Motion-Secondary: BANK OF AMERICA, NATIONAL ASSOCIATION AS SUCCESSOR VS. STEPHANIE NAIFEH et al

• 
• 
• 
• 
• 
• 
• 
• 

						
                                
Preview
                                N

Mani Sheik (SBN 245487)
SHEIK LAW, INC.
333 West Portal Ave., Suite A

San Francisco, CA 94127 ELECTRONICALLY
Tel: (415) 205-8490 FILED
Fax: (415) 867-5093 Superior Court of California,
email: mani@sheiklaw.us County of San Francisco
Attorneys for Defendants 40/04/2018
Stefanie Naifeh, Stephen Easterly, and Sam Segall BY:JUDITH ane eae
jeputy Clerl

SUPERIOR COURT OF THE STATE OF CALIFORNIA

COUNTY OF SAN FRANCISCO

U.S. BANK AS SUCCESSOR TRUSTEE, CASE NO. CGC-11-509805
BANK OF AMERICA, NATIONAL

AMENDED AFFIDAVIT AND
ASSOCIATION AS SUCCESSOR BY
MERGER TO LASALLE BANK NA AS TESTIMONY OF MARIE MCDONNELL,

CFE IN SUPPORT OF DEFENDANTS’

TRUSTEE FOR WAMU MORTGAGE OPPOSITION TO PLAINTIFF’S MOTION
PASS THROUGH CERTIFICATES FOR SUMMARY ADJUDICATION
SERIES 2007-HY06 TRUST,
Plaintiff, Date: October 4, 2018

Time: 9:00 A.M.
vs. Dept: 303

STEPHANIE NAIFEH, an individual;
SAM SEGALL, an individual; STEPHEN

Peek Complaint Filed: April 4, 2011
ANDREW EASTERLY, an individual;
ADAM J. WHITE, an individual; Amended Complaint Filed: March 14, 2014
ANDREA S$. WHITE, an individual; ALL
PERSONS UNKNOWN CLAIMING Orig. Trial Date: June 24, 2013
ET Ga OF OUT BLE RIGHT, New Trial Date: October 9, 2018

TITLE, ESTATE, LIEN, OR INTEREST
IN THE PROPERTY KNOWN AS 49 Assigned for all purposes to
ZOE STREET #15, SAN FRANCISCO, Hon. Newton J. Lam
CALIFORNIA 94107; and DOES 1
through 50, inclusive,

Defendants.

Defendants’ Amended Affidavit of Marie McDonnellSUPERIOR COURT OF THE STATE OF CALIFORNIA
FOR THE COUNTY OF SAN FRANCISCO

BANK OF AMERICA, NATIONAL
ASSOCIATION AS SUCCESSOR BY
MERGER TO LASALLE BANK NA AS
TRUSTEE FOR WAMU MORTGAGE
PASS THROUGH CERTIFICATES
SERIES 2007-HY06 TRUST,

Plaintiff,
v.

STEPHANIE NAIFEH, an individual; SAM
SEGALL, an individual; STEPHEN
ANDREW EASTERLY, an individual;
ANDREA S. WHITE, an individual; ALL
PERSONS UNKNOWN CLAIMING ANY
LEGAL OR EQUITABLE RIGHT, TITLE,
ESTATE, LIEN, OR INTEREST IN THE
PROPERTY KNOWN AS 49 ZOE STREET
#15, SAN FRANCISCO, CALIFORNIA
94107; and DOES 1 through 50, inclusive,

Defendants.

CASE NO.: CGC-11-509805

AFFIDAVIT AND TESTIMONY OF MARIE MCDONNELL, CFE

IN SUPPORT OF DEFENDANTS’ OPPOSITION TO PLAINTIFF’S MOTION

FOR SUMMARY ADJUDICATION

COMMONWEALTH OF MASSACHUSETTS)

COUNTY OF BARNSTABLE

Being duly sworn, Marie McDonnell hereby deposes and says on oath as follows:

1. Tama natural born citizen of the United States of America and a resident of the

Commonwealth of Massachusetts. I am over the age of majority and believe in the obligations of

an oath.

AFFIDAVIT OF MARIE MCDONNELL, CFE

PAGE 1 oF 182 Tam a Mortgage Fraud and Forensic Analyst, and a credentialed Certified Fraud
Examiner (“CFE”) with over thirty-one (31) years’ experience in transactional analysis,

mortgage auditing, and mortgage fraud investigation.

3. I am the President and Chief Executive Officer of McDonnell Analytics, Inc. also
d/b/a McDonnell Property Analytics (the “Firm”), a litigation support and research firm having a
principal place of business at 15 Cape Lane, Brewster, Massachusetts 02631. The Firm, among
other services, provides mortgage-backed securities research and foreclosure forensics to
attorneys nationwide. McDonnell Property Analytics also advises and performs services for

county registers of deeds, attorneys general, courts and other governmental agencies.

4. I have personal knowledge of the facts contained herein and, if called upon, could
and would competently testify thereto. My credentials are set forth in a curriculum vitae attached

hereto as Exhibit A. (See Exhibit A. — Curriculum Vitae of Marie McDonnell)

5. I make this affidavit in support of Defendants’ Opposition To Plaintiff's Motion

For Summary Adjudication.

1, EXPERT ENGAGEMENT

6. On July 19, 2018, Stefanie Naifeh engaged me to examine certain mortgage loan
documents that memorialize a consumer credit transaction consummated on March 22, 2007, by
and between Stefanie Naifeh and Dusan Ristic (“Borrower” or “Ms. Naifeh”),! and Washington
Mutual Bank, FA (“Lender” or “Washington Mutual”). More specifically, I was instructed to

conduct the following investigation and analysis:

Stefanie Naifeh and Dusan Ristic are divorced, and Mr. Ristic is not a party to the current
litigation.

AFFIDAVIT OF MARIE MCDONNELL, CFE PAGE 2 oF 18A. — Review the terms of the subject Adjustable Rate Note (“Note”) in the
amount of $500,000.00 (“Principal”), financed at an initial interest rate of
6.350% per annum for the first five (5) years during which interest-only
payments of $2,645.83 were required.

