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Home My WebLink About14-4689 Supreme Co, 40 ;ennsylvania COU f�CdInin0 leas ForProtlsonataryUse_E?nly a C 11 DockefN.. CU RC/fi1gi5 ' County :.. The information collected on this form is used solely for court administration purposes. This form does not supplement or replace the,frling and service of leadings or other papers as required by law or rules of court. Commencement of Action: Complaint n Writ of Summons 13 Petition Transfer from Another Jurisdiction n Declaration of Taking Lead Plaintiff s Name: Lead Defendant's Name: Old Republic National Title Insurance Company Mortgage Services III, LLC Dollar Amount Requested: F7within arbitration limits Are money damages requested? 0 Yes Na (check one) outside arbitration limits N. Is this a Class Action Suit? 0 Yes El No Is this an MDT Appeal? n Yes No' A Name of Plaintiff/Appellant's Attorney: Blair H. Granger, Esquire#56025 and David J. Scaggs, Esquire#82117 ;ry~. y �' ( 1 i 1 Litigant) it><.,:,.,,,• © Check here if you have no attorney are aSelf-Re Self-Represented Pro Se Liti ant w :.. 4, Nature of the Case Place an"X"to the left of ti e ONEY6 category'that most accurately descrtbes your PRIMARY CASE If you are making more 14han'one type of clarity,check the one that Youconsider:m644 MPp rtan TORT(do not include Mass Tort) CONTRACT(do not include Judgments) CIVIL APPEALS Intentional _l Buyer Plaintiff Administrative Agencies Malicious Prosecution ! Debt Collection:Credit Card ril Board of Assessment Q Motor Vehicle Debt Collection:Other rl Board of Elections Nuisance Dept.of,Transportation Q Premises Liability n Statutory Appeal:Other Product Liability(does not include Employment Dispute: mass tort)E Discrimination Slander/Libel/Defamation Employment Dispute:Other 0 Zoning Board Other: Other: Other: MASS TORT 0 Asbestos 1 IQ Tobacco r1l Toxic Tort-DES { F1, Toxic Tort-Implant REAL PROPERTY MISCELLANEOUS n Toxic Waste Other. Ejectment Common Law/Statutory Arbitration M Eminent Domain/Condemnation X Declaratory Judgment El Ground Rent Mandamus El Landlord/Tenant Dispute rl, Non-Domestic Relations Mortgage Foreclosure:Residential Restraining Order PROFESSIONAL LIABLITY Mortgage Foreclosure:Commercial Quo Warranto Dental Partition Replevin }; Legaln Quiet Title n Other: Medical Other: Q Other Professional: l=Y Updated 11112011 �~lLL.LJ-Uf �-11;V. THE GRANGER FIRM Ur SHE PRO TFC fli4Q"A Blair H. Granger,Esquire 2014 AUG —:� Attorney I.D. # 56025 AM to: pq David J. Scaggs, Esquire CUMBERLAND COUNTY Attorney I.D. #82117 PENNSYLVANIA 1800 East Lancaster Avenue Attorneys for Plaintiff Paoli,PA 19301 (610) 640-7500 Old Republic National Title Insurance Company IN THE COURT OF COMMON PLEAS 400 South Second Avenue CUMBERLAND COUNTY, PA Minneapolis, MS 55401 Plaintiff, CIVIL ACTION v. No.��4�10 610;Lc7ie-tY�` Mortgage Services III, LLC 502 N. Hershey Road NOTICE Bloomington, IL 61704 Defendants. You have been sued in Court. If you wish to defend against the claims set forth in the following pages, you must take action within twenty (20) days after this Complaint and notice are served, by entering a written appearance personally or by attorney and filing in writing with the court your defense or objections to the claims set forth against you. You are warned that if you fail to do so the case may proceed without you and a judgment may be entered against you by the Court without further notice for any money claimed in the complaint or for any other claim or relief requested by the Plaintiff. You may lose money or property or other rights important to you. YOU SHOULD TAKE THIS NOTICE TO YOUR LAWYER AT ONCE. IF YOU DO NOT HAVE A LAWYER, GO TO OR TELEPHONE THE OFFICE SET FORTH BELOW. THIS OFFICE CAN PROVIDE YOU WITH INFORMATION ABOUT HIRING A LAWYER. IF YOU CANNOT AFFORD TO HIRE A LAWYER, THIS OFFICE MAY BE ABLE TO PROVIDE YOU WITH INFORMATION ABOUT AGENCIES THAT MAY OFFER LEGAL SERVICES TO ELIGIBLE PERSONS AT A REDUCED FEE OR NO FEE. Cumberland County Bar Association 32 South Bedford Street Carlisle,PA 17013 1-800-990-9108 or 717-249-3166 7s V'41 y ��. y� THE GRANGER FIRM Blair H. Granger, Esquire Attorney I.D. #56025 David J. Scaggs, Esquire Attorney I.D. #82117 1800 East Lancaster Avenue Attorneys for Plaintiff Paoli, Pennsylvania 19301 (610) 640-7500 Old Republic National Title Insurance Company IN THE COURT OF COMMON PLEAS 400 South Second Avenue CUMBERLAND COUNTY, PA Minneapolis, MS 55401 Plaintiff, CIVIL ACTION V. No. Mortgage Services III, LLC 502 N. Hershey Road Bloomington, IL 61704 Defendants. COMPLAINT Plaintiff, Old Republic National Title Insurance Company ("Old Republic") by and through its undersigned counsel, complains against Defendant, Mortgage Services III, LLC ("Mortgage Services") as follows: THE PARTIES 1. The Plaintiff is Old Republic Title Insurance Company, a Minnesota corporation with a principal place of business at 400 South Second Avenue, Minneapolis, MN 55401. 2. The Defendant is Mortgage Services III, LLC, an Illinois limited liability company which has its principal place of business located at 502 N. Hershey Road, Bloomington, IL 61704. JURISDICTION AND VENUE 3. Jurisdiction and venue are proper because this is a dispute arising out the refinancing of real property located in Cumberland County, PA. INTRODUCTION 5. This is an action for declaratory relief to settle questions concerning the Defendant Mortgage Services' claims for coverage under a Closing Service Letter ("CSL"), dated January 21, 2013 issued by Old Republic, which claims persist despite written correspondence from Plaintiff to Defendant Mortgages Services that there is no valid claim against Old Republic under the Closing Service Letter. See copy of the Closing Service letter attached hereto as Exhibit "A". 6. Old Republic files this lawsuit in order to obtain a declaration that it has no obligations for any of the alleged claims asserted by Defendant, which claims are set forth in detail below. FACTUAL BACKGROUND 7. The dispute between the parties arises out of a real estate refinance closing for certain real property known as 102 Country Club Road, Carlisle, Pennsylvania 17015 (the "Property"). The refinance took place on February 22, 2013 and involved a loan in the amount of $167,000.00 from Capital Financial Mortgage Corporation ("Capital Financial") to Paul E. Whippo to refinance a prior loan with Wells Fargo. In consideration for the new loan, Paul E. Whippo and Jennifer S. Person Whippo, the title holders to the Property, were to grant a first lien mortgage to Capital Financial on the Property. 8. However, as a result of the apparent failure of Capital Financial to actually fund the loan, the refinance was not completed, as is set forth in further detail below. 9. Thereafter, on or about May 19, 2014, Defendant Mortgage Services sent correspondence to Old Republic, wherein Defendant nonetheless made a claim under the CSL for alleged losses it claims it suffered from the Whippo refinance closing. 10. Defendant Mortgage Services was not itself a direct lender for the Whippo refinance. Rather, it provided funds for the loan to Capital Financial, who in turn was to provide the funds for closing the refinance. Mortgage Services was then to take an assignment of the mortgage on the Property from Capital Financial. 11. The CSL referenced in and attached to the May 19, 2014 correspondence from Mortgage Services names Affinity Land Services, LLC as an Issuing Agent for Old Republic under the terms and conditions in the CSL. 12. Affinity Land Services, LLC ("Affinity") also acted as the settlement agent for the closing for Capital Financial. 13. Affinity prepared and signed a HUD-1 Settlement Statement indicating that it had or would cause the funds to be disbursed in accordance with the settlement statement. 14. Affinity signed a letter dated February 22, 2013 prepared by Capital Financial that stated that the refinance closed and the $167,000.00 loan had been disbursed with a resulting first mortgage on the Property in favor of Capital Financial. See First Lien Letter attached hereto as Exhibit "B". 15. While Capital Financial was to provide the funds to Affinity for the refinance, it appears that in fact no funds were actually sent by Capital Financial to Affinity. Since Capital Financial never sent the closing funds, no disbursement was made by Affinity. 16. Nonetheless, based on the First Lien Letter and the HUD 1 closing statement, Defendant alleges that it has been harmed because it purchased the mortgage from Capital Financial. 17. Defendant has now demanded payment from Old Republic under the CSL for its alleged actual loss of $166,347.67, along with its costs and expenses and attorney fees. See correspondence Defendant to Plaintiff dated May 19`h, 2014 attached hereto as Exhibit "C". 