1

WHAT IS NEEDED TO BEGIN THE THREE ARCK MORTAGE AMELIORATION PROCESS?

A Cashier's Check or Wire-Transfer in the amount of $7,995 made payable to Three Arck Capital Group, LLC(note that a personal check may be used, although doing so can hold up the entire process for two weeks ormore while waiting for out-of-state bank clearance).

This fully refundable sum will become your Contingency Fund in your title-holding inter vivos trust in whichyour property will be vested and protected for the duration of our agreement. Your check and all requireddocuments will be received and reviewed by NARSCor, LLC prior to forwarding by Overnight Mail to ThreeArck Capital for handling

Application: The attached Application and Questionnaire - signed and dated

Picture ID: A clear copy of your valid picture I.D. (one for each person listed on the mortgage or property'stitle)Social Security Numbers: Social Security numbers for each person on title (just the number, not necessarily acopy of anything)Promissory Note and Deed: A clear copy of the Promissory Note and Deed of Trust, or Promissory Note andMortgage, assuring that we have the property's Tax Identification number (APN, PIN, etc.) We need only thefirst page of the Mortgage with the instrument number as filed with the County Recorder)Original Settlement Statement (HUD 1): A clear copy of the original Settlement Statement from settlementofficial (title company, escrow company, closing attorney, etc.): must include name and addresses of thecompany and names and titles of all persons involved in the closing process and their respective titlesLegal Description: Full legal description of property (will be usually be on the note, the trust deed, grantdeed, warranty deed, bargain and sale deed, etc…. and or on your mortgage)Payment Statements: Current payment statements from each lender of record, indicating to whom you payyour mortgage payments (some lenders will have transferred the mortgage to a secondary or tertiarymortgage company or bank following your purchase settlement (escrow). Please provide name, address,phone number and contract person for each onePOA’s (4 Original Powers of Attorney): Four (4) originals independently signed and notarized ("wet ink"originals). Please have this form formally notarized with a red right thumb print (if possible…'not mandatoryor available in some states: although a good idea may be to take a red ink pad with you when you go to thenotary and have them give you a second notary form imprinted with the red ink…the color prevents forgeryby duplication).

SEND ALL DOCUMENTS WITH THE CASHIER'S CHECK [FOR $7,995 MADE OUT TO THREE ARCK CAPITAL] TO:

NARSCOR, LLC C/O:NORTH AMERICAN RLTY SERVICES, INC.6520 PLATT AVENUE #548WEST HILLS, CA 91307

*All documents except for the check and the four original Powers of Attorneycan be Emailed or Faxed (But for POA's and Check, Overnight Mail is Preferable)[EMAIL BG@LANDTRUST.NET, OR FAX TO 1 818 610 8805]

IMPORTANT NOTE: IF MONEY IS WIRED TO THREE ARCK, PLEASE PROVIDENARSCOR, LLC WITH A CLEAR COPY OF THE WIRE TRANSFER INSTRUCTIONS.(Please DO NOT wire moneys unless asked to do so by NARSCOR forexpediency's sake):

Wire Transfer Instructions, should wiring become necessaryFIFTH-THIRD BANK, LINDEN/CLEVELAND BRANCH

3407 CLEVELAND AVE., COLUMBUS, OH 43224PHONE: (614) 262-4888;

ACCT#7282038517; RT. #042 000 314;ACCT. NAME: GARY JONES, 3ARCK CAPITAL, L.L.C.

2

THREE ARCK CAPITAL GROUP, LLC

Represented by NARSCOR, LLC

Mortgage Amelioration Package

Introduction

Thank you very much for considering Three Arck Capital Group concerning assistance with your current

mortgage arrangement. Please know with certainty that we will exert our best efforts in seeking to ameliorate the

conditions under which you presently find yourself (i.e., over encumbrance, exorbitant payments and interest demands,

hopelessness and/or the imminent threat of losing your home).

The fundamental principal under which we work is the "educated supposition" that a preponderance of real

estate loans having been originated by the banking industry in the last several years were, at least in part, predatory in

nature and fraught with myriad blatant illegalities, errors and omissions in their construction and execution. We find as

well that many of the documents which purport to secure these alleged loans with ownership in your real estate, have

been lost or destroyed in favor of creating the more convenient and legally protective electronic mortgage recording

system (MERS): thereby rending certain of the documents largely unavailable and unenforceable under the law. Our

primary contention is that a copy of a negotiable instrument is not a valid instrument, irrespective of the production of

such items as "Certified Copies" or "Affidavits of Lost Document" (i.e., a certified copy of a dollar bill will obviously not

buy you a dollar's worth of anything; and an affidavit saying your dog ate your dollar bill won't buy anything either).

During the examination (forensic auditing) phase of your transaction, we generally discover that no "loan" was

actually made by the originating lender. We find instead that your signature and averred obligation to pay was in fact

sold for a large profit well before your "loan" documents were presented to you; and that in fact no money was ever

expended by your "lender" on your behalf: thereby inferring that your signature did in effect retire your so-called

mortgage obligation to that “lender” in-full well before your payment-stream was established.

Since its inception, your alleged loan has most likely been sold and re-sold several times, then fractionalized into

small increments and used to securitize international stock market purchases (mostly by foreign investors, who, at the

time, had an exaggerated faith in US real estate, but who long-since have accepted their losses in the stock market). For

the most part, these folks have moved on and may have no expectation of recompense of any kind. Ergo, one might ask:

"So where does all the money go when I am evicted for non-payment and my bank sells the property for top dollar?" The

answer lies with each party in the line succession: i.e., those who purchased, re-sold and fractionated your loan by

including it in a multi-million (or billion) dollar bundle of other mortgages with which to make certain stock purchases

more attractive to investors. Each party in the queue were long ago paid far more from their acquisition of your loan

than they paid for it, and in effect will have lost virtually nothing as a result of your inability to pay.

Please note that as your own scenario plays out over the next few months (each transaction is different), you

may need to make some tough decisions as to how determined you are about keeping your home in the face of certain

baseless demands that you could receive from involved parties. Bank officials and their legal advisors can be very

threatening and intimidating. You must remain aware of that fact, and be ready and willing to stand up to them, (albeit,

always politely) refusing to do their bidding or allowing them into your home. If anyone fails to leave your property when

asked to do so, they are in violation of laws relative to trespassing and can be arrested.

Above all, remember, that possession and control of the property remains completely yours until you have been

successfully evicted by ue process of law. Eviction notices and Unlawful Detainer actions have no force or effect relative

to your need to possess and use the property, until you have been successfully sued and ruled subject to dispossession

and eviction.

The Very Best of Success to You

Bill J. Gatten

Bill J. Gatten, Managing Member, NARSCor, LLC, a Nevada Limited Liability Company,

3

STEPS IN THE PROCESS

STEP ONE (THE TRUST): Once you have determined that you would like to proceed with the Mortgage

Amelioration Process, you will be required to vest the title of your property with a trustee for a Title-Holding

Beneficiary-Directed, Third-Party Land Trust, naming yourself (and your spouse, if applicable) as the sole

beneficiary/ies. Following creation of the trust, the trusteeship will be assigned to Equity Holding Corporation of

Midpines California, a bonded, licenced, non-profit third-party corporate trustee that holds title to many millions

of dollars worth of real estate in trusts across the US, since 1997. A sample of the trust Agreement is included in

this package for your review and acceptance.

STEP TWO (THE LEASE AGREEMENT): Following the recording of your deed transfer to the trustee nominee, you

will be asked to execute a Triple-Net Occupancy (Lease) Agreement which solidifies your full right to possession

and occupancy, while shielding the property’s title from public scrutiny. This document allows you to continue

availing yourself of all of the Fee-Simple rights in real estate ownership and possession, including: Use,

Occupancy, Income Tax Write-Off, Appreciation, Equity Build-Up from any loan principal reduction, quiet title and

marketability…as well as the right to let or sub-lease (be advised: Don't claim tax deductions for any mortgage

interest not paid during, or prior to, the ThreeArck process).

STEP THREE (THE ASSIGNMENT): The next documents to be executed are the related Assignment of Beneficiary

Interest and the Beneficiary Agreement (the latter being somewhat analogous to a Partnership Agreement in that

it delineates each beneficiary's respective benefits and responsibilities relative to the property and the trust.

Each of these documents will explain the distribution of net proceeds at the trust's termination, which proceeds

are to be shared by the co-beneficiaries in accordance with their respective percentages of beneficiary interest

held in the trust (i.e., 100% of the starting equity to co-beneficiaries, and 100% of any equity acquired in the

future by means of appreciation, principal reduction to you, the settlor beneficiary).

STEP FOUR (THE AMELIORATIONPROCESS): Following completion and execution of the related documents, the

Mortgage Amelioration process will commence and the "waiting period" will begin. On average it can take from

three to five or six months (sometimes more) for Three Arck to have expunged all existing mortgage claims and to

have readied the property for new asset-based, low LTV (loan to value) re-financing.

STEP FIVE (NEW LIEN): Upon full reconveyance of title by the lender following elimination of the existing

encumbrances, the property will be temporarily removed from the trust in Escrow in order to enable a new lien

to be placed against the property for its verifiable (true) value. It's at that point that you will be required to

obtain replacement financing in the amount of no less than fifty-percent of the new lender's determination of

value. From that point forward your payments will be comprised of ordinary property tax, applicable insurance

premiums, the fifty-percent LTV loan obligation and a nominal monthly trustee fee paid to Equity Holding

Corporation: I.e., 0.5% to 1% per-year of the agreed-upon value of the property at the inception of your new loan

to a maximum of $140 p/mo and a minimum of $39 p/mo, with the first year's trustee fee and trust transfer and

set up costs (the new NEHTrust™ Transfer) being fully funded within the new loan.

Please Note: Upon obtaining your new loan following the removal of you existing mortgage, any amount of the

replacement loan that is above 50% of the property's value will be paid to your trust’s co-beneficiaries, and shall

accrue to you as a dollar for dollar, no intrest, buy-down (purchase) of equity in the property.

4

MORTGAGE AMELIORATION

APPLICATION AND AGREEMENT

The person/s completing this form declare/s under penalty of law that all information submitted in

preparation for an attempted mortgage amelioration is true and accurate to the best of their

knowledge.

IMPENDING SALE DATE: ___/___/___ County: __________ State: ________Day of Week:_________

Property Address: __________________________________________________________________

Owner 1 Full Name: _____________________________________So. Sec #:_____________________

Driver’s License#:________________________State:_________ Email: _______________________

Phone: ____________________ Mobile: _____________________ Fax: ______________________

Owner 2 Full Name: ______________________________________So. Sec. #:___________________

Driver’s License#:________________________State:_________ Email:_______________________

Phone: _____________________ Mobile: ____________________ Fax: ______________________

Is the property occupied? Y / N If occupied, Homeowner or tenant? ________________________

How long has the subject property been owned by applicant? ________Is the property listed? Y / N

Who is the FIRST mortgage holder?_____________________________________________________

What was the original date of the FIRST mortgage? ________________________________________

Approximate balance of the FIRST mortgage? $__________________ Mo/Pmt? (P&I) $___________

Is this an FHA or VA loan?_____________________________________________________________

Is the FIRST mortgage adjustable, graduated or a fixed rate loan? Adjustable _____ Fixed_____

Are payments on the FIRST mortgage current? Y/N If No, how many months in arrears? ______

Is there a second mortgage? Y/N

Who is the 2nd mortgage holder?______________________________________________________

What was the original date of the 2nd mortgage? _________________________________________

Approximate balance of SECOND mortgage? $________________ Mo/Pmt? (P&I) $_____________

Is this an FHA or VA loan? Y.N If Yes, which one? _________________________________________

Is the SECOND mortgage adjustable, graduated or fixed rate? Adjustable _______ Fixed_______

Are the SECOND mortgage payments current? Y/N If No, how many months in arrears? ________

Property Taxes? (Annual amount) $_____________ Hazard Insurance? Monthly: $_______________

Is there any Private Mortgage Insurance (PMI) Mo/Pmt) $_____________ Name of PMI Carrier (company, bank,

etc)________________________________________________________________________________________

5

Is property owner aware of any other encumbrances or clouds re. non-mortgage liens against the property Y / N

If other liens explain.__________________________________________________________________________

Has the homeowner received notice of Foreclosure Sale Date? Y / N If yes, what is the scheduled date ?________

If Has a sale date ever been postponed? Y / N If yes, How many postponements have there been?___________

Has the property owner ever filed for a bankruptcy? Y/N If Yes, Chapter thirteen pr seven ?________________

Date of the bankruptcy filing? _____________ Date that bankruptcy was fully discharged?__________________

Has the property owner petitioned for a loan modification or offer and compromise (short sale)? Y/N If yes, what

was the date (month/year) of the petitions?__________________ Was such petition accepted by the lender? Y/N

Has the owner ever received any approval or rejection letter regarding loan modification or short sale? Y/N

If yes, what was the lender's decision, and date of the acceptance or rejection from the lender?

_____________________________________________________________________________________________

Is there a Homeowners Association? Y/N …If Yes, what is the address?

1st HOA_______________________________________________________Phone_______________

2nd HOA______________________________________________________Phone_______________

By my signature below, I acknowledge a clear understanding that there are no guarantees being made relative to

efforts to extinguish the mortgage obligations relative to the subject property on the basis of fraud and deception

on the part of the lenders in question. I further agree to hold the publisher and preparer of this document, and all

related parties free and harmless from future claims of unsubstantiated impropriety, errors or omissions relative to

attempts to assist in bringing about the removal or modification of all mortgage liens relative to the subject

property.

____________________________________________________________ ______________

Signature Date

____________________________________________________________

Print Name

____________________________________________________________ ______________

Signature Date

____________________________________________________________

Print Name

6

RE/ THE EQUITY HOLDING TRUST TRANSFER™

Please complete the following form (next page) with the pertinent information required for the

establishment of your Title Holding Asset Protective Land Trust:

The Trust Questionnaire and Fact Sheet - Provides North American Realty Service, Inc. with the data necessary for

creating the land trust which is the underpinning of the Three Arck Capital Group, LLC program. Such trust will be in your

name as beneficiary/s, and after the conveyance to your trustee is recorded the assignment of Beneficiary Interest will be

effected.

The Title-Holding Land Trust - This is the document affirming that the title to your property is vested in the third-party

corporate trustee for a specific term of years in correlation with the term of your asset-based, 50% LTV re-financing at

inception

The Trust's Assignment of Beneficiary Interest - This is the document that asserts each participant's percentage of

beneficiary interest held in the title holding trust. It is this percentage that is used to calculate the parties' respective

profit sharing at the trust's termination, upon the sale or other disposition of the property.

The Trust's Beneficiary Agreement - This document sets out the respective benefits, obligations and responsibilities of

each participant throughout the trust term, and outlines the first, second and third right of refusal relative to acquisition

of full ownership of the property at the trust's termination at the then fair market value less any moneys owed to the

purchaser as is stipulated in the beneficiary arrangement).

The Trust's Triple-Net Occupancy Agreement - This agreement (analogous to a Lease), along with the assignment of

Beneficiary Interest and Beneficiary Agreement is what allows you, as the resident beneficiary access to all the rights of

possession and occupancy of the property throughout the trust period. Further, it outlines your monthly payment and

general maintenance and repair responsibilities, along with terms for eviction and dispossession should there arise an

uncured default in your obligation during the term of the agreement.

The Trust's External Rider Agreement - This document sets out any additional provisions or terms that are required and

mutually agreed-to by parties, but that are not included in the forgoing highly structured trust documentation.

Requisite Notices and Exculpatory Releases and Disclosures - There are a few releases and hold-harmless issues that you

must agree to prior to full execution of the subject transaction, i.e., relative to certain unforeseen circumstances that may

occur in the future that are not caused by, or the responsibility of, the preparers of documentation or other principals and

participants in the transaction.

North American Realty Services, INC.

Bill J. Gatten

Bill J. Gatten, CEO

7

TRUST SET-UP INFORMATIONName W/MiddleInitial Soc. Sec. No.

Drivers Lic. No

Spouses NameW/Middle Initial Soc. Sec. No.

Drivers Lic. No.

Best phone Alternate Phone Email Address Cell if different UPCOMING SALE(AUCTION) DATE ___/__/_____

Exact Title Vesting asit Appears on yourTransfer Document(Deed)

EXAMPLE:

Mr. and Mrs. [….] as joint tenants, tenants in common, tenants by the entirety, etc.Mr. or Ms. [….] a single man/womanMr. or Mrs. [….] a married man/woman as his/her sole and separate property

XYZ Corporation, etc.

Property Address Street No. City State and Zip County

Best estimate of Current Resale Value[Amount to be adjusted by appraisal upon release of your mortgage] $

Have to tried a short sale? Yes [ ] No [ ] Loan Modification? Yes [ ] No [ ]Deed in Lieu of Foreclosure? Yes [ ] No [ ] Approved for any? Yes [ ] No [ ]

Legal Descriptionwith APN,, Tax ID, TaxKey Code, etc.

1st Mortgage Holder

Name Street No. or POB City State and Zip

Loan Number Amount of 1st Loan 1st Pmt (incl tx & Ins) Amount in Arrears Total Amount owed

2nd

Mortgage Holder

Name Street No. or POB City State and Zip

Loan Number Amount of 2nd Loan 2nd Pmt (incl tx & Ins) Amount in Arrears Total Amount owed

3rd

Mortgage Holder

Name Street No. or POB City State and Zip

Loan Number Amount of 3rd Loan 3rd Pmt (incl tx & Ins) Amount in Arrears Total Amount owed

Trustee Equity HoldingCorporation,

a California Non-Profit Benevolent501C3 company

Midpines, California Phone (toll free)1 (800) 646 3445

Email - Tom@Selleroans.com

Beneficiaries 3Arck Capital LLC

As to a 40%Beneficiary Int.

IDM Corporation

As to a 20%Beneficiary Int.

NARSCor, LLC

As to a 40% BeneficiaryInt. (subject to sharew/other participants)

Name

As to a _____%Beneficiary Int.

Name

As to a _____% Beneficiary Int.

The property is: Occupied

Yes No

Vacant

Yes No

A rental

Yes No

Approx Rent Income

Yes No

My current residence

Yes No

Prop Tax p/mo Amt of Haz Ins p/mo Amt of HOA p/moAmt of EQ/HurricaneIns. p/mo Amt Utilities p/mo Other monthly costs

Three ARCK

THE TRUST

The SettlorOwner of record (YOU)

The Trustee

(Equity Holding Corp.)