B. Research the Index described in Paragraph 4(B) of the Note and compute
the fully indexed interest rate that existed on March 14, 2007 (“the
disclosure date”) and March 22, 2007 (“the consummation date”).

C. Compute the fully amortizing monthly payment that was scheduled to
change on May 1, 2012, the month following the first Interest Rate
Change Date, as described in Paragraphs 4(A) and 4(C).

D. Calculate the total amount of interest expense that was projected to accrue
by the Maturity Date of April 1, 2037 based on the Index prevailing on
March 14, 2007 and March 22, 2007.

E. Examine the following disclosures prepared by Washington Mutual on
March 14, 2007, and report on any discrepancies in the prepaid finance
charges contained therein: Borrower’s Disbursement Authorization;
Itemization of Amount Financed; and Truth In Lending Disclosure
Statement.

F. Examine the Estimated Closing Statement dated March 16, 2007 and
identify all prepaid finance charges contained therein.

G. — Examine the Lender’s Closing Instructions dated March 14, 2007 prepared
by Washington Mutual and report on any restrictions contained therein
that impact the viability of the Truth In Lending Disclosure Statement
dated March 14, 2007.

H. Discuss the importance of the HUD-1 Settlement Statement that the
closing agent was required to prepare and deliver to Washington Mutual
Bank, FA, Stefanie Naifeh, and Dusan Ristic.

I. Express an opinion as to whether all material disclosures were delivered to
Stephanie Naifeh and Dusan Ristic on March 22, 2007, the consummation
date.

J. Express an opinion as to whether the Truth In Lending Disclosure
Statement prepared on March 14, 2007 contains accurate material
disclosures for the transaction dated March 22, 2007.

K. _ Express an opinion as to whether Stefanie Naifeh had an extended right to
rescind the subject transaction on or before March 22, 2010.

L. Review the Declaration of Kathlyn L. Farrell in Support of Motion of
Plaintiff for Summary Adjudication.

AFFIDAVIT OF MARIE MCDONNELL, CFE PAGE 3 oF 18fe I acknowledge that this contested matter involves mixed questions of fact and law
that are inextricably intertwined. The instruments that memorialize the mortgage transaction, i-e.,
the debt instrument that describes the terms of the alleged “loan” and the security instrument that
binds the obligation to a plot of real property, are legal contracts that are heavily regulated by

federal, state, and local laws, and governmental authorities.

8. My role here is to be of assistance to the Court by ferreting out material facts that
require the specialized knowledge of a subject matter expert. I am fully aware that it is the
exclusive jurisdiction of the Court to apply the law to those facts in rendering its decision. I ask
the Court’s indulgence if certain logical deductions and syllogistic conclusions I report herein

sound like conclusions of law, which they are not intended to be.

Il. METHODOLOGY
9. Over the past thirty-one (31) years, I have developed, extensively tested, and
reliably employed a proprietary set of auditing tools and protocols that enable me to track with
precision a lender’s loan application and servicing systems and determine with particularity
whether a problem is the result of borrower failure, lender malfeasance, or whether it is

technology and policy related.

10. By mid-1991, I had developed a mathematically based “Truth In Lending
Analysis” to assist consumers and their attorneys in identifying material disclosure violations
that enabled qualified homeowners to raise their extended right to rescind and cancel certain

consumer mortgage transactions for up to three (3) years following the consummation date.

11. My process begins by assembling the necessary documentation, i.c., the Note

(with Addenda); the Mortgage (with Riders); the HUD-1 Settlement Statement; the Truth In

AFFIDAVIT OF MARIE MCDONNELL, CFE PaGe4 oF 18Lending Disclosure Statement; the Itemization of Amount Financed; and the Notices of Right to

Cancel.

12. The federally mandated Truth In Lending Disclosure Statement in effect at the
time of this transaction contains the five material disclosures that must be properly provided for
closed-end transactions in order to terminate the consumer’s cancellation rights after the initial

three-day cooling-off period.” These are:

e The annual percentage rate, including the existence of a variable rate feature
in the case of a closed-end loan;

« The finance charge;
¢ The amount financed;
e The total of payments; and

+ The payment schedule.

13. This list of material disclosures giving rise to the extended rescission right is
exclusive and the right does not arise based on violations of other TILA rules, such as the
requirement to provide notice of a transfer, sale, or assignment under section 15 U.S.C. §
1641(g). These disclosures must meet the “clear and conspicuous” standard. Ifa disclosure is
misleading or capable of more than one plausible interpretation, it is not “clear.” Provision of
blank disclosures or disclosures only partially filled out should also be a violation of the clear
and conspicuous standard. For example, some courts have held that the misstatement or omission
of dates on the notice of right to cancel renders the disclosure unclear. Disclosures that are

illegible are not clear.

? See 508 15 U.S.C. § 1602(v); Reg. Z § 1026.23(a)(3)(ii). See Pulphus v. Sullivan, 2003 WL
1964333 (N.D. Ill. Apr. 28, 2003) (providing two different disclosure statements at closing was material
violation).

AFFIDAVIT OF MARIE MCDONNELL, CFE PAGE 5 oF 1814. In the instant case, we are primarily concerned with whether the “Finance
Charge” in Washington Mutual’s Truth In Lending Disclosure Statement was accurate within the
allowable tolerance for a closed-end irregular transaction. The finance charge is comprised of the
sum of any prepaid interest, prepaid finance charges actually collected from the consumer, and
the interest that accrues over the life of the loan based upon the rate(s) in effect on the

consummation date.

15. To calculate the interest portion of the finance charge, I begin my analysis by
translating the terms of the Note into their mathematical form and effect. Essentially, I create an
amortization schedule in a Microsoft Excel spreadsheet that reflects the legal obligation between
the parties. This enables me to quantify the interest component of the finance charge contained in

the lender’s Truth In Lending Disclosure Statement (“TILDS”).

16. Once accomplished, I review the HUD-1 Settlement Statement to identify any
prepaid interest and prepaid finance charges (collectively “prepaid finance charges”) that the
lender has imposed as a condition of the transaction. Ideally, the prepaid finance charges
contained in the HUD-1 Settlement Statement (“HUD-1”) will be precisely equivalent to those
listed in the Itemization of Amount Financed (“Itemization” or “IAF”) which lists the prepaid
finance charges used to calculate the TILDS. If the prepaid finance charges in the HUD-1 and
Ttemization don’t match up, this discrepancy may reveal an understatement in the finance charge
that could potentially trigger the extended right to rescind the transaction. When a consumer is
exercising their right of rescission in defense to foreclosure, an understatement in the Finance

Charge of only $35.00 will trigger the extended right to cancel.

