Case 1:15-cv-00293-LTS-JCF Document 191 Filed 06/15/17 Page 1 of 21

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK
----------- ----------- ----------- ----- X
Mortgage Resolution Servicing, LLC, 1st
Fidelity Loan Servicing, LLC, and S&A Capital
Partners, Inc.,

Plaintiffs, 1:15-cv-00293 (LTS) (JCF)

-against-

JPMorgan Chase Bank, N.A., Chase Home

Finance LLC, and JPMorgan Chase & Co.,

Defendants.
---------- - ----------- ----------- ----- X

DECLARATION OF LAURENCE SCHNEIDER

LAURENCE SCHNEIDER, pursuant to 28 U.S.C. § 1746, declares the following

under penalty of perjury:

1. I am the President and shareholder of S&A Capital Partners, Inc. ("S&A"),

the President and managing member of 1st Fidelity Loan Servicing, LLC ("1st Fidelity"), and the

President and managing member of Mortgage Resolution Servicing, LLC ("MRS") (collectively,

"Plaintiffs" or the "Schneider Entities"). I am a real estate specialist and I work and reside in Boca

Raton, Florida.

2. I submit this declaration in support of Plaintiffs' Motion for a Temporary

Restraining Order and a Preliminary Injunction.

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A. The Schneider Entities' Business Model and Early Relationship with

Defendants S&A and 1st Fidelity

3. Each of the Schneider Entities is in the business of buying defaulted

n:sidential mortgage loans, including both the note obligation and the security interest (mortgage

or deed of trust), and working out payment plans with the borrowers of those loans. Unfortunately,

not every defaulted loan is one that the Schneider Entities are able to resolve with a payment plan

or other loan modification that results in the borrower at issue remaining in their home. In those

circumstances, the Schneider Entities pursue foreclosure or other rights and remedies, to avoid

b,eing left with just loan documents, including notes and mortgages, that they paid money to

purchase but are not generating any revenue.

4. From 2005 to 2010, I directed the Schneider Entities to purchase thousands

of first and second lien residential mortgage loans from JPMorgan Chase Bank, N .A. and affiliates

(collectively, "Chase"). I first began purchasing loans from Chase through S&A and 1st Fidelity,

and later purchased a pool ofloans from Chase through MRS.

5. S&A, a Florida corporation located at 6810 N. State Rd. 7, Coconut Creek,

Florida, acquired approximately 650 defaulted first and second lien residential mortgage loans

from Chase Home Finance LLC ("Chase Home Finance") through a Master Mortgage Loan Sale

Agreement from April 2005 to June 2010.

6. 1st Fidelity, a Florida limited liability company located at 6810 N. State Rd.

7, Coconut Creek, Florida, acquired approximately 3 50 defaulted first and second lien mortgage

loans from Chase Home Finance through individual note sale agreements that included the

assignment of the mortgage (or deed of trust) securing the loan from May 2005 to November 2010.

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B. The Mortgage Loan Purchase Agreement Between MRS and Chase

7. MRS, a Florida limited liability company located at 6810 N . State Rd. 7,

Coconut Creek, Florida, acquired a larger pool of loans from Chase in February 2009. Eddie S.

Guererro, Chase Home Finance' s then Loss Recovery Supervisor, approached me in 2008 about

the opportunity to purchase a larger pool of closed end first lien residential mortgage loans. Mr.

Guerrero informed me that the pool of loans was labeled "First Lien Walks" because they were

loans that Chase had decided to "walk away from" based on its cost-benefit analysis. Chase

eventually convinced me, despite my initial reluctance, to conduct initial due diligence on the pool

of loans. However, Chase refused to provide full and customary servicing information on the

loans, and instead provided a data tape, which was attached to a November 5, 2008 email from

Mr. Guerrero to me (the "November 2008 Data Tape").

8. Although the November 2008 Data Tape included some fields of

information that would be relevant to a due diligence inquiry into purchasing mortgage loans, it

did not contain other information that I expected would be included, and as a matter of practice

and custom should have been included, in a data tape prepared from complete servicing file records

for the loan pool, which servicing file records Chase should have had for each of these federally

related mortgage loans regulated by various federal laws, including the Real Estate Settlement

Procedures Act ("RESP A").