18. Specifically, Defendant has alleged that Affinity failed to comply with the closing instructions of the lender, Capital Financial, and that as a result, Mortgage Services suffered a loss that Old Republic was responsible for pursuant to the CSL issued by Old Republic. 20. Upon receipt of the May 19, 2014 correspondence, counsel for Affinity notified Defendant that no disbursements were made because the loan was never funded by Capital Financial. See copy of correspondence from counsel for Affinity dated May 23, 2014 attached hereto as Exhibit "D". 21. Thereafter, on May 29, 2014, Old Republic sent a letter to Defendant indicating that it appeared that Capital Financial itself was engaged in a fraudulent scheme whereby it would direct loan fundings to itself and not the closing agent, Affinity. The letter pointed out that if Affinity never received the funding for closing, it could not have mishandled those funds. The letter went on to ask Mortgage Services to advise whether it had itself sent any funds directly to Affinity for the closing or had evidence that Capital Financial had sent any funds to Affinity. See copy of correspondence attached hereto as Exhibit "E". 22. in the correspondence from Old Republic to Defendant on May 29, 2014, Old Republic also reminded Defendant that the CSL was directed to Mortgage Services in its capacity as an assignee of Capital Financial. 23. Mortgage Services rights under the CSL are only as an assignee of Capital Financial. The CSL identifies "Capital Financial Mortgage Corporation" by name, referencing it in the letter as "you" or "your" with regards to payment of funds or closing instructions. It does not appear that Defendant itself ever sent any funds or closing instructions for which it has made Old Republic aware of. As such, Mortgages Services cannot gain any rights greater than Capital Financial has under the CSL. 24. On May 29, 2014 Mortgage Services, through counsel, once again sent correspondence to Old Republic demanding payment under the CSL. See copy of correspondence attached hereto as Exhibit "F" 25. On May 30, 2014, Old Republic notified Defendant in writing that any losses it had suffered were caused by the willful acts of the indemnitee Capital Financial and thus were not covered by the CSL. The correspondence went on to state that Mortgage Services rights under the CSL were that of an assignee and subject to all defenses available against Capital Financial. See copy of correspondence attached hereto as Exhibit "G". 26. On June 25, 2014 Mortgage Services sent yet another letter demanding payment by Old Republic under the CSL. See copy of correspondence attached hereto as Exhibit "H". 27. The June 25, 2014 letter continues to assert the positon that because Affinity had represented that funds had been received and disbursed, Old Republic was liable for losses suffered by Mortgage Services. The correspondence also argued since Mortgage Services was to be considered an "addressee" under the CSL, it did just not stand in the shoes of Mortgage Financial (despite the fact that there is no allegation that Mortgage Services ever sent its own funds or closing instruction). 28. The CSL is addressed to "Capital Financial Mortgage Corporation, its successors and/or assigned as their interest may appear". See copy of Closing Service Letter attached hereto as Exhibit "A". 29. Under the terms of the CSL, "If you are a lender protected under the foregoing paragraph, your borrower, your assignee and your warehouse lender in connection with a loan secured by a mortgage shall be protected as if this letter were addressed to them." 30. Thus, under the plain language of the CSL, the "you" refers to Capital Financial and not any assignee of Capital Financial. 31. Therefore, to the extent Capital Financial was acting as a lender in the transaction, any assignee or warehouse lender of Capital Financial is protected by the CSL. 32. The CSL also requires by its own terms that any claim under it be filed within one (1) year from the date of the letter. Specifically the document states in paragraph"G": G. The Company shall not be liable hereunder unless notice of claim is received by the Company within one year from the date of the Closing." 33. No claim was filed or sent to Old Republic until the May 19, 2014 correspondence. 34. Despite all of the above, Mortgage Services continues to pursue claim submissions under theories that allege that somehow coverage is owed under the CSL. COUNT I—DECLARATORY JUDGMENT RELIEF 35. Plaintiff incorporates the above paragraphs herein by reference. 36. As set forth above, a controversy exists between the Plaintiff and the Defendant based on the existence of the CSL, a written document. 37. Old Republic denies that it has any obligations to reimburse or otherwise indemnify or pay any monies to Mortgage Services under the CSL, as none of the claim submissions from Mortgage Services qualify to trigger any obligation by Old Republic. 38. Moreover, even if a claim was viable under the CSL, said claim was not timely made within one (1) year from the date of the CSL. 41. Old Republic seeks adjudication that no liability or obligations exists under the CSL. 42. An actual and justiciable controversy exists between Old Republic and Mortgage Services concerning the rights of the Defendant and the obligations of the Plaintiff under a written contract (i.e. the Closing Service Letter), and Plaintiff is entitled to have its legal obligations determined by this Honorable Court in a Declaratory Judgment Action. 43. As such, Old Republic seeks a declaratory judgment that it owes no duty to reimburse or indemnify Mortgage Services for any of the claims asserted by Mortgage Services under the Closing Service Letter as set forth herein. WHEREFORE, Plaintiff Old Republic Title Insurance Company hereby respectfully requests this Court to enter judgment in its favor and against Defendant Mortgage Services, IJI, LLC and further declare that: a. Declare that Plaintiff has no obligation to reimburse or indemnify Defendant Mortgage Services under the January 21, 2013 Closing Service Letter; b. For such other relief as this Court deems just and proper. THE GRANGER FIRM Date: By: ZIA r /\--- Blair H. Granger, Esquire David J. Scaggs, Esquire Attorneys for Plaintiff VERIFICATION I, JAMES D. PARTIN, being Vice President of Old Republic National Title Insurance Company, duly depose and state that I am authorized to make this verification. I have read the foregoing Complaint, and state that the facts contained therein are true and correct to the best of my knowledge, information and belief and make these statements subject to the penalties of 18 Pa. C.S.A. Section 4904 relating to unsworn falsification to authorities. Dated: August 1, 2014 By: Name: J S D. PARTIN EXHIBIT "A" to Plaintiff' s Complaint * OLD REPDBLICK.,no:ur.Trt,.tinsURArt(rro„rutY P-myt—laO,ffrG *#*# 1265DnomaerzLen4 State 220 Waync PA 19087 voice.-610-87.80M—Fax Number,610.6876056 ToltFme.9DO-842_2080 laauary 21,2013 Capital Financial Mortgage Corporation,its successors andror assigns as their Interests may appear 215 Kedroa Avenue Folsom,PA.19033 R6: Clasing Service tetter *issuing Agent or Approved Attorney.AWalty Land Services,LLC 820 Township Line Road,Yardley,PA 19067 *Binder or Commitment No:A334-0R 'Premises:102 Country Club Road,Carlisle,PA 17015 Borrowers.Paul M Whippo and Jennifer S.Person Whippo To veri fy this agent is in good standing,go to www.oldrenub)iFpljy corn.go to ServiccftAucts,and select Agent Verification.Mien select Agent Number and use Dear Customer. When title insurance of Old Republic National Title Insurance Company(the company)is specified for your protection In connection with the closing of the above described real estate transaction(the Closing)In which You are to be the(i)lender secured by a mortgage of an interest in land,its assignees or a warehouse leader, 01)purchaser of an interest in land,or(iii)lessee of an interest In land,the Company,subject to the Conditions and Exclusions set forth below,hereby agrees to reimburse you for actual loss incurred by you in connection with the Closing when conducted by the above named Issuing Agent(an agent authorized to issue title insurance for the Pompany)or the above named Approved Attorney(an atlomeyupon whose certification of title the Company issues ti0e insurance)and when such loss arises out of 1. Failure of the Issuing Agent or Approved Attorney to comply with your written closing instructions to the extent that they relate to(a)the title to said interest in land or the validity,enforceability and priority of the lien of said mortgage on said interest In land,including the obtaining of documents aad the disbursement or funds necessary to establish such title or lien;or(b)the collection and payment of funds due you;or 2. Fraud or misapplication of the Issuing Agent or Approved Anomey in handling your funds In connection with the matters act forth in numbered paragraph 1 above. If you are a leader protected under the fhragoing paragraph,your borrower,your assignee and your warehouse lender in cotmation with a loan secured by a mortgage shall be protected as If this letter were addressed to them. CONDTPIONS AND EXCLUSIONS A. The Company will not be liable to you for loss arising out of: 1. Failure of the Approved Attomey to comply with your closing instructioas which rcgnire title insurance protection inconsistent with that set forth in the title Insurance binder or commitment issued by the Company.Instructions which require the removal of specific exceptions to title or compliance with the requirements contained in ad binder or commitment shall not be deemed to be inconsistent. •Must be complete for this Luta to be effective. 