17. If the discrepancy between the HUD-1 and the Itemization is unfathomable, the

Court could declare that the TILDS is misleading or capable of more than one plausible

AFFIDAVIT OF MARIE MCDONNELL, CFE PAGE 6 OF 18interpretation, i.e., it is not “clear.” Such a finding would constitute a material disclosure
violation that would also trigger the extended right to rescind. By mathematically parsing out the
interest component of the finance charge from the prepaid finance charges, I can pinpoint where

and why material disclosure violations arise.

18. Through my forensic auditing skills, I can detect and quantify a lender’s failure to
comply with state and federal truth in lending laws; expose errors, omissions, or the imposition
of unauthorized fees and costs; describe inappropriate handling of the escrow and suspense
accounts; uncover equity skimming schemes; and discover other unfair and deceptive acts and
practices as these are defined by the Federal Trade Commission. I am also able to reconstruct
lost or suppressed data through a variety of forensic accounting techniques; detect
unconscionable loan terms; identify predatory lending schemes that may violate state and federal

consumer protection statutes; and uncover fraud.

TH. SUMMARY OF FINDINGS

19. After undertaking an intensive examination of the subject transaction and the

documentary evidence available to me for review, I found as follows:

A. On March 14, 2007, Washington Mutual issued a four-page document titled Lender’s
Closing Instructions which states on page one: “This loan is scheduled to close on
03/14/2007. This is an estimated closing date but the loan must close no later than
03/21/2007.” (emphasis supplied).

B. Accordingly, the settlement agent, Fidelity National Title Company (“Fidelity”), was
required to return all of the closing documents dated March 14, 2007 to Washington
Mutual and have them re-drawn.

C. _ It is apparent that Fidelity and Washington Mutual were not communicating
regarding the broker fees and other prepaid finance charges that were to be
incorporated into the Final Truth In Lending Disclosure Statement. As a result, none
of the disclosures issued on March 14, 2007 and March 16, 2007 represent an
accurate reflection of the prepaid finance charges actually collected from Ms. Naifeh
on the settlement date of March 22, 2007.

AFFIDAVIT OF MARIE MCDONNELL, CFE PAGE7 oF 18D. _ Fidelity was required to prepare a final HUD-1 Settlement Statement pursuant to the
Real Estate Settlement Procedures Act, and Washington Mutual’s closing
instructions. Washington Mutual was required to retain the HUD-1 for at least five (5)
years.

E. Ms. Naifeh rescinded the transaction after only 2.33 years; accordingly, Washington
Mutual was on notice that the HUD-1 Settlement Statement would be critical in
determining whether the rescission was valid. This raises a concern with respect to
spoliation of the evidence.

F. I found that the interest component of the finance charge was accurate to the penny
and is not at issue.

G. On the other hand, the calculation of prepaid finance charges is unfathomable for the
reasons described in detail below.

H. The Truth In Lending Disclosure Statement dated March 14, 2007 was not a “final”
disclosure; it was an estimate that became obsolete when the transaction did not close
on or before March 21, 2007 as mandated by Washington Mutual in its closing
instructions.

I. There is no evidence that Ms. Naifeh and Mr. Ristic received a Final Truth In
Lending Disclosure Statement on March 22, 2007 that accurately reflected the
prepaid finance charges she actually paid.

J. For these reasons, I concluded that Ms. Naifeh timely and validly exercised her
extended right to rescind the transaction on July 18, 2009.

IV. DOCUMENTARY EVIDENCE AND RELEVANT FACTS

The Transaction

20. The subject of this analysis is a residential mortgage transaction that took place on
March 22, 20073 (“Consummation Date”), by and between Stefanie Naifeh and Dusan Ristic’,
wife and husband (“Borrower” or “Ms. Naifeh”) and Washington Mutual Bank, FA (“Lender” or

“WaMu” or “Washington Mutual”).

3 Although the Note and Deed of Trust are dated March 14, 2007, the transaction was
consummated on March 22, 2007, as evidenced by the date of the notary acknowledgment on the Deed of
Trust.

* Stefanie Naifeh and Dusan Ristic are divorced, and Mr. Ristic is not a party to the current
litigation.

AFFIDAVIT OF MARIE MCDONNELL, CFE PAGE 8 oF 1821. On the Consummation Date, Ms. Naifeh executed an Adjustable Rate Note
(“Note”) in favor of Washington Mutual Bank, FA and granted a Deed of Trust to obtain funds
in the amount of $500,000.00 (“Principal”). To ensure repayment of the debt, Ms. Naifeh
pledged residential property located at 49 Zoe Street #15, San Francisco, CA 94107 (“Property”).
The Deed of Trust was recorded in the San Francisco County Recorder’s Office (““Recorder’s
Office”) on April 6, 2007, as Document # 2007- 1365695-00. (See Exhibit B. — Deed of Trust,

03/14/2007)

22. Definition (D) of the Deed of Trust identifies California Reconveyance Company

as Trustee under the Deed of Trust.

23. The Deed of Trust is amended by a Fixed/Adjustable Rate Rider which reiterates
the terms of the Note and is incorporated into and shall be deemed to amend and supplement the

Deed of Trust. (See Exhibit C. — Fixed/Adjustable Rate Rider, 03/14/2007)

24. The Note establishes the terms of “Hybrid Adjustable Rate Mortgage” (“HARM”)
loan that begins with a fixed interest rate of 6.350% for the first five (5) year period. The
monthly payment amount of $2,645.83 was sufficient to cover only the interest accruing each
month. The initial fixed interest rate was scheduled to adjust on April 1, 2012 and on that day
every 12th month thereafter. Following each interest rate change, monthly payments of principal
and interest were to reset in an amount sufficient to fully amortize the principal to a zero balance

by the maturity date of April 1, 2037. (See Exhibit D. — Adjustable Rate Note, 03/14/2007)

25. Page five of the copy of the Note I examined contains an undated, blank
indorsement allegedly signed by Cynthia Riley, Vice President of Washington Mutual Bank, FA,

which purports to convert the Note to bearer paper.