9. On February 4, 2009, Mr. Guerrero e-mailed me a copy of the Mortgage

Loan Purchase Agreement ("MLPA") to review and sign on behalf of MRS. On February 25 ,

2009, I e-mailed the executed copy back to Mr. Guerrero, and then received back from Chase the

countersigned MLPA, signed by Victor Fox. A true and correct copy of the fully executed MLPA

is attached hereto as Exhibit 1.

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10. The MLP A repeatedly confirmed that the pool of loans that Chase Home

Finance was selling, and that MRS was purchasing, consisted of non-performing first lien

mortgage loans. The MLPA further specified that the agreement was on a "servicing-released

basis." Based on my communications with Mr. Guerrero, I understood this terminology to refer

only to secured mortgage loans. Indeed, Mr. Guerrero's explanation was consistent with my

understanding of the general meaning of "servicing-released basis" in the finance industry, in that

it generally applies only to secured mortgage loans.

11. At the time Chase Home Finance and MRS executed the MLP A, it did not

include the Mortgage Loan Schedule, which was referenced in the MLP A as "Exhibit A."

Nevertheless, it was the intent of both parties that the Mortgage Loan Schedule would consist of

3,529 loans with an outstanding principal balance as of December 22, 2008 in the amount of

approximately $156 million, drawn from the November 2008 Data Tape. Further, Mr. Guerrero

represented to me that I, on behalf of MRS, would receive the updated loan schedule and

corresponding information on the loans sold once Mr. Guerrero completed "scrubbing" the

November 2008 Data Tape to ensure that MRS was buying only closed end first lien mortgages

that were listed on the November 2008 Data Tape. I relied on these representations, and based on

my prior dealings with Mr. Guerrero and Chase Home Finance, expected that the promised

information would be forthcoming and that Exhibit A would consist of 3,529 loans from the

November 2008 Data Tape with accompanying usual and customary data and information

reasonably necessary to service mortgage loans. However, that did not happen.

12. Instead, the same day Chase sent me back the countersigned MLP A, they

also sent a schedule of mortgage loans that they claimed was an updated data tape of the loans that

were sold to MRS with the MLP A, but this schedule contained even less information than the

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November 2008 Data Tape and lacked information that Exhibit A was required to contain. In fact,

the lack of information on this February 25, 2009 schedule made it impossible for me to cross-

reference it with the November 2008 Data Tape and verify that the mortgage loans supposedly

sold to MRS according to this schedule were on the November 2008 Data Tape.

C. Problems Plaintiffs Have Faced Because of Chase's Misconduct

13. Because Chase refused to produce original loan files and a myriad of other

documents about each of the loans sold to the Schneider Entities (documents Chase was required

to produce to the Schneider Entities before this lawsuit was filed), the Schneider Entities have

faced obstacle after obstacle to building up their business and working out payment plans with

their borrowers. Since MRS signed the MLP A with Chase, Chase engaged in a protracted pattern

of misconduct in which Chase would do the following:

(a) make false representations to borrowers that Chase or its collection agency

was the authorized servicer or owner of the loans and that borrowers should make payments

directly to Chase or the collection agency, even though Chase had previously sold the loans at

issue to the Schneider Entities;

(b) collect, and refuse to remit, mortgage and insurance payments related to

loans it sold to the Schneider Entities, whether the collection was done in-house or by

authorized collection agencies;

(c) approve short sales on properties subject to loans that Chase sold to the

Schneider Entities;

(d) make false representations to enforcement agencies that the Schneider

Entities were responsible for Chase's servicing violations;

(e) make false representation to certain borrowers that their loans had been

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transferred to one of the Schneider Entities, prompting those borrowers to file complaints with

various state and federal agencies leading to loss of reputation and impeding the ability of the

Schneider Entities to generate new business;

(f) mail debt forgiveness letters (the "Forgiveness Letters") to thousands of

borrowers, including borrowers whose loans Chase had previously sold to the Schneider

Entities;

(g) wrongfully release and discharge liens, through third-party agents such as

Nationwide Title Clearing, Inc. ("NTC") and PiersonPatterson LLP ("PiersonPatterson"), on

properties that served as collateral for loans Chase had already sold to the Schneider Entities

when these liens were released, which lien releases appear to have been "robo-signed" by

certain Chase employees, and/or their authorized third-party agents, such as NTC and

PiersonPatterson, in that they appear to have been mass-produced and signed by persons

without knowledge of the facts to which their signature attests (a composite of representative