2. Loos or impairment of your funds is the course of collection or while on deposit with a bank due to book failure,insolvency or suspension,except such as shall result from failure of the Issuing Agent or the Approved Altomey to Comply with your written closing instructions to deposit the funds in a bank which you designated by name. 3. Defects,Gees,encumbrances or other matters in connective with the Closing if it is a pwchasq luso or loan transaction except to the extent that protection against those defects,liens,encumbrances or ocher matters is afforded by a policy of title insuuancenot ioconsisunt with ynur dosing instructions. 4. Ptaud,dishonesty or negligence of your employee,agent,attorney or broker. 5. Your settlement or release of any claim without the written consent of the Company. 6. Any matters Created,suffered,assumed or agreed to by you or known to you. B. If the Closing is to be conducted by an Approved.Attorney,a title insurance binder or commitment for the Issuance of A policy of title insurance of the Company must have been received by you prior to the transmission of your final closing instructions to theApproved Attorney, C. Should the Company reimburse you pursuant to this letter,it shall be subrogated to all rights and remodles which you would have had against Any person or property had you not been so reimbursed Liability of the Company for such reimbursement shall be reduced to the extent that you bavc knowingly and voluntarily impaired the value of sock right of subrogation. D. Any liability of the Company for loss moored by you In Connection with the Closing by an Issuing Agent or Approved Attorney shall be limited solely to the protection provided by this letter. E Liability under ibis letter Is limited to the amount of the policy of policies of title Insurance to be issued,and any payment of loss under Otis letter shall constitute a payment under the policy. F. Claims shall be made promptly to the Company at its office at 400 Second Avenue South,WrLncnpolis, Minnesota 55401.Wbcn the failure,to give prompt notice shalt prejudice the Company,then liability of the Company hereunder shall be reduced to the extent orsuch prejudice. G. The Company shall not be liable hereunder unless notice of claim in writing is received by the Company within one year from the date of the Closing. H. Ibis tetter does nes appoint the above named Approved Attorney,If any,as as agent ofthe Company. L The scope and effect of this Letter is limited to a single transaction,which is the Closing on the commitment or binder referenced in the caption. J. Either the Company or you may demand that any claim arising trader this letter be submitted to arbitration pursuant to the True Insurance Arbitration Rules of the American Land Tide Association,unless you have a policy of title Insurance for the applicable transection with an Amount of lnsnranee greater than$2,000,000.If YOU have a policy of title insurance for the applicable tratasactlom with an Amount of Insurance greater than $2.000.000,a claim arising under tills letter may be submitted to arbitration only when agreed to by both the Company and you. OLD REPUBLIC NATIONAL TITLE INSURANCE COMPANY By. Aavi i E.Edwards Vice President,Associate Counsel TM80P-PA CSL(9/14109) TRANSACTION SPECVIC EXHIBIT "B" to Plaintiff' s Complaint FIRST LIEN LETTER Loan Number: 17607616 Case Number. Data: FEBRUARY 22, 2013 Lender: CAPITAL FINANCIAL MORTGAGE CORPORATION Borrower(s): PAUL, E WHIPPO Property Address: 102 COUNTRY CLUB ROAD, Carlisle, PennmYlvania 17015 Title Commltmenr Number: A13-4-OR Title Comptmy: AFFINITY LAND SERVICES, LLC Wehaveclosed and completely disbursed the proceeds of the loan Covered by the above captioned commitmentfreport io the amount of S 1157,000,0o The Mortgage/Deed of Trust is a valid first lien on the property described In the conuaitment/report,subjwt only to the uxeptabla exceptions shown in Schedule B therein,and there art no outstanding or unpaid taxes or special assessments on the subject property as to the date thereof. A Mortgagees Title Policy,conforming to the requirements of the commitment/report,dated as of the date of recording of the Mortgago/Deed of Trust,and subject only to those exceptions referred to above,will be issued in due course. This letter is an endorsement to the captioned eornmirment/report.and Is subject to the schedules,conditions and stlpulaGons of the Title Policy Penn. IL Closing ou"lemeou=Kow Officar AFFINITY LAND SERVICES, LLC RFtsr UEN LEITER Docafaglc�raams rvww.docmagrc.mm Rtnocml EXHIBIT "C" to Plaintiff's Complaint Michael Best&Friedrich LLO MICHAEL B E S T Attorneys at Law One South Pinckney Street & FRIEDRICH LLP Suite 700 Madison,WI 53703 P.O.Box 1806 Madison,WI 53701-1806 Phone 608.257.3501 Fax 608.283.2275 May 19, 2014 Nathan L.Moenck Direct 608.283.4438 —--— Email nfmoenck@michaelbest.com VIA FEDERAL EXPRESS AND U.S. MAIL Old Republic National Title Insurance Company ATTN: Claims Department 400 Second Avenue South Minneapolis, MN 55401 Re: Claim under Old Republic National Title Insurance Company Closing Service Letter("Letter") Commitment Number: A13-4-OR Lender: Capital Financial Mortgage Corporation ("Lender") Warehouse Lender: Customers Bank ("Warehouse Lender") Assign: Mortgage Services III, LLC ("Insured") Issuing Agent: Affinity Land Services, LLC Borrowers/Mortgagors: Paul E. Whippo and Jennifer S. Person Whippo ("M ggagors") Property: 102 Country Club Road, Carlisle, PA 17015 ("Property") Dear Sir or Madam: This law firm represents Mortgage Services III, LLC, the insured ("Insured") under the Letter identified above, a copy of which is attached as Exhibit A defined terms in the Letter. . Capitalized terms below refer to Insured hereby makes this claim for actual loss incurred by Insured in connection with a closing conducted by Agent named above, who had been certified and approved by Old Republic National Title Insurance Company ("OldRepublic") to provide closing and settlement services. The loss arises out of at least (1) the failure of Agent to comply with Lender's closing instructions that relate to the status of title in the Property and the validity, enforceability, and priority of the lien of the Mortgage ("Mortgage") on the Property, including the obtaining of documents and disbursements of funds necessary to establish such status of title or lien, and (2) fraud and misapplication of Agent in handling the funds in connection with the matters set forth above. The issues raised are not an exclusion under the Letter, and Old Republic will suffer no prejudice as a result of the date of this notice. Agent was the closing agent on a residential mortgage loan that Mortgagors sought to obtain from Lender ("Loan"). A copy of the Closing Instructions is attached as Exhibit B. At the closing, Mortgagors executed the Note and Mortgage, copies of which are attached as Exhibit C. Mortgagors also executed the HUD-1 Settlement Statement, a copy of which is attached as Exhibit D. michaelbest.com MICHAEL BEST & FRIEDRICH LLP Old Republic National Title Insurance Company May 19, 2014 Page 2 Agent signed the HUD-1 Settlement Statement, under penalty of perjury, and represented: °The HUD-1 Settlement Statement which I have prepared is a true and accurate account of this transaction. I have caused or will cause the funds to be disbursed in accordance with this statement." Agent also signed the Certification Addendum to HUD-1 Settlement Statement, under penalty of perjury, and made the same representation. Agent never disbursed any funds under the HUD-1 Settlement Statement and never paid off the first-position mortgage held by Wells Fargo. Agent also signed the First Lien Letter, a copy of which is attached as Exhibit E. In the