AFFIDAVIT OF MARIE MCDONNELL, CFE PAGE 9 oF 1826.

On March 14, 2007, Washington Mutual issued a four-page document titled

Lender’s Closing Instructions which states on page one: This loan is scheduled to close on

03/14/2007. This is an estimated closing date but the loan must close no later than 03/21/2007.

(emphasis supplied). (See Exhibit E. — Lender’s Closing Instructions, 03/14/2007)

27.

28.

29.

Page three of the closing instructions contains the following paragraph:

Lender is aware that a Mortgage Broker is involved. All broker charges,
including but not limited to broker fee, credit report fee, courier charges,
and appraisal fee, must be disclosed to Lender in order for Lender to
properly prepare final loan documents. If the broker charges or amounts
differ from those contained in these Lender’s Closing Instructions or any
final loan documents that Lender provides, immediately notify Lender of
same and return the documents and any funds that Lender has provided.
Lender will redraw final loan documents and/or provide new Lender’s
Closing Instructions. Sign and return the Addendum to Closing
Instructions. Your firm is responsible for collecting and disbursing all
broker fees. Prepare only one HUD-1 Settlement Statement. (emphasis in
original)

Finally, the following directive appears on page four:

A COPY OF THE COMPLETED, FINAL HUD-1 SETTLEMENT
STATEMENT is to be forwarded within three days after closing to the
lender’s post closing office at the address below. A copy of estimated
settlement statement is to be forwarded with funding package. (emphasis
in original)

Washington Mutual also prepared a Borrower’s Disbursement Authorization

dated March 14, 2007. (See Exhibit F. — Borrower’s Disbursement Authorization, 03/14/2007)

30.

The Truth in Lending Disclosure Statement allegedly signed by Naifeh on March

22, 2007 was prepared on March 14, 2007 and appears to be an estimate rather than a Final

Disclosure. (See Exhibit G. — Truth In Lending Disclosure Statement, 03/14/2007)

AFFIDAVIT OF MARIE MCDONNELL, CFE PAGE 10 OF 1831. The Itemization of Amount Financed (a/k/a Truth in Lending Worksheet) lists the
prepaid finance charges contained in the TILDS and was also prepared by Washington Mutual

on March 14, 2007. (See Exhibit H. — Itemization of Amount Financed, 03/14/2007)

32. On March 16, 2007, Fidelity National Title Company produced a six-page
document titled Borrower’s Escrow Instructions which included an Estimated Closing Statement
on page 3, (See Exhibit I. — Borrower’s Escrow Instructions and Estimated Closing Statement,

03/16/2007)

Vv. ANALYSIS

Amortization Analysis

33. I began my analysis by selecting an audit template from my toolkit for an
adjustable rate note with an initial fixed interest-only period for the first five (5) years, and which
adjusted thereafter based on the average of interbank offered rates for one-year U.S. dollar-
denominated deposits in the London Market (“LIBOR”) as published in The Wall Street Journal.
I input the Principal of $500,000.00, the initial interest rate of 6.350%, and the settlement date of
March 22, 2007. I then input the date the loan came out of rescission, March 27, 2007, and the
new focal date of the loan, April 1, 2007. I input the term of 360 months, and my analytical tool
automatically calculated the interest-only payment of $2,645.83, which precisely reflects Ms.
Naifeh’s Adjustable Rate Note at Paragraph 3(B). In addition, my analytical tool automatically

amortized the loan up through the Maturity Date of April 1, 2037.

34. Next, I researched the 12-month LIBOR rate history which is now reliably
archived on the St. Louis Fed’s public access website. (See Federal Reserve Bank of St. Louis

website at: https://fred.stlouisfed.org/series/USD12MD1S6N)

AFFIDAVIT OF MARIE MCDONNELL, CFE PAGE 11 OF 1835. I performed an Interest Rate Analysis based on the Index and Margin formula
contained in Paragraph 4 of the Note and found that the fully indexed interest rate as of March

22, 2007 was 7.625%. (See Exhibit J. — Interest Rate Analysis)

36. Since Paragraph 4(A) of the Note establishes April 1, 2012 as the first Interest
Rate Change Date, I implemented that change in my analytical tool, which resulted in a fully
amortizing monthly payment of $3,735.71 beginning May 1, 2012. (See Exhibit K. —

Amortization Analysis, p. 2)

37. Next, I rounded the last payment to precisely payoff the principal and interest at
maturity, which results in a final monthly payment of $3,731.26. (See Exhibit K. — Amortization

Analysis, p. 10)

38. Having concluded my Amortization Analysis, | examined Washington Mutual’s
Truth In Lending Disclosure Statement dated March 14, 2007 and found that the Schedule of
Payments reconciles to the penny with my calculations notwithstanding the fact that I used a
closing date of March 22, 2007. In addition, Washington Mutual’s Total of Payments is a precise
match to the Audited Totals in my Amortization Analysis. What this means is that the interest

component of the Finance Charge is not at issue here.

Prepaid Finance Charge Analysis

39. My examination of Washington Mutual’s documentation regarding prepaid
finance charges proved to be considerably more complex than determining the interest

component of the Finance Charge because:

a) Washington Mutual's Borrower’s Disbursement Authorization does not comport
with the Itemization of Amount Financed, or the alleged Final Truth In Lending
Disclosure Statement, all of which are dated March 14, 2007.

AFFIDAVIT OF MARIE MCDONNELL, CFE PAGE 12 oF 1840.

b) The settlement agent, Fidelity National Title Company, issued an Estimated
Closing Statement on March 16, 2007 that is radically different from the
Borrower's Disbursement Authorization, the Itemization of Amount Financed,
and the alleged Final Truth In Lending Disclosure Statement dated March 14,

2007.

c) Plaintiff in this action has failed to produce the HUD-1 Settlement Statement from
the March 22, 2007 closing which is the only document that contains the actual

prepaid finance charges Ms. Naifeh was required to pay.