Deeds of Release, Release of Lien, Satisfaction of Mortgage, Discharge of Mortgage, Release

of Mortgage lien releases that occurred after loans had been sold by Chase to the Schneider

Entities is attached hereto as Exhibit 2);

(h) attempt unsuccessfully to restore the Schneider Entities' position on the

loans for which Chase wrongfully released the liens by filing documents that purport to vacate

those lien releases (a composite ofrepresentative Vacation and Rescission documents signed

by Ingrid Whitty, purportedly a Chase Vice-President, is attached hereto as Exhibit 3); and

(i) communicate with the Schneider Entities to get them to sign documents

pertaining to the loans that were purportedly sold by Chase once a borrower would contact

Chase, even though Chase never gave the Schneider Entities any of these documents when the

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loans were initially sold to the Schneider Entities, ostensibly to shift the liability for Chase's

mishandling of these loans to the Schneider Entities.

D. Problems the Schneider Entities Are Still Facing Because of Chase's Actions.

14. If the Schneider Entities could have assurances that the issues that they face

with borrowers would end while this litigation is pending, that would provide me with some

measure of comfort that the Schneider Entities will be able to survive and eventually thrive once

more. However, the Schneider Entities continue to deal with problems with numerous borrowers

on the loans that the Schneider Entities thought they had bought from Chase, but for which loans

they never received the full documentation and ownership rights to the loans.

15. Compounding the problems caused by the issuance of lien releases are

Chase's mailing of wrongful Forgiveness Letters and statements via Chase's representatives that

borrowers no longer owe money to the Schneider Entities or that their loans were "charged off."

One such example is Joseph Davis. Mr. Davis contacted the Schneider Entities in February 2015

after having first contacted Chase, who told him that they sold the loan to the Schneider Entities.

While the Schneider Entities expressed to Mr. Davis that they would be willing to work with him,

they advised him that nothing could be done until and unless Chase prepared and filed an

assignment of the mortgage to MRS. MRS repeatedly contacted Chase to get the assignment, to

no avail. However, in October 2015, Mr. Davis infonned MRS that Chase provided him with a

copy of the recorded assignment of mortgage, even though no such recorded assignment was sent

to the Schneider Entities. Chase never sent this documentation directly to the Schneider Entities.

By January 2016, the borrower filed a complaint against the Schneider Entities with the Illinois

and Florida Attorney Generals' Offices. Because Chase refuses to acknowledge which loans it

sold to the Schneider Entities, the Schneider Entities now stand in the unenviable position of

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violating federal regulations for loan servicing if they forgive loans such as the Davis loan because

there is no record in the Schneider Entities' possession that the Davis loan was ever sold from

Chase to MRS. A true and correct composite of the complaint filed by Mr. Davis with the Illinois

Attorney General's Office, the communications sent by the Florida and Illinois Attorney Generals,

and my counsel's response to the Attorney Generals' offices is attached hereto as Exhibit 4.

16. A further example is Mary Schmidt. Ms. Schmidt intended to sell her home

in March 2016, and learned there was a lien on the property relating to a line of credit she had

opened with Chase. Chase would not release the lien because they claimed they did not own the

loan, but they had not provided the Schneider Entities with any of the loan documentation either,

including the Assignment of the Mortgage. During the efforts between the Schneider Entities and

Chase to resolve this matter, Chase initially sent the Schneider Entities a purported assignment of

mortgage from Chase to MRS, which appeared to be "robo-signed." The Schneider Entities

refused to accept this fraudulent document, and insisted upon the preparation and delivery of a

valid Assignment of Mortgage, which was eventually provided just as the borrower was interested

in closing on the sale of her home. Again, unnecessary delays and expenses were visited upon the

Schneider Entities and the borrowers because of Chase's failure to tum over loan files and execute

documents when the loan sales were executed. A true and correct copy of the communications

described herein is attached hereto as Composite Exhibit 5 .

17. A final example involves the borrower Willie J. Holmes. In May 2016, Mr.

Holmes contacted Chase about his mortgage, and received a letter from Chase indicating that as

far as Chase was concerned, his loan carried a zero balance. Mr. Holmes then contacted the

Schneider Entities to ask for a release. Chase, however, never provided the Schneider Entities

with the loan file, including an Assignment of Mortgage for this loan, at the time it was sold to the

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Schneider Entities. Then, in February 201 7, the borrower approached Chase to get this

Assignment of Mortgage from Chase to MRS because the borrower wanted to sell the house before

the end of March. A true and correct copy of the communications described herein is attached

hereto as Composite Exhibit 6.