First Lien Letter, Agent made the following representations: We have closed and completely disbursed the proceeds of the loan covered by the above captioned commitment/report in the amount of$167,000.00. The Mortgage/Deed of Trust is a valid first lien on the property described in the commitment/report . . . . A Mortgagees Title Policy, conforming to the requirements of the commitment/report, dated as of the date of recording of the Mortgage/Deed of Trust . . .will be issued in due course. This letter is an endorsement to the above captioned commitment/report, and is subject to the schedules, conditions and stipulations of the Title Policy Form. Despite making multiple representations that the loan to Mortgagors disbursed, Agent failed to make any disbursements on the loan. Further, despite these representations, a mortgage was never recorded and Insured received no mortgage interest on the Property. Insured purchased the Loan and the corresponding Loan documents were transferred to Insured. Because Agent was Settlement Agent for the closing, and Old Republic issued the Letter for the closing, please take this letter as notice to Old Republic of the claim for Agent's failure to comply with the closing instructions and Agent's fraud and misapplication during the closing, which has resulted in the failure of the Loan to disburse and the failure of Insured to receive a valid and enforceable mortgage lien on the Property. On behalf of Insured, we therefore demand under the Letter that you Insured its actual loss in connection with this claim, including the amount that Insured p id rovI orr the Loan ($166,347.67), and Insured's costs and expenses, including attorneys'fees. I also have copied Agent on this letter. mlchaelbest.com MICHAEL BEST i3< FRIEDRICH LLP Old Republic National Title Insurance Company May 19, 2014 Page 3 Insured filed a lawsuit against Warehouse Lender for its subsequent representations and conduct in selling and transferring the Loan to Insured. A copy of the Complaint in this lawsuit is attached as Exhibit F. As this lawsuit is pending,we look forward to your prompt response. Very truly yours, MICH 'LST& FRIED LLP ath L. Moenck NL /fmw Attachments A-F cc: Affinity Land Services, LLC 820 Township Line Rd Yardley, Pennsylvania 19067-4200 michaelbest.com EXHIBIT A * OLD REPUBLIC rano ur rmcursvtcwpsCosarnrn Pmnsytvanrn C7Dicu **** 1265DrwnmrsLmuG Suite 220 Wa^PA 19087 Voice,610-87-WW—Fhx Number.61&W-6056 Toil Free. 8000.842-2090 laauary21,2013 Capital Financial Mortgage Corporation,Its successors anther assigns as their interests trmy appear 215 Ycdton Avenue Folsom,PA.19033 RE: Closing Service Letter OIssuing Agent or Approved Attorney:AWWty Land Servfces,LLC 820 Township Line Road,Yardley,PA 19067 *Binder or Commitment No:A134-OR 'Premises:102 Country Clob Road,Carlisle,PA 17015 BOrmwers.Paul 1?Whippo and Jennifer S.Person Whippo To verify this agent is in good standing,go to www.oldrmub)iWtlecom,go to SavicesTrvducts,and select Agent Verification.Then select Agent Number anduse Dear Customer. What title insurance of Old Republic National Title Insurance Company(the Company)is spec9Led for your protection in connection with the closing of the above described real estate transaction(the Closing)In which you are to be the(r)lender secured by a mortgage Of an interest in land,its assignees or a warehouse lender, (il)purchaser of an interest in land,or(iii)lessee of an interest In land,the Company,subject to the Condirions and Exclusions set forth below,hereby agrees to reimburse you for actual teas interred by you in connection with the Closing when conducted by the above named Issuing Agent(an agent authorized to issue title insurance for the Company)or the above named Approved Attorney(an attomayupon whose certification of title the Company issues ti0e insuance)and when such loss arises out at I. Failure of the Issuing Agent or Approved Attorney to comply with your written closing instructions to the extent that they relate to(a)the title to said interest in land or the validity,enforceability and priority of the Gen of said mortgage on said interest in land,including the obtaining of documents and the disbursement of funds necessary to establish such title or lien;or(b)the collection and payment of funds due you;or 2. Fraud or misapplication of the Issuing Agent or Approved Attorney in handling your funds In connection with the matron set forth in numbered paragraph 1 above. If you are a lender protected under the foregoing paragraph,your borrower,your assignee and your warehouse lender In connection with a loan secured by a mortgage shall be protected as If this letter were addressed to them. CONDITIONS AND EXCLUSIONS A. 'Ilse Company will not be liable to you for loss arising out of: I. Failure of the Approved Attorney to comply with your closing instructions which requite tide Insurance protection inconsistent with that set forth in the title Insurance binder or commitment issued by the Company.Instructions which require the removal of specific exceptions to title or compliance with the requirements contained in said binder or commitment shall not be deemed to be inconsistent •Mast be complete fof this Letter to be effective. 2. Lasa or impairment of your funds in the course of collation or while on deposit with a bank due to bank failure.insolvency or suspension,except such as shall result from failure of the Issuing Agent or die Approved Attorney to comply with your written dosing instr edons to deposit the funds in a bank which you designated by name, 3. Defects,Deas,encumbrances or other matters in connection with the Closing if it is a purchase,hate or loan transaction except to the extent that protcetion against those defects,liens,encumbrances or other matters is afforded by a policy of title insurance not inconsistent with your closing inspm dons 4. Rand,dishonesty or negligmee of your employee,agent,attorney or broker. S. Your settlement or release of any claim without the written cm=t of the Company, b. Any mauers ereattd,suffered,assumed or agreed to by you or known to you. B. If the Closing is to be conducted by an Apptoved•Attorney,a title insurance binds or eommltmeat for the Issuance of a policy of title insurance of the Company must have been received by you prior to the transmission Of your final closing Instructions to theApproved Attorney. C. Should the Company reimburse you pursuant to this letter,it shell be subrogated to all rights and remedies which you would have had against any person or property had you not been so reimbursed Liability of the Company for such reimbursement shall be reduced to the extent that you have knowingly and voluntarily impaired the value of such right of subrogation. D. Any liability of the Compauy for lou inaared by you In connection with the Closing by an Issuing Agent or Approved Attorney shall be limited solely to theprotcetion provided by this letter. Iw Liability under ibis letter It limited to the amount of the policy of policies of title Insurance to be issued,and any payment of loss under this letter shall constitute a payment ander the policy. P. Claims shall be made promptly to the Company at its office at 400 Second Avenue South,Minneapolis, Wannesota SS401.When the failure to give prompt notice shall prejudice the Company,then liability of the Company bercoader shall be reduced to the extent orsuch prejudice G- The Company shall not be liable hereuoder unless noticaef etaim in writing is received by the Company within one year from the date of the Closing. H. This letter aloes not appoint the above named Approved Attorney,if any,as as agent of theCompany. L The scope and effect of this Letter is limited to a single trenwdon,which is the Closing on the comm(tment or binder referenced in the caption. J. Either the Company or you may demand that any claim arising under this letter be submitted to arbitration pursuant to the Tide Insurance Arbitration Rules of the American Land We Association,unless you have a policy of title Insurance for the applicable transaction with an Amount of Insurance greater then 52,000,000.If you have a policy of title insurance for the applicable mms ctiort with an Amount of Insurance grouter than $2,000,OOD,a claim arising under this letter may be submitted to arbitration only when agreed to by both the Company and you. OLD REPUBLIC NATIONAL TITLE INSURANCE COMPANY By. Divi i E.Edwards Vice President,Assodate Counsel TIIt80P-PA CSL(91140) TRANSACTION SPECIFIC EXHIBIT B PROM: CAPITAL FINANCIAL MORTGAGE 215 REDRON AVE CORPORATION' Document Date: FEBRUARY 22, 2013 FOLSOM, PENNSYLVANIA 19033 Closing Data: FEBRUARY 22, 2013 PhCne: (610)532-1775 Fax; (610)532-1776 Disbursement: FEBRUARY 27, 2013 TO: AFFINITY LAND SERVICES, LLC Case No.: 