To illustrate the problem here, I have created two tables comparing the prepaid

finance charges set forth in these various disclosures. Table 1 lists the prepaid finance charges

contained in the Borrower’s Disbursement Authorization (“BDA”) with the Itemization of

Amount Financed (“IAF”). The difference between these two versions is $4,930.00, and we

don’t know which version would be accurate had the closing taken place on March 14, 2007.

Therefore, the Truth In Lending Disclosure Statement based on the Itemization of Amount

Financed is not “clear” as mandated by the Truth In Lending Act.

41.

Table 1: Compare Borrower's Disbursement Authorization with

Itemization of Amount Financed

Prepaid Finance Charges BDA — Exhibit F JAF — Exhibit H
Interest @ $86.99/ Day for 18 Days $1,565.82 $1,565.82
Funding and Review Fee $530.00 $530.00
Payment Processing Fee $200.00 $200.00
Tax Service $81.00 $81.00
Wire Transfer Fee $35.00 $35.00
Flood Determination Fee $8.00 $8.00
Broker Origination Fee $3,000.00
Broker Other #1 $50.00
Settlement / Closing Fee $1,850.00
Miscellaneous $3
$2,419.82 $7,349.82

Table 2 compares the March 14, 2007 Borrower’s Disbursement Authorization

with the March 16, 2007 Estimated Closing Statement (“ECS”). The difference between these

AFFIDAVIT OF MARIE MCDONNELL, CFE

PAGE 13 oF 18two disclosures is $3,038.05. Obviously, the Truth In Lending Disclosure Statement dated March
14, 2007 does not accurately reflect the prepaid finance charges described in the Estimated.
Closing Statement. Furthermore, when the ECS is compared with the IAF, the difference is
$1,891.95. In short, these disclosures are so erratic that we cannot predict —never mind know—

what Ms. Naifeh actually paid in the way of prepaid finance charges at settlement on March 22,

2007.
Table 2: Compare Borrower's Disbursement Authorization with
Estimated Closing Statement
Prepaid Finance Charges BDA—ExhibitF  ECS— Exhibit!

Interest @ $86.99/ Day from 3/19-4/1/2007 $1,565.82 $1,130.87
Funding and Review Fee $530.00 $530.00
Payment Processing Fee $200.00 $200.00
Tax Service $81.00 $81.00
Wire Transfer Fee $35.00 $35.00
Flood Determination Fee $8.00 $8.00
Broker Origination Fee $3,000.00
Condo Documents to Viva Financial $50.00
Escrow Fee to Fidelity National Title $250.00
Doc Prep Fees to Fidelity National Title $75.00
Outside Courier / Special Messenger $28.00
Notary Fees

$2,419.82 $5,457.87

42. Without having the opportunity to review the HUD-1 Settlement Statement, the

question of whether or not the Truth In Lending Disclosure Statement of March 14, 2007 was
compliant or not will remain a mystery. This is precisely what the Truth In Lending Act

(“TILA”) was designed to avoid.

TILA Must be Liberally Construed in Favor of the Consumer

43. TILA’s stated purpose is “to assure a meaningful disclosure of credit terms so that

the consumer will be able to compare more readily the various credit terms available to him and

AFFIDAVIT OF MARIE MCDONNELL, CFE PAGE 14 OF 18avoid the uninformed use of credit, and to protect the consumer against inaccurate and unfair
credit billing and credit card practices.” 15 U.S.C. § 1601 (a). To fulfill that purpose, TILA
requires lenders to provide borrowers with certain clear and accurate disclosures, and lenders
face criminal penalties and damages for noncompliance. See, e.g., id. §§ 1604, 1611, 1631-32,
1635, 1637-38, 1640; see also Beach v. Ocwen, 523 U.S. at 412 (“[T]he Act requires creditors to
provide borrowers with clear and accurate disclosures of terms dealing with things like finance
charges, annual percentage rates of interest, and the borrower's rights.”). These provisions
evidence what amounts to the statute's core, remedial purpose. See Littlefield v. Walt Flanagan
& Co., 498 F.2d 1133, 1136 (10th Cir.1974) (“The Act is designed to prevent ‘unscrupulous and
predatory creditor practices |’ [and] is remedial .“* (quoting N.C. Freed Co. v. Bd. of Governors
of Fed. Reserve Sys., 473 F.2d 1210, 1214 (2d Cir.1973))). In light of its remedial nature, we
liberally construe TILA's language in favor of the consumer. See id. (“[TILA] must be liberally
construed to effectuate the intent of Congress.”); see also Bragg v. Bill Heard Chevrolet, Inc.,
374 F.3d 1060, 1065 (11th Cir.2004) (“As a remedial statute, TILA must be construed liberally
in favor of the consumer.”); Begala v. PNC Bank, Ohio, Nat'l Ass'n, 163 F.3d 948, 950 (6th
Cir.1998) (“We have repeatedly stated that TILA is a remedial statute and, therefore, should be
given a broad, liberal construction in favor of the consumer.”); Freeman v. B & B Assocs., 790
F.2d 145, 149 (D.C.Cir.1986) (noting that TILA’s provisions must be given an appropriate level
of liberal construction in light of its broad, remedial purposes); cf. Johnson y. Riddle, 305 F.3d
1107, 1117 (10th Cir.2002) (construing a different statute liberally “in favor of the consumer”

because it, like TILA, is “remedial” in nature).

AFFIDAVIT OF MARIE MCDONNELL, CFE PaGE 15 oF 18VI.

CONCLUSION
44. The evidence is clear and convincing that Washington Mutual Bank, FA failed to
comply strictly with the material disclosure requirements of the Truth In Lending Act 15 U.S.C.
§ 1635 and § 1640 (“TILA”), and Regulation Z § 226.23 (“Reg. Z”) as amended which
implements the purpose of the Act. There is simply no evidence in the record that Washington
Mutual delivered a compliant Final Truth In Lending Disclosure Statement to Ms. Naifeh and
Mr. Ristic on March 22, 2007. Nor can we cobble one together from the disparate disclosures

dated March 14, 2007 and March 16, 2007.

45. Accordingly, Stefanie Naifeh had an extended right to rescind the subject
transaction until three (3) years after the consummation date of March 22, 2007. Ms. Naifeh sent
the proper parties a valid notice of rescission on July 18, 2009, which was effective as of that

date by operation of law.