18. Chase only chooses to be proactive in delivering loan documents to the

Schneider Entities when prompted by borrowers and when it serves their own self-interest; namely,

to shift liabilities from Chase to the Schneider Entities. Otherwise, there is no effort by Chase to

keep the Schneider Entities informed, much less to provide them with the loan documents that

should have been provided for each loan when they were sold by Chase to the Schneider Entities.

19. Moreover, a review of the document production that Chase made on May

31, 2017 pursuant to the Court's May 18, 2017 ruling on Plaintiffs' more recent Motion to Compel

Discovery further confirms that Chase cannot be trusted with ensuring that no further damage is

done to the Schneider Entities.

20. One example is evidenced in the fact that loans that Chase made to two

borrowers, Ali and Salinas, each of which loans carried balances in excess of $500,000, which

loans I viewed as two of the "cherries" to encourage MRS to pursue the deal with Chase for the

loan pool, and both of which loans were pulled back by Chase after the sale to MRS, were

identified in Chase's May 3 l81 production as loans that were in fact sold to MRS as part of the

MLP A. Interestingly, both loans had already been lien released on July 28, 2008, several months

before they were even put on a list to be sold and represented as 1st Lien Mortgage loans.

21. Further, a review of Chase's May 31 st document production shows that the

lien releases on loans that have been identified as having been sold to the Schneider Entities not

only continues through the present date (with the most recent instance happening in March of this

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year), but actually started on October 17, 1998, continuing on unabated through 2004, before the

Schneider Entities even began conducting business with Chase. By that time, according to Chase's

production, they had already lien released approximately 250 loans before they began representing

and marketing to me, on behalf of the Schneider Entities, that they were selling federally related

mortgage loans. These lien releases are still happening, despite the initiation and pursuit of this

lawsuit.

22. In addition, Chase's May 3!51 document production inexplicably omitted

information on more than 300 loans, including at least thirteen loans for which Plaintiffs provided

information about their lien releases to Chase in this action as exhibits to earlier filings, including

the recently heard Motion to Compel. Some of these same loans are discussed above as the

Schneider Entities account for the pernicious and wide-spread practice by Chase of lien releasing

loans that were ostensibly sold to the Schneider Entities, and then attempting in vain to fix the

mess they created by vacating or rescinding the releases.

23. Unless Chase is prevented from further releasing liens on property securing

loans that Chase previously sold to the Schneider Entities or further engaging with borrowers on

loans that were supposedly sold to the Schneider Entities without the supervision of the Court, and

is ordered to provide full documentation on the lien releases and supposed efforts to remediate the

lien releases on all loans sold to the Schneider Entities, the harms resulting from Chase's ongoing

misconduct threaten to destroy the Schneider Entities' business irreparably.

24. The threat of potential lien releases and inappropriate assignments is

paralyzing the Schneider Entities, and preventing them from pursumg foreclosure or other

remedies with respect to mortgages where the need arises. Borrowers could also attempt to rely

on the lien releases, loan forgiveness letters and other inappropriate actions by Chase as defenses

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or counterclaims in foreclosure actions brought by the Schneider Entities. More importantly, it is

impossible for the Schneider Entities to check county recorders in dozens of states across the

United States daily, necessitating that some lien releases will fall through the cracks.

25. The inability to pursue such remedies also adversely affects mortgage loan

restructuring negotiations with borrowers, which is at the heart of the Schneider Entities' business

model. Borrowers with whom one or more of the Schneider Entities have or would otherwise have

worked out payment plans can cease making payments or refrain from entering into new payment

plans.

26. The Schneider Entities also face the risk that state and local governments

could attempt to hold the Schneider Entities liable for breaches of consumer protection laws, and/or

attempt to impose liability on the Schneider Entities for community blight, failure to maintain

properties and other public kinds of damages for which governments have aggressively sought to

hold lenders liable in recent years.

27. Further, because Chase has ceased all communications with the Schneider

Entities, except when Chase wants to shift liability for a loan whose file was never properly

assigned to the Schneider Entities in the first place, the Schneider Entities receive irregular and

minimal notice (and often not advance notice) regarding when Chase files additional releases or

which of the Schneider Entities' loans are affected. Because of the frequency of the lien releases,

the Schneider Entities must check on an almost daily basis to see if further releases have been

issued. This is a time-consuming process that imposes continuing administrative burdens and title

search expenses on the Schneider Entities.