820 TOWNSHIP LINE ROAD YARDLEY, PENNSYLVANIA 19067 Loan No.: 17607616 (215)860-7500 ATTN; AFFINITY LAND SERVICES, LLC APP.No.: Ordcr No.: A13-4-OR RE: Borrower(s): PAUL E WHIPPO Escrow No,; A13-4-OR Ptvperty Address: 102 COUNTRY CLUB ROAD Carlisle, Pennsylvania 17015 GENERAL CLOSING INSTRUCTIONS Do not close or find this loan unless ALL conditions In these closing fnstntctioos ansupplemental d any closing Instructions have been satisfied. The total consideration in this transaction except for our loan proceeds and approved secondary financing must pasv ra you in the form of cash, Do not clow or fluid this loan if you have knowledge of a concurrent or subsequent transaction whdcb would transfer the subject property. You must follow tbeselnstructionsexactly.raessclOsing instructions can Only be modified with our advance written approval, You shall be deemed to have accepted and to be bound by these closing Instructions if you fail to notify us in writing to the contrary wlthin 4S hours of your receipt hereof or if you disburse any funds to or for the account or the Borrower(s). All documents with the exception of those to be recorded(Security Instrtrrnent,Riders,Corporation Assignment(s),Grant Deed,Quit Claim,Power of Attortwy,etc.) must be returned to our office within 48 HOURS of the signing. Please return certified copies ofthosedocumantsthat are toberecorded,Fanuretocomply with these instructions may delay funding. EXECUTION OF DOCUMENTS: I. Each Borrower mast sign all documents exactly as his or her name appears on the blank line provided for his or her signature.All signatures must bewitnesW11'requlredcroustomary.All signature acknowledgements mustbeexecuted by a person authorized to take acknowledgements In the state of closing. 2. Any correction to loan documents must be approved in writing by us in advance. Norpyadd,whito out permittApp e deletion should be made by marling a single line through the language being deleted. All additions and ed App must be initialed by all borrowers, 3. All Powers of Attorney must be provided to and approved by us in advance. If approved,the Power of Attomoy must be recorded in the same county(ies)in which the Security Instrument is recorded,a certified copy provided to us. RESCISSION: 1. If the transaction is subject to rescission,provide each Borrower and each person having any ownership interest in the amity property with two(2)copies of the completed Notice of Right to Cancel. The Notice of Right to Cancel must be properly completed(including all dates) and each borrower and person given two notices must executa an acknowledgement of receipt. Your failure to properly complete and provide the Notices of Right to Cancel to each person entitled to receive them will delay this closing. 2. No Borrower orotherperson having anowncmhip interest III the Security property may modify or waive his or her right to rescind without our prior written consent. 3. If any Borrower or other person having an ownership interest in the security property indicates that he or she wishes to Cancel this transaction,contact us immediately for further instructions. SURVEYS: 1. A valid survey dated within 90 days of'closing Is required in area where surveys are customary. 2. The survey mast contain all relevant and customary Information and certifications and the legal description,lot size and street mast agree with the appraisal and closing documents. HAZARD INSURANCE: 1. Tea Borrower(s)must provide satisfactory evidence of hazard Insurance coverage and flood insurance coverage if the Property is lactated in a special flood hazard area. 2. Dwelling coverage must be equal to the lesser of the loan amount or the full replacement value of the propert improvements,and must extend for either a term of at least one(1)year after the closing date for purchase transactions or six (6) months after the closing date for refinance ttansectiom. 3. Loss payealmortgagee clause to read: CAPITAL FMWCIAL MORTGAGE CORPORATIO 1 N 215 KEDRON AVE FOLSOM, PENNSYLVANIA 19033 Loan Number.- 17607616 ACKNOWLEDGED AND AGREED: Settlement Agent APPINITY LAND SERVICES, LLC UENERAL CLOWNG INSTRUCnoM 04/2alaa Daearagla�paatoa www.docmegJecom Gtnee.nnh ' FROM: CAPITAL:, FMWCIAL MORTGAGE CYIRPORATION Document Da(e: FEBRUARY 22, 2013 215 1=013 AVE FMSOM, PMWSYLVANIA 19033 PY10)532-1775 Closing Date: FEBRUARY 22, 2013 aane: (6 Fax: (S10)532-1776 Disburacmenu FEBRUARY 27, 2013 TO: AFFINITY LAND SERVICES, LLC 820 TOWNSHIP LINE ROAD Case No.: YARDLEY, PENNSYLVANIA 19067 Loan No.: 17607616 izls)860-7500 ATM: AFFINSTy LAND 5ERVICES, LLC App.No.: OrderNo.: A13-4-OR RE: Bo—war(s): PAUL, E NHIPPO EscmwNo.: A13-4-OR Property Address: 102 COUNTRY CLUB ROAD Carlisle, Pe GY1VaUia 17015 SPECIFIC CLOSING INSTRUCTIONS LOAN DOCUMENTS; we ealbe rllorsee the following documents necessary to complete the above referenced loan transacts Rn � . Req.. an N CWat anti Agtrittt. ( AUcxsto o Nobe DO Arpl=D) ��Lath. (7O V�beets W T ntth-in-r.�3ng of t (x) rmn P�Iication 00 Itaftimt kn of amt fin. 00 Atit.ial.FbX=a Aact� DO 0=P1Patrot Act 00 Rescismm N3r1 Ste. 0 Agcesn3tt Deliver one(')Copy of all loan documents to the Borrower(s);deliver one(1)copy of the Federat Truth-In-Lending Disclosures Statement To each Borrower. LOAN TERMS: Loan Amount:167,0 0 0.0 0 ARM Loan:( )Yes (x)No Initial Advance: Indox: Sales Price: Margin: Term(Months);180 Periodic Rate Cap: Interest Rate: 2.75 0 LiretIme Rate Cap: Initial Payment:1,133.30 Lifetime Rata Floor: First Payment Dnte: 04/01/13 Interest Change Date: Payment Chan8e Date Last Payment Date: o3/01728 IAaA Purpose:REFINANCE PAYOFF REQUIREMENTS: It E a condition to the funding of this loan that the fotlowhig payoffs be made through this closing. Indicate payofrs ort tha HUD-I Settlement Statement or ppmvlde other setisfaaorryy evidence of payoff: PAYOFF to wrrLS FARGO tiA1 XCRTG $:L60,66 .28 GOND TIONM2US ffivTO BE$BAVEZ�WTIS b MPR ORIS WM��S 1ACMUNO nr D[OC DS: M�CR =V S,M VISIQS T 11�7f M I S A P M L!• CW4M 3I 7��EII IE �� ILcSELS CR PL�f tIl4lrTt i L cp PNY B' y DREM��V�7M 5i1LR CLOSW 171 .p FZW==,�10 JX IaN A�IST FLi i �o L it S1WAJ'ft TITLE INSURANCE REQUIREMENTS; You arra authorized to use funds for the account of the Borrowers and to record all instruments when you comply with the following: I. THIS LOAN MUST RECORD]N IST LIEN POSITION ON OR PRIOR TO THE DISBURSEMENT DATE NOTED ABOVE. PROVIDE DUPLICATE ORIGINALS OF THE ALTA TITLE POLICY. 2. Vesting to read: PAUL E WHIPPO AND JENNIFER S PERSON WHIPPO 3. Title Policy must Contain the following endorsements(or their equivalents):8,1 & ALL .APPLICABLE 4. isle PoFiS j�mu bef-f--liens,encumbrances,easements,cnctroachments andother tide matters except (1)the lien of our loan In the amount of our loan on the Property described herein shoving the Instrument or Doeunrent Number and the date of recording of the Security Instrument;(s)general,specific,state,county,city, school or other taxes and assessments not yet due or payable; 011)commitment,binder or equivalent dated other items asp nt d Civ))the cofollowing items as shown on the preliminary title report. SECONDARY FINANCING: Secondary financing in the amount of 3 NONE has been approved. SPECIFIC CL031N0 1NSTflUt;nbNS HCI.MSC 70lOH/10 Pbao 1 oft Docata99lc?dto:era wwn.d�nagk.cvm ESTIMATE OF FEES AND COSTS: s . AP. K It ; LOAN ORIGINATION FEE tot Capital FinanCial ` APPRAISAL FEE to; MANAGED APPRAISAL SERVICE 425.00 Borrower FLOOD CERTIFICATION to: LPS NATIONAL FLOOD 425'00 $0,00 Borrower CLOSING FEE to: SETTLEMENT AGENT $12.00 0.00 Borrower Lenders Title Insurance to: SETTLEMENT AGENT $380.00 0.00 borrower NOTARY FEE to: SETTLEMENT AGENT S1,30b,Z5 O,qO Borrower EDOC to: SETTUMVENT AGgNT $40.00 0.00 Borrower COURIER to: SETTLEMENT AGENT .00 0.00 Borrower WIRE to: SETTT.EMENT AGENT 4040,00 $0,00 Borrower Tax Cert tot 30,00 $D.00 Borrower RECORDIN13 WMTGAG�tooGtEOther50.00 5$0.00 Borrower HAZARD INS. PREMIUM to; Other $150.00 0.00 Borrower $1,033.00 $1,033.00 Borrower Subtotal of Estimated Fees and Costs: 3 3.174 25 PER DIEM INTEREST: Prom: 02/27/13 To:03/01/13 (Amid Red C1WP&Duo) days at$ 12.5822 per day Subtotal of Per Diem interest S 25 i 1MPOUNDSIESCROWS: Impoundfamwcheeks shouldbe made payable to and sent to us together with theoriginai final HUD-I Settlement Statement. 