46. Liability for these Truth In Lending Act violations has been established in a
variety of national and state venues; however, enforcement is always local and requires an
informed and fair-minded judiciary to level the playing field and uphold the rule of law. In

conclusion, I refer the Court back to page 7 above where I summarize and recap my findings.

~ Continued Below ~

AFFIDAVIT OF MARIE MCDONNELL, CFE PAGE 16 OF 18Certification

The factual and expert opinions stated above are based on my research, review of and
reliance upon the documents and information supplied to date. I reserve the right to amend
and supplement my opinion based on documents and data gathered through the discovery
process and supplied to me in the future.

Therefore, based on my education, specialized knowledge and professional expertise as a
Mortgage Fraud and Forensic Analyst and a Certified Fraud Examiner and the documents
before me now, I find within a reasonable degree of certainty, that the opinions expressed
herein are true and accurate.

I, Marie McDonnell, under penalty of perjury, do hereby affirm that the foregoing
representations are true and correct to the best of my knowledge and belief.

I declare under penalty of perjury under the laws of the State of California that the foregoing is
true and correct.

Respectfully submitted,

Marie McDonnell, President & CEO
Mortgage Fraud and Forensic Analyst
Certified Fraud Examiner

Date: September 27, 2018 McDonnell Property Analytics

15 Cape Lane | Brewster, MA 02631
(v) 774-323-0892 | (f) 774-323-0894
M cdo lytics.com

AFFIDAVIT OF MARIE MCDONNELL, CFE PAGE 17 oF 18Affidavit Exhibits

Curriculum Vitae of Marie McDonnell

Deed of Trust, 03/14/2007

Fixed/Adjustable Rate Rider, 03/14/2007
Adjustable Rate Note, 03/14/2007

Lender’s Closing Instructions, 03/14/2007
Borrower’s Disbursement Authorization, 03/14/2007
Truth In Lending Disclosure Statement, 03/14/2007
Ttemization of Amount Financed, 03/14/2007

aAanmm OO w >

Borrower’s Escrow Instructions & Estimated Closing Statement, 03/16/2007

Interest Rate Analysis

Rae

Amortization Analysis

COMMONWEALTH OF MASSACHUSETTS
COUNTY OF BARNSTABLE, SS

aan

At Brewster, Massachusetts, on this a day of Sesremaor , 2018, before me, the

undersigned Notary Public, personally appeared Marie McDonnell who is personally known to

me to be the person who signed the preceding or attached document in my presence, and who
swore or affirmed to me that the contents of the document are truthful and accurate to the best of

her knowledge and belief.

Subscribed to and sworn before me.

Go B. SOUZA
Notary Public
a Di oven of Massachusetts
Sumona @ My Comm. mmm. Expires November 27, 2020)
Notary Public

My commission expires: Woon

AFFIDAVIT OF MARIE MCDONNELL, CFE PAGE 18 OF 18EXHIBIT “A”MtarieMtarieMtarieMtarieMtarieMtarieMtarieMtarieMtarieMtarieEXHIBIT “B”&.

THE

Recording Requested By:

vere MN

NA

San Francisea AssessoreRecorder

WASHINGTON MUTUAL BANK FA

Ting, Assessor-Recorder

FLORENCE, SC. 20801 Bac *2007-1365695-00

DOC OPS M/S FSCE 440 Acct MN-PIDELITY a Tithe Company
Friday, APR 06, 7 08:00:00

} 4 By Tt Pd $78.00 eee

Prepare y

HANG BUI REEL J364 oar/AB/i-24

ay @

[Space Above This Line For Recording Datal
2CAt

ize DEED OF TRUST 202
(42/3 176.

DEFINITIONS
Words used in multiple sections of this document are defined below und other words are defined

in Sections 3, 11, 13, 18, 20 and 21. Certain rules regarding the usage of words used in this
document are also provided in Section 16.

(A) "Security Instrument” meuns this document, which is duted MARCH 14, 2007
together with all Riders to this document.

(B) “Borrower” is STEFANIE NAIFEH AND, DUSAN RISTIC, WIFE AND HUSBAND

Borrower's address is 49 ZOE STREET #18, SAN FRANCISCO, CA 94107
. Borrower is the trustor under this Security Instrument.
(C) “Lender” is WASHINGTON MUTUAL BANK, FA

Lenderisa FEDERAL SAVINGS BANK
organized and existing under the jaws of THE UNITED STATES OF AMERICA

CALIFORNIA ~ Single Family - Fannie Mae/Freddie Mae UNIFORM INSTRUMENT Form 3006 1/04

ZBy,-BIca) (e207)

pase tot 18 initiate Al 4, D/
VMP MORTGAGE FORMS - (800/821-7291 woLender's address is 2273 N. GREEN VALLEY PARKWAY, SUITE 14, HENDERSON, NV
89014
Lender is the beneficiary under this Security Instrument.

(D) “Trustee” is CALIFORNIA RECONVEVANCE COMPANY, A CALIFORNIA CORP

{R) "Note" means the promissory note signed by Borrower and dated MarcH 14, 2007
The Note states that Borrower owes Lender F ive HUNDRED THOUSAND AND 00/100

Dollars
(US. § 500,000.00 ) plus interest. Borrower has promised to pay this debt in regular
Periodic Payments and to pay the debt in full not later than APRIL 01, 2037 7
(F) “Property” meuns the property that is described below under the heading “Transfer of Rights
in the Property,”
({G) “Loan” means the debt evidenced by the Note, plus interest, any prepayment charges und late
charges due under the Note, and all sums due under this Security Instrument, plus interest.
(1) “Riders” means all Riders to this Security Instrument that are executed by Borrower. The
following Riders are to be executed by Borrower (check bax as applicable):

Adjustable Rate Rider [Xj Condominium Rider Second Home Rider
Batioon Rider Planned Unit Development Rider Other(s) (specify)
1-4 Family Rider Biweekly Payment Rider

(1) "Appticable Law" means all controlling applicable federal, state and local statutes,
regulations, ordinunces and administrative rules and orders (that have the effect of law) as well as
all applicable final, nonappeslable judicial opinions,

Q) “Community Association Dues, Fees, and Assessments” means all dues, fees,
assessments and other charges that ure imposed on Borrower or the Property by a condominium
association, homeowners essocistion or similar organization.

