

EXHIBIT E

Case ID: 110302291

Diane Taylor - Direct 1 Q. Is this -- this document kept in the ordinary course of

1.106

business by WMC? A. Q. WMC? A. Q. Yes. And is it also made at or near the time of -- of the sale Yes. And is it also made in the ordinary course of business by

by WMC? A. Yes.

12

Ill -- Ill admit it, it reflects the sale of this mortgage -- particular mortgage -- to Goldman Sachs. (Plaintiff Exhibit 16B received in evidence.) BY MR. EPSTEIN: Q. And what is the -- can you please tell the -- the Court the

date and just point out where it shows the date of the sale? A. (No verbal response.)

25

And -- and tell us how much WMC sold the mortgage for

Case ID: 110302291

Diane Taylor - Direct 1 2 3 4 5 6 7 -- the loan for? A. Q. For 159,999.47. Okay.

1.107

And where does it re -- and how much profit did it get from selling that loan? A. Q. $4,399.47. Okay. And thats reflected on this document? A. Q. A. Q. That is correct. Under premium? Under premium, yes. Very good. Please look at Exhibit C -- 16C. (Pause at 12:01 p.m.) Q. A. Q. Did WMC at some point repurchase the loan? Yes, we did. Okay. And does Document 16C reflect that repurchase?

Case ID: 110302291

EXHIBIT F

Case ID: 110302291

Sarah Baker - Direct 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 to strike. THE COURT: MR. DONOVAN: rescission had been made. MR. SCHEFFEL:

2.164

Objection, your Honor, hearsay, move

Your response to the hearsay objection? Well, she is reflecting what her

understanding of the conversation was, shes not offering to prove the truth of the matter, whether the woman had no idea or not. THE COURT: Very well.

The objection is sustained, the response from the person who communicated with her is stricken from the record. You may proceed. MR. DONOVAN: BY MR. DONOVAN: Q. A. Do you recall this persons name that you spoke to? I believe her name was Stacy, there was girls that we Okay.

spoke to and one was Stacy and one was Clarissa. Q. Okay. How did you react to this conversation that you had with Stacy? A. Q. Well, I -- I was surprised to hear her say that. What? MR. SCHEFFEL: THE COURT: Objection, again --

Sustained --- move to strike.

MR. SCHEFFEL:

Case ID: 110302291

Sarah Baker - Direct 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. THE COURT: -- response stricken.

2.165

You cannot tell me anything that somebody told you outside of the courtroom. BY MR. DONOVAN: Q. Why dont you just tell us what your reaction was, you

were surprised? A. I was surprised that she wasnt aware that we had

rescinded it. Q. Okay. MR. SCHEFFEL: THE COURT: Objection, move to strike.

Sustained.

(Laughter at 1:52 p.m.) THE COURT: Response stricken.

Did you react with surprise during the phone

conversation? A. Q. A. Q. A. Q. A. Yeah. Okay. Yeah, uh-huh. Ah -And concerned and worried. Why were you concerned and worried? Because we did -- followed our -- exercised our right to

cancel and she was telling me, that they didnt receive this notice, so I was -- obviously -THE COURT: Again --

Case ID: 110302291

EXHIBIT G

Case ID: 110302291

Sarah Baker - Direct 1

2.176

because it says that theyre supposed to turn everything back in twenty days and they hadnt. back to USAA. We didnt -- oh, they -- there was within, like, about three weeks after this whole thing happened, two -maybe, two weeks, ten days, two weeks -- was when we received And we just wanted to go

8 9 10 11 12 13

And we asked them at that time, do you want us -well, actually, I think we asked them the very first phone call -- do you want us to return these checks? Because we

had no need for them, we didnt want them -- you know -- we were not going to enter into this loan.

Case ID: 110302291

EXHIBIT H

Case ID: 110302291

Diane Taylor - Direct 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 evidence. THE COURT: MR. DONOVAN: Very well. Any objection? at WMC? A. Q. Yes, it is.

1.108

And is it also made at or near the -- the time of -- of the

event by WMC? A. Yes, it is. MR. EPSTEIN: Your Honor, Id move this also into

Yes, your Honor.

I -- I object on the grounds that it -- the -- the same basis as I objected to before. we dont know from where it came. THE COURT: But it -- theres other mortgages, thats Its an redacted document,

whats being redacted from -- from this document, this -MR. DONOVAN: THE COURT: I understand. -- pertains to the mortgage in this case,

which is what interests the Court. MR. DONOVAN: your Honor, and -THE COURT: MR. DONOVAN: MR. EPSTEIN: Very well. Yeah. Very good. Thank you, your Honor. Overruled. You know, you -- you have my objection,

(Plaintiff Exhibit 16C received in evidence.) BY MR. EPSTEIN: Q. Does it reflect the date that WMC repurchased the loan?

Case ID: 110302291

Diane Taylor - Direct 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. A. A. Q. A. Q. A. Yes, it does. And what date was that? April 26 -- 22nd, 2006. And how much did WMC pay to repurchase the loan? $164,985.57. MR. DONOVAN: are we on 16D? MR. EPSTEIN: THE COURT: MR. DONOVAN: on it, okay. 16C. 16C.

1.109

Your -- your Honor, are we on -- what --

Oh, Im sorry, I was -- I was confused

Fine, thank you.

BY MR. EPSTEIN: Q. And why did they repurchase the loan -- why did WMC

repurchase the loan? A. Q. For early payments default. And does it reflect how much WMC in -- in how much -- in

having to repurchase this loan? A. Q. A. Q. Yes, it does. And how much was that? $9,385.57. Okay. Please look to 16D. (Pause at 12:03 p.m.) Did WMC sell the loan after it repurchased it? Yes, it did.