1 AR I MMURANCE 9 month(S)at$- 86,08 month— S 774.72 QXTQIY nY= 13 moath(s)at S 65.63 per month= S 853.19 SCMM PI�TAX 9 month(s)at S 17 .17 per month— $ 1,576-53 months)at S per month a $ 11104th(S)at$ per month= S m0r1th(s)at$ per month- S Aggregate Fserow Adjusunent•, S Impound Subtotal: S____2 L.941-93 Mortgage Ins.Prenium: $ TOTAL OF BEES AND COME S 7_971�.34 HUD-1 SETTLEMENT STATEMENT: The final HUD-1 Settlement Statement must be completed at settlement and roust acwrately reReet ell tscelptS and disbursements Indicated in these closing instructions and any amended closing instructions subsequent hetero. if any changes to fees ouxurdot documents ma need to bero-dmwa and re-s_i�gned.Fax acertified copyy ofthe fina111UD-1 Scttlemsart Statement to CAPITAL FINANCIAL MORTGAGE COKPORATION ® (610)532-1776 Attention: QualityAssurance. Send the original final HUD-1 Settlement Statement to Us at the following address within 24 hours of settlement: 215 XEDRON AVE, FOLSOM, PIENNNSYLVANIA 19033 ADDITIONAL INFORMATION: BORROWEk MUST SIGN AND DATE TRES6 CLOSING INSTRUCTIONS. If for any reason this loan does not close within 48hours of your receipt of funds,immedintely retum W I dm meats to Leader and wire all funds only to: CAPITAL FINANCIAL MORTGAGE CORPORATION 215 KEDRON AVE, FOLSOM, PENNSYLVANIA 19033 If you have an sessions regarding airy of these instructions,please contact CAPITAL F32WCZAL MORTGAGE CORPORATION BE (610)532-1775 BZOR WER CK LE T: I/We have read and acknowledged receipt of these Closing instructions. 27 �Zb3 BerPA E W HI Date Borrower Date Borrower Date Borrower Date Borrower Date Borrower Date ACKNOWLEDGED AND AGREED: Settlement Agent Dale APPINITY LAND SERVICES, LLC SPECIFC C1091NQ 1NSTRUCT[ONS SCt.MSC 10/05110 Papa 2 of 2 aocMa9fa trww. acmagh.tom SAPx<aN FROM: CAPITAL FINANCIAL MORTGAGE CORPORATIO 215 KEDRON AVE Document Dace:FEBRUARY 22, 2013 FOLSOM, P]1 SYLVANI,A 19033 PhoneFax: 6101 2-1.77675 Closing Dare:FEBRUARY 22, 2013 T0: Disbursement Date:FEBRUARY 27, 2013 AFFINITY LAND SERVICES TOWNSHIP LINE ROAD LLC Cue No,: � YDLEY, P SYLVANIA 19067 �(2one: (215- 860-7500 Fax Loan No.:17607616 AM: AFFINITY LAND SERVICES, LLC App.No.: RE: 8ormwcr(e} pAUL E p IPpO Crdor No.:A13-4-OR Escrow No..A13-4-OR Property Address:102 COUNTRY CLUB ROAD, Carlisle, Pennsylvania 17015 ADDENDUM TO CLOSING INSTRUCUONS (Additionsi conditions to be satisfied prior to disbursement of loan proceeds) THE. INTEREST RATE OF THIS LOAN I5 LOCKED AT 2.7SW. VERBALCLOSINGVOEMS ARE R$gUIRED FOR ALL BORROWERS WIIN 48 HOURS OF - UST INCLUDI3 ALT, LOYERS FOR MOST RECENT 2 YR PD DOCUMENT EXPIRATION DATES: LOCK 2/23/12; CREDIT 3/28/13; INCOME 4/1/13; ASSETS ; APPRAISAL 4/17/13 THE INTEREST RATE ON THIS LOAN IS interest rate changes at LOCKED AT 2.75 - if the or Prior to closing/funding, the loan must be reviewed and re-approved by underwriter TOTAL MONTF7LY SOUSING PAYMENT INCLUDING PITT, ANY MI PREMIUMS AND ANY ADDITIONAL SUBORDINATE FINANCING NOT TO EXCEED $1470.38 LOAN MUST FUND BY: MARCH 15, 2013 TITLEWORK TO PROVIDE FOR NO DELINQUENT TUXES, UNDISCLOSED LIENS, JUDGMENTS OR ASSESSMENTS OR APPROVAL MAY BE CONSIDERED NULL AND VOID- TITLEWORK MUST REFLECT A 24 MONTH CHAIN OF TITLE- IF LESS THAN 12 MONTHS- FILE MUST BE GIVEN TO U/W FOR FINAL REVIEW AND APPROVAL AMOUNT OF PAYOFF(S) ON FIN2%TL HUD1 FOR ANY EXISTING LIENS MUST MATCH PAYOFF LLTTER(S) PROVIDED BY LIENHOLDER(S) . OR JUSTIFICATION TO BE PROVIDED FROM TITLE COMPANY AS TO WHY THE}( DO NOT MATCH (ONLY ACCEPTABLE VARIANCE IS FOR ADDITIONAL PER DIEM INTEREST) ***PAYOFF MAY NOT BE PADDED UNDER ANY CIRCUMSTANCE ANY PROPERTY TAXES AND INSURANCE PREMIUMS DUE W/ IN 60 DAYS or SETTLEMENT DATE MUST BE PAID IN FULL AT CLOSING _ IF LOAN IS NOT BEING ESCROWED, FUNDS MUST BE PROVIDED BORROWER AND FULLY SOURCED WITH MOST RECENT BANK STATEMENT- FROM PROCEEDS OF TRANSACTION UNLEFUNDS CAN NOT COME SS LOAN i5 ESCROWED CAPITAL FINANCIAL MORT CORP TO SECURE A VALID SUBJECT PROPERTY- No NEW SUBORDINATE FINANCING ALLOWD1STLIEN ON LOAN MUST CLOSE ON A MFRS SECURITY INSTRUMENT CONVENTIONAL RATE TERM REFINANCE- MAX INCIDENTAL CASH BACK TO ACMWL.RDGFDAi_ ^+a_G_Rprtn Setttemont Aggea[ Date AFFIi3ITX LAND SERVICES, LLc s�� r' FROM; CAPITAL FINANCIAL MORTGAGE CoRPORATIO 215 KEDRON AVPs Dominent Dale:FEBRUARY 22, 2013 honeM` (6 01532-1775 19033 gDate:FEBRUARY 22 2013 Fax- {610532-1776 Closing r T0: AFFINITY LAND SERVICESLLC ne D'ubument Due:FEBRUARY 27, 2013 820 TOWNSHIP LINE ROAD, Case No.: $hon • '{215 esa 7500 F067 ((215 1460-75 I loan No.-17607616 A'ITN: AFFINITY LAND SERVICES, LLC APP.No.: RE: Buffo—r(s): PAUL E WHIPpo Order Na:A13-•4-OR Escrow No.:A13-4-OR Property Address:102 COUNTRY CLUB ROAD, Carlisle, PennsYlvania 17015 • CONTiNUBD ADDENDUM TO CLOSING INS1RUMONS (Addidonel conditions m be saWfied prior to disbursement of loan pmeeeds) BORROWER(S) NOT TO EXCEED THE LESSER OF 2ve OF THE BASE LOAN AMOUNT OR $2000 ON ALL RATE/TERM REFINANCES, NOT ADDITIONAL LIENS, TAXES OR OUTSTANDING UTILITY BILLS MAY BE PAID PROM THE PROCEEDS OF THE TRANSACTION- ALL FUNDS MUST BE PROVIDED BY BORROWER AND DOCUMENTED WITH THE MOST RECENT BANK STATEMENT FFf•T,y HDD' TO REFLECT MAX CASH FROM BORROWER(S) AT CLOSING OF $0 HUD' TO REFLECT THE FOLLOWING LIEN(S) IS PAID IN FULL AND CLOSED: WFHM ***+4074 PRIMARY RESIDENCE REFINANCE- TAREE DAY RIGHT OF RECISSION APPLIES BORROWER'S SPOUSE TO SIGN ALL LIEN PERFECTION DOCUMENTATION AT CLOSING BORROWER(S) AND ALL PERSONS OBLIGATED TO EXECUTE THE LIEN PERFECTION DOCUMENTS FOR THIS TRANSACTION MUST PROVIDE EVIDENCE OF ID AT CLOSING BORROWERS) TO SIGN AND DATE FINAL APPLICATION AND ALL RELATED DISCLOSURES INCLUDING HUD 92900A , IF APPLICABLE ALL APPLICABLE DISCLOSURES AND RIDERS TO BE EXECUTED BY BORROWERS) AT CLOSING PER PRODUCT DESCRIPTION/ImVESTOR COMMITMENT LETTER TO BE EXECUTED BY BORROWER(S) IRS FORM 4506T TO BE EXECUTED BY BORROWER(S) AT CLOSING BORROWERS) TO SIGN AND DATE OCCUPANCY AFFIDAVIT AT CLOSING CERTIFICATION STATEMENT TO BE CLOSING CONFIRMINGSIGNED AND DATED By BORROWER(S) AT COMMITMENT, IFFAAPPLICABLE CABIPT OF APPRAISAL REPORT AND CONDITIONAL PP NOTICE TO ROME LOAN APPLICANT 1:ORMS 3248 AND 3249 OR SIMILAR DOCUMENTS) TO BE SIGNED AND DATED BY BORROWER(S) AT CLOSING *** PLEASE FAX OR EMAIL ALL FINAL HUDls TO SUE GALLO and JENNIFER LEARY AT 610-532-1776 OR sgali0®capi.talfmc and ACKNO MWEDANDA arrr SaWern= pstent Date AFFINITY' LAND SERVICES, LLC FROM: CAPITAL FINANCIAL MORTGAGE CORFORATIO 215 KEDRON AVE DO=eut Date:FEBRUARY 22, 2013 FOLSOM, P YLVANIA 19033 Phone (610 532-].775 Ci�91),1=FEBRUARY 22, 2013 Fax: 610)5 2-1776 TO: AFFINITY LAND SERDisbursement Date:FEBRUARY 27, 2013 VI S, LLC 620 TOWNSHIP LINE RAD Case No.: YARDLEY, P SYI,VAN714 19067 Phori d0r(215 860-7500 Fax Loan No.:17607616 ATrN: (215%J -LAND SERVICES, LLC App.No.: 1LE: Borrower(a}: PAUL E WHIFPO Order NO.:A13-4-OR Bsww No.:A13-4-OR Yropenp Address:102 COUNTRY CLUB ROAD, Carlisle, Penasyxvauia 17015 CONI'iNU6D ADDBNDUM TO CLOSING INSTRUMONS (Additional conditions W be nds8ed prior to disbursement of loan prmcds) Jleary@Capitalfmc.00m PRIOR TO FUNDING LOAN *** ALL HUDls AR$ StTBTECT TO FINAL REVIEW AND APPROVAL OF UNDERWRITER PRIOR TO FUNDING *** IRS TRANSCRIPTS FOR THE MOST RECENT 2 YEARS AVAILABLE TO BE PROVIDED FOR EACH BORROWER UCDP- SSR REPORT FROM APPRAISAL MGMT CO AND INVOICE R,EQUIR$L7 HAZARD INSURANCE POLICY W/ SUFFICIENT COVERAGE TO SUPPORT LOAN AMOUNT ENDORSED TO: CAPITAL FINANCIAL MTG CORP, ISAOA/ATIMA, 215 REDRON AVEND$, FOLSOM, PA 19033- ****FOR ALL M AND T LOANS POLICY MUST REFLECT WIND 5� OF FACE VALUE OF FOLICYCOVERAGE W/ A DEDUCTIBLE NOT TO EXCEED SATISFACTORY LOCK CONFIRMATION FROM INVESTOR TO BE PROVIDED TITLE COMPANY TO PROVIDE FULL 24 MONTH CHAIN OF TITLE LOANSAFE REPORT- ALL RED FLAG ITEMS TO BE ADDRESSED UPDATED PAYOFF FOR WFHM REFLECTING DUE FOR MARCH 1, 2013 BORROWER TO PROVIDE SATISFACTORY EXPLANATION FOR INQUIRY ON 1/30/13 FROM WELLS FARGO borrower was receiving too much cash back w/ new payoff- loan amt reduced by ]000- provide change o£ circumstance and gfe and til EFOR LREPORT AS CONFIRMING NO NEW DEBT HAS BEEN INCURRED S A A RESULT OF CRCR EDIT TNQMMY ON 1/30/13 FROM WELLS FARGO SATISFACTORY VERIFICATION THE BORROWER DOES NOT HAVE ANY OWENRSHIP INTEREST IN 4 RENTAL PROPERTIES ON IRS 1040S NEW LQI CREDIT IF LOAN DOES NOT CLOSE BY 2/22/13 G FED: Settlement Agent Date AFFINITY LAND SERVICES, LLC EXHIBIT C MIN: 1007303201302070D1 NOTA Loan Number; 17607616 FEBRUARY 22, 2013 FOLSOM PENNSYLVANIA [Data] (Ory] Isewel 102 COUNTRY CLM ROAD, Carlisle, Permsylvania 17015 (Property Add—) 1. BORROWER'S PROMISE TO PAY In return fora loan that I have=cIved,I promise to pay U.S.S 167,000.00 (this amot at is called'Principal').plus interest,to the order of rho Lender. The Lender Is CAPITAL FINANCIAL MORTGAGE CORPORATION, A PENNSYLVANIA CORPORATION I will make all payments under this Now In the form of cash,check or money order. I uodenatand that the Lender may transfer this Nola The Leader or anyone who tel=this Note by mauler and who Is entitled to receive payments under this Note Is called ibg'Nota Holder." 