The BeneficiariesStarting Equity Future Appreciation Tax Benefits Rental Income Mtg Principal Pay Down

IDM Corporation - 20% 0 0 0 0

NARSCor LLC - 40% 0 0 0 0

3ARCK Capital, LLC - 40% 0 0 0 0

You - 0 100% 100% 100% 100%

8

Capital Group, LLC

Mortgage Review and Restructuring

Dear Property Owner(s),

It is our distinct pleasure to work with you and the named mortgage lender/s relative toreviewing and rectifying any shortcomings relative to your arrangement with them (re.indications of violations or abridgments of the requirements of the Federal Truth in Lending Act(TILA), the Real Estate Settlement Procedures Act (RESPA), the Homeowner's EquityProtection Act (HOEPA 12 C.F.R. § 226.32 (c)) as well as violations re. the Federal FraudEnforcement and Recovery Act (18 USC § 20).

Random issues to be explored by Three Arck Capital Group LLC include, but are by nomeans limited to, potential for the following:

Predatory or abusive lending practices i.e., whereby mandated protections have been side-stepped or ignored

The lender's possession of the proper legal forms and documents for initiating foreclosure

Unjust defects in (or clouds upon) the property's title that are brought about by a lender's action

Misrepresentation of the inclusion of the credit insurance in the loan (implying thatthe insurance is free by telling the borrower that it "comes with the loan")

Illicit "negative amortization" option plans that are unfair or deceptive (re. , 16C.F.R. Part 425)

Failure to rebate accrued interest on forgone insurance premiums

Failure to refund financed "points" charged on insurance premium, or the accruedinterest on those points.

Failure to consider standard indicia of the borrower's ability to repay the loan(current and expected income, other outstanding debts, and employment status).

Failure to consider whether the borrower had sufficient residual income afterrepayment of the obligation to meet ordinary living expenses (Re. U.S. v. DeltaFunding Corp., Civ. Action No. 00 1982 (E.D.N.Y. filed March 30, 2000).

Failure to include a contractual comment providing that in evaluating a borrower'sability to repay an adjustable rate mortgage, the creditor may not use initial ratesand monthly payments.

Failure to require (or advise) borrowers to use reasonable assumptions re. monthlypayment adjustments when evaluating their own ability to pay.

Failure to provide mandatory written disclosures before consummation of theacceptance of the mortgage, including: the amount financed, the finance charge, theannualized percentage rate (APR), and the total of all payments (See 12 C.F.R.§ 226.17-18 of Reg. Z pertinent to closed-end credit structuring.

9

Intent…

In this transaction, it is the express intent of Three Arck Capital Group, LLC to exertits best efforts to seek out the above described abridgments with a reasonable expectation ofreplacing your property's current financing arrangements with a superior program in termsof overall debt obligation and monthly payments.

1. Upon the elimination of the property's presently existing mortgage, should we have beensuccessful in that regard, you will be asked to obtain refinancing at approximately fifty percent(50%) of the property's verified true value at that time, with such cash proceeds being tenderedto Three Arck Capital Group, LLC in one lump sum.

2. Following the above, the remainder of all equity in the property may be acquired by you on adollar-for-dollar basis via elevated monthly payments, wholly at your own discretion, and ofany amount you might choose without application of interest. Such additional payments theThree Arck Capital Group LLC or its assigns shall not contain interest charges, late fees orother assessments. At any time during the transaction you may increase the amount of youradditional month payment or discontinue making it at any time you would so choose.

3. Should you opt to remain in the property following the restructuring of the financing on theproperty, payment of all property taxes and insurance shall be solely your obligation. Do notehere than only the property tax amount and the interest being paid on your new first mortgageare deductible under current IRS regulations.

4. As you continue occupying the property (should that be your choice), any equity accrued byway of the property's appreciation in value or from mortgage principal reduction as of the dateof the inception of our re-financing arrangement, shall accrue only to you. Our claim to equityis limited that that amount between your new first mortgage and the true market value of theproperty at the inception of our agreement.

Except for the referenced Power of Attorney, all required documents can be photocopied, scannedand emailed as attachments to bg@landtrust.net with the phrase, "Mortgage Replacement" appearingin the subject line, whereupon they will be promptly forwarded to the pertinent parties at Three ArckCapital Group, LLC, c/o Mr. Gary Jones in Columbus, Ohio.

10

SOME OF THE MOST COMMONLY ASKED QUESTIONS:Q: How much will this cost me?

A: $7,995 preferably in the form of a cashiers or wire preferably to expedite the process

Q: How much Equity in the property will I have at start?

A: Effectively none on properties with value below $250,000; although, on larger properties we will arrange

to leave no less than from five to ten percent(5% to 10%) “new” equity in the property for the owner of

record -- As per the asset-based financing appraisal, such appraisals are typically very conservative and will

most often result in value findings considerably lower than a standard bank appraisal might be; thereby,

most often resulting in an effective equity position for the owner of record (you): i.e., Equity being that

amount represented by standard Fair Market Value assessment, less the amount of the Asset-Based

lender's appraisal.

Q: How much of any future appreciation will I be entitled to?

A: All of it (100%). You will be entitled to 100% of all equity build-up from future appreciation and loan

principal reduction over the term of the subject Agreement.

Q: How much Income Tax Write-off do I get? (I.e., Will I be able to take full income tax write-off for

mortgage interest and property tax expenditures?)

A: Yes (all of it…100%). Under IRC 163(h)4(D) a qualified beneficiary in a title-holding ("Illinois type") land

trust is treated as the owner of the property by the IRS relative to active income tax deductions for

mortgage interest and property tax expenditures (See TC Memo 2010-72 Adams v. IRS)

Q: If the property is a rental property, how much of the rental income do I get during the course of our

agreement?

A: All of it (100%). Three Arck Capital Group LLC and its assigns receive none of your rental income, or any

other business income that you might derive by virtue of your ownership position within the trust in whose

trustee the property is vested during the course of the Agreement.

Q: Is there a way I can have all of the equity in the property for myself?

A: Yes. NARS.LivingFreeandClear.com, a Portland, Oregon based company sells a "training kit" replete with all

appropriate documentation designed to allow a person to challenge their lender for the release of the

presumably fraudulent mortgage contact (www.livingfreeandcler.com). Or…under the ThreeArck program,

you can acquire all equity held by the trust's co-beneficiaries on a dollar-for-dollar basis over the term of

the agreement without interest, and without penalties for discontinuing such "over-payment."

Q: Is there a guarantee that efforts by Three Arck Capital Group will work for me?

A: No. No such guaranty can ever be made; however, you are assured of a full refund of any moneys paid in

by you to Three Arck, should such efforts fail.

11

Q: Will the attempt to free my property from its current mortgage/s damage my credit?

A: Not normally, but there can never be a wholly accurate expectation of what any lender might or might not

attempt to do with regard to one's challenging the legality and validity of their mortgage loan; however, for

a lender whose loan is shown to have been fraudulent (as attested to by their release of it), to take

exception to past or present late or missed payments would not be reasonable under the law. Under this

justification, Three Arck Capital Group will take appropriate steps necessary to assure that derogatory

credit entries relative to the loan in question do not impact your credit record.

Q: Will the lender/s initiate a lawsuit for a Deficiency Judgment for my non-payment of their mortgage

loan?

A: No. For the reasons cited above, there is no deficiency if the loan is released. Any such efforts by a lender

would potentially be deemed illegal, subjecting them to lawsuit.

Q: Will I become subject to income tax on the basis of Debt-Relief relative to my mortgage loan's having

been made, but not honored?

A:No. When your present mortgage is successfully eliminated, there is no Form 1099 to be sent to theIRS on your behalf in that the bank is effectively declaring that no loan was made. Furthermore, thenew lien on your property by Three Arck Capital Group, LLC will encumber the property to itsverifiable true market value, which lien in essence may constitute a first purchase-money financingarrangement with no income tax due on capital gains until the property is sold or refinanced (atwhich time you will be availed of the benefits of IRC Section 121 Exclusion of Gain From Sale ofPrincipal Residence (i.e., "Gross income shall not include gain from the sale or exchange ofproperty if, during the 5-year period ending on the date of the sale or exchange, such property hasbeen owned and used by the taxpayer as the taxpayer's principal residence for periods aggregating2 years or more.") Or…if it is non-owner-occupied you may be entitled to the benefits of IRCSection 1031 Like Kind Tax-Deferred Exchange.

Q: My attorney told me that Three Arck Capital Group LLC might be guilty of something called "Unjust

Enrichment" in that they are making a lot of money off my duress without spending very much in the

process. Is that true?

A:No. Unjust Enrichment is a doctrine under the rules of Equity that are applied in the absence of acontract, and which is used to prevent one person from being unjustly enriched at a victim'sexpense.

For one thing, the expense associated with completing these kinds of transactions are generally notinconsequential. However, be that as it may, "Unjust Enrichment" under the law occurs only whena person unfairly obtains a benefit by chance, mistake or at the cost of another's misfortune, forwhich the party being enriched has not paid or worked, and morally and ethically has not earned. Aperson who has been unjustly enriched at the expense of another's impoverishment must legallyreturn the unfairly acquired money or benefits.

12

Under Equity there are five elements that must be established in order to prove and act upon the

Doctrine of Unjust Enrichment:

There must be a [provable] enrichment of the person being so charged;

There must be a demonstrable impoverishment of the claimant as a result of the claimedunjust enrichment;

There must be a direct connection between the enrichment and the claimedimpoverishment;

There must be an absence of any logical or legal justification for the enrichment

There must be an absence of any other remedy that would be provided by law toaddresses the claimant's issue.

Relative to your mortgage amelioration, one might consider the "enrichment" of Three Arck Capital Group,

LLC and that of its assigns in the same light as you might the charges of a surgeon, an attorney or bank

wherein their just enrichment results from their superior knowledge of a service or process that only they,

and those of equal education, competence and capability, can render.

Q: What do I need to provide you with now in order to receive my package of information and webinar

series registration to get started (Note that the series of four webinars will be held the second and

third Wednesday evenings at 5:30 PM, Pacific Standard Time and will run for approximately one hour

and fifteen minutes each, and be repeated each four weeks for new students).

A Cashier's Check, Money Order or Wire Transfer in the Amount of $7,995 made out to

Three Arck Capital Group, LLC (note that a personal check may be used, although doing so will hold

up the entire process for at least two weeks while waiting for out-of-state bank clearance). This

check will be forwarded to Three Arck once your transaction is approved and your title-holding

trust is complete

Application: The attached Application and Questionnaire - signed and dated

Picture ID: A clear copy of your valid picture I.D. (one for each person listed on the mortgage orproperty's title)

Social Security Numbers: Social Security numbers for each person on title (just the number, notnecessarily a copy of anything)

Promissory Note: A clear copy of the Promissory Note and Deed of Trust, or Promissory Note andMortgage, assuring that we have the property's Tax Identification number (APN, PIN, etc.) Weneed only the first page of the Mortgage with the instrument number as filed with the CountyRecorder)

Settlement Statement (HUD 1): A clear copy of the original Settlement Statement fromsettlement official (title company, escrow company, closing attorney, etc.): must include name andaddresses of the company and names and titles of all persons involved in the closing process andtheir respective titles

Legal Description: Full legal description of property (will be usually be on the note, the trust deed,grant deed, warranty deed, bargain and sale deed, etc…. and or on your mortgage)

13

Payment Statements: Current payment statements from each lender of record, indicating towhom you pay your mortgage payments (some lenders will have transferred the mortgage to asecondary or tertiary mortgage company or bank following your purchase settlement (escrow).Please provide name, address, phone number and contract person for each one

POA (Powers of Attorney- 4): Four (4) originals independently signed and notarized ("wet ink"originals). Please have this form formally notarized with a red right thumb print if possible…'notmandatory or available in some states: although a good idea may be to take a red ink pad with youwhen you go to the notary and have them give you a second notary form imprinted with the redink…the color prevents forgery by duplication).

SEND DOCUMENTS WITH CASHIER'S CHECK FOR $7,995 MADE OUT TO THREE ARCK CAPITAL BUTSENT TO:

NARSCOR, LLC C/O:NORTH AMERICAN RLTY SERVICES, INC.6520 PLATT AVENUE #548WEST HILLS, CA 91307

All documents except for the check and the four original Powers of Attorney can be Emailed orFaxed (Overnight Mail Preferable for POA's and Check)

[EMAIL BG@LANDTRUST.NET, OR fax TO 1 818 610 8805]

IMPORTANT NOTE: PLEASE DON'T FAIL TO PROVIDE NARSCOR, LLC A CLEAR COPY OF ANY WIRE

TRANSFERS INSTRUCTIONS IF MONEY IS WIRED TO THREE ARCK. BUT PLEASE DO NOTWIRE MONEYS UNLESS SPECIFICALLY ASKED TO DO SO BY NARSCOR.

Wire Transfer InstructionsFIFTH-THIRD BANK, LINDEN/CLEVELAND BRANCH

3407 CLEVELAND AVE., COLUMBUS, OH 43224PHONE: (614) 262-4888;

ACCT#7282038517; RT. #042 000 314;ACCT. NAME: GARY JONES, 3ARCK CAPITAL, L.L.C.

GUARANTEE: Note that should Three Arck Capital Group, LLC, through any error of its own, beunsuccessful in its stated intentions, the entire amount of any moneys relinquished (with the exception of$495 for Trust Set Up)will be refunded. Note that should you, of your own volition, desire to cancel thesubject handling after handling has been initiated, but prior to its completion, you may do so at any time,but without a refund of any moneys paid to that point.

Once your petition for mortgage amelioration has been approved and accepted by NARSCor, LLC, allrequisite documentation and funds will be forwarded by Express Mail for handling by Three Arck CapitalGroup, LLC in Columbus, Ohio and the first phase of your transaction will have begun.

North American Realty Services, INC. and NARSCor, LLC

Bill J. Gatten

Bill J. Gatten, CEO, Managing Director

14

COMPARISON CHART LFC AND 3 ARCK

LFC (Go to www.NARS.Livingfreeandclear.com) Benefit

Comparison3Arck

$4,995 Upfront ($2,995 for single property) * $7,995 Upfront

Training ProvidedWho provides training – LFC or NARS? (LFC) * Training provided by 3Arck, IDM, Inc. and NARSCor, LLC - A

full service Companies

Potential future litigation at client's expense, includingQuiet Title Action (potentially $2,500-$3,500 or more)Included in price, or additional? (additional)

* Company covers litigation and possible Quiet Title action if

it is needed

Any subsequent legal action is at your expense * 3Arck handles any legal expense that might accrue along

the way (if any)

Paperwork and follow-up is on a Do-it-Yourself basis for a100% equity claim * 3Arck handles all paperwork for you

If you do all the work LFC keeps nothing of the equity inthe property.If, however, paperwork done for you, LFC keeps 49% ofall EquityIs that paperwork company LFC, or NARS? It’s an LFCaffiliate company in Utah.

* 3Arck leaves you with no equity

No guarantees, no refunds * 3Arck guarantees a refund of $5,000 of the $7,495 if they

are unsuccessful

If you do it all yourself, all Equity is yours when the loan iseliminated * 3Arck leaves you with 100% financing at half the mo/cost,

If you are successful, you have no Principal and/or Interestpmts until you refinance at your own volition at some pointin the future

* You must refinance after the loan is removed (although no

qualifying or credit needed), and new pmts are based on a

50% LTV

Does company provide loan? (They can, but NARS may help

as well)

50% LTV of FMV? (50% of FMV at inception)

No full success stories thus far, but many sale datesindefinitely postponed) * Over 100 fully completed and verifiable full transaction

successes to date

Transactions in process taking up to 3/4ths of year or more * Process takes from 3 to 6 months

Multi-level incentive for signing up new affiliates * No incentive programs, except via the Ruby Level NARS

Network

LFC has a lower-priced "Do it Yourself Kit" ($2,900) * No Do it Yourself Programs Offered

No commercial, industrial or agri. properties * Handles all property types and amounts

GOAL: Full release of all liens on the property with goodtitle and nothing owed

GOAL: Profit. [However, the Ancillary effects for

homeowner are: avoidance of foreclosure, removal of over-

encumbrance and adverse credit, and 60%-70% payment

reduction while retaining all future appreciation, equity

accrued, and continuing income tax write-off]

15

TRUST AGREEMENT (EXAMPLE … NOT FOR USE)

Purpose of Agreement. This Trust Agreement, dated , which date is for reference

purposes only, shall be known as the Trust, Number . This Agreement

certifies that xxxxxxxxxxxxxxxxx appurtenant rights and personal property now used in

the general operation of the real estate, located in County, State of .

, APN# 66~: Located at: , (the "Trust Property")

1. When the Trustee has taken the title to the Trust Property, or title to any other property conveyed

to it as Trustee under this Agreement, the Trustee shall hold such property, and the proceeds and

profits from it, in trust for the ultimate use and benefit of the Beneficiaries and their successors or

assigns. The Trustee shall protect and conserve title to the Trust Property until its sale or other

disposition. The Trustee shall not manage or operate the Trust Property nor undertake any other

activity not strictly necessary to the fulfillment of the purposes set forth above. The Trustee shall

not transact business of any kind with respect to the Trust Property which may cause this

Agreement to be deemed to be, or which may create the existence of a corporation (de facto or de

jure); or a Massachusetts Trust, or any other type of business trust; or an association in the nature

of a corporation; or a partnership or joint venture by or between the Beneficiaries, or by and

between the Trustee and the Beneficiaries.

2. Beneficiaries. The person or persons identified in the attached Schedule "A," are the Beneficiaries of

this Trust, and as such shall be entitled to all of the proceeds and profits of the Trust Property .

3. Interests of Beneficiaries as Personal Property. The interests of any Beneficiary shall consist solely of

a power of direction to the Trustee regarding the Trust property; the right to receive or direct the

disposition of the proceeds from the rentals and from the mortgages, sales, or other disposition of

the Trust Property; the right to purchase, lease, manage, and control the Trust Property; and the

obligation for expenses and disbursement relative to the property. The right to the proceeds and

profits of the property shall be deemed to be personal property. In case of the death of any

Beneficiary during the existence of this Trust, the Beneficiary's right and interest shall, except as

specifically provided to the contrary in this Agreement, pass to the Beneficiary's executor or

administrator. No Beneficiary now has, or shall subsequently at any time have, any right, title, or

interest in or to any proportion of the real estate as such, either legal or equitable, nor in any other

Trust property. A Beneficiary has only an interest in the proceeds and profits, it being the intention

of this instrument to vest the full legal and equitable title to the Trust Property in the Trustee. No

Beneficiary shall have the right to require partition of any Trust property.

SAMPLE

ONLY

DONOTUSE

SAMPLEONLY

SAMPLEONLY

DO NOTUSE

16

4. Death of Beneficiary. The death of any individual Beneficiary, or the merger, reorganization, or

dissolution of any other corporate, partnership, or other form of Beneficiary shall not terminate the

Trust nor in any manner affect the powers of the Trustee.