Case ID: 110302291

EXHIBIT I

Case ID: 110302291

Case ID: 110302291

Case ID: 110302291

Case ID: 110302291

Case ID: 110302291

Case ID: 110302291

Case ID: 110302291

Case ID: 110302291

Case ID: 110302291

Case ID: 110302291

Case ID: 110302291

Case ID: 110302291

Case ID: 110302291

Case ID: 110302291

Case ID: 110302291

Case ID: 110302291

Case ID: 110302291

Case ID: 110302291

Case ID: 110302291

Case ID: 110302291

Case ID: 110302291

EXHIBIT J

Case ID: 110302291

Diane Taylor - Direct

1.108

25

Q.

Does it reflect the date that WMC repurchased the loan?

Case ID: 110302291

Diane Taylor - Direct 1 2 3 4 5 A. Q. A. Q. A. Yes, it does. And what date was that? April 26 -- 22nd, 2006. And how much did WMC pay to repurchase the loan? $164,985.57. MR. DONOVAN: are we on 16D? MR. EPSTEIN: THE COURT: MR. DONOVAN: on it, okay. 16C. 16C.

1.109

Your -- your Honor, are we on -- what --

Oh, Im sorry, I was -- I was confused

Fine, thank you.

BY MR. EPSTEIN: Q. And why did they repurchase the loan -- why did WMC

repurchase the loan? A. Q. For early payments default. And does it reflect how much WMC in -- in how much -- in

having to repurchase this loan? A. Q. A. Q. Yes, it does. And how much was that? $9,385.57. Okay. Please look to 16D. (Pause at 12:03 p.m.) Q. Did WMC sell the loan after it repurchased it?

Case ID: 110302291

EXHIBIT K

Case ID: 110302291

Diane Taylor - Direct 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A. Q. Q. Is this -- this document kept in the ordinary course of

1.106

business by WMC? A. Q. WMC? A. Q. Yes. And is it also made at or near the time of -- of the sale Yes. And is it also made in the ordinary course of business by

by WMC? A. Yes. MR. EPSTEIN: THE COURT: Your Honor, I -- Id move to admit. Very well.

Ill -- Ill admit it, it reflects the sale of this mortgage -- particular mortgage -- to Goldman Sachs. (Plaintiff Exhibit 16B received in evidence.) BY MR. EPSTEIN: Q. And what is the -- can you please tell the -- the Court the

date and just point out where it shows the date of the sale? A. Q. (No verbal response.) Id direct your attention to purchase date -MR. EPSTEIN: To help the Court.

Its -- sorry -- its fifteen over purchase date. Okay. 7/29/2005. Okay. And -- and tell us how much WMC sold the mortgage for

Case ID: 110302291

Diane Taylor - Direct 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. Q. A. Q. A. Q. A. Q. -- the loan for? A. Q. For 159,999.47. Okay.

1.107

And where does it re -- and how much profit did it get from selling that loan? A. Q. $4,399.47. Okay. And thats reflected on this document? That is correct. Under premium? Under premium, yes. Very good. Please look at Exhibit C -- 16C. (Pause at 12:01 p.m.) Did WMC at some point repurchase the loan? Yes, we did. Okay. And does Document 16C reflect that repurchase? Yes, it does. Okay. And now, is this also a document that is made in the ordinary course of business at WMC? A. Q. When there is repurchase, yes. Okay. And is it also kept in the ordinary course of business

Case ID: 110302291

Diane Taylor - Direct 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 evidence. THE COURT: MR. DONOVAN: Very well. Any objection? at WMC? A. Q. Yes, it is.

1.108

And is it also made at or near the -- the time of -- of the

event by WMC? A. Yes, it is. MR. EPSTEIN: Your Honor, Id move this also into

Yes, your Honor.

I -- I object on the grounds that it -- the -- the same basis as I objected to before. we dont know from where it came. THE COURT: But it -- theres other mortgages, thats Its an redacted document,

whats being redacted from -- from this document, this -MR. DONOVAN: THE COURT: I understand. -- pertains to the mortgage in this case,

which is what interests the Court. MR. DONOVAN: your Honor, and -THE COURT: MR. DONOVAN: MR. EPSTEIN: Very well. Yeah. Very good. Thank you, your Honor. Overruled. You know, you -- you have my objection,

(Plaintiff Exhibit 16C received in evidence.) BY MR. EPSTEIN: Q. Does it reflect the date that WMC repurchased the loan?

Case ID: 110302291

EXHIBIT L

Case ID: 110302291

Diane Taylor - Cross 1

1.162

7 8 9 10 11 12 13 14 15 16 A. Q.

Now, the resale date is -- I -- where on this document, 16D do we see the resale date? A. Q. Under purchase date. Okay. So, thats 6/2/2006? That is correct. Okay. All right. If I understand your testimony correctly, as of 6/2/2006. GMAC -- what did you call it, GMAC Non-performing? A. Yes.

Case ID: 110302291

EXHIBIT M

Case ID: 110302291

Case ID: 110302291

Case ID: 110302291

Case ID: 110302291

Case ID: 110302291

Case ID: 110302291

Case ID: 110302291

Case ID: 110302291

Case ID: 110302291

Case ID: 110302291

Case ID: 110302291

Case ID: 110302291

Case ID: 110302291

Case ID: 110302291

Case ID: 110302291

Case ID: 110302291

Case ID: 110302291

Case ID: 110302291

Case ID: 110302291

Case ID: 110302291

Case ID: 110302291

Case ID: 110302291

Case ID: 110302291

EXHIBIT N

Case ID: 110302291

Case ID: 110302291

Case ID: 110302291

Case ID: 110302291

Case ID: 110302291

Case ID: 110302291