2. INTEREST Interest will be charged an unpaid principal until the full amount of Principal has been paid. I will pay interest at a yearly rate of 2.750%. The interest rate requ!Ttd by this Section'-)is the Tale I will pay both before and after any default described in Section 6(B)of this Nota. 3. PAYMENTS (A) Time and Place of Payments I will pry principal and interest by maldrrg a payment every mornb, I will make my monthly payment on the 1st day of cacb month beg"mning on APRIL 1 2013 . I will mala:these payments every month until 1 bvepaid all of the principal and interest acid any other charges described below that I may owe under ibis Nora. Foch monthly payrnrnr will be applied as of its scheduled due date and will be epplicd to interest befora Principal. Mort MARCH 1, 2026 ,I still owe amounts under this Note,I will pay those amouals in fall on that dace,which is called the'Maturity Date.' I will make my monthly payments at 215 AEDRON AVE, FOLSOM, PENNSYLVANIA 19033 or ata different place If required by tba Note Holder. (B) Amount of Monthly Payments My monthly payment will be in the amount of U.S.S 1,133.30 4. BORROWER'S RIGHT TO PREPAY I have the right to maim payments of Principal=any time before they ate due. A paymat of Principal only is(mown au a"Prepayment." When I male n Ptcpaymeut,I will tell the Nato Holder In writing that I ren doing so. I may not designate a payment as a Prepayment if I have not made all the mombly payments due tinder the Notc. T may malre a Rill Prepayment or partial Prepayments without paying a I'mpaymant charge. The Note Holder will use my prepayments to reduce the amount of Principal that I owe under this Note. However,the Note Holder may apply my Prepayment to the accrued and unpaid incrust on the Pmpaymerrc amount,before applying my Prepayment to reduce the Principal amount of the Note. If I make a partial Prepayment,there will be no changes in. the due date or in the amount of my monthly paymear uudcss the Nate Holder zV=In writing to those changes. S. LOAM(CHARGES If a law,which applies to this loan and which sets maximum loan charges,is finally interpreted so that the interest or other loan charges collected or to be collected In connection with this loan exceed the permitted limits, then:(a)any such loan charge sball be Teductd by the amount noeessary to reduce the charges to the permitted limit; MULTISTATE FIXED RATE NOPE—Sngle Fame_ becAftgrc Fennk MoelFreddia Mac UNIFORM INSTRUM wwmdo agie,min farm 3200 1101 Page 1 of 3 �N, r and(b)any mum already collected from me which exceeded permitted liatits will be refhnded to me, The Nora Holdermay choose to make this refund by reducing the Principal I owe under this Norcor by making a dlreet payment to me. If a refired reduces Principal,tba reduction will be treated as a partial Prepayment, 6. BORROWER'S FAILURE TO PAY AS REQUIRED (A) Late Charge For Overdue Payments If the Note Holder has not received the Rail amount of any monthly payment by the end of 3.5 calendar days after the date It is duo,I will pay a lata charge to the Note Holder. The amount of the charge will be 5.000 ;6 of cry overdue payment of principal tend interest. 1 will pay this late cbarge promptly but only once on each latepayment. (B) Default If I do not pay the full amoum of each moodily payment on the dace his due.I will be in default. (C) NotteeofD*faait If i am in default,the Note Holder may send me a written notice telling me that if I do not pay the overdue amountby a cerraln date,the Note Holder may requheme to pay immediately the hall amount of Principal wbleb has not been paid and aU the Interest that I owe on that amours.That data must be ar 1=30 drys after the date on which the notice is aralled to me or delivered by other meant. (D) No Waiver By Note Holder Even if,at a time when I em in default,the Note Holder does not requite me to pay immediately in full as described above,the Note Holder will still have the right to do so if l am in default at a later time. (E) Payment of Note Holder's Costs and Expenses If the.Note Holder has required roc to pay immediately in full as described above,the Note Holder will have the right to be paid back by me for all of its casts and expenses in cmforcing chis Note to the extent not prohibited by applicable law. Those expenses include,for example,reasonable attorneys'fees. 7. GIVING OF NOTICES Unless applicable law requires a different method,any notice that must be given to me ondcr this Note will be given by delivering it or bymailing it by Erst class mail to me at the Property Address above or at a different address if i give dee Note Holder a notice of my different address. Any notice that must be given to the Nom Halder under this Note will be given by delivering it or by mailing it by first class mail to the Not*Holder at the address stated in Section 3(A)above or at a difrerear address if I am given a notice of[bat different address, 8. OBLIGATIONS OF PERSONS UNDER THIS NOTE Tf nmrr-than one person signs this Note,each person is fully and personally obligated.to keep allofthopromiscs made in this Note,inciudiog the promise to pay the full amount owed. Any person who is a guarantor,surety or endorser of this Note is also obligated to do these things. Any Person who takes over these obligations,including the obligations of a guarantor,surety or endorser of this Nore,is also obligated to keep all of the promises made in this Note. TheNoteHo)der may enforce iarrgbts under this Note against each person incavidually or against all of us together. This means that any one of to may be required to pay all of the amounts owed under this Note. 9. WAIVERS I and any other person who has obligations under this Nora valve the rights of Presentment and Notice of Dishonor, 'Presentment'means the right to require the Note Bolder to demand payment of amounts due. 'Notice of Dishonor'means the right to require the Note Holder to give notice to other persons that amounts duo have not been paid. 10. UNIFORM SECURED NOTE This Note is a utriform inthumm with limited variations in mzmjutisdiedons. In addidoo to she protrntfons given to the Note Holder under this Note,a Mortgsgc,Dead of Tnsst,or Seeurity Deed(the"Security Insuvmeat'), dared the same date as this Noto,process the aerate Holder from possible losses which might result if I do not keep MULTISTATE FIXED RATE NurE—Sinpia Femity D*cMeple Formle Mae.Treddla Mee UNIFORM 1N5'FRUMW Form 3200 1101 Page Z of 3 r+rm dove gtc,com tnrcnmml the promises which I matte in this Note. That Security Imtnnnent describes how and tinder what conditions I may be required to make immediate payment in full of all amounts I owe tinder this Note. Some of those conditions are described as follows: If all or any part of thc?roperty or my Interest in the Property is sold or aansferrad(or if 3orrower is noc a aatutal person and a beneficial interest in Borrower is sold or tramferred)without Leurices prior wduan consent, Lender may require invnediate payment in full of all surto secured by this Security Iastr=CIIL However,this option shall not be exercised by Leader if such exercise is prohibited by Applicable Law. If Leader exercises lits option.Leader shall give Borrower notica of acceleration.The notice shall provide s periad of not less than 30 days Boom the date the notice is given in acowdance with Section 15 within which Borrower must pay all stout secured by ibis Security lastsumient. IfBorrower fails to pay these sums prion to the expiration of this period,Lender may invoke any remedies permitted by this Seaurily Instrument without further notice or demand on Borrower. WITNESS THE HAND(S)AND SEAL(S)OF THE UNDERSIGNED. f._. ' (S-J) (Seal) PAUL E WHTPP .Borrower -Borrower (Seal) (sew) -Borrower -Borrower (sea) (Seal) -Borrower -Borrower [Sign Original onfyl MULTISTATE FIXED RAZE NOTE-S nos Pamtglyy Fmmta Mae/Fradi fe Mee UMFORM INSTRUMENT borlfogfo Form 3200 1101 Page 3 of 3 w'•daaaagre.mm wsanra,.m, ALLONGE Lo=Number: 176 07616 Loan Date: P<SBROARY 22, 2013 Borro%ver(s): PAUL B WHIPPO Property Address: 102 COUNTRY CLUB ROAD, Carlisle, Pennsylvania 17015 PcMpal Balance: $167,000.00 PAY TO THE ORDER OF MORTGAGE SERVICES III, LLC Without Recourse Compay ham; _CAPITAL PZNANCIAL MORTGAGE CORPORATION A PM4NSYL W3:A CORPORATION By: PRESIbENT DAVID FILI, critic) muLTISTATE NOTE ALLONOE AISR 02118109 DaMoglcdUf:v as www.doan2L*.acm AtrJaC ALLONGE TO NOTE DATE OF NOTE: ' 02/22/2013 MORTGAGOR(S): PAUL E WEIIPP0 PROPERTY ADDRESS: 102 COUNTRY CLUB ROAD CARLISLE,PENNSYLVANIA 17015 LOAN-AMOUNT: $167,000.00 LOAN NUMBER: 0296351307 PAY TO TIM ORDER OF WELLS FARGO BANK,N.A. WITHOUT RECOURSE MORTGAGE SERVICES III,LLC CAI Wil Cheryl D=b,VF/Post Closing Manager EXHIBIT D r .. OMB Approval No.2502-0265 A. Settlement Statement(HUD-1) 1.❑FHA 2,O RHS 3.0Con V.Unlns. 6.Flle Number. 7.Loan Number. 