5. Notice of Assignment of Beneficial Interests.

a. No assignments of interests by a Beneficiary shall be binding on the Trustee until the original or

duplicate copy of the assignment, in such form as the Trustee may approve, is delivered to the

Trustee and the Trustee's acceptance is indicated on the assignment. Any assignment not

delivered to the Trustee shall be void as to all subsequent assignees or purchasers without

notice. The Trustee shall also maintain and revise Schedule "A" of this Trust to reflect any

changes in ownership.

b.No assignment of any interest that includes the power to direct the Trustee to convey or

otherwise deal with the Trust property, as provided for in Paragraph 12 of this Agreement, shall

be valid without the written approval of all the Beneficiaries. No person who is vested with

such power of direction, but who is not a Beneficiary, shall assign such power without the

written consent of all of the Beneficiaries.

c. Should Beneficiaries opt to convey beneficial interest in this trust, Certificates evidencing the

interests of the Beneficiaries may be issued by the Trustee in such form as it may approve, in

which event the assignment of the interest shall be valid only upon the surrender of the

Certificate, and in which event no assignee shall be entitled to recognition as a Beneficiary

until such time as the original Certificate is surrendered to the Trustee along with a proper

assignment and until a new Certificate has been issued. However, Certificates shall not be used

in the event they would subject the Trust, the Trustee, or the Beneficiaries to state or federal

securities regulations from which economical and non-restrictive exemptions would not be

readily obtainable.

6. Tax Returns. The Trustee shall not be obligated to file any income, profit, or other tax reports,

schedules, or returns with respect to this Trust notwithstanding the provisions of Section 671 of the

Internal Revenue Code of 1954 or any other applicable regulations. The Beneficiaries shall

individually report and pay any and all taxes on the earnings and proceeds of the Trust property or

otherwise arising out of their respective interests. The Trustee shall make available, upon request

by the Beneficiaries, accounting records of the Trust that pertain to their respective interests, which

records the Trustee agrees to maintain. If it should be found necessary to file Form 1041 or other

informational returns under Section 6031 of the Internal Revenue Code of 1954, or otherwise, the

SAMPLE

ONLY

DONOTUSE

SAMPLEONLY

SAMPLEONLY

DO NOTUSE

17

Trustee shall not be obligated to prepare the returns, although upon request from the Beneficiaries

the Trustee shall, if necessary, sign the informational returns.

7. Reimbursement and Indemnification of Trustee. In the event that the Trustee shall make any

advance of money on account of this Trust or shall be made a party to any litigation on account of

holding title to real estate in this Trust or in connection with this Trust, or in case the Trustee, either

personally or as Trustee, shall be compelled to pay any sum of money on account of this Trust or any

property included in this Trust, whether on account of breach of contract, injury to personal

property, fines, failure to file tax returns, or penalties under any law or otherwise, the Beneficiaries,

in accordance with their respective interests will, on demand, pay to the Trustee all such

disbursements, advances, or payments made by the Trustee, together with the Trustee's expenses,

including reasonable attorneys' fees, with interest at the rate of ten percent (10%) per year,

commencing upon the date of Trustee's disbursement of such funds, The Beneficiaries will

indemnify and hold the Trustee harmless of and from any and all payments made or liabilities

incurred by it for any reason whatsoever as a result of this Agreement, including, but not limited to,

liability arising from the management of the trust property pursuant to a direction by the

Beneficiaries . The Trustee shall be under no duty to convey or otherwise deal with the Trust

property until all of such disbursements, payments, advance, and expenses made or incurred by the

Trustee have been fully paid, together with interest. The Trustee shall not be required to advance or

to pay out any money on account of this Trust or to commence or defend any legal proceedings

involving this Trust or any property or interest held in trust unless the Trustee shall be furnished

with sufficient funds or be satisfactorily indemnified.

8. Reliance by Third Parties on Authority of Trustee. No third party dealing with the Trustee in regard

to the Trust Property in any manner, nor any party to whom the Trust Property or any interest in the

Trust Property is conveyed, contracted to be sold, leased, or mortgaged by the Trustee, shall be

obliged to see to the proper handling, application, or disbursement of any moneys paid, or to

inquire into the necessity or expediency of, or authority for, any act of the Trustee or as to the

provisions of this Trust Agreement.

9. Prohibition Against Recordation. This Agreement need not be recorded in the recorder's office of

the county in which the Trust property is situated, or elsewhere. However, in the event that any

such recording shall occur, the recording shall not be considered as notice of the rights of any

person derogatory to the title or powers of the Trustee.

10. Resignation and Replacement of Trustee.

SAMPLE

ONLY

DONOTUSE

SAMPLEONLY

SAMPLEONLY

DO NOTUSE

18

a. Notwithstanding anything herein contained to the contrary, in the event that the Trustee shall

die or become incapacitated, or shall undergo a dissolution, or if the Trustee shall become

unwilling or unable to act for any reason, the following, in order of their listing (provided they

shall be willing and able to act), shall be appointed as the successor Trustee with the same

powers and duties of the predecessor Trustee:

1st Choice: ____________________________________

2nd Choice: ___________________________________

In the event that none of the above choices are available to serve as the successor Trustee, or

in the event that no choices have been designated, the Beneficiaries may appoint a successor

Trustee. A Beneficiary may be named as a successor Trustee. In the event that a successor

Trustee is appointed, a copy of this Trust Agreement, together with a Statement of

Appointment of the new Trustee and the Acceptance of the Successor Trustee, shall be

recorded in the county or counties where the Trust Property is located. The recording shall act

to vest title in the successor Trustee with the same powers and duties of the predecessor

Trustee, and all other provisions of this Trust shall remain in full force and effect.

b. The Trustee may resign at any time by sending at least a thirty (30) day notice of its intention

to do so by certified mail to each of the Beneficiaries at his or her address last known to the

Trustee. In the event of the Trustee's resignation, a successor or successors may be appointed

by the Beneficiaries, by an instrument in writing which includes the endorsement of the

successor Trustee, delivered to the resigning Trustee. The resigning Trustee shall then convey

the Trust Property to the successor(s).

c. In the event no successor trustee is appointed within sixty (60) days from the date of the

resignation, the resigning Trustee may convey the Trust Property to the Beneficiaries in

accordance with their respective interests and this Trust shall terminate at that time.

Alternatively, the Trustee may, at its sole discretion, apply for appropriate relief in any court

of competent jurisdiction.

d. Notwithstanding the resignation or replacement of the Trustee, the Trustee (and the Trustee's

estate, if applicable), shall continue to have a lien on the Trust Property for any unpaid costs

and expenses, including reasonable attorneys' fees, and for reasonable compensation as may

be otherwise provided for in this Agreement until such matters are resolved.

e. Every successor Trustee appointed shall become fully vested with all the estate, properties,

rights, titles, powers, trusts, duties, and obligations of its, his, or their predecessor-in-trust.

19

11. Powers and Duties of Trustee. So long as the Trustee is the sole owner of record of the real estate

and any other property held by it under this Trust Agreement, it is understood and agreed by the

parties to this Agreement and by any persons who may subsequently obtain an interest in this

Agreement, that the Trustee will deal with the property only when authorized to do so in writing by

all the Beneficiaries. Also, notwithstanding any change in the Beneficiary or Beneficiaries, it will, on

the written direction of the Beneficiaries, or their successors-in-interest, make and execute

contracts or deeds for the purchase of or the sale of, execute mortgages, leases, or options on, or

otherwise deal with, the Trust Property and with the disposition of the proceeds from any rentals,

mortgages, insurance, sales, or other disposition of the Trust Property upon such terms and

conditions as may be directed. Nevertheless, neither the Trustee nor any agent employed by the

Trustee shall be required, without its consent, to enter into any personal obligation or liability in

dealing with the Trust Property or to make itself liable for any damages, costs, expenses, fines, or

penalties, or to deal with the title so long as any money is due to it unless it has agreed to do so and

has been appropriately compensated for any acts or services afforded on behalf of the trust, the

trust property or the trust Beneficiaries. To the extent of any moneys due to the Trustee, it shall

have a lien on the Trust Property or the proceeds of the Trust Property. The power of direction may

be given to a person, corporation, or other form of legal entity upon the written designation of a

majority in interest of the persons then entitled to direct the Trustee as to the disposition of the

Trust Property, regardless of whether the recipient of the power of direction shall be a Beneficiary.

Otherwise, the Trustee shall be required to inquire into the propriety or purpose of any direction.

12.Rights and Duties of Beneficiaries. The Beneficiaries shall have and retain (except as otherwise

herein expressly provided) the management of Trust property, and control of the purchasing,

renting, handling, maintenance, encumbering, selling, or making of any other disposition of the

Trust Property. Expenses shall be allocated according to each beneficiary's respective interest in

the Trust, unless otherwise so agreed. The Trustee shall not be called upon to do anything with

respect to the management or control of the Trust Property, the payment of taxes or assessments,

insurance, litigation, or otherwise, except on written direction of the Beneficiaries as provided in this

Agreement, and after the payment to it of all moneys necessary to carry out the instructions.

13.Termination of Trust. If the Trust Property or any part of the Trust Property remains in the Trust

twenty (20) years after the date this Trust was executed, the Trustee shall give written notice to the

Beneficiaries of the proposed termination of the Trust. The notice shall be sent not later than thirty

(30) days after the twentieth anniversary date. In the event that an agreement extending the term

of this Trust has not been agreed to by all parties within sixty (60) days from the date of the

notification, the Trustee shall either convey the Trust Property to the Beneficiaries in accordance

SAMPLE

ONLY

DONOTUSE

SAMPLEONLY

SAMPLEONLY

DO NOTUSE

20

with their respective interests; or, upon written direction of all the Beneficiaries or their successors-

in-interest, sell the Trust Property at public sale on reasonable notice and divide the proceeds of the

sale among all the Beneficiaries in accordance with their respective interests.

14.Insurance. The Beneficiaries agree at all times to carry public liability insurance and such other

insurance as the Trustee shall deem necessary or appropriate in the circumstances, insuring the

trust property, not its contents, and insuring the Trustee in amounts and form acceptable to the

Trustee. In the event of the failure of Beneficiaries to furnish the required insurance, the Trustee,

in its discretion, after reasonable notice, may procure insurance, without any requirement for

comparative cost analysis, and the Beneficiaries do hereby jointly and severally agree that they will

pay on demand to the Trustee the amount of the premium on the insurance plus interest of ten

percent (10%) per-annum on the amount expended by Trustee for such insurance.

15.Compensation of Trustee. The Trustee shall receive reasonable compensation for its services with

respect to this Trust and shall be entitled to reimbursement of its expenses reasonably incurred.

The specific amount, form, and manner of compensation shall be reflected in the attached Schedule

"B", which Schedule may be modified from time to time by the approval of all the Beneficiaries or

their successors-in-interest, and by the approval of the Trustee. The Trustee shall have no obligation

to advance any sums on behalf of the Trust but may do so in its sole discretion. The Trustee shall

have a lien on the Trust Property for its fees, expenses, and advances. The Beneficiaries and any

persons accepting an assignment of the interest of any Beneficiary agree to pay the fees and to

reimburse the Trustee for its expenses and advances on demand. Payment is to be made pro rata

based upon each Beneficiary's respective interest unless otherwise agreed among the Beneficiaries.

However, as to the Trustee, the payments shall be a joint and several obligations of the

Beneficiaries. If the amounts due to Trustee as provided in this paragraph and as provided in

paragraph 7 are not paid within sixty (60) days after demand, then the Trustee is authorized and

directed by the beneficiary, for the benefit of the beneficiaries, to sell from time to time at public or

private sale and to transfer and convey sufficient funds to pay for the fees, expenses, and advances,

including any additional charges and Trustee compensation which may arise as a result of the sale.

Following the sale, the Trustee shall pay the proceeds to the Beneficiaries in proportion to their

respective interests, following satisfaction of moneys owed to the Trustee. Notwithstanding any

other provision of this Agreement, the Trustee shall be under no obligation to make any deed,

mortgage, lease, or conveyance of the Trust Property or to enter into any contractual obligation

with respect to the Trust Property until its fees are paid and its expenses reimbursed, or until such

fees and expenses are secured to its satisfaction.

SAMPLE

ONLY

DONOTUSE

SAMPLEONLY

SAMPLEONLY

DO NOTUSE

21

16.Binding Effect on Successors. The terms and conditions of this Agreement shall inure to the benefit

of and be binding on any Successor Trustee and on all assigns and successors in interest of the

Beneficiaries.

17.Governing Law. This Agreement shall be construed and regulated and its validity and effect shall be

determined by the laws and regulations of the State of California as such laws may from time to

time exist.

18.Valid Notice Requirements. Any notice in writing required or permitted to be given to the

Beneficiaries by the Trustee or by another Beneficiary will be deemed to have been sufficiently given

if actually received or personally delivered, or if mailed by certified mail with return receipt

requested, in an envelope addressed to such person at the address shown opposite that person's

name in Schedule "A" of this Agreement or at such other address as such person may specify by

written notice to the Trustee. Any notice in writing required or permitted to be given to the Trustee

will be sufficiently given if delivered to the Trustee at its principal office or at such other address as

the Trustee may specify.

19.Restrictions on Transfers of Beneficial Interests. Prior to the termination of the trust agreement,

any holder of a beneficial interest desiring to sell or dispose of the beneficial interest, or any portion

thereof, at any time, must first offer to sell the interest to the other beneficial interest holders, if

any, according to their respective proportionate beneficial interests. The beneficial interest for sale

must be offered at the same price as the highest written good faith offer by a third party to

purchase the interest, at a price mutually agreed upon by the parties, or at a price determined by an

M.A.I. appraisal of the corpus of the Trust. An option for the purchase of the interest shall be given

to the remaining beneficial interest holders for a period of thirty (30) days. If the option is accepted,

the purchasing beneficial interest holders shall have the right to purchase the interest for a lump-

sum payment in cash within ten (10) days after the exercise of the option, or payment may be made

upon terms agreeable to both the purchasing and selling beneficial interest holders. If the option is

not accepted within the thirty-day period, the beneficial interest may then be offered to any third

party. However, the other beneficial interest holders hereunder are given an option for an

additional period of ten (10) days to meet the price and terms at which it is proposed to sell the

interest to the third party if the terms have changed. If the beneficial interest holders meet the

price, the sale shall be made to them, for a lump-sum payment in cash or upon other mutually

agreeable terms, within ten (10) days after the exercise of the subsequent option. This shall not

interfere with the right of any beneficial interest holder to transfer a beneficial interest by will or

gift. The beneficial interest, however, shall be subject to this provision in the hands of all future

SAMPLE

ONLY

DONOTUSE

SAMPLEONLY

SAMPLEONLY

DO NOTUSE

22

beneficial interest holders, including heirs, executors, administrators, personal representatives,

donees, successors, and assigns. The terms of this provision respecting the transferability of

beneficial interest may be modified by agreement of all of the beneficial interest holders, in writing.

20.Amendment, Modification, or Termination of Agreement. This Trust Agreement contains the entire

understanding between the parties and may be amended, revoked, or terminated only by a written

agreement signed by the Trustee and all of the Beneficiaries or their designees, except that

termination may result from the operation of this Agreement.

21.Non-liability of Trustee. All obligations incurred by the Trustee shall be the obligations of the Trust

only, and shall not under any circumstances be the individual obligations of the entity acting as

Trustee unless the Trustee specifically consents in writing to such liability. No Beneficiary shall have

any authority to contract for, on behalf of, or in the name of the Trustee, or to bind the Trustee

personally, unless the Trustee's consent is first obtained in writing.

22.Beneficiary Cannot Bind Other Beneficiary. Except as specifically set forth elsewhere in this

Agreement, or provided for in law relative to community property, no beneficial interest holder

shall have the authority to contract for or in the name of any other beneficial interest holder or to

bind any other beneficial interest holder personally.

23.Addition of Other Property to Trust. Additional property may at any time be conveyed to the

Trustee under this Trust, and such property and the proceeds shall be held, dealt with, and disposed

of under the terms of this Agreement and in the same manner as the property specifically described.

The terms and conditions of the deed or other manner of transaction by which such property is

conveyed to the Trustee shall constitute and be construed as a part of this Agreement. The Trustee

shall maintain the attached Schedule "C," which shall identify all property held by this Trust.

24. Perpetuities Saving Clause. Notwithstanding any other provisions of this Agreement, if any portion

of the Trust estate is in any contingency capable of being held in trust for a longer period than is

permitted by law, or if in any such contingency the vesting of any interest may occur after the

expiration of such permissive period, then upon the happening of such contingency all of the Trust

estate shall not be held in further trust, and the Trust estate assets shall be divided, transferred,

conveyed, and delivered to the Beneficiary or Beneficiaries in accordance with their respective

beneficial interests hereunder. The Trust shall then terminate by operation of law.

BY SIGNING BELOW PARTIES ACKNOWLEDGE AND ATTEST TO A FULL UNDERSTANDING AND

ACCEPTANCE OF ALL TERMS AND CONDTIONS HEREIN WRITTEN.

SAMPLE

ONLY

DONOTUSE

SAMPLEONLY

SAMPLEONLY

DO NOTUSE

23

The Following – Pages 19 thru32 – is Provided Here for the

Benefit of NARS and NARSCorLLC Network Members

The Member is instructed toremove any portion of this

material that is not germane tothe client's interests prior topresenting the data included

here

24

Three Arck/NARSCorServices and Training

Would it be worth posting a fully refundableContingency Fund of , say, $7,995 in order to

be able to have your current mortgagechallenged and replaced a few weeks by a new

loan in the amount of your property's truevalue…with just half the payment?

Let's Talk About That…

Your Three Arck Membership:

Upon the vesting of your property with a bona fide trustee for a revocable title-holding (Illinois type) land

trust arrangement, posting a refundable Contingency Fund of $7,995, then naming ThreeArck Capital as

co-beneficiaries therein, you will, without additional charge, be availed of regular Webinar training and

coaching relative to mortgage amelioration via administrative processes (i.e., out of court) where

possible. Should litigation come into play, Three Arck will cover all of such expenses.

With a clear understanding of the mortgage industry's loan origination process, and the history and cause

of the prevailing economic crisis in the US, it has become quite possible for an individual (homeowner) to

challenge his/her [alleged] mortgage on the basis of its legitimacy relative to a "lender's" claim against

you and your property. In the process, one becomes quickly aware that an alarmingly large percentage

of mortgages in the United States are fraught with errors, omission, inadequate disclosure and even

blatant forgery and, as a result can (and should) be expunged.