28. The Schneider Entities have suffered, and continue to suffer, grave injury

to their business relationships and reputation. The Schneider Entities' business model relies on

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goodwill between borrowers and the Schneider Entities. Chase's misconduct, including its

continued wrongful release ofliens, has entangled the Schneider Entities in ongoing disputes with

borrowers and governmental agencies with whom the Schneider Entities previously enjoyed

positive working relationships. Chase's misconduct has harmed and continues to harn1 the

Schneider Entities' reputation by effectively portraying the Schneider Entities as predatory

businesses attempting to collect payments on loans that had been forgiven or released, when, to

the contrary, the Schneider Entities only acted in a manner they were legally entitled as the rightful

owners of the loans at issue.

E. The Problems the Schneider Entities Face Build On The Pattern of Bad Actions Chase
Has Taken Against the Schneider Entities' Interests In the Loans From The Outset.

29. As I discussed above, upon receiving the February 25, 2009 MLPA

spreadsheet purportedly representing the 1st lien mortgage loans being sold to MRS, I notified Mr.

Guerrero immediately, and continued my attempts to obtain the proper data and collateral files

from him until his untimely death on October 31, 2009.

30. During the same period, I continued to request a useable, normal and

customary data tape and the collateral files from Ms. Launi Solomon of Chase's Mortgage

Recovery Support.

31. For several years, Ms. Solomon was cooperative in her attempts to assist

me with numerous problems brought upon the Schneider Entities by Defendants' schemes to

defraud its borrowers, investors, and regulators.

32. For example, on December 18, 2009, Ms. Solomon informed me that

several collection agencies were continuing in their collection efforts on loans that were

supposedly sold to the Schneider Entities and that she was going to forward the payments due to

MRS: "I have pulled a report of the pmts due to you since the Feb. sale." Ms. Solomon knew there

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was a way to determine which loans were purportedly sold to MRS, despite Defendants' ongoing

misrepresentations that they cannot determine which loans were sold to MRS, which

misrepresentation they finally admitted was wrong on May 8, 2017 in a letter from their counsel

to my counsel in this matter on the eve of the Court's hearing on the Schneider Entities' Motion

to Compel Discovery, in which letter Chase sheepishly admitted at long last that they can

determine which loans were sold to MRS. A copy of this May 8, 2017 letter is attached as Exhibit

7. In fact, in March of 2009, Ms. Solomon specifically informed me that the "Agency Code for

the loans sold to MRS is MRS209."

33. Furthermore, in her December 18, 2009 e-mail to me, Ms. Solomon

discusses payments made by borrowers, and stated that the Schneider Entities would not be getting

these payments because "[t]here are issues due to a dupe acct# project of something Larry Sandra

says you know about? So some of these accts your groups can't find under certain acct. #'s because

we changed them???" I have never heard of Larry Sandra and did not know that Chase changed

the account numbers on borrowers who continued to make payments to the collection agencies,

despite these loans purportedly being sold to MRS but without Chase ever providing MRS with

the files or data to contact these borrowers. A true and correct copy of the December 18, 2009 e-

mail correspondence is attached hereto as Exhibit 8, Bates-stamped SA00277513-00277514.

34. After having requested a data tape of the loans sold to MRS pursuant to the

MLPA, I requested Ms. Solomon provide me with an updated "Exhibit A" list of loans sold to

MRS. On December 29, 2009, Ms. Solomon had requested a list of the MLPA loans and received

the list from Christine Price. Although this data tape provided five data fields, upon information

and belief, two of the fields were searchable identifiers of the loans sold to MRS: the Agency

Number being "MRS209" and the Collector Code being "Sold." A true and correct copy of the

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December 29, 2009 e-mail correspondence 1s attached hereto as Exhibit 9, Bates-stamped

SA00422937-00422938.

35. Unfortunately, shortly after receiving this e-mail and data tape from Ms.

Solomon, she informed me that I was no longer going to receive most of the payments which she

notified me about in the December 2009 e-mails.