(K) "Electronic Funds ‘Transfer" means any transfer of funds, other than a transection
originated by check, draft, or similar paper instrument, which is initiated through an electronic
terminal, telephonic instrument, computer, or magnetic tape so as to order, instruct, or authorize
a financial institution to debit or credit an account. Such term includes, but is not limited to,
point-of-sale transfers, automated teller machine transactions, transfers initiated by telephone, wire
transfers, and autornated clearinghouse transfers.

(1) “Escrow Items” meuns those items that are described in Section 3.

{M) “Miscellaneous Proceeds" means any compensation, settlement, award of damages, or
proceeds paid by any third pafty {other than insurance proceeds paid under the coverages
described in Section 5) for: (i) damage to, or destruction of, the Property; (ii) condemnation or
other taking of all of any part of the Property; (iii) conveyance in lieu of condemnation; or (iv)
misrepresentations of, Or omissions as to, the value andlor condition of the Property,

(NX) "Mortgage Insurance” means insurance protecting Lender agsinst the nonpayment of, or
default on, the Loan.

(OQ) “Periodic Payment" means the regularly scheduled amount due for (i) principal and
interest under the Note, plus (ii) any amounts under Section 3 of this Security Instrument,

{P) "RE.SP.A” means the Real lstate Settlement Procedures Act (12 U.S.C, Section 2601 et seq.)
and its implementing regulation, Regulation X (24 CI.R. Part 3500), as they might be amended
from time to time, or any additional or successor fegistation of regulation that governs the same
subject matter. As used in this Security Instrument, "RESPA" refers to alt fequirements and

EQ-BICA) «zor rape 2 ot 18 D a 4 dy Ferm S005 1/01restrictions that are imposed in regard to a “federally related mortgage loan” even if the Loan
does not qualify as "federally related mortgage loan” under RESPA,
(Q) "Successor in Interest of Borrower” means any party that has taken title to the Property,

whether or not that party has assumed Borrower's Obligations under the Note and/or this Security
Instrument.

TRANSHER OF RIGHTS IN THE PROPERTY

‘This Security Instrument secures to Lender: (i) the repayment of the. Loan, and all renewals,
extensions and modifications of the Note; and (ii) the performance of Borrower's covenunts and
agreements under this Security Insttument and the Note. For this purpose, Borrower irrevocably
Grants and conveys to ‘Trustee, in trust, with power of sale, the following described property
lovated in the county of SAN FRANCISCO :
(Type of Recording Jurisdiction) {Name of Recurding Jurisdiction
THE LEGAL DESCRIPTION IS ATTACHED HERETO AS A SEPARATE EXHIBIT
AND |S MADE A PART HEREOF,

Parcel ID Number: which currently has the address of
49 ZOE STREET #15 oe (Street)
SAN FRANCISCO (City California 94107 (zip Cadel

(Property Address”):

TOGETHER WITH all the improvements now or heresfter erected on the property, and all
easements, appurtenances, and fixtures now or hereafter a part of the property, «All replacements
and additions shall also be covered by this Security Instrument, All of the foregoing is referred to
in this Security Instrument as the "Property,”

BORROWER COVENANTS that Borrower is lawf ully seised of the estate hereby conveyed
and has the right to grant and convey the Property and that. the Property is unencumbered, except
for encumbrances of record, Borfower watrants and will defend generally the title to the Property
against all claims and demands, subject to any encumbrances of record,

THIS SECURITY INSIRUMENT combines uniform covenants for netional use and
non-uniform covenants with limited variations by jurisdiction to constitute a uniform security
instrument covering real property.

UNIFORM COVENANTS, Borrower and Lender covenant and agree us follows;

1. Payment of Principal, Interest, Escrow Items, Prepayment Charges, and late
Charges. Borrower shall pay when due the principal of, and interest on, the debt evidenced by the

aman L/
ZB, -BICA) «0207 rage et 18 9 / J Form 8006 1/01
LgNote and any prepayment charges and late charges due under the Note, Horrower shell also pay
funds for Escrow Items pursuaft to Section 3. Payments due under tho Note and this Security
Instrument shall be made in U.S, currency, However, if any check or other instrument received by
Lender as payment under the Note or this Security Instrument is returned to Lender unpaid,
Lender may require that any or all subsequent payments duc under the Note and this Security
Instrument be made in one or more of the following forms, as selected by Lender; (8) cash; (b)
money order, (c) certified check, bank check, treasurer's check or cashier's check, provided any
such check is drawn upon an institution whose deposits are insured by s federal agency,
instrumentality, or entity; or (d) Electronic Funds Transfer,

Payments are deemed received by Lender when received at the location designated in the
Note or at such other location as may be designated by Lender in accordance with the notice
Provisions in Section 15, Lender may return any payment or partial payment if the payment or
partial payments ure insufficient w brifg the Loan current, Lender may accept any payment or
Partial payment insufficient to bring the Loan current, without waiver of any rights hereunder or
Prejudice to its rights to refuse sich payment or partial payments in the future, but Lender is not
obligated 10 apply such payments at the time such payments are acvepted. If each Periodic
Payment is applied us of its scheduled due date, then Lender need not pay interest on unapplied
funds. Lender may hold such unapplied funds until Borrower makes payment to bring the Loan
current, If Borrower does not do so within w reasonable period of time, Lender shall either apply
such funds or return them to Borrower. If not applied earlier, such funds will be applied to the
outstanding principal balance under the Note immediately prior to foreclosure. No offset or claim
which Borrower might have now or in the future against Lender shall relieve Borrower from
making puyments due under the Note and this Security Instrument or performing the covenants
and agreements secured by this Security Instrument,

2, Application of Payments or Proceeds, Except as otherwise described in this Section 2,
all payments accepted end applied by Lender shall be applied in the following order of priority:
(a) interest due under the Note; (b) principal due under the Note; (c) amounts due under Section
3, Such payments shall be applied to each Periodic Payment in the order in which it became due.
Any remaining amounts shall be applied first to late charges, second to any other amounts due
Under this Security Instrument, and then to reduce the principal balance of the Note,

If Lender receives a payment from Borrower for a delinquent Periodic Payment which
includes a sufficient amount wo Pay eny late charge due, the payment may be applied to the
delinquent payment and the late charge. If more then one Periodic Payment is outstanding, Lender
may apply any payment received from Borrower to the repayment of the Periodic Payments if,
and to the extent that, each payment can be paid in full, ‘To the extent that any excess exists after
the payment is applied tw the full payment of one or more Periodic Payments, such excess may be
applied to uny late charges duc, Voluntary prepayments shall be applied first to any prepayment
charges and then as described in the Note.