Of the approximately fifty to eighty million home mortgages extant in the US today (figures vary from 45

to 150 million), between twelve and fifteen million of them are currently nearing the possibility, if not

likelihood, of foreclosure. Interestingly, however, it is being discovered that an alarmingly large

percentage of these mortgage transactions are being found to be wholly unenforceable and voidable

after close scrutiny .

25

Why?

In the years since 1996-1998, millions of gullible, trusting, formerly financially comfortable , American

citizens were lulled into a false sense of security by the burgeoning real estate market, brought on, at

least largely in part by (if solely not at the result of) the mortgage banking industry.

As borrower after borrower was lured by persuasive and unending radio, TV and Newspaper ads and

mailers for home-refinancing: while being told repeatedly, "Oh, don't worry about the adjustable

rate…you can refinance anytime you want when the rate adjusts." Few were aware that those

comforting words were coming from the very people who, at the time, were heading en-masse

(knowingly or not), toward the bankruptcy of the US housing market (and ultimately the world's

economy)…wholly for purposes of their own insatiable corporate greed.

During these years, as far as the foreign market was concerned, the quality of these US loan portfolios

was not all that important, as they could be sold as quickly even before being purchased… as back-up

security for foreign stock market investors. And, as the production line was speeded up to the danger

level, more and more mistakes, omissions, and outright fraud became possible… and, in many cases,

necessary to get the job done.

As the mortgage industry earned hundreds of billions of dollars from equally naïve mortgage-backed

securities buyers (uncountable millions of stock market gamblers), there seemed to be no limit to the

fortunes to be amassed by selling bundles of American signatures on the world market for more than

would ever have been needed to advance an equivalent number of mortgage loans (i.e., no longer a need

for the loan originator - the lender - to take any chances or wait for a Return on Investment…just an

immediate gigantic risk-free bolus of profit. And the profit was piling up even before any disbursal of

funds would ever take place or show up on the debit side of the "lender's" balance sheet.

During the heyday of this mortgage-backed securities explosion , it became unnecessary for mortgage

lenders to loan (or even possess) money in order to capitalize on the billions that were virtually falling

from the sky (the abundance to be matched only by the trillion dollars that would later be handed to the

culprits by the very victims that were harmed by the uncontrolled "capital feeding frenzy." In the latter

days of the 20th century and the early days of the 21st, all a mortgagee needed to do in order to make

money was to create a few bundles of American citizen's signatures and sell them on Wall Street to

investment bankers, the likes of Bear Stearns, Lehman Brothers or AIG (to name just the three that would

have been bankrupt were it not for the bailout) who would link these signatures and houses with stock

purchases, for sale on the world market.

And viola! Not a dime needed to be spent by the so-called "lender." As well, the secondary market

securitizer would then go through similar machinations with a tertiary (3rd) stock-backed mortgage

buyer: neither did that institution ever need to spend its own money.

[Aside: This banking practice is, by the way, not at all unlike one the lending industry particularly

despises…that of real estate investors sizing up a property to "buy" for re-sale, then serrupticiously using

26

the end-user-buyer's money to close on their own purchase at a much lower price than the end-buyer has

agreed to pay, and thereupon pocketing the difference.]

So, who loses when our economy and real estate market falls

apart because of what the mortgage industry did to it?

If you are the verge of losing your home to foreclosure, then you already know the answer to that

question:

On October 3, 2008, the Senate passed the $700 billion bank bailout bill designed to save the friends of

the then Secretary of the Treasury, Henry Paulsen, at Goldman Sachs from the devastation they had

caused. Oh yeah, and Henry Paulsen is the former CEO of Goldman Sachs (on loan to the government at

the time): the company that benefitted most from his gift of our money and homes…the "Bailout."

So what? What's the solution?

It's quite simple…let's just have every man woman and child in the United States (each of us) give the

culprits some two-and-one-half-million dollars (i.e., $2,500,000 each…from each and every US

citizen)…along with our homes. (i.e., an unrealistic amount? You didn't know you had tht much money?

Simply divide $700 billion by our population of 312 million people--meaning that a family of four

contributed ten million dollars to the very people who created the situation that we have to "fix." After

all, we can't have these gigantic companies and their leaders being inconvenienced. And we have to

presume too that these folks have all been homeless at one time or another, and know that it's not all

that bad…or else, why would they be so adamantly insisting that we experience it. And if it's just not

that tough an existence, it's a small price for us as citizens of the "greatest country in the world" to pay to

assure that the Wall Street billionaires continue to be… well…Wall Street billionaires.

Benefits of the Three Arck Capital Approach

Through use of our on-line data entry resource at NARSCor (www.landtrust.net) you can beginthe process of reducing your current mortgage obligation to the current (true) value of your home,while lowering your monthly payment obligation by as much as 30% to 40% of what a new 100%loan would ordinarily have cost. Upon the release, under challenge, of your existing mortgage, alien will be placed on your property for its true value and you'll be asked to procure a new loan forhalf (50%) of the property's appraisal, which loan's payment will determine the amount of yournew monthly payment obligation.

You can now escape your current mortgage situation by reducing your monthly paymentobligation by at least 30 to 40 percent by taking out a new loan with a fixed payment, for up tofive years or until you can either sell or refinance the property and retire the Three Arck Lien.

You can remain in your house without the stress and uncertainties you've undergone for so long

Beyond the initial payment from the 50% asset-based financing,, there are no payments to ThreeArck.

27

The program allows you the full benefits of homeownership with a new start

You retain all future appreciation potential

You benefit from any equity build-up from loan principal reduction

All income tax benefits are yours (re. mortgage interest and property tax write-off)

The trust in which the title to the property is vested, provides protection from creditor judgments,tax liens, lawsuits, bankruptcy and probate

You'll avoid payment of income tax on accrued "debt relief" and/or lawsuit for deficiencyjudgment, as are all too often encountered in Foreclosure, lender compromise ("short sale") or theoffering and acceptance of a "Deed-in-Lieu" (i.e., a deed to your property given to your lender toavoid the process of foreclosure).

IMPORANT NOTE: THREE ARCK CAPITAL, LLC ,NARSCOR, LLC

AND THEIR EMPLOYEES, ASSIGNS AND AFFILIATES ARE NOT

LICENSED AS FORECLOSURE CONSULTANTS, REALTORS®,

ATTORNEYS OR MORTGAGE PROFESSIONALS. THE PROGRAM

EXPLAINED HERE AND OFFERED BY THREE ARCK CAPITAL IS

NOT DESIGNED TO, OR INTENDED TO, CURE, CURTAIL OR IN

ANY MANNER AVOID LEGITIMATE FORECLOSURE ACTIONS BY

ANY BONAFIDE CREDITOR: AND NO SUCH END-RESULT IS

ASSURED OR PROMISED IRRESPECIVE OF ANY MONEY-BACK

REFUNDS PROMISED.

Land Trust Vesting Requirement:

Analogous to holding the property in escrow for the benefit and protection of all parties against

threats from, or actions by, outside creditors and/or untoward internecine actions (against one

beneficiary by another that would/could negatively affect the interests of the other), it will be

necessary to place the subject property's title under the temporary ownership of a bona fide third-

party corporate trustee prior to the provision of assistance by Three Arck Capital, LLC.

Furthermore, once the property has been so vested, a fully refundable Contingency Fund of a

specified amount will be posted in connection with the trust, which sum shall remain 100% fully

refundable, to the party posting it: either at the termination of the mutual agreement by parties

(i.e., upon the sale or refinance of the property); or refunded (less $495for the trust set-up fee) in

the event that the amelioration process has not been wholly successful for any reason. This fund

will also be refunded to the party posting it should it be determined in the beginning that there is a

likelihood that your mortgage cannot be successfully challenged.

28

Also note that it is from this fully refundable Contingency Fund that the costs of establishment of

the trust and the transfer of the property's title will be paid.

Trusteeship, along with collections and disbursement services will be respectively assigned to,

and provided by, Equity Holding Corporation and Equity Management Company of Midpines,

California (a non-profit, duly licensed and bonded corporate trustee).

How Quickly Can This Program Be Completed?

Following receipt of all necessary documents and the fee for establishment of the relatedContingency Fund, we estimate a timeframe for completion to be between three and one half, toas much as eight months.

What Will Be The Cost For Replacement Financing When My[Alleged] Current Mortgage Is Expunged?

Replacement financing (the 50% LTV loan whose proceeds are paid to the trust co-beneficiaries inproportion to their respective percentages of beneficiary interest held, will be fully the client’sresponsibility. is to be obtained under whatever terms, rates and conditions one might negotiate for itself.Neither Three Arck Capital, nor its affiliates are mortgage brokers or lenders; nor are they affiliated with,or in any manner compensated by, any such entities. Any assistance afforded by them shall be limited tosearching for and referring compliant companies found on the internet.

What Kind of Client and Student Support Can I Expect?

You will be able to communicate with our staff during any of our bi-weekly group training calls, and youare, of course, invited to call or Email our offices (Email preferred) at any time with any question or needof assistance you might have.

What Is the Cost Of the Membership and Assistance Provided?

Once your current mortgage has been expunged by the collective efforts of Three Arck Capital inconjunction with the cooperation of, and assistance by, NARSCor, LLC and IDM Corporation,your payment for services rendered will, in effect, be the current value of your property, or ninetypercent thereof (i.e., closely analogous to having received 100% financing at a fraction of thecost). As enumerated above, your own benefits are: 1) release from your current over-encumbrance; 2) release from past-due (unpaid) payment amounts and penalties; 3) release fromthe effects of taxation on your debt-relief and threat of lawsuit for deficiency judgment; 4)entitlement to all of the properties future appreciation; 5) entitlement to full income tax benefit; 6)entitlement to all profits earned that are above the current value of the property; 7) any accruedequity build-up from loan principal reduction; 8) any and all income that can/may be generatedthrough renting or leasing of the property; 9) the ability to acquire additional equity from theThree Arck affiliates on a dollar-for-dollar basis without interest, at any time you would so choose(via either a monthly payment increase, or a full or partial lump-sum cash contribution).

29

What is Three Arck Capital's Success Rate so Far?

At this junction, Three Arck Capital states that has been successful in all of its attempts to

date…estimated to be in excess of 100 properties released from their mortgages as attested to by

full reconveyance documents and lien releases from various major mortgage lenders (a few

samples of which of which are included herein).

Are There Court Cases Supporting the Success and Righteousness of

These Mortgagee Challenges?

The answer is a resounding YES! A few of those cases are listed here:

Arizona

In Re Chapter 7 Case No.09-23270, Debtor(s) GARY AND SUSAN MIALOCQ, Gary

Mialocq, Respondent v. One West Bank (IndyMac) Movant(s)

In Re. Michael f. Diessner vs. Mortgage Electronic Registration Systems; Aurora Loan

Services, LLC; etal. 2:09-cv-00095 jws 618 f. Supp. 2d 1184; 2009 u.s. Dist. Lexis 47384

California

In re Vargas, 396 B.R. 511 (Bankr. C.D. Cal. 2008)

and

In re Hwang, 396 B.R. 757 (Bankr. C.D. Cal. 2008)

These two opinions by Judge Bufford have been discussed above. Judge Bufford carefully

explores the related issues of standing and ownership under both federal and California law.

Kansas

In Re. In Landmark National Bank v. Kesler, 2009 Kan. LEXIS 834

The Kansas Supreme Court held that a nominee company called MERS has no right or

standing to bring an action for foreclosure.

Nevada

In Re. Mortgage Electronic Mortgage Recording System v. Lisa Marie Chong, Dist. Ct.

Case No 2:09-CV-006610LRL,

Movant (MERS) did not produced evidence that it held the note or that it could act as the agent

of the note holder.

30

Massachusetts

In re Schwartz, 366 B.R.265 (Bankr. D. Mass. 2007)

Schwartz concerns a Motion for Relief to pursue an eviction. Movant asserted that the

property had been foreclosed upon prior to the date of the bankruptcy petition. The pro se

debtor asserted that the Movant was required to show that it had authority to conduct the sale.

Movant, and “the party which appears to be the current mortgagee…” provided documents for

the court to review, but did not ask for an evidentiary hearing. Judge Rosenthal sifted through

the documents and found that the Movant and the current mortgagee had failed to prove that the

foreclosure was properly conducted.

Specifically, Judge Rosenthal found that there was no evidence of a proper assignment

of the mortgage prior to foreclosure. However, at footnote 5, Id. at 268, the Court also finds

that there is no evidence that the note itself was assigned and no evidence as to who the current

holder might be.

Nosek v. Ameriquest Mortgage Company (In re Nosek), 286 Br. 374 (Bankr D Mass. 2008).

Almost a year to the day after Schwartz was signed, Judge Rosenthal issued a second

opinion. This is an opinion on an order to show cause. Judge Rosenthal specifically found that,

although the note and mortgage involved in the case had been transferred from the originator to

another party within five days of closing, during the five years in which the chapter 13

proceeding was pending, the note and mortgage and associated claims had been prosecuted by

Ameriquest which has represented itself to be the holder of the note and the mortgage. Not

until September of 2007 did Ameriquest notify the Court that it was merely the servicer. In

fact, only after the chapter 13 bankruptcy had been pending for about three years was there even

an assignment of the servicing rights. Id. at 378.

Because these misrepresentations were not simple mistakes: as the Court has noted on

more than one occasion, those parties who do not hold the note of mortgage do not service the

mortgage do not have standing to pursue motions for leave or other actions arising from the

mortgage obligation. Id at 380.

As a result, the Court sanctioned the local law firm that had been prosecuting the claim

$25,000. It sanctioned a partner at that firm an additional $25,000. Then the Court sanctioned

the national law firm involved $100,000 and ultimately sanctioned Wells Fargo $250,000. Id.

at 382-386.

In re Hayes, 393 B.R. 259 (Bankruptcy D. Mass. 2008).

Like Judge Rosenthal, Judge Feeney has attacked the problem of standing and authority

head on. She has also held that standing must be established before either a claim can be

allowed or a motion for relief be granted.

New York

31

Judge Christopher A. Boyko of Federal District Court in Cleveland dismissed 14

foreclosure cases brought on behalf of mortgage investors, ruling that they had failed to prove

that they owned the properties they were trying to seize.

The ruling was issued Oct. 31 by Judge Boyko, and relates to 14 foreclosure cases

brought by Deutsche Bank National Trust Company. The bank is trustee for securitization

pools, issued as recently as June 2006, claiming to hold mortgages underlying the foreclosed

properties.

On Oct. 10, Judge Boyko, 53, ordered the lenders’ representative to file copies of loan

assignments showing that the lender was indeed the owner of the note and mortgage on each

property when the foreclosure was filed. But lawyers for Deutsche Bank supplied documents

showing only an intent to convey the rights in the mortgages rather than proof of ownership as

of the foreclosure date.

Saying that Deutsche Bank’s arguments of legal standing fell woefully short, the judge

wrote: “The institutions seem to adopt the attitude that since they have been doing this for so

long, unchallenged, this practice equates with legal compliance. Finally put to the test, their

weak legal arguments compel the court to stop them at the gate.”

HSBC Bank USA, N.A. v. Valentin, 21 Misc. 3D 1124(A), 2008 WL 4764816 (Table) (N.Y.

Sup.) November 3, 2008.

In Valentin, the New York court found that, even though given an opportunity to,

HSBC did not show the ownership of debt and mortgage. The complaint was dismissed with

prejudice and the “notice of pendency” against the property was cancelled.

Note that the Valentin case does not involve some sort of ambush. The Court gave

HSBC every opportunity to cure the defects that the Court perceived in the pleadings.

Ohio

In re Foreclosure Cases, 521 F.Supp. 2d (S.D. Ohio 2007).

Perhaps the District Court’s orders in the foreclosure cases in Ohio have received the

most press of any of these opinions. Relying almost exclusively on standing, the Judge Rose

has determined that a foreclosing party must show standing. “[I]n a foreclosure action, the

plaintiff must show that it is the holder of the note and the mortgage at the time that the

complaint was filed.” Id. at 653.

Judge Rose instructed the parties involved that the willful failure of the movants to

comply with the general orders of the Court would in the future result in immediate dismissal of

foreclosure actions.

Deutsche Bank Nat’l Trust Co. v. Steele, 2008 WL 111227 (S.D. Ohio) January 8, 2008.

In Steele, Judge Abel followed the lead of Judge Rose and found that Deutsche Bank

had filed evidence in support of its motion for default judgment indicating that MERS was the

32

mortgage holder. There was not sufficient evidence to support the claim that Deutsche Bank

was the owner and holder of the note as of that date. Following In re Foreclosure Cases, 2007

WL 456586, the Court held that summary judgment would be denied “until such time as

Deutsche Bank was able to offer evidence showing, by a preponderance of evidence, that it

owned the note and mortgage when the complaint was filed.” 2008 WL 111227 at 2. Deutsche

Bank was given twenty-one days to comply. Id.

Illinois

U.S. Bank, N.A. v. Cook, 2009 WL 35286 (N.D. Ill. January 6, 2009).

Not all federal district judges are as concerned with the issues surrounding the transfer

of notes and mortgages. Cook is a very pro lender case and, in an order granting a motion for

summary judgment, the Court found that Cook had shown no “countervailing evidence to create

a genuine issue of facts.” Id. at 3. In fact, a review of the evidence submitted by U.S. Bank

showed only that it was the alleged trustee of the securitization pool. U.S. Bank relied

exclusively on the “pooling and serving agreement” to show that it was the holder of the note.

Id.

Under UCC Article 3, the evidence presented in Cook was clearly insufficient.

Texas

In re Parsley, 384 B.R. 138 (Bankr. S.D. Tex. 2008)

and

In re Gilbreath, 395 B.R. 356 (Bankruptcy S.D. Tex. 2008)

These two recent opinions by Judge Jeff Bohm are not really on point, but illustrate another

thread of cases running through the issues of motions for relief from stay in bankruptcy court

and the sloppiness of loan servicing agencies. Both of these cases involve motions for relief

that were not based upon fact but upon mistakes by servicing agencies. Both opinions deal with

the issue of sanctions and, put simply, both cases illustrate that Judge Bohm (and perhaps other

members of the bankruptcy bench in the Southern District of Texas) are going to be very strict

about motions for relief in consumer cases.

SUMMARY

The cases cited above are by no means representative of the vast number of such cases extant and

currently being heard The primarily problems with today alleged mortgage loans have arisen largely in the

context of securitization of Wall Street stock offerings to foreign investors, and serve to illustrate the ever

widening severity of the problem that faces the American homeowner today.