36. On August 28, 2012, I e-mailed Ms. Solomon about two borrowers who had

recently been contacted by third-party debt collector Real Time Resolutions ("RTR") about

making payment arrangements on their loans. In fact, upon information and belief, RTR filed a

transfer of Plaintiffs' claims on these loans in federal bankruptcy court. This claim transfer caused

the Bankruptcy Trustee to stop making payments to 1st Fidelity on the loans, until Plaintiffs proved

the fraudulent transfer of the claim, which RTR eventually retracted. A true and correct copy of

the August 28, 2012 e-mail correspondence between the Schneider Entities and Launi Solomon of

Chase is attached hereto as Exhibit 10, Bates-stamped SA00277639-00277641.

37. Later that same day, I received an e-mail from Ms. Solomon, which

contained an e-mail exchange between Ms. Solomon and Mr. Omar Kassem of Chase, in which

Ms. Solomon informs Mr. Kassem that the Garcia loan "was already in the DOJ Queue." Upon

information and belief, the DOJ queue was the coding in the Collector Code ("CLTR") field in the

Recovery system. The DOJLTR queue was the holding identifier for eventual mailing of the

33,456 2nd Lien Extinguishment Letters sent by Defendants to various borrowers, including

borrowers on loans owned by the Schneider Entities. Chase produced a copy of this e-mail during

discovery, Bates-stamped JPMC-MRS-00016498-00016499, but marked it

CONFIDENTIAL/SUBJECT TO PROTECTIVE ORDER.

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38. On September 5, 2012, Mr. Kassem wrote back to me, stating: "In an effort

to comply with new corporate asset sale practices across all lines of business of Chase, Chase

Mortgage Banking recovery will no longer be providing support as it relates to portfolio and note

sales that funded prior to October 2011. Issues related to the following items must be

remediated/addressed prior to Friday, October 12 2012: Lost note affidavits, Assignments of

mortgage, Pay histories, Repurchases. All requests will be reviewed by the Recovery Portfolio

Manager and a final assessment will be made on a case by case basis. Repurchase requests will

not be considered absent an identifiable breach of the reps and warranties by Chase in the purchase

and sale agreement. Thank you for your attention to this matter." The communication was sent

at a time Defendants knew that loans owned by the Schneider Entities were going to be impacted

by the upcoming 2nd Lien Extinguishment Program. A true and correct copy of this e-mail is

attached hereto as Exhibit 11, Bates-stamped SA00256532.

39. I had followup e-mail communications with Mr. Kassem on September 5,

2012. In these communications, I shared with Mr. Kassem correspondence I received from another

borrower, Mr. Dubinski, which correspondence had been ongoing since the execution of the

MLPA in 2009, at a time when the Schneider Entities did the best they could to send out RESP A

letters to borrowers they could identify, having no reason to suspect that the loans were not 1st lien

mortgages.

40. As described above, there are multiple instances of Plaintiffs' borrowers'

loans being sent by Chase to a collection agency to extract monies from these borrowers and to

assert consumer relief credit under the National Mortgage Settlement Agreement ("NMSA")

before the borrowers were sent 2nd Lien Extinguishment letters on September 13, 2012 as part of

an overall set of 33,456 letters from Chase that went out that same day. Upon information and

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belief, Mr. Kassem and Ms. Solomon from Chase, at the very least, knew that if these loans were

targeted for consumer relief crediting under the NMSA, there had to have been other borrowers as

well who would get swept up by Chase's dragnet of fraud, to either circumvent its mortgage

servicing obligation or to assert consumer relief credit unlawfully.

41. Sure enough, the next day, September 14, 2012, the Schneider Entities'

offices were contacted by a borrower, Robert Warwick, whose loan was purchased from Chase

several years before. The borrower had made consistent payments for several years after the

Schneider Entities acquired his loan from Chase. However, Mr. Warwick was not calling about a

payment that he was making, but rather about a 2nd Lien Extinguishment letter he received from

Chase, and notifying the Schneider Entities that he would no longer be making payments to them

on the loan. Shortly after Mr. Warwick sent the Schneider Entities a copy of the letter, I

immediately e-mailed Mr. Kassem to not only resolve the Warwick issue but also to inquire if any

other borrowers whose loans the Schneider Entities had bought from Chase would be receiving a

similar letter. My communication to Mr. Kassem was an immediate attempt to determine the scope

of the mailing errors and to proactively work with Defendants to remediate the pending issues and

to mitigate the harms to the Schneider Entities, Defendants and borrowers.