8.Mo tgage Insurance Case Numher. A134-OR 17607616 4,❑VA 5.El Cdnv.Ins. C.Nate:This forth is furnished Id give you a statement of actual settlement costs.Amounts paid to and by the settlement agents are shown.items marked ,(p,o.cr were paid outside the closing:they ere shown here for Worn purposes and are not included In the totals. D.Name&Address of Borrower. E.Name&Address of Seller. F.Name&Address of Lender. Paul E.Whippo,Jennifer S.Person Whfppo Capital Financial Mortgage Corpma5on 102 Country Crab Road,Cadlsle,PA 17015 215 Kedam Avenue.F•otsam,PA 19033 0.Property Location: H.Settlement Agent: I.Settlement Date:02/22/2013 102 Country Club Road Affinity Lend Services,LLC Disbursement Dote:0212712013 Carlisle,PA 17016 820 Township Line Road,Yardley,PA 19M 21-17-2692-031,Mlddiesex rbwnship 215.860.7500 Place of Settlement TlUeExpress 820 Township Line Road,Yardley,PA 18067 100. Gross Amount Usfruint0irower 400. Gniss Amount Due toSeller 101, convect sales pdce 401. Contract miss Oce 102. Pmsanal property 402 Personal propyily 103. Settlement charges to boomer One 1400) 6,132.84 401 104. P Ir of reW mortgage loan 90372944074 to Wells 160,667.18 404. FaraoHomeM a e 105. 405. Adjustments for Items paidb eater in advance Adjustmentofultamspaidb sollerin advance WS. CltyAawn taxes to 406. ClVwwn taxes to 187. Counlytaxes to 407. County Was to 10& School Taxes to 408, School Tam to 109. 409. 110. 410. 111. KE*fpm 112 120, Grew Amount Due from Borrower' 166,800,02 ountDuetoSeller 200:` Ai bbuot Oafdb bthiBehalfof6orfawer "'�':"•' " sInAMourdDuateSeOar201. Deposit oreamedmoney osit(seaInstrudlons) 202 PMdpalamounlofnewim(s) 167JI00.00 charges toseller(ft 14D0) 207. E roans taken su eta to ans taken subjerl to 264 504. PEVOff of rust mortgage loan 205605. Payoff of second mortgage loan 206. 606. 207. SB/. 20& 50& Y09 50& Acqustments for Items unpaid by seller Adjustments for Items unpaid bseller 210. Cityltoxn faxes to 510. CityAonn[am to 211. Caurdylaxe5 t0 511. County taxes to 212 School Taxes to 512 Sdnol Taxes 10 213. 513, 214. 514. 215. 515. 21& 518. 217. 617. 218. 518. 219. Sig. 220, Total Paid b Ror Bonower. 167,000.00 520. Total Rodmtlan Amount Due Boller 0.00 100:�;Cash'at'Se9lameeltminBoBotrowoc' ;'-'-:•': 600, Cash at5bttlbiaentto)fram$eller•.• 301. Gross amount due from barrmmr(One 120) 166,800.02 601. Gross amoum due to seller(fine 420) OJ10 311 Low effrourdspaid byRorburrower(One 220) 167.liuon 602. Lass reductions Inamount due seller rim 520) 0.08 303. Cash ElFrom Qtr To Borrower 199.98 603. Cash ❑X To ❑From Seller 0.09 pv„rmu, oM„ePM1MwW.nq,lpeMywtN.Npw¢Io1,OePwIM rNmlM�.bvrV.b ah b„t�N>kWf+��v�M aW,.M„OnM,L NeoMtd�I�.,n,�C OR etJ,w.111NMN/.TNt bMbMmP�r�es WR'r.b.PF9AmaMVuw6's�,.4.+fw4i'iN�M Previous editions are ottsolete Page 1 of 4 HUD-1 •700.: TotalkealEsta(e8rokerFar�'�••�.:'.'�' ' : : Paid From Paid From :' ":'DlvlslcrtofcamrtJasion e700 asfa9Cws: "'� , .:: ;:• _. ..� ...� - . •�-' .�.Borrower's Seller's 701. 50.00 (a Funds at Funds at 702• 50.00 to Settlement Settlement 703. Commission paid at settlement e00:i`il(emcPa fefnConnecDonwllhLaati • 80i. Wroogirafoncharge (Includes Origination Point O.M%or SO-DO) $799.00 (kumGFE91) 8D2. Your cradllorcharge(polms)for the spedficinlarestrate chosen S (from GFE#2) 803. Your adjusted origbualioncharges (from GFE A) 799.00 804. Appraisal foe to Managed Appraisal Servke (from GFE#3) 42500 805. Crodgmpod to (I mGFE93) 809. n service to rom GFE#3 807, Flood cerUriica8an to LPS Naeonal Flood (from GFE 93) 12.00 808, to 900:'Ilems Re�utiud :Lander to be:kcrin Adwnce'`-..°• - 901. Dally interest dwges from fmm 027 2013 to 0018013 Q 61248221day (from GFE 910) 25.16 902. Mortgage los.Premium for months to (from GFE 93) 903. Hameumierstnsurdnce 1a12 nuimhstoERIE $1.03340p.O.C. '(from GFE#11) 904, months to rom GFE 011 1006.• Res.;.;.'DejioSllkd{v66 Lender-. 1001. InKWdeposit for your escrow aeaunl (fremGFE#9) --- 2,941.93 1002.Homearneesinsurance 9modhs s S&Oglmonih $774.72 1003.Mortgage Insurance MMlhs S 0.00fmonth 3 1004.Prop"Tax 13 Months @ 5 65.63/month $853.19 1005.CmmtyPropo4yTax months M S 0,001nwnth S 1008.SchoolTaxos 9 tnonna @ 3 175.171morr0l 31$76.53 1007.AggregateAdjusGrtout 3.282.51 '11a"o:':Ttllechd i11?'r:l�::•.:•;,..;,. 1101- TIUe services and lender's Ulle Insurance bs ABIn land Sarvicrs.LLC from GFE 94 1,778.15 1102. Selliementor dosing leo to AfFolly Land Services.LLC $28000 1 t03. Owner%We Insurance-Old Republic National T07e insurance Co. from GFE 05) 1100 Lender's Egoircmranoo-OldRepublicNationalTNelnsuranceCo. $1,299.75 110$, Lende.&policy W$167,00D.0o LendeesPoliry 1106. Owners 61Ie policy W$0.00 Owners Policy 1107. Agents portion of the lotal UUe Insurance premium SIM.63 1108. Underwr8ees portion of One total 00e insurance premium $234.22 1109. 1200.A.7ierrimenrfi6EaiAln-'andTrdnsferCh ss 1201. Government recordIngdrages 5 (from OFEY7) 160.00 1202, Deed MWgaqe$150.OD Releases 12D3. Trenslartauip $ (Gan GFE 95) 1204. Clty/County lax/damps Deed$ Mortgage 3 1205. StateTaxfsmmps Oeed$ Marl e5 1206. Deeds Mortgage S .:{000.::Addlllonef9otllemenfCliars%•>:::::_..r;:.......• ....,_..:...; ,...._ .... .:...... 1301.ReQriredservices ihalyou can shop for (from GFE#6) 1302, Survey to S 1303. to 1304. to 1305. to r n 6,132.84 0.00 'Paid outside of dosing by(8)amwu,(S)e0er,(L)ender.(Investor,Bro(K)er."Credll by lendershown en page 1."Tr9d0 by seller shown an pogo 1. Previous editions are obsolete Page 2 of 4 HUD-t :Coin aitsbiiof.Gaodk�HlEsiline3e:6FE eoAHUD:1'Cha- s;>!%:';::' :':':::�;i.:-�-•,:;,::�-::..,= :..;,:.::. �.:;_:Gbad:FeltkEsUiriale::+` -.;i." HUU•1 iC es,TFiAcinn't'tint.ae8d;%':�d:.�r�s'.:':.::�-:.::;:::: �z�'.IiUD,1:LineNumber •��="' P61er. 799.00 789A0 Oiigdgln?BuPsf57gei a'i:e:r :�! R :.Youiued0aro 9B:(Polids)t4clhesped05Nl9reslnntechasen ";i O,Elm::.:: 0.00 alio .. _.__... ... . ......._ .,......_.....:.,...:::: 807"• 799.09 799,00 :Ypaaddsled.qrlglnpOpn:dw}BaP'::'n=.��:_^:.:•: ':::.':•; ':.:'•�'.:,�::#' jaimarer. : .. _., . . :.r0.:':_!:'(a•:• �::+:';i..,c.rr......... 1203::..:,::.,. 0.00 0.00 ;Cha esThaFln:Tofaf.CahriofliieroasaTAore7hah10Ye:;:::.:_:`:r°'• %:::GoodFellkFstlmuta::'''. '' HUD-11 ,C�Ven10 'Ale. gdW 150.00 150.00 :::r_:-' :,•.r.?` _ _ - :8(µ:; - - d25.00 425.00 _�c�'`"U 12.60 1200 ,f,• 792.50 1.774.75 :znue'ssii'icezea�,tgndg�suf)alnsu'reme:--""''+�' — -':1F:1o.1;;: -:.;-:c:_::c;_` t, WAN Z,379S0 2,365.75 h S•12.75 or -0.5358% Cesar' 'sThStCanCh sv;_,:,:..,;;:-i. ..:'..:'::.:-:::::.•::�:^'r` -_:... .....'. ; ;�... . GoodFslttcFstlmale": . -: HUD•1 IrpNaldeposlffafvurasc?Y4'9Eznuol :.'::.:...._;:,;:;:;-'.'., ".:..;�,'.a;.:;.`•:"g1001:.. ..x..:.:,`: 3,270.25 2,941.93 '.Daly lnlareslclrziges:from::':';':�;:.:..<.:. S12S82210ay 19M 25.16 _.:.:. Hmepwne(alnsnmOce::'.;::::: :,::i!::: ...:;.;,.:.. >: per.• 0.00 1.033A0 Owns(sblte� uaace-Ol4Reptib66'Na¢onal:TiOeInsuranceCo: ::;:::,;:_': :"p.1103 Will a: Loan Terms Y* ''Na�witGemv`vnl'�7 ''J .�t�= -'�'•'a- --�"F'rr 576700,00 - :'-ti i}"� - „��;_- :`s"i' 1_t+? _ '.ilk :�?:::-.—:1`i:�:lt r�•T 'Y`OIIFIOalflemtl5rc.,i:iryS, _i2f�-',,i•_ �:{`___ _ _;-:titi'�- 1SrY� ;Youilifila]'•Mtare�lel r ef:G_t E;�'` ~.-.. .'".�,r 27600% S�.�I vI/ ;isFL�i�•'�'1'—_�" ,l:ti:'«.ti.f.:Vl '-_'.: _bra;. ... .�•,.,:--4r_:r�;:�;.,.,.r.:..,._..-,.,T_ Youilnitlal�monlhlyarnaunieoWed�.yiliidpal;Iriterast;spQarry�j�jungaAo;:.•;`�;"r51,133.3glndudes Ilujt@npBls�: ;i�!•s.%':;�:� ';,.- - :, ^.i>: ❑X Principal «}' ❑X Merest ,,r':= ;j'�-;•sy ,, `;�: - Mortgage Insurance ;Ceiu'. "r0.e,ilsey•��-�� _ - ❑X Nor ryes,hcan rBeloamaximum af 70..The rust change and can change again every yearsa0er 7 I .Every _ -- - tita etlab, Inleroslrabranl increase by Over the Re of o ran 'Kahl higher d b neve e I wo b - never urN rate B guaranteed B - Neloan lemst e '•.�. i:hs Yo than Y.. - '!tilll"'Ri:;ti��n:;,Ll�:u'_'�.i?in _ -^.L:J.ivy ,•'t.?a _ _ ,�.,j:.:1• r:"t.:Yxn�,,:t.,:l:?�:"�'_.�;:I:i!:v':i_:_i-jf�i��2`��.: ESen(:�oU�haY_e'po�yn q_nfoREri e'e_apygd�toahela uese7t`_ .s ii:❑X No. ❑Yes,it can risa to a maxlnum of 5 Even l(' ?ioeNe;peyitijap(5 i�mei.canyotirjnon?MainudjTPwedfar,-;.`:r=' :Y X❑No. ❑Yas IheBstNcreaseanhaon / 1 and the monthly . .a=- :{rit::.6 HUD CERTIFICATION OF BUYER AND SELLER I have carefully reviewed the HUD-1 Settlement Statement and to the best of my knawladgo and belief,it Is a true and accurate statement of all rcualpLs and disbursemanbi made on my aceaunl or by me In this transaction.I further certify that I have mcohed a copy of Ore HUD-1 Settlement Slaturnsa Pa hiPo 'tei S.Person thippo The HUD-1 SelOemj.pnt dnlwmrh I have prepared Is a true and accurate account of this trensaclion.I have caused orvAl cause the hinds to be disbursed in accoldan this st / 3 scT�L�G 'ceNr DATE WARNING:IT IS A CRIME TO KNOWINGLY MAKE FALSE STATEMENTS TO THE UNITED STATES ON THIS ORANY SIMILAR FORM PENALTIES UPON CONVICTION CAN INCLUDE A FINE AND IMPRISONMENT.FOR DETAILS SEE TITLE 