Interestingly, with the exception of Judge Bufford and a few other judges, there has been less than

adequate focus upon the UCC title issues. The next round of cases may and should focus upon the title to

debt instrument. The person seeking to enforce the note in legally bound to show that…

33

(1) It is the holder of this note original by transfer, with all necessary rounds;(2) It had possession of the note before it was lost;(3) If it can show that title to the note runs to it, but the original is lost or destroyed, the holder must be

prepared to post a bond;(4) If the person seeking to enforce is an agent, it must show its agency status and that its principal is the

holder of the note (and meets the above requirements).

Then, and only then, do the issues of evidence of debt and default and assignment of mortgage rights become

relevant.

EXAMPLES[Originals on File]

DENISE STEPHENS and LOYD STEPHENS

3923 CROSS BEND DR

ARLINGTON TX 76016-3806

RE: Loan Number: 0000006763

SHORT YEAR HISTORY STATEMENTLOAN NUMBER: 0000006763

PAST YEARS PAYMENT BREAKDOWN:

August 2009 THROUGH April 2010

RIN & INTEREST 1,836.10

ESCROW PAYMENT 1,237.89

TOTAL PAYMENT 3,073.99

Date: 04/05/2010

Payments from Escrow Projected Actual Ending Balances Projected Actual Payments to Escrow Month Projected

01/09 0.00 0.00 09109 10109 12109 02110 04110 0.

08/09 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 8,143.5700

01/10 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

03/10 0.00 0.00 0.00.0 00 0.00 0.00 0.00 0.00 0.00 0.00

Actual

05/10 0.00 0.00 0.0000 00 0.00 0.00 0.00 0.00 0.00 0.00

07/10 0.00 0.00 0.0000 00 0.00 0.00 0.00 0.00 0.00 0.00

TOTAL 8,143.57

2,867.96*

2,867.96

Description Starting Balance County Tax

-5,275.61

-8,143.57

0.00

An asterisk (*) indicates a difference in either the amount or date of the anticipated payments from escrow and the actual

payments from Escrow: When -applicable, the letter "E" beside an amount indicates that a payment or disbursement has not yet

occurred, but is estimated to occur as shown. The information provided does not require any action on your part. If you have any

questions please call our toll free number. 1-866-973-3399, Monday through Friday, 8:00 A.M. - 5:00 P.M., CST.

This information is being provided to you because your loan was paid off.

34

35

36

37

DEMAND LETTERS CLAIMING DAMAGES FOR ERRORS AND OMISSIONS, NEGLIGENCE AND MALPRACTICESubstitution of Trustee and Full Reconveyance

38

The Following is

a Collection of

Pertinent Articles

By a Few Who are

Attuned to the

Foreclosure

Problems at Hand

39

HOMEOWNERS' REBELLION

COULD 62-MILLION HOMES BE FORECLOSURE-PROOF?

Ellen Brown, August 18th, 2010http://www.webofdebt.com/articles/homeowners.php

Over 62 million mortgages are now held in the name of MERS, an electronic recording system devised by and for theconvenience of the mortgage industry. A California bankruptcy court, following landmark cases in other jurisdictions,recently held that this electronic shortcut makes it impossible for banks to establish their ownership of property titles—andtherefore to foreclose on mortgaged properties. The logical result could be 62 million homes that are foreclosure-proof.

Mortgages bundled into securities were a favorite investment of speculators at the height of the financial bubble leading upto the crash of 2008. The securities changed hands frequently, and the companies profiting from mortgage payments wereoften not the same parties that negotiated the loans. At the heart of this disconnect was the Mortgage ElectronicRegistration System, or MERS, a company that serves as the mortgagee of record for lenders, allowing properties to changehands without the necessity of recording each transfer.

MERS was convenient for the mortgage industry, but courts are now questioning the impact of all of this financial jugglingwhen it comes to mortgage ownership. To foreclose on real property, the plaintiff must be able to establish the chain of titleentitling it to relief. But MERS has acknowledged, and recent cases have held, that MERS is a mere “nominee”—an entityappointed by the true owner simply for the purpose of holding property in order to facilitate transactions. Recent courtopinions stress that this defect is not just a procedural but is a substantive failure, one that is fatal to the plaintiff’s legalability to foreclose.

That means hordes of victims of predatory lending could end up owning their homes free and clear—while the financialindustry could end up skewered on its own sword.

California Precedent

The latest of these court decisions came down in California on May 20, 2010, in a bankruptcy case called In re Walker,Case no. 10-21656-E–11. The court held that MERS could not foreclose because it was a mere nominee; and that as aresult, plaintiff Citibank could not collect on its claim. The judge opined:

Since no evidence of MERS’ ownership of the underlying note has been offered, and other courts have concluded thatMERS does not own the underlying notes, this court is convinced that MERS had no interest it could transfer to Citibank.Since MERS did not own the underlying note, it could not transfer the beneficial interest of the Deed of Trust to another.Any attempt to transfer the beneficial interest of a trust deed without ownership of the underlying note is void underCalifornia law.

In support, the judge cited In Re Vargas (California Bankruptcy Court); Landmark v. Kesler (Kansas Supreme Court);LaSalle Bank v. Lamy (a New York case); and In Re Foreclosure Cases (the “Boyko” decision from Ohio Federal Court).(For more on these earlier cases, see here, here and here.) The court concluded:

Since the claimant, Citibank, has not established that it is the owner of the promissory note secured by the trust deed,Citibank is unable to assert a claim for payment in this case.

The broad impact the case could have on California foreclosures is suggested by attorney Jeff Barnes, who writes:

This opinion…serves as a legal basis to challenge any foreclosure in California based on a MERS assignment; to seek tovoid any MERS assignment of the Deed of Trust or the note to a third party for purposes of foreclosure; and should besufficient for a borrower to not only obtain a TRO [temporary restraining order] against a Trustee’s Sale, but also aPreliminary Injunction barring any sale pending any litigation filed by the borrower challenging a foreclosure based on aMERS assignment.

40

While not binding on courts in other jurisdictions, the ruling could serve as persuasive precedent there as well, because thecourt cited non-bankruptcy cases related to the lack of authority of MERS, and because the opinion is consistent with priorrulings in Idaho and Nevada Bankruptcy courts on the same issue.

What Could This Mean for Homeowners?

Earlier cases focused on the inability of MERS to produce a promissory note or assignment establishing that it was entitledto relief, but most courts have considered this a mere procedural defect and continue to look the other way on MERS’technical lack of standing to sue. The more recent cases, however, are looking at something more serious. If MERS is notthe title holder of properties held in its name, the chain of title has been broken, and no one may have standing to sue. InMERS v. Nebraska Department of Banking and Finance, MERS insisted that it had no actionable interest in title, and thecourt agreed.

An August 2010 article in Mother Jones titled “Fannie and Freddie’s Foreclosure Barons” exposes a widespread practice of“foreclosure mills” in backdating assignments after foreclosures have been filed. Not only is this perjury, a prosecutableoffense, but if MERS was never the title holder, there is nothing to assign. The defaulting homeowners could wind up withfree and clear title.

In Jacksonville, Florida, legal aid attorney April Charney has been using the missing-note argument ever since she firstidentified that weakness in the lenders’ case in 2004. Five years later, she says, some of the homeowners she’s helped arestill in their homes. According to a Huffington Post article titled “‘Produce the Note’ Movement Helps Stall Foreclosures”:

Because of the missing ownership documentation, Charney is now starting to file quiet title actions, hoping to get herhomeowner clients full title to their homes (a quiet title action ‘quiets’ all other claims). Charney says she’s helpedthousands of homeowners delay or prevent foreclosure, and trained thousands of lawyers across the country on how toprotect homeowners and battle in court.

Criminal Charges?

Other suits go beyond merely challenging title to alleging criminal activity. On July 26, 2010, a class action was filed inFlorida seeking relief against MERS and an associated legal firm for racketeering and mail fraud. It alleges that thedefendants used “the artifice of MERS to sabotage the judicial process to the detriment of borrowers;” that “to perpetuatethe scheme, MERS was and is used in a way so that the average consumer, or even legal professional, can never determinewho or what was or is ultimately receiving the benefits of any mortgage payments;” that the scheme depended on “theMERS artifice and the ability to generate any necessary ‘assignment’ which flowed from it;” and that “by engaging in apattern of racketeering activity, specifically ‘mail or wire fraud,’ the Defendants . . . participated in a criminal enterpriseaffecting interstate commerce.”

Local governments deprived of filing fees may also be getting into the act, at least through representatives suing on theirbehalf. Qui tam actions allow for a private party or “whistle blower” to bring suit on behalf of the government for a past orpresent fraud on it. In State of California ex rel. Barrett R. Bates, filed May 10, 2010, the plaintiff qui tam sued on behalf ofa long list of local governments in California against MERS and a number of lenders, including Bank of America,JPMorgan Chase and Wells Fargo, for “wrongfully bypass[ing] the counties’ recording requirements; divest[ing] theborrowers of the right to know who owned the promissory note . . .; and record[ing] false documents to initiate and pursuenon-judicial foreclosures, and to otherwise decrease or avoid payment of fees to the Counties and the Cities where the realestate is located.” The complaint notes that “MERS claims to have ‘saved’ at least $2.4 billion dollars in recording costs,”meaning it has helped avoid billions of dollars in fees otherwise accruing to local governments. The plaintiff sues for trebledamages for all recording fees not paid during the past ten years, and for civil penalties of between $5,000 and $10,000 foreach unpaid or underpaid recording fee and each false document recorded during that period, potentially a hefty sum.Similar suits have been filed by the same plaintiff qui tam in Nevada and Tennessee.

By Their Own Sword: MERS’ Role in the Financial Crisis

MERS is, according to its website, “an innovative process that simplifies the way mortgage ownership and servicing rightsare originated, sold and tracked. Created by the real estate finance industry, MERS eliminates the need to prepare and

41

record assignments when trading residential and commercial mortgage loans.” Or as Karl Denninger puts it, “MERS’ ownwebsite claims that it exists for the purpose of circumventing assignments and documenting ownership!”

MERS was developed in the early 1990s by a number of financial entities, including Bank of America, Countrywide,Fannie Mae, and Freddie Mac, allegedly to allow consumers to pay less for mortgage loans. That did not actually happen,but what MERS did allow was the securitization and shuffling around of mortgages behind a veil of anonymity. The resultwas not only to cheat local governments out of their recording fees but to defeat the purpose of the recording laws, whichwas to guarantee purchasers clean title. Worse, MERS facilitated an explosion of predatory lending in which lenders couldnot be held to account because they could not be identified, either by the preyed-upon borrowers or by the investorsseduced into buying bundles of worthless mortgages. As alleged in a Nevada class action called Lopez vs. ExecutiveTrustee Services, et al.:

Before MERS, it would not have been possible for mortgages with no market value . . . to be sold at a profit orcollateralized and sold as mortgage-backed securities. Before MERS, it would not have been possible for the Defendantbanks and AIG to conceal from government regulators the extent of risk of financial losses those entities faced from thepredatory origination of residential loans and the fraudulent re-sale and securitization of those otherwise non-marketableloans. Before MERS, the actual beneficiary of every Deed of Trust on every parcel in the United States and the State ofNevada could be readily ascertained by merely reviewing the public records at the local recorder’s office where documentsreflecting any ownership interest in real property are kept....

After MERS, . . . the servicing rights were transferred after the origination of the loan to an entity so large thatcommunication with the servicer became difficult if not impossible .... The servicer was interested in only one thing –making a profit from the foreclosure of the borrower’s residence – so that the entire predatory cycle of fraudulentorigination, resale, and securitization of yet another predatory loan could occur again. This is the legacy of MERS, and theentire scheme was predicated upon the fraudulent designation of MERS as the ‘beneficiary’ under millions of deeds of trustin Nevada and other states.

Axing the Bankers’ Money Tree

If courts overwhelmed with foreclosures decide to take up the cause, the result could be millions of struggling homeownerswith the banks off their backs, and millions of homes no longer on the books of some too-big-to-fail banks. Without thoseassets, the banks could again be looking at bankruptcy. As was pointed out in a San Francisco Chronicle article by attorneySean Olender following the October 2007 Boyko [pdf] decision:

The ticking time bomb in the U.S. banking system is not resetting subprime mortgage rates. The real problem is thecontractual ability of investors in mortgage bonds to require banks to buy back the loans at face value if there was fraud inthe origination process.

. . . The loans at issue dwarf the capital available at the largest U.S. banks combined, and investor lawsuits would raisestunning liability sufficient to cause even the largest U.S. banks to fail . . . .

Nationalization of these giant banks might be the next logical step—a step that some commentators said should have beentaken in the first place. When the banking system of Sweden collapsed following a housing bubble in the 1990s,nationalization of the banks worked out very well for that country.

The Swedish banks were largely privatized again when they got back on their feet, but it might be a good idea to keep somebanks as publicly-owned entities, on the model of the Commonwealth Bank of Australia. For most of the 20th century itserved as a “people’s bank,” making low interest loans to consumers and businesses through branches all over the country.

With the strengthened position of Wall Street following the 2008 bailout and the tepid 2010 banking reform bill, the U.S. isfar from nationalizing its mega-banks now. But a committed homeowner movement to tear off the predatory mask calledMERS could yet turn the tide. While courts are not likely to let 62 million homeowners off scot free, the defect in titlecreated by MERS could give them significant new leverage at the bargaining table.

-0-

42

Banks’ Self-Dealing Super-Charged the Country's (and World's) Financial Crisis

by Jake Bernstein and Jesse Eisinger

Additional reporting by Kitty Bennett, Krista Kjellman Schmidt, Lisa Schwartz and Karen Weise.

Over the last two years of the housing bubble of the new century, Wall Street bankers perpetrated one of the greatest

episodes of self-dealing in financial history.

Toward the end of the bubble, faced with increasing difficulty in selling the mortgage-backed securities that had been

among their most lucrative products, the banking industry hit on a solution that preserved their massive quarterly earnings

and huge bonuses: In the simplest of terms, they created fake demand for their less than worth products.

A ProPublica1 analysis has shown for the first time the real extent to which banks -- primarily Merrill Lynch, but also

Citigroup, UBS and others -- bought their own products and cranked up an assembly line that otherwise should have

seriously waned.

The products these institutions were buying and selling were at the very heart of the 2008 meltdown -- collections of

mortgage bonds known as collateralized debt obligations, or CDOs.

As the housing boom began to slow in mid-2006, investors became skittish about the riskier parts of those investments. So

the banks created -- and ultimately provided most of the money for -- new CDOs. Those new CDOs bought the hard-to-sell

pieces of the original CDOs. The result was a daisy chain that solved one problem but created another (like taking out new

credit cards to pay off old ones): Each new CDO had its own risky pieces. Banks created yet other CDOs to buy those.

Individual instances of these questionable trades have been reported before, but ProPublica's investigation, done in

partnership with NPR's Planet Money, shows that by late 2006 they became a common industry practice.

An analysis by research firm Thetica Systems, commissioned by ProPublica, shows that in the last years of the boom,

CDOs had become the dominant purchaser of key, risky parts of other CDOs, largely replacing real investors like pension

funds. By 2007, 67 percent of those slices were bought by other CDOs, up from 36 percent just three years earlier. The

banks often orchestrated these purchases. In the last two years of the boom, nearly half of all CDOs sponsored by market

leader Merrill Lynch bought significant portions of other Merrill CDOs [3].

ProPublica also found 85 instances during 2006 and 2007 in which two CDOs bought pieces of each other's unsold

inventory. These trades, which involved $107 billion worth of CDOs, underscore the extent to which the market lacked real

buyers. The analysis shows that often the CDOs that swapped purchases closed within days of each other.

There were supposed to be protections against this sort of abuse. While banks provided the blueprint for the CDOs and

marketed them, they typically selected independent managers who chose the specific bonds to go inside them. The

managers had a legal obligation to do what was best for the CDO. They were paid by the CDO, not the bank, and were

supposed to serve as a bulwark against self-dealing by the banks, which had the fullest understanding of the complex and

lightly regulated mortgage bonds.

1ProPublica is an independent, non-profit newsroom that produces investigative journalism in the public interest. Its work focuses exclusivelystories with “moral force.” Their journalism shines a light on exploitation of the weak by the strong and on the failures of those with power tovindicate the trust having been placed in them. http://www.propublica.org

43

It rarely worked out that way. The managers were beholden to the banks that sent them the business. On a billion-dollar

deal, a managers could earn a million dollars in fees, with little risk. Some small firms did several billion dollars of CDOs

in a matter of a few months.

"For years all these banks, were spawning 'trading partners'," says a former executive from Financial Guaranty Insurance

Company, a major insurer of the CDO market. "What? You don't have a trading partner? Well, just create one."

The executive being interviewed--no unlike most of the dozens of people ProPublica spoke with about the inner workings

of the market at the time--asked not to be named based on a fear of being sucked into ongoing investigations, or because

they were already involved in civil litigation.

Keeping the assembly line going had a wealth of short-term advantages for the banks. Fees rolled in by the millions upon

millions of dollars. A typical CDO could net the bank that created it between $5 million and $10 million -- about half of

which amount usually ended up as employee bonuses. Indeed, Wall Street awarded record billions in bonuses in 2006, a

hefty chunk of which came from the CDO business.

The self-dealing truly did super-charge the market for CDOs, enticing many less-than-savvy investors to try their luck.

Crucially, such deals maintained the value of mortgage bonds at a time when the lack of buyers should have been driving

their values down.

But the strategy of speeding up the "assembly line" ultimately had wholly avoidable devastating consequences for

homeowners, the banks themselves, and ultimately the global economy. Because of Wall Street's nefarious machinations,

more mortgages had been granted to ever-less qualified borrowers. The results can now be seen in the millions of

foreclosed homes across America.

The incestuous inside (not "insider") trading also made the CDOs more intertwined and thus fragile, thereby accelerating

the decline in value that began in the fall of 2007 and deepened over the next year. Most CDOs are virtually valueless.

Nearly half of the nearly trillion dollars in losses to the global banking system arose from CDOs, which losses were

ultimately absorbed by taxpayers and investors around the world. The banking industry's troubles sent the world's

economies into a tailspin from which they have yet to recover and may not do for some time.

According to the government, it remains unclear whether any of these destructive and greedy actions violated specific laws.

The SEC reports that it is actively looking at as many as 50 CDO managers as part of its "broad examination" of the CDO

business' role in the Financial Crisis. In particular, the agency is focusing on the relationship between the banks and the

CDO managers. The SEC is exploring how specific "deals" were structured, whether any quid pro quo arrangements

existed, and whether or not managers were pressured to accept bad assets to accomplishes their purposes.