42. On October 10, 2012, Mr. Kassem informed me that "Retraction Letters

were off the table."

43. After further months of efforts to speak and e-mail Mr. Kassem to address

these issues with these letters that were sent by Chase to the Schneider Entities' borrowers, on

February 26, 2013, Mr. Kassem informed me that he was no longer allowed to speak with me.

44. Despite strict instruction to cease all communications with the Schneider

Entities, likely to conceal Defendants' frauds, Ms. Solomon from Chase attempted to assist me

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with a 1st Fidelity loan which had a pending closing, representing several hundred thousand dollars

in revenue to 1st Fidelity. This was a loan that was to be paid off by the borrower, but Chase would

not provide the payoff number. Ms. Iacino from pt Fidelity's offices requested Ms. Solomon's

assistance with this matter, and Ms. Solomon replied: "As much as I would like to help, I have

been advised I cannot work with S&A on any accounts until the DOJ Legal matter regarding

assignments is cleared up between S&A/Chase. Per Omar [Kassem], he said to please get with

legal counsel on any matters regarding Chase." Ms. Solomon copied me on this e-mail. I

responded to Ms. Solomon, stating: "This is really unfair. You know I've tried communicating

with Glenn Seeley [Chase legal counsel] a few times and did not get a reply. I copied you on some

correspondence. I don't know ifhe is the right person and Omar never gave me a contact person

in legal. IfI was given an actual person within Legal Counsel to communicate with, I would have."

Ms. Solomon tried to provide me with a contact person but to no avail.

45. As time wore on, I realized that the mystery that surrounded my dealings

with Chase were part of a larger scheme of fraud perpetrated by Chase upon both me as well as

the borrowers who had originally obtained loans from Chase, as well as the United States

government and various states who had worked to negotiate the NMSA. As a prelude to a separate

lawsuit that I filed under the False Claims Act ("FCA"), 31 U.S.C. § 3730 et seq., on March 28,

2013, my prior legal counsel sent a letter to Eric Holder, the then United States Attorney General,

accompanied by the Relator's Disclosure Statement required by the FCA.

46. Then, on May 6, 2013, my FCA case was filed under seal in the United

States District Court for the District of South Carolina, and the following day, my counsel sent a

copy of the FCA complaint to Attorney General Eric Holder.

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47. While this FCA case was still under seal and purportedly being investigated

by the U.S. Department of Justice, Chase executed its Alternative Foreclosure Process ("AFP") on

numerous loans owned by the Schneider Entities. This special project, in which Chase concealed

the 1st Lien Recovery loans from government regulatory scrutiny, was specifically known as the

Pre DOJ Lien Release Project. As part of this undertaking, Chase made note in the Mortgage

Servicing Platform ("MSP") of all the loans in which borrowers, whose loans were owned by the

Schneider Entities, were lien released. A true and correct copy of Print Screens of this Pre-DOJ

Lien Release is attached hereto as Exhibit 12. This exhibit was previously submitted to the Court

as Exhibit G to the Declaration of Helen Chaitman, filed on May 27, 2016 in support of an earlier

Motion to Compel Discovery.

48. Between October 2013 and December 2013, Chase had released hundreds

ofloans owned by the Schneider Entities, according to Chase's plan and scheme to conceal loans

from being measured for metrics testing and then taking credits for those same loans under the

RMBS settlement.

49. On November 1, 2013, while the FCA case was still under seal (but after it

had been transferred to the United States District Court for the District of Columbia), the United

States requested a partial unsealing of the FCA case, which unsealing was granted without my

knowledge or consent. While Chase were purporting to deny the allegations contained in the FCA

case to the DOJ, Chase was simultaneously setting the wheels in motion to actively release loans

owned by the Schneider Entities, as part of the AFP.

50. On February 8, 2014, after the United States and the States party to the

NMSA and RMBS Settlements declined to intervene in the FCA case, I received communication

via text from Mr. Jeff McGrane of Chase, informing me of the following: "Looks like they have

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 Case 1:15-cv-00293-LTS-JCF Document 191 Filed 06/15/17 Page 19 of 21

done it again. Heard someone outside of our group may have processed 800-900 lien releases on

Recovery sold loans."