Any application of payments, insurance proceeds, or Miscellaneous Proceeds to Principal due
under the Note shall not extend or postpone the due date, or change the amount, of the Periodic
Payments,

3. Funds for Lscrow [tems Borrower shall pay to Lender on the day Periodic Payments
ae due under the Note, until the Note is paid in full, @ sum (the “Funds*) to provide for payment
of amounts due for: (a) taxes and assessments and other items which can attain priority over this
Security Instrument lien of encumbrance on the Property; (b) lewsehold payments or ground
rents on the Property, if any; (c) premiums for any and all insurance fequired by Lender under
Section 5, and (d) Mortgage Insurance premiums, if any, or any sums payable by Borrower to
Lender in licu of the payment of Mortgage Insurance premiums in accordance with the provisions
of Section 10, These items are called "Escrow Items." At origination or at any time during the

ZB_-8ICA) 207. cove 808 18 D 0 6 ts Ly Form 3005 1/01term of the Lost, Lender may require that Community Association Dues, Mees, and Assessments,
if any, be escrowed by Borrower, and stich dues, fees and assessments shall be an Escrow Item,
Borrower shall promptly furnish to Lender all notices of amuunts to be paid under this Section.
Borrower shall pay Lender the Funds for [scrow Items unless Lender waives Borrower's
obligation to pay the V'unds for any or all Escrow Items. Lender may waive Borrower's obligstion
to pay to Lender Funds for eny or all Escrow Items at any time, Any such waiver may only be in
writing, In the event of such waiver, Borrower shall pay directly, when and where payable, the
amounts due for any biscrow Items for which payment of Funds has been waived by Lender and,
if Lender requires, shall furnish to Lender receipts evidencing such payment within such time
period us Lender may require. Borrower's obligation to make such payments and to provide
receipts shall for all purposes be deemed to be a covenant and agreement contained in this
Security Instrument, as the phrase "covenant and agreement” is used in Section 9. If Borrower is
obligated to pay Escrow Items directly, pursuant to @ waiver, and Borrower fails to pay the
amount due for an Escrow Item, Lender may exercise its sights under Section 9 and pay such
amount and Borrower shall then be obligated under Section 9 to repay to Lender any such
amount. Lender may revoke the Waiver as w any or all Escrow Items at any time by @ notice
given in accordance with Section 15 and, upon such revocation, Borrower shall pay to Lender all
Funds, and in such amounts, that are then required under this Section 3,

Lender may, at any time, collect and hold Funds in an amount (a) sufficient to permit
Lender to apply the Funds at the time specified under RESPA, and {b) not to exceed the
maximum amount a lender can require under RIISPA. Lender shall estimate the amount of Funds
due on the basis of current data and reasonable estimates of expenditures of future Escrow Items
or otherwise in accordance with Applicable Law.

The Funds shall be held in an institution whose deposits are insured by 8 federal agency,
instrumentality, or entity (including Lender, if Lender is en institution whose deposits are so
insured) or in any Federal Home Loan Bank, Lender shall apply the Funds to pay the Escrow
Items no later than the time specified under RESPA, Lender shall not charge Borrower for
holding and applying the Funds, annually ansly'zing the escrow account, or verifying the Escrow
Items, unless Lender pays Borrower interest on the Funds and Applicable Law permits Lender to
make such » charge. Linless at agreement is made in writing or Applicable Law requires interest
to be paid on the Funds, Lender shall not be required to pay Borrower any interest or earnings on
the Funds, Borrower and Lender can agree in Writing, however, that interest shall be paid on the
Funds. Lender shall give to Borrower, without charge, an annual accounting of the Funds as
required by RESPA.

If there is a surptus uf Funds held in escrow, as defined under RESPA, Lender shall account.
10 Borrower for the excess funds in accordance with RESPA. If there is a shortage of Funds held
in escrow, as defined under RESPA, lender shall notify Borrower as required by RESPA, and
Borrower shall pay to Lender the amount necessary t0 make up the shortage in accordance with
RFSPA, but in no more than 12 monthly payments. If there is a deficiency of Funds held in
escrow, as defined under RESPs4, Lender shall notify Borrower es required by RESPA, and
Borrower shall pay to Lender the amount nevessary to make up the deficiency in accordance with
RESPA, but in no more than 12 monthly payments,

Upon payment in full of all sums secured by this Security Instrument, Lender shall promptly
refund t Borrower any Funds held by Lender.

4. Charges; Liens. Borrower shall pay all taxes, assessments, charges, fines, and impositions
attributable to the. Property which can attain priority over this Security Instrument, leasehold
Payments or ground rents on the Property, if any, and Community Association Dues, Fees, and
Assessments, if any. To the extent thet these items are Lacrow Items, Borrower shall pay them in
the manner provided in Section 3,

initiates, /
ZD,-6ICA) coro Pane 6 of 19 Dp £ b Form 3006 1/01Borrower shall promptly discharge any lien which has priority over this Security Instrument
unless Borrower: (4) agrees in writing to the payment of the obligation secured by the lien in a
manner acceptable to Lender, but only so long as Borrower is performing such agreement; (b)
contests the lien in good faith by, or defends against enforcement of the lien in, legal proceedings
which in Lender’s opinion operate to prevent the enforcement of the lien while those proceedings
are pending, but only until such proceedings are concluded; or (c) secures from the holder of the
lien an agreement satisfactory to Lender subordinating the lien to this Security Instrument, If
Lender determines that any part of the Property i is subject to a lien which can attain priority over
this Security Instrument, Lender may give Borrower a notice identifying the lien. Within 10 days
‘of the date on which that notice is given, Borrower shall satisfy the lien or take one or more of
t