Upon requests for interviews, the banks pinpointed categorically declined to directly address ProPublica's questions. Asked

about its relationship with managers and the cross-ownership among its CDOs, Citibank responded with this one-sentence

statement:

"It has been widely reported that there are ongoing industry-wide investigations into CDO-related matters and we do not

comment on pending investigations."

Interestingly, none of ProPublica's questions had even mentioned the SEC or "pending investigations."

When confronted with a similar list of questions, Bank of America, which now owns Merrill Lynch, said:

44

"These are very specific questions regarding individuals who left Merrill Lynch several years ago, and a CDO origination

business that, due to market conditions, was discontinued by Merrill before Bank of America acquired the company."

The first installment of ProPublica's series about the largely hidden history of the CDO boom and bust looked at how one

particular hedge fund helped create at least $40 billion (that's forty followed by nine zeros) in CDOs as part of a strategy to

bet against the market (in other words to create bad transaction then benefitting in the billions by betting that they would

fail).

Merrill Lynch Pioneers Pervert the Market

By 2004, the US housing market was in full swing, and Wall Street bankers flocked to the CDO feeding frenzy. At that

point in time, it seemed to be the perfect money machine, and for a time, it was…and everyone was happy. Homeowners

got easy mortgages. Banks and mortgage companies felt secure lending the money because they could sell the mortgages

almost immediately to Wall Street and retrieve all their cash, plus a little extra for their trouble. The investment banks

charged massive fees for repackaging the mortgages into fancy financial products. Investors all around the world got to

play in the then-phenomenal American housing market.

Mortgages were bundled by the millions into bonds, which were in turn combined with and converted into CDOs, offering

varying interest rates and levels of risk.

Investors who held the top tier of a CDO were first in line to receive the big money coming from mortgages. By 2006,

some banks often kept this layer for themselves, a practice that credit agencies blessed with their highest rating--"Triple A."

Buyers of the lower tiers took on more risk and got higher returns. It was, however, they who would be the first to take the

hit should the homeowners funding the CDO defaulted on their mortgages.

Over time, these risky CDO slices became increasingly harder to sell, posing a serious problem for the banks. If they

remained unsold, the sketchy assets stayed on their books like rotting inventory. That then required the banks to set aside

money in reserve to cover the losses and banks hate doing that, because reserves can't be loaned out or put to other money

making uses.

It became clear that being stuck with the risky portions of CDOs would ultimately lower profits and endanger the whole

"assembly line" ultimately creating the bank's failure and its cannibalization by the FDIC and/or larger banking institutions.

The banks, such as (and notably) Merrill and Citibank, sought to solve this problem by greatly expanding what had been a

common and accepted practice: directing CDOs to buy small pieces of other CDOs in order to create the false impression

tht he CDO business was robust, when in actuality it was dying on the vine.

Architects of the CDO structure typically included in the process what was referred to as "a bucket" -- which "side account"

would hold portions of higher yielding CDOs. The practice was designed to boost overall returns on the deals that were

primarily composed of safer assets. In the early days, the bucket was simply a small portion of a CDO held by another

CDO.

One pioneer of the concept of pushing CDOs to buy other CDOs was Merrill Lynch's Chris Ricciardi, who had been

brought to the firm in 2003 in order to take Merrill to the top of the CDO business. According to his former colleagues,

Ricciardi's team cultivated smaller firms as CDO managers in order to best control them. A strong relationship with Merrill

was then seen by these smaller organizations as the difference between a business that thrived and one that probably

wouldn't. The more deals the banks heaped upon the managers, the more money they got paid.

45

As the head of Merrill's CDO business, Ricciardi also wooed CDO managers with golf outings and dinners. One Merrill

executive summed up the overall arrangement: "I'll make you rich, but you'll have to be my bitch." But not all managers

went for it.

An executive from Trainer Wortham, a CDO manager, recalls a 2005 conversation with Ricciardi. "I wasn't going to buy

other CDOs, but Chris said: 'You don't get it. You have to buy the other guys' CDOs to get your deal done: that's how it

works!'" When the manager refused, Ricciardi told him flatly: 'That's it. You're finished, you're not going to get another

deal done.'" After this Trainer Wortham largely withdrew from the market, concerned about the ethics of the practice and

the grossly overheating prices for CDOs.

Mr. Ricciardi declined multiple requests by ProPublica to comment.

Merrill CDOs regularly acquired slices of other Merrill deals. This seems to have happened more in the second half of any

given year, according to ProPublica's analysis, apparently because annual bonuses are based on the deals completed by year

end. Although at that time, the acquisitions constituted but a small portion of the overall CDO business compared with

what was to come later.

Ricciardi left Merrill Lynch in February 2006. But the CDO machine he put into place not only survived his departure, it

became a model for all of Merrill's competitors, big and small.

As the Housing Market Wanes, Self-Dealing Takes Off

By mid-2006, the housing market was seriously on the waning side, particularly relative to subprime mortgages, which

were high interest rate loans made to borrowers with spotty or questionable credit. As the collateralized debt obligation

business began to fail as its house of cards toppled, subprime lenders followed suit, in what would become a mass

extinction of CDOs. In the first half of the year, the percentage of subprime borrowers who didn't even make the first

month's mortgage payment tripled from the previous year.

CDO investors, such as pension funds and insurance companies became increasingly nervous. If homeowners couldn't

make their mortgage payments, then the diminishing stream of cash to CDOs would make them valueless. According to

Fiachra O'Driscoll, who co-ran Credit Suisse's CDO business from 2003 to 2008: "Buyers began to shrivel and shrivel."

Faced with disappearing investor demand for CDOs, bankers could have wound down the lucrative business and just

moved on. That's the way a market is supposed to work. Demand disappears; supply follows. However, the bankers were

making tons of money, having amassed warehouses chock full of CDOs and billions in other mortgage-based assets whose

values were also falling rapidly. But not to be deterred and without regard for the country or the world economy their

pocket books took precedent over the people who had created all their wealth.

Rather than stop, bankers at Merrill, Citi, UBS and elsewhere kept making CDOs. The only question, though, was: Who

would buy them?

The top 80 percent, the less risky layers or so-called "super senior CDO's," were held by the banks themselves. The beauty

of owning that supposedly safe top portion, was that it required hardly any money to be posted as reserves for the myriad

failing mortgages.

That left 20 percent of the portfolio that the banks did not want due to the higher risk and reserve requirements. The Banks

then began discounting the bottom level, riskiest parts to large hedge funds, which left the middle layer, known on Wall

Street as "the Mezzanine," which was sold off to newly forming CDOs whose top 80 percent was ultimately owned by ...

the Banks.

46

"As we progressed into 2006, the Mezzanine portfolios were regularly still being bought by other CDOs," says Credit

Suisse's O'Driscoll.

This was the daisy chain. On paper, the risky stuff was gone, held by new independent CDOs. In reality, however, the

banks were buying their own otherwise unsellable assets themselves, creating a very convoluted and erroneous impression

that all was not yet lost ("so keep giving us your money").

How could something so seemingly short-sighted and so blatantly self-serving have happened?

It's one of the great mysteries of the crash. Banks have large fleets of risk managers whose duty it is to defend against just

such reckless behavior. Top executives have maintained that while they suspected that the housing market was cooling,

they never imagined the crash. For those doing the deals, the payoff was immediate an enormous. From the point of view,

they insist, the dangers seemed abstract and remote.

The CDO managers played a crucial role. CDOs were so complex that even buyers had a hard time seeing exactly what

was in them and who really owned them -- making a missing neutral third party that much more essential.

As per Peter Nowell, a former London-based investor for the Royal Bank of Scotland: "When you're investing in a CDO

you are very much putting your faith in the manager. The manager is who chooses all the bonds that go into the CDO."

(RBS suffered mightily in the global financial meltdown, posting the largest loss in United Kingdom history, and was de

facto nationalized by the British government.)

By persuading their managers to pick and choose the unsold slices of CDOs, the banks helped keep the market going and

keep themselves in business (for a while). "It guaranteed distribution when, quite frankly, there was not a huge market for

them," says Nowell.

The counterintuitive result of these practices was that even as investors began to vanish, the mortgage CDO market more

than doubled from 2005 to 2006, reaching $226 billion, according to the trade publication Asset-Backed Alert.

Sweetheart Deals Handed Out by CitiBank and Merrill

As the CDO market grew, so did the number of CDO management firms, including many small shops that relied on a

single bank for most of their business. The number of CDO managers that it rated rose from 89 in July 2006 to 140 in

September 2007.

One CDO manager epitomized the devolution of the business, according to numerous industry insiders: a Wall Street

veteran named Wing Chau. Earlier in the decade, Chau had run the CDO department for Maxim Group, a boutique

investment firm in New York. Chau had built a profitable business for Maxim based largely on his relationship with

Merrill Lynch. In just a few years, Chau and corralled for Maxim more than four billion dollars worth of assets under

management solely from Merrill's CDOs cast-offs.

In August 2006, Chau bolted from Maxim to start his own CDO management business, taking several colleagues with him.

Chau's departure gave Merrill, the biggest CDO producer, one more avenue for unsold inventory.

Chau named the firm Harding, after the town in New Jersey where he lived. The CDO market was starting its most

profitable stretch ever, and Harding would play a big part. In an eleven-month period, ending in August 2007, Harding was

managing $13 billion in CDOs, including more than $5 billion from Merrill itself, and another nearly $5 billion from

Citigroup. Chau would later earn a measure of notoriety for a cameo appearance in Michael Lewis' bestseller "The Big

Short," wherein he is depicted as a cheerfully feckless "go-to" buyer for Merrill Lynch's CDO machine.)

47

Chau had a long-standing friendship with Ken Margolis, who was Merrill's top CDO salesman under Ricciardi. When

Ricciardi left Merrill in 2006, it was Margolis who became a co-head of Merrill's CDO group, carrying a genial, let's-just-

get-the-deal-done demeanor into his new position. An avid poker player, Margolis told a friend that in a previous job he

had stood down a casino owner during a foreclosure negotiation after the owner had threatened to put a fork through his

eye.

Chau's close relationship with Merrill continued. In late 2006, Merrill sublet office space to Chau's startup in the Merrill

tower in Lower Manhattan's financial district. A Merrill banker, David Moffitt, scheduled visits to Harding for prospective

investors in the bank's CDOs. "It was a nice office," overlooking New York Harbor, recalls a CDO buyer. "But it did feel a

little weird that it was Merrill's building," he said.

Moffitt is another who did not respond to requests for comment.

Under Margolis, other small managers with meager track records were also suddenly handling CDOs valued at as much as

$2 billion. Margolis declined to answer any questions about his own involvement in these matters.

A Wall Street Journal article from late 2007, one of the first of its kind, described how Margolis worked with one

inexperienced CDO manager called NIR on a CDO named Norma, in the spring of that year. The Long Island-based NIR

made about $1.5 million a year for managing Norma, a single CDO that imploded.

According to a lawsuit filed in New York against Merrill over the CDO, Norma, was settled quietly after the plaintiffs

received internal Merrill documents. NIR's collateral management business had arisen from efforts by Merrill Lynch to

assemble a stable of captive small firms to manage its CDOs that would be beholden to Merrill Lynch on account of the

business it funneled to them.

NIR also declined to comment.

Banks had a variety of ways to influence managers' behavior. Some of the few more intrepid outside investors remaining

in the market following the implosion believed that the manager would do a better job if he owned a small slice of the CDO

he was managing. That way, the manager would have more incentive to manage the investment properly in that he/she too

was an investor. But small management firms rarely had money to invest. Some banks solved this problem by advancing

money to managers such as the previously referred to Harding, Chau's company.

Chau's group managed two Citigroup CDOs -- 888 Tactical Fund and Jupiter High-Grade VII -- in which the bank loaned

Harding money to buy risky pieces of the deal. The loans would be paid back out of the fees the managers took from the

CDO and its investors. The loans were disclosed to investors in a few sentences among hundreds of pages of legalese that

accompanied the highly complex and convoluted deals.

In response to ProPublica's questions, Chau's lawyer said, "Harding's dealings with investment banks were all proper and

all details were fully disclosed."

Citigroup made similar deals with other managers. The bank lent money to a manager called Vanderbilt Capital Advisors

for its Armitage CDO, completed in March 2007.

Vanderbilt declined to comment. It couldn't be learned how much money Citigroup loaned or whether it was ever repaid.

Yet again banks had masked their true stakes in CDO's. Banks were lending money to CDO managers so they could buy

the banks' dodgy assets. If the managers couldn't pay the loans back -- and most were very thinly capitalized -- the banks

were on the hook for even more losses when the CDO business collapsed.

48

Goldman Sachs, Merrill Lynch and Others Get Tough

When the housing market deteriorated, banks took advantage of a little-used power they possessed but had seldom

employed over CDO managers.

The way CDOs are put together, there is a brief period when the bonds chosen by managers sit idly on the banks' balance

sheets. In so much as the values of such assets can fall, banks contractually reserved the right to overrule managers'

selections. According to numerous bankers, managers and investors, banks rarely wielded that veto until late 2006, after

which it became common. Merrill was in the lead.

"I would go to Merrill and tell them that I wanted to buy, say, a Citi bond," recalls a CDO manager. "They would say 'no.' I

would suggest a UBS bond, they would say 'no.' Eventually, you got the joke." Managers could choose assets to put into

their CDOs but they had to come from Merrill CDOs. One rival investment banker says Merrill treated CDO managers the

way Henry Ford treated his Model T customers: You can have any color you want, as long as it's black.

Once, Merrill's Ken Margolis pushed a manager to buy a CDO slice for a Merrill-produced CDO called Port Jackson that

was completed in the beginning of 2007: "'You don't have to buy the deal but you are crazy if you don't because of your

business,'" an executive at the management firm recalls Margolis telling him. "'We have a big pipeline and only so many

more mandates to give you.' You got the message." In other words: Take our stuff and we'll send you more business. If not,

forget it.

Margolis is still another who declined to comment on the incident.

"All the managers complained about it," recalls O'Driscoll, the former Credit Suisse banker who competed with other

investment banks to put deals together and market them. But "they were indentured slaves." O'Driscoll recalls managers

grumbling that Merrill in particular told them "what to buy and when to buy it."

Other big CDO-producing banks quickly adopted the practice.

A little-noticed document released this year during a congressional investigation into Goldman Sachs' CDO business

reveals that bank's thinking. The firm wrote a November 2006 internal memorandum about a CDO called Timberwolf,

managed by Greywolf, a small manager that was headed by ex-Goldman bankers. In a section headed "Reasons To Pursue,"

the authors touted that "Goldman is approving every asset" that will end up in the CDO. What the bank intended to do with

that approval power is clear from the memo: "We expect that a significant portion of the portfolio by closing will come

from Goldman's offerings."

When asked to comment whether Goldman's memo demonstrates that it had effective control over the asset selection

process and that Greywolf was not in fact an independent manager, the bank responded: "Greywolf was an experienced,

independent manager and made its own decisions about what reference assets to include. The securities included in

Timberwolf were fully disclosed to the professional investors who invested in the transaction."

Greywolf declined to comment. One of the investors, Basis Capital of Australia, filed a civil lawsuit in federal court in

Manhattan against Goldman over the deal. The bank maintains the lawsuit is without merit.

By March 2007, the housing market's signals were flashing red. Existing home sales plunged at the fastest rate in almost 20

years. Foreclosures were on the rise. And yet, to CDO buyer Peter Nowell's surprise, banks continued to churn out CDOs.

"We were pulling back. We couldn't find anything safe enough," says Nowell. "We were amazed that April through June

they were still printing deals. We thought things were over."

49

Instead, the CDO machine was in overdrive. Wall Street produced $70 billion in mortgage CDOs in the first quarter of the

year. Many shareholder lawsuits battling their way through the court system today focus on this period of the CDO market.

They allege that the banks were using the sales of CDOs to other CDOs to prop up prices and hide their losses.

"Citi's CDO operations during late 2006 and 2007 functioned largely to sell CDOs to yet newer CDOs created by Citi to

house them," charges a pending shareholder lawsuit against the bank that was filed in federal court in Manhattan in

February 2009. "Citigroup concocted a scheme whereby it repackaged many of these investments into other freshly-baked

vehicles to avoid incurring a loss."

Citigroup described the allegations as "irrational," saying the bank's executives would never knowingly take actions that

would lead to "catastrophic losses."

In the Hall of Mirrors, Myopic Rating Agencies

The portion of CDOs owned by other CDOs grew right alongside the market. What had been 5 percent of CDOs

(remember the "bucket") now came to constitute as much as 30 or 40 percent of new CDOs. (Wall Street also rolled out

CDOs that were almost entirely made up of CDOs, called CDO Squareds).

The ever-expanding bucket provided new opportunities for incestuous trades. It worked like this: A CDO would buy a

piece of another CDO, which then returned the favor. The transactions moved both CDOs closer to completion, when

bankers and managers would receive their fees.

ProPublica's analysis shows that in the final two years of the business, CDOs with cross-ownership amounted to about one-

fifth of the market, i.e., about $107 billion.

Here's an example from early May 2007:

A CDO called Jupiter VI bought a piece of a CDO called Tazlina II. Tazlina II bought a piece of Jupiter VI.

Both Jupiter VI and Tazlina II were created by Merrill and were completed within a week of each other. Both were

managed by small firms that did significant business with Merrill: Jupiter by Wing Chau's Harding, and Tazlina by Terwin

Advisors.

Chau did not respond to questions about this deal. Terwin Advisors could not reached.

Just a few weeks earlier, CDO managers completed a comparable swap between Jupiter VI and another Merrill CDO called

Forge 1. Forge has its own intriguing history. It was the only deal done by a tiny manager of the same name based in

Tampa, Fla. The firm was started less than a year earlier by several former Wall Street executives with mortgage

experience. It received seed money from Bryan Zwan, who in 2001 settled an SEC civil lawsuit over his company's

accounting problems in a federal court in Florida.

Zwan and Forge executives didn't respond to requests for comment.

After seemingly coming out of nowhere, Forge won the right to manage a $1.5 billion Merrill CDO. That earned Forge a

visit from Moody's, the rating agency. "We just wanted to make sure that they actually existed," says a former Moody's

executive. The rating agency saw that the group had an office near the airport and expertise to do the job.

Rating agencies regularly did such research on managers, but failed to ask more fundamental questions. The credit ratings

agencies "did heavy, heavy due diligence on managers but they were looking for the wrong things: how you processed a

50

ticket or how your surveillance systems worked," says an executive at a CDO manager. "They didn't check whether you

were buying good bonds."

One particular Forge employee recalled in a recent interview that he was amazed that Merrill had been able to find buyers

so quickly. "They were able to sell all the tranches" -- slices of the CDO -- "in a fairly rapid period of time," said Rod

Jensen, a former research analyst for Forge.