51. The communication continued and then on February 21, 2014, Mr.

McGrane confirmed to me that the 1st lien mortgages, which I had identified in the FCA case as

the AFP, had been released. Unlike the 2nd Lien Extinguishment Program, in which Chase harmed

a couple dozen of the Schneider Entities' loans to seek credit for 2nd mortgages under the NMSA,

the AFP impacted most of the Schneider Entities' 1st lien mortgages. The communications also

confirmed that unlike the 2nd Lien Extinguishment Program, in which borrowers were notified

about the forgiveness, the borrowers whose 1st lien mortgages were released, to avoid being

included in the NMSA metrics testing, did not receive notification: "No letters sent just lien release

processed."

52. On March 5, 2014, prior to the filing of this lawsuit, the Schneider Entities'

prior legal counsel sent a hand-delivered letter to Stephen Cutler, Chase's then-General Counsel,

outlining the scope of the ongoing harms that Chase has been committing against the Schneider

Entities. In this letter, the Schneider Entities' counsel identified these harms, including the

rampant and unchecked release of liens on loans previously sold by Chase to the Schneider

Entities, as well as the rogue actions taken by Chase through the AFP and the 2nd Lien

Extinguishment Program. Plaintiffs' counsel pointed out to Chase that "Chase has not delivered

allonges and assignments for many of the loans," "continued to collect payments (on its own or

through collection agencies) on many of the sold loans without remitting the payments" to the

Schneider Entities, and post-sale, has "continued to harm the Schneider Entities" by "(1) changing

the list of loans sold, and adding hundreds of loans that violate loan servicing and consumer

protection laws; (2) pulling valuable loans back after the sale closed; (3) keeping payments made

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 Case 1:15-cv-00293-LTS-JCF Document 191 Filed 06/15/17 Page 20 of 21

by borrowers after sale of the loans; (4) directing enforcement agencies to [the Schneider Entities]

for Chase's violations; (5) releasing and discharging liens on sold loans; (6) short-selling properties

subject to loans sold to Schneider Entities; and (7) receiving payments from borrowers and

insurance carriers and refusing to remit such payments to [the Schneider Entities]." In this letter,

Plaintiffs' counsel provided detailed case studies of the problems that have been faced by several

borrowers because of the mishandling ofloan files by Chase, problems which are not only harming

the Schneider Entities financially in their operation of their businesses, but further exposing the

Schneider Entities to ongoing liability from litigation being pursued by those borrowers. A true

and correct copy of this March 5, 2014 letter is attached hereto as Exhibit 13.

53. On May 1, 2014, one day before Defendants began filing the Rescission of

Modification of Mortgages, I informed my counsel of the need to address the situation regarding

Chase moving forward with filing "vacation documents." Unfortunately, my counsel was not able

to draft a cease and desist letter to Chase on that day. Starting on May 2, 2014, Ingrid Whitty, a

purported Vice-President of Chase, executed the various :fraudulent Vacation of Modification of

Mortgage and Vacation of Release of Mortgage documents which were prepared by Erika Lance

of NTC. NTC then proceeded to knowingly record these fraudulent documents in the various

county recorders' offices. Examples of these documents are set forth in Composite Exhibit 3 to

this Declaration.

54. On June 27, 2014, the Schneider Entities' prior counsel wrote to Chase

again, this time sending his letter to Chase's counsel Robert Bailey, to follow up on his March 5th

letter to Chase. As this letter points out, Chase requested additional supporting materials relating

to the Schneider Entities' claims that were made in the March 5th letter, and Plaintiffs counsel

made several binders of documents available for Chase's review. As Chase's in-house counsel

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 Case 1:15-cv-00293-LTS-JCF Document 191 Filed 06/15/17 Page 21 of 21

asked for a further summary of the Schneider Entities' claims and demands, the June 27 th letter

was sent to Chase. In this letter, the Schneider Entities' legal counsel reminded Chase's counsel

that "[t]he scope of harm caused by [Chase's] actions is mushrooming," and further detailed how

Chase's lien releases and attempts "to 'revive' recordings of the liens whose releases [Chase]

recorded" were exposing the Schneider Entities to liability under various laws. A true and correct

copy of this June 27, 2014 letter is attached hereto as Exhibit 14.

Pursuant to 28 U.S.C. §1746, I declare under penalty of perjury that the foregoing

is true and correct.

Dated: Coconut Creek, Florida

June I~ , 2017

&fperso,, ci//v ky')o l,Jf" Laurence Schneider

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CAROLINE IACINO
MY COMMISSION# GG 77456
EXPIRES May 07 , 2021

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