Forge achieved this feat because Merrill sold the slices to other CDOs, many linked to Merrill.

The ProPublica analysis shows that two Merrill CDOs, Maxim II and West Trade III, each bought pieces of Forge. Small

managers oversaw both deals.

Forge, in turn, was filled with detritus from Merrill. Eighty-two percent of the CDO bonds owned by Forge came from

other Merrill deals.

Citigroup did its own version of the shuffle, as these three CDOs demonstrate:

A CDO called Octonion bought some of Adams Square Funding II. Adams Square II bought a piece of Octonion. A third CDO, Class V Funding III, also bought some of Octonion. Octonion, in turn, bought a piece of Class V Funding III.

All of these Citi deals were completed within days of each other. Wing Chau was once again a central player. His firm

managed Octonion. The other two were managed by a unit of Credit Suisse.

Credit Suisse declined to comment.

Not all cross-ownership deals were consummated.

In spring 2007, Deutsche Bank was creating a CDO and found a manager that wanted to take a piece of it. The manager

was overseeing a CDO that Merrill was assembling. Merrill blocked the manager from putting the Deutsche bonds into the

Merrill CDO. A former Deutsche Bank banker says that when Deutsche Bank complained to Andy Phelps, a Merrill CDO

executive, Phelps offered a quid pro quo: If Deutsche was willing to have the manager of its CDO buy some Merrill bonds,

Merrill would stop blocking the purchase.

Phelps declined to comment.

The Deutsche banker, who says its managers were independent, recalls being shocked: "We said we don't control what

people buy in their deals." The swap didn't happen.

The Missing Regulators and the Aftermath

In September 2007, as the market finally started to catch up with Merrill Lynch, Ken Margolis left the firm to join Wing

Chau at Harding.

Chau and Margolis circulated a marketing plan for a new hedge fund to prospective investors touting their expertise in how

CDOs were made and what was in them. The fund proposed to buy failed CDOs -- at bargain basement prices. In the end,

Margolis and Chau couldn't make the business work and dropped the idea.

Why didn't regulators intervene during the boom to stop the self-dealing that had permeated the CDO market?

51

No one agency had authority over the whole business. Since the business came and went in just a few years, it may have

been too much to expect even assertive regulators to comprehend what was happening in time to stop it.

While the financial regulatory bill passed by Congress in July creates more oversight powers, it's unclear whether

regulators have sufficient tools to prevent a replay of the debacle.

In just two years, the CDO market had cut a swath of destruction. Partly because CDOs had bought so many pieces of each

other, they collapsed in unison. Merrill Lynch and Citigroup, the biggest perpetrators of the self-dealing, were among the

biggest losers. Merrill lost about $26 billion on mortgage CDOs and Citigroup about $34 billion.

-0-

Miscellaneous Notes and Articles of Interest

DEMAND LETTERS CLAIMING DAMAGES FOR ERRORS AND OMISSIONS, NEGLIGENCE

AND MALPRACTICE

Posted on November 18, 2008 by Neil Garfield

Demand letters are one of your opening tools in putting the parties on notice that you have a claim and you

intend to pursue it. AN ATTORNEY’S DEMAND LETTER CARRIES FAR MORE WEIGHT THAN ONE FROM A

HOMEOWNER.

Most of the participants in your loan closing have malpractice or errors and omissions insurance policies. You

must couch your claim as negligence or malpractice, an error or omission and not as a crime or intentional tort

if you want to invoke insurance coverage.

You should also include a provision that they should forward a copy of the letter to their insurance carrier. Most

carriers say that if you don’t notify them within thirty (30) days they won’t defend or cover the claim. So you

put the receiver of the letter in a bind of either settling with you without insurance (so his premiums won’t go

up or his coverage dropped) or letting the insurance company know there is a problem.

The carrier will instantly understand that this is one of thousands of claims that they are going to be hit with, so

they will likely try to either intimidate you out of the claim or offer minimal settlements. Depending upon what

you have decided as your goal (getting money or getting rid of your mortgage) you might accept the offer or

negotiate something higher.

This adds to the war chest you can mount up to pay for more expensive litigation. It also increases the

likelihood that an attorney will take your case since there are so many insurance companies involved (including

the insurance purchased from AMBAC, AIG, or credit default swaps, over collateralization and cross

collateralization).

BEWARE OF THE RELEASE HOWEVER, SINCE THEY WILL TRY TO GET YOU TO RELEASE EVERY

CLAIM OR DEFENSE YOU HAVE IN SETTLEMENT. DO NOT SIGN SUCH A DOCUMENT UNLESS YOU

INTEND TO STOP THERE. INSIST ON CHANGES TO THE RELEASE DOCUMENT SUCH THAT YOU

WILL STILL BE ABLE TO CLAIM THAT THE NOTE AND MORTGAGE ARE VOID, INVALID, NON-

52

NEGOTIABLE, FRAUDULENTLY OBTAINED, ETC. GET COMPETENT LEGAL ADVICE BEFORE YOU

SIGN ANYTHING.

WHO THE PARTIES ARE WHO RECEIVE DEMAND LETTERS FOR ERRORS, OMISSIONS AND

MALPRACTICE:

1. Appraiser and Appraisal Company

2. Mortgage Broker and Mortgage Brokerage Company

3. Escrow Agent and Escrow Company

4. Title Agent, Title Agency and Title Insurance Company claiming cloud on title

5. Lender who appears on paper as payee on note and as mortgagee on mortgage or beneficiary under Deed of

Trust

6. Trustee under deed of trust and add challenge to authority because of successive Trustees named in pooling

and services agreement and in the issuance of the mortgage backed securities.

7. Mortgage Servicers — each of them that you know of for misapplication of funds and demand that they show

a full accounting for all funds received and all funds disbursed. How do you know the holder of the note

received the payment? Who is the holder of the note?

-0-

EXECUTIVE ACCUSED OF MORTGAGE SECURITIES SCHEME.

[IN THE STANDARD MORTAGE LOAN] EVERYONE HAS BEEN PAID AT LEAST ONCE, 100 CENTS ON

THE DOLLAR, PLUS FEES AND PROFITS. NOW THEY WANT YOUR HOME TOO! ARE YOU GOING TO

GIVE IT TO THEM?

December 12, 2008 by Atty Neil Garfield (http://livinglies.wordpress.com)

DECEMBER 12, 2008 Editor’s Note: They (the mortgage industry) would have us believe that this was anexception to the rule. It was not! In fact this WAS the rule.

The reasons for Wall Street being so awash in money [during the first part of this century] were (a) they weresuccessfully selling unregulated securities under false pretenses and false ratings and (b) they regularlypressured employees to change borrower information, who in turn pressured the mortgage brokers, all ofwhom pressured the “pretender lender” (the “bank” that was named as payee on the mortgage, and asmortgagee or beneficiary under the mortgage or deed of trust respectively).

Wall Street geniuses thought they keep “clean hands” by not doctoring the documents themselves.

But the dictation of terms came from Wall Street and everything that the parties did was at the behest of WallStreet.

Thus the standard “market forces” were turned upside down, to wit: whereas once upon a time a mortgagebroker or loan officer who turned in a lot of bad loans was out of a job, now he/she was out of a job if he/shedidn’t fake loans, appraisals, mortgage terms, interest rates etc.

53

The reason was, as usual…straight economics. In other words, if you can sell rotten apples for the same priceas imported fresh ones, then you make a lot more money, because finding rotten apples is a lot cheaper thanordering good apples from a reliable vendor. In this process, you’re doing just fine (great in fact) untilsomeone looks at, much less bites into, the apple. So if someone says “let’s see the apples” you produce acertificate of freshness from a respected inspection service. But if they still insist on seeing the apples, what doyou do? Why of course you get rid of the apples by destroying or losing them (i.e., like bad promissory notes).Hence 40% of all original notes were destroyed, another 40% were lost or doctored in some way; and theremaining notes, had conditions of insurance, overcollateralization, cross collateralization, reserves, insuranceand Federal Bailouts making them bad apples as well.

THIS IS WHY WE ASSERT SO STRONGLY THAT THE NOTE HAS BEEN FULL PAID IN FULL EVEN IF IT WASN’TPAID BY THE BORROWER. AND THIS IS PRECISELY WHY THE FINANCIAL SERVICES INDUSTRY CANNOTCOME TO COURT WITH A REAL, BONA FIDE HOLDER IN DUE COURSE. EVERYONE HAS BEEN PAID AT LEASTONCE, 100 CENTS ON THE DOLLAR, PLUS FEES AND PROFITS..AND NOW THEY WANT YOUR HOUSE TOO!!

-0-

LOOK CAREFULLY AT EXHIBITS CONTAINING MERS ADVERTISING TO LENDERS LOOKING TO

TRANSFER NOTES AND MORTGAGES

January 8, 2009 by Neil Garfield

MERS MEMBERSHIP INFORMATION REVEALS INDEX TO SECURITIZATION. AND ANY ASSERTION

OR LITIGATION ASSERTING THAT MERS IS AUTHORIZED TO FORCLOSE…OR EVEN A NOMINAL

BENEFICIARY… IS FALSE

From the amended complaint.

That Deed of Trust (“DOT”) [in the referenced case] contained a false representation on its face when it

represented that Defendant MERS was a beneficiary under the DOT. Paragraph (E) in related documentation

states that “MERS is a separate corporation that is acting solely as a Nominee for Lender and Lender’s

successors and assigns. MERS simply is NOT the beneficiary under the DOT, it never had ownership or

possession of the Promissory Note, which is the obligation secured by the DOT--and MERS has never been

entitled to receive one single cent of remuneration from Mr. Buse’s loan proceeds. The statement that MERS is

the nominee is nonsensical and means nothing in a real estate transaction, and most certainly, MERS has never

been, nor is it now, the beneficiary under the DOT. The language is a sham.

From MERS explained by Aurora Lawyers

-0-

THE RESIDENTIAL MORTGAGE MARKET AND CLAIMED FUNCTION OF MERS

When a mortgage lender loans money to a homebuyer, it obtains from that buyer a promissory note in the formof a negotiable instrument, as well as a mortgage instrument in the form of a deed of trust or mortgage, whichis recorded in the county official records. The lender often does not continue to hold the note. Instead, thelender sells the note into the secondary mortgage market, most often to one of the government or government-sponsored entities created by statute to purchase residential mortgage loans from banks and other lenders. See12 U.S.C. §§ 1451-59, 1716-23 et seq. (creating the Government National Mortgage Association (“Ginnie Mae”),Federal National Mortgage Association (“Fannie Mae”), and Federal Home Loan Mortgage Corporation (“FreddieMac”)). In turn, these entities re-sell the notes into a tertiary mortgage backed securities market, usually aspart of a bundle of notes held in trust for investors. As a result, the notes are held for the benefit of numerouspeople simultaneously, whose identities change as these negotiable instruments are sold and resold and

54

tumbled about in these markets (mostly foreign), and as the investors sell and re-sell their shares in themortgage-backed securities.

Because of the secondary and tertiary mortgage markets, the original lender is then able to make the noteavailable for sale to additional home buyers. The availability of these funds is the specific and intended result ofthe statutes that created the government and government sponsored entities – to increase funds for homeownership in the United States. See 12 U.S.C. §§ 1451, 1716.

MERSCORP, Inc. and MERS are companies specifically designed and formed to play an integral part inthe federally established free-market system, which was ostensibly created in order to increase liquidity in themarket for home mortgages. In 1993, the Mortgage Bankers Association, Ginnie Mae, Fannie Mae, Freddie Macand others in the real estate finance industry created an electronic registration and tracking system that issimilar to the process used with great success by the Depository Trust Company for the securities industry.

MERSCORP, Inc. was thereby formed to track both beneficial ownership interests in, and servicing rights to,mortgage loans as they change hands throughout the life of the loan.

This tracking supposedly assists the mortgage banking industry by reducing questions regarding thesecontractual interests as they are bundled into mortgage-backed securities. In this manner, MERSCORP, Inc.expedites the facilitation of liquidity in the secondary mortgage markets. MERS serves as the mortgagee orbeneficiary for its member lenders.

Upon the purchase of a home, the borrower signs a loan contract that names MERS as the beneficiary (as

“nominee” for the lender and its successors and assigns as here). In that contract, the borrower assigns his or

her right, title, and interest in the property to MERS. The borrower contractually agrees that, in the event of

default, MERS is a proper party to foreclose on the home. The mortgage or deed of trust with MERS as a

named beneficiary is then recorded. When the note is subsequently sold by the original lender to others, the

sales of the notes are tracked on the MERS® System. As long as the sale of the note involves a member of

MERS, MERS remains a named mortgagee or beneficiary of record and continues to act as a nominee for the

new holder. But in the face of this, the "lender" retains the deed or mortgage so that it might later foreclose on

the property (your home) and resell it all over again.

This relationship is memorialized in the original mortgage or deed of trust to which the borrower is a party .

Upon the re-sale of the loan the member lender is, form that point on, no longer involved. An assignment from

MERS to the non MERS member lender is then made, executed and recorded in the county where the real

estate is located, and the loan is “de-activated” from the MERS® System and viola! the fraud is buried and the

so-called lender , secondary purchaser, Wall Street and MERS are off the hook.

-0-

MERS: PURELY AN ILLEGAL SCHEME TO AVOID/EVADE STATE AND FEDERAL LAW, TAXES, FEES,

FINES , PENALTIES AND LITIGATION FOR WORLD-WIDE PREDATORY LENDING PRACTICES

January 8, 2009 by Neil Garfield

See: MERS Membership Information Reveals Index To Securitization And Investors Allegation That MERS Is

Authorized, Or Even A Nominal Beneficiary Is patently False!

From the amended complaint.

55

In this case, the Deed of Trust (“DOT”) contained a false representation on its face when it represented that

Defendant MERS was a beneficiary under the DOT. Paragraph (E) States that “MERS is a separate corporation

that is acting solely as a Nominee for Lender and Lender’s successors and assigns. MERS is the beneficiary

under this Security Instrument.”

As is demonstrated here, MERS is in fact NOT the beneficiary under the DOT: it never had ownership or

possession of the Promissory Note which is the obligation which is secured by the DOT; and MERS has never

been entitled to receive one single cent of remuneration from Mr. Buse’s loan proceeds. The statement that

MERS is the nominee is nonsensical language which means nothing in a real estate transaction, and most

certainly, MERS has never been, nor is it now, the beneficiary under the DOT. The language is a sham.

From MERS explained by Aurora Lawyers, Bold emphasis are my highlights.

A. The Residential Mortgage Market and Function of MERS

When a mortgage lender loans money to a home buyer, it obtains a promissory note in the form of a negotiableinstrument from the borrower, as well as a mortgage instrument in the form of a deed of trust which isrecorded in the county official records. The lender often does not continue to hold the note. Instead, the lendersells the note into the secondary mortgage market, most often to one of the government or government-sponsored entities created by statute to purchase residential mortgage loans from banks and other lenders. See12 U.S.C. §§ 1451-59, 1716-23 et seq. (creating the Government National Mortgage Association (“Ginnie Mae”),Federal National Mortgage Association (“Fannie Mae”), and Federal Home Loan Mortgage Corporation (“FreddieMac”)). In turn, these entities re-sell the notes into a tertiary mortgage backed securities market, usually aspart of a bundle of notes held in trust for investors. As a result, the notes are held for the benefit of numerouspeople simultaneously, whose identities change as these negotiable instruments are sold and resold in thesemarkets, and as the investors sell and re-sell their shares in the mortgage-backed securities.

Because of the secondary and tertiary mortgage markets, the original lender is then able to make the funds

from the first sale of the note available to additional home buyers. The availability of these funds is the specific

and intended result of the statutes that created the government and government sponsored entities – to

increase funds for home ownership in the United States. See 12 U.S.C. §§ 1451, 1716.

MERSCORP, Inc. and MERS were companies formed to play an integral part in the federally established free-

market system created to increase liquidity in the market for home loans. In 1993, the Mortgage Bankers

Association, Ginnie Mae, Fannie Mae, Freddie Mac and others in the real estate finance industry created an

electronic registration and tracking system that is similar to the process used with great success by the

Depository Trust Company for the securities industry. MERSCORP, Inc. was formed to track both beneficial

ownership interests in, and servicing rights to, mortgage loans as they change hands throughout the life of the

loan.

This tracking assists the mortgage banking industry by reducing questions regarding these contractual interests

as they are bundled into mortgage-backed securities. In this manner, MERSCORP, Inc. facilitates liquidity in the

secondary mortgage markets. MERS serves as the mortgagee or beneficiary for the MERS member lender.

Upon the purchase of a home, the borrower signs a loan contract that names MERS as the beneficiary (as

“nominee” for the lender and its successors and assigns as here). In the loan contract, the borrower assigns his

56

or her right, title, and interest in the property to MERS. The borrower contractually agrees that, in the event of

default, MERS is a proper party to foreclose on the home. The mortgage or deed of trust with MERS as a

named beneficiary is recorded. When the note is sold by the original lender to others, the sales of the notes are

tracked on the MERS® System. As long as the sale of the note involves a member of MERS, MERS remains a

named mortgagee or beneficiary of record and continues to act as a nominee for the new holder.

This relationship is memorialized in the original mortgage or deed of trust to which the borrower is a party. If a

member is no longer involved upon sale, an assignment from MERS to the non MERS member is made,

executed and recorded in the county where the real estate is located, and the loan is “de-activated” from the

MERS® System.

57

THE FOLLOWOING PAGES INCLUDE FORMS THAT MUST BE

SIGNED, AND INFORMATION TO BE PROVIDED BY CLIENT ITEMS

FOR INCLUSIONIN THE APPLICTION PACKET…

A Cashier's Check or Wire-Transfer in the amount of $7,995 made payable to Three Arck Capital Group, LLC(note that a personal check may be used, although doing so can hold up the entire process for two weeks ormore while waiting for out-of-state bank clearance).

This fully refundable sum will become your Contingency Fund in your title-holding inter vivos trust in whichyour property will be vested and protected for the duration of our agreement. Your check and all requireddocuments will be received and reviewed by NARSCor, LLC prior to forwarding by Overnight Mail to ThreeArck Capital for handling

Application: The attached Application and Questionnaire - signed and dated

Picture ID: A clear copy of your valid picture I.D. (one for each person listed on the mortgage or property'stitle)

Social Security Numbers: Social Security numbers for each person on title (just the number, not necessarily acopy of anything)

Promissory Note: A clear copy of the Promissory Note and Deed of Trust, or Promissory Note and Mortgage,assuring that we have the property's Tax Identification number (APN, PIN, etc.) We need only the first pageof the Mortgage with the instrument number as filed with the County Recorder)

Settlement Statement (HUD 1): A clear copy of the original Settlement Statement from settlement official(title company, escrow company, closing attorney, etc.): must include name and addresses of the companyand names and titles of all persons involved in the closing process and their respective titles

Legal Description: Full legal description of property (will be usually be on the note, the trust deed, grantdeed, warranty deed, bargain and sale deed, etc…. and or on your mortgage)

Payment Statements: Current payment statements from each lender of record, indicating to whom you payyour mortgage payments (some lenders will have transferred the mortgage to a secondary or tertiarymortgage company or bank following your purchase settlement (escrow). Please provide name, address,phone number and contract person for each one

POA (Powers of Attorney- 4): Four (4) originals independently signed and notarized ("wet ink" originals).Please have this form formally notarized with a red right thumb print if possible…'not mandatory or availablein some states: although a good idea may be to take a red ink pad with you when you go to the notary andhave them give you a second notary form imprinted with the red ink…the color prevents forgery byduplication).

The Trust Set Up Questionnaire

Exculpatory Affirmations

Agreement to participate in Training Course

Acknowledgement of the Explanation of The Process

58

IMPORTANT EXCULPATORY AFFIRMATIONS (1-4)

1. The undersigned affirms here a clear understanding that it is NOT the intent of Three Arck Capital Group, LLCand/or its associates and/or assigns to assist in curing, postponing or ameliorating the effects of a mortgage lender'svalid foreclosure process. Three Arck Capital Group, LLC is entering the subject transaction as a principal acquiringparty, acting solely in its best interests with the anticipation of justified financial enrichment .

2. The undersigned affirms here a clear understanding that Three Arck Capital Group, LLC, its owners, affiliates and/orassigns are not attorneys and not licensed to proffer legal, accounting or real estate agency advice. All requisitedocuments are fixed, boiler-plate and "fill in the blank" forms, with Three Arck acting solely as a principal and bonafide attorney-in-fact relative to the afore mentioned Power of Attorney. All parties are therefore hereby urged to seekindependent legal counsel in all matters relative to the proposed transaction.

3. The undersigned affirms here a clear understanding that the refund policy of Three Arck Capital Group LLC is suchthat if removal and replacement of your existing home loan proves unworkable or unfeasible, all moneys paid to itwill be fully refundable. As well, if prior to the commencement of handling by Three Arck Capital Group LLC, yourmortgage would be determined for any reason to be fully without error, omission or any of the infractions referencedabove, there will be no charge for services and your documents and the entire amount of your payment will bereturned to you.

4. The undersigned affirms here an understanding that Three Arck Capital Group, LLC and/or any person or firm withwhom it may associate during the course of this transaction are not, and have not presented themselves as,Foreclosure Consultants, which term may be defined in pertinent local, state or federal legislation as relevant topersons purporting to charge money to "save one from foreclosure" imminently or at some time in the future. Theintent of Three Arck Capital Group, LLC in the subject transaction is not, in any manner the stoppage, delay orpostponement of any lender's foreclosure efforts, is, instead, prior to acquiring the subject property, to examine andchallenge the legitimacy of the property's existing financing, and to then acquire a financial interest in the property,with all the avails of ownership and anticipation of financial gain. Although, should the undersigned opt to remain inthe property following the efforts of Three Arck Capital Group LLC, it may be entitled to do so under the conditionsreferenced.

By signing here beneath the signature of Gary Jones of Three Arck Capital Group, you are acknowledging acomplete understanding of, and agreement with, the intent and efforts of Three Arck Capital Group, LLCand its assigns as explained herein above.

Please call at any time with any further questions or concerns you may have.

Respectfully,

Gary Jones, Managing Member3ARCK Capital Group, LLCColumbus Ohio 43224

I have read this letter, understand it, agree with it terms and exculpatory verbiage and wish to proceed withthe process offered by Three Arck Capital Group, LLC

_________________________________ ______________Homeowner Date

_________________________________ ______________Homeowner Date

59

Agreement to Enter a Training Course

By signing this form, you are requesting delivery of, an educational package designed to assist you in ameliorating

your current real property mortgage burden. Upon your acquisition of the package and participation in the various

training and assistance programs relative to the process, you may, without additional charge, elicit the assistance of

Three Arck Capital Group, LLC of Columbus Ohio to work with you in bringing about a challenge of your mortgage

lender's right to mortgage payments. In that regard, Three Arck Capital Group, LLC of Columbus Ohio will assert its

best efforts in assisting you.

You are also agreeing to having a full understanding and acceptance of the intent and conditions under which such

process is to be conducted and carried out (administrative defense vs. legal offense when possible).

You are acknowledging a complete understanding that Three Arck Capital Group LLC is acting solely in its own best

interest and for its own ultimate financial benefit by seeking to acquire your property subject to replacement

financing following a successful out of its challenge of the legality/validity of your current financing arrangement.

You are confirming here an understanding that your solicitation of assistance by Three Arck Capital Group, LLC, is not

for the purpose of, or in anticipation of forestalling legitimate foreclosure and auction sale actions on your behalf; but

instead for them to attempt for their own benefit and with your permission, to analyze and possibly challenge your

current mortgage lender [alleged] or servicer, so that an ownership interest in the property may be attained by means

of replacing the current mortgage with a new lien in the amount of today's true value of the property, following the

establishment of a bonafide title-holding trust in whose trustee the property's title will be fully vested for a stipulated

period and in which a minimum of six monthly payments will be held in the trust's fully refundable, non-interest-

bearing Contingency Fund.

Upon the release of your current mortgage holders' lien, a new lien in the true value of the property will be placed on

it by Three Arck Capital Group, LLC on behalf of its principals and/or assigns. This new lien will be for the actual,

current appraised value of the property and you will have the first right to remain in the property with the

responsibility of payments on the new lien, and a new loan in the approximate amount of half of the property's

verified market value (thereby doing away with any currently existing Value-to-Debt over-encumbrances).

Upon the successful release of the current mortgage lien/s, you agree to be bound by a new (50% LTV) lien on the

property in favor of Three Arck Capital Group, LLC and its assigns (the beneficiaries of the land trust in whose trustee

the property will have been vested). The amount of such new lien will become due and payable by two separate

modes --

1. Half of the property's value will be paid to Three Arck Capital Group, LLC and its affiliates(IDM Corporation and

NARSCor, LLC) in full at inception, following the successful removal of current mortgage financing (i.e., to do so,

you will be assisted in obtaining new Asset-Based Financing (a "hard money" loan) in the amount of up to half

(50%) of the property's actual Fair Market Value; and

2. The remainder of that amount will become due and payable to the assigns of Three Arck Capital Group, LLC at

the termination of the subject agreement (in from two to five years) by means of your sale or refinancing of the

property at that time. Should the real estate market and/or the economy not allow for a full payoff at

termination, then any unpaid sums may be carried by the assigns of Three Arck Capital Group, LLC by means of a

promissory note secured by either--A the property, or B by a promissory note and collateral assignment of your

beneficiary interest in a land trust in whose trustee the property may be vested at that time.

60

Note here that at the time of the subject agreement's termination, any extenuating circumstances may also be

addressed by all parties, whom might agree to either a term extension, a reduction in the amount owed to co-

beneficiaries at termination, or to other considerations that may be deemed appropriate at that time in view of

unpredictable market conditions, economic circumstances or other obstacles that could present themselves.

In view of the forgoing, upon your petition for such concession by co-beneficiaries, any compromises shall be solely at

the discretion and approval of the co-beneficiaries. In the event that no such solutions would be deemed practical or

prudent at that time, it is agreed that the property may be sold to the highest bidder, whereupon all proceed of sale

that are over and above the initial (starting) appraisal at inception will be paid to you in full.

In the event of a sale at below the beginning equity value, at no time will you be responsible for any deficiency

balance (re. amounts otherwise owed to co-beneficiaries) that would be the result of a general decline in property

values over the course of the subject agreement.

During the initial stage of handling of the subject transaction, you will be asked to execute and provide certain related

documents that are intended to best protect the property and the respective interests of all parties, while

simultaneously enabling you to later maintain all of the fee-simple rights in real estate ownership: i.e., use, occupancy,

income tax deductions (re. property tax and interest expenses), appreciation and loan principal reduction (if any),

quiet enjoyment, merchantability, as well as all littoral and/or riparian (water) rights and mineral rights as included in

the official title, whose records are on file in the office of the local county recorder. (See IRC163(h)4(D) and TCM 2010-

72)

I have read this agreement, and I understand and agree with it without request for further explanation, alteration,amendment or correction, and I hereby choose to proceed with the process and services offered by Three Arck CapitalGroup, LLC

_________________________________ ______________Homeowner Date

_________________________________ ______________Homeowner Date

61

THE PROCESSFollowing your review of the required documentation package, and following satisfactory completion

of your initial training re. the Three Arck Program (bi-weekly training sessions held by Three Arck Capital Group

and North American Realty Consultants in concert with IDM Corporation of Los Angeles, California, you will be

asked to forward the requested data (see the itemized list below) to:

Attention: Mr. Bill Gatten

NARSCor, LLC

6520 Platt Avenue #548

West Hills, California 91307

Upon approval of your request and verification that your property will fit within the acquisition

program of Three Arck Capital Group, LLC, a title-holding (Illinois-type) land trust will be drafted in your name

and for your benefit and mailed to you for verification of the accuracy of information and your instructions to

proceed.

Upon your acceptance of the terms of the trust and verification of the data contained therein, you will

be asked to transfer the property's title to a third-party, non-profit, bonded and licensed corporate trustee

(Equity Holding Corporation, Midpines, California, since 1997) .

The term of the beneficiary-directed land trust will be set to correspond to the length of the

underlying new financing, or for another term that would be mutually agreeable to all parties.

The trust's assignees (co-beneficiaries) following initial recordation shall include: Three Arck Capital

Group, LLC, or Columbus, Ohio, as to a 40% beneficiary interest; IDM Corporation, a California Corporation as

to a 25% beneficiary interest; and NARSCor, LLC, a Nevada Limited Liability Company as to 25%. Other bona

fide participating parties may also be given fractional ownership interests upon the trust's establishment (i.e.

designated and qualified NARSCor, LLC Professional Network Members).

The homeowner of record will hold a transitory 10% beneficiary interest throughout the trust term, to

be relinquished upon the trust's termination, prior to any distribution of proceeds to any beneficiary. With h

exception of the settlor beneficiary, all co-beneficiaries shall reserve the right to sell or otherwise dispose of

their respective beneficiary interests during the course of the trust agreement, but only with the approval of

all then extant beneficiaries.

At the termination of the title-holding trust, the subject property will be sold on the open market to

the highest bidder, or may be refinanced and retained by the settlor beneficiary (the homeowner of record).

The proceeds of such sale or re-fi are to be distributed among co-beneficiaries beneficiaries in direct

proportion to their respective shares of beneficiary interest held, but with the settlor beneficiary receiving all

of the following:

o Any (all) equity accumulated by mortgage interest pay-down (i.e., mortgage principal

reduction) over the course of the agreement

o Any (all) appreciation that is over and above the starting value of the property,

o All income tax benefits re. mortgage interest and property tax payments

o Any (all) rental or lease income that may be or will have been earned over the course of the

agreement

o A full refund of any unused sums having been placed into the trust's Contingency Fund at

inception by the settlor beneficiary (i.e., the $7,995 Trust Set-Up Fee)

62

o Any mutually approved, licensed repair or refurbishment costs expended by settlor beneficiary

during the term of the agreement which expenditures are to approved by all beneficiaries in

advance of the commencement of work).

Upon commencement of handling by Three Arck Capital Group, LLC, a requisite Power of Attorney will

be relinquished to whomever is nominated to serve as Attorney-in-Fact, with respect to dealings with creditors

(i.e., mortgage companies, homeowner associations, junior lien holders, taxing agencies, insurance companies,

etc.).

All future loan payments will be paid monthly to a bill-paying agency: "Equity Management Company"

of Midpines, California. Note that although there is no service charge by Equity Management Company, a

nominal Fee will assessed by the separate land trust trustee, Equity Holding Corporation (also of Midpines,

California) in the form of a triple-net lease payment, as part of your aggregate monthly payment obligation

(i.e., the aggregate payment includes: loan principal and/or interest, property tax, insurance, association fees

and the referenced trustee fee)

I have read this document and I understand and agree with it, without request for further explanation,alteration, amendment or correction.

_________________________________ ______________Homeowner Date

\

_______________________________ ______________Homeowner Date

63

PLEASE DELETE ALL RED TYPE INTHIS FORM [INCLUDING THIS] AFTER FILLING IN THE REQUIRED SPACES…

LIMITED POWER OF ATTORNEYProperty Management

________________________________________________________________________ (borrower/s), Grantor

and Principal at ____________________ ________________________________________subject property

address, street, city, state, and zip code, does hereby appoint Gary: Jones, c/o 2968 Atwood Terrace, Columbus,

Ohio [43224], Republic, Non Domestic Without the US, as Secured Party and as my lawful attorney-in-fact, in

my name and on my behalf:

1. To exercise or perform any act, power, duty, right or obligation whatsoever that I now have, or may

subsequently acquire the legal right, power or capacity to exercise or perform, in connection with, arising from

or relating to the real property located at __________________________________________ (subject property

address, street, city, state, and zip code), (Subject Property) including the preparation, negotiation, execution,

filing and all other management of any documents related to the management of the Subject Property and/or

the settlement of any and all debts and disputes pertaining to the Subject Property and/or its related deeds,

grants, promissory notes, agreements and contracts.

2. I grant to my attorney-in-fact full power and authority to do, take, and perform each and every act or

thing whatsoever necessary or proper to be done, in the exercise of any of the rights and powers granted in

this instrument, as fully to all intents and purposes as I might or could do if personally present, with full power

of substitution or revocation, and by this instrument I ratify and confirm whatever act or thing that my

attorney-in-fact shall lawfully do or cause to be done by virtue of this durable power of attorney and the rights

and powers granted by this instrument.

3. The rights, powers and authority of my attorney-in-fact as granted in this durable power of attorney

shall commence and be in full force on the date of this instrument and such rights, powers and authority shall

remain in full force and effect for ninety (90) days thereafter unless revoked in writing.

Executed and sealed by the voluntary act of my own hand, this ____ day of ______________, 2010.

______________________________________

Grantor (borrower)

Acceptance by Gary Jones, Authorized Representative

I, the above named attorney-in fact, accept responsibility for the Grantor here named and will execute the

power of attorney Without Prejudice in good faith and with all due diligence

_______________________________________

Gary Jones, GranteeAuthorized Representative.

64

********************************************************************************************************

ACKNOWLEDGEMENT OF NOTARY

State of ________________)

}

County of ______________)

On _________ before me, _____________________________________________________________

(Insert name of Notary Public and Title)

Personally appeared ___________________________________________________________________

who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within

instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and

that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted,

executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and

correct.

WITNESS my hand and official seal.

Signature ______________________________________ (Seal)

65

MORTGAGE SETTLEMENT

QUESTIONNAIRE AND AGREEMENT

[This form appears elsewhere in the book . If you already completed

the form, there’s no reason to be concerned about this one]

The person/s completing this form declare/s here that all information submitted in preparation for an

attempted mortgage settlement is true and accurate to the best of their knowledge

Property Address: __________________________________________________________________

Seller 1 Full Name: _____________________________________So. Sec #:_____________________

Driver’s License#:________________________State:_________ Email: _______________________

Phone: ____________________ Mobile: _____________________ Fax: ______________________

Seller 2 Full Name: ______________________________________So. Sec. #:___________________

Driver’s License#:________________________State:_________ Email:_______________________

Phone: _____________________ Mobile: ____________________ Fax: ______________________

Is the property occupied? Y / N If occupied, Homeowner or tenant? ________________________

How long has the subject property been owned by applicant? ________Is the property listed? Y / N

Who is the FIRST mortgage holder?_____________________________________________________

What was the original date of the FIRST mortgage? ________________________________________

Approximate balance of the FIRST mortgage? $__________________ Mo/Pmt? (P&I) $___________

Is this an FHA or VA loan?_____________________________________________________________

Is the FIRST mortgage adjustable, graduated or a fixed rate loan? Adjustable _____ Fixed_____

Are payments on the FIRST mortgage current? Y/N If No, how many months in arrears? ______

IS THERE A SECOND MORTAGE? Y/N

Who is the 2nd mortgage holder?______________________________________________________

What was the original date of the 2nd mortgage? _________________________________________

Approximate balance of SECOND mortgage? $________________ Mo/Pmt? (P&I) $_____________

Is this an FHA or VA loan? Y.N If Yes, which one? _________________________________________

Is the SECOND mortgage adjustable, graduated or fixed rate? Adjustable _______ Fixed_______

Are the SECOND mortgage payments current? Y/N If No, how many months in arrears? ________

Property Taxes? (Annual amount) $_____________ Hazard Insurance? Monthly: $_______________

Is there any Private Mortgage Insurance (PMI) Mo/Pmt) $_____________ Name of PMI Carrier (company, bank,

etc)________________________________________________________________________________________

Is property owner aware of any other encumbrances or clouds re. non-mortgage liens against the property Y / N

66

If other liens explain.__________________________________________________________________________

Has the homeowner received notice of Foreclosure Sale Date? Y / N If yes, what is the scheduled date ?________

If Has a sale date ever been postponed? Y / N If yes, How many postponements have there been?___________

Has the property owner ever filed for a bankruptcy? Y/N If Yes, Chapter thirteen pr seven ?________________

Date of the bankruptcy filing? _____________ Date that bankruptcy was fully discharged?__________________

Has the property owner petitioned for a loan modification or offer and compromise (short sale)? Y/N If yes, what

was the date (month/year) of the petitions?__________________ Was such petition accepted by the lender? Y/N

Has the owner ever received any approval or rejection letter regarding loan modification or short sale? Y/N

If yes, what was the lender's decision, and date of the acceptance or rejection from the lender?

_____________________________________________________________________________________________

Is there a Homeowners Association? Y/N …If Yes, what is the address?

1st HOA_______________________________________________________Phone_______________

2nd HOA______________________________________________________Phone_______________

By my signature below, I acknowledge a clear understanding that there are no guarantees being made relative to

efforts to extinguish the mortgage obligations relative to the subject property on the basis of fraud and deception

on the part of the lenders in question. I further agree to hold the publisher and preparer of this document, and all

related parties free and harmless from future claims of unsubstantiated impropriety, errors or omissions relative to

attempts to assist in bringing about the removal or modification of all mortgage liens relative to the subject

property.

____________________________________________________________ ______________

Signature Date

____________________________________________________________

Print Name

____________________________________________________________ ______________

Signature Date

____________________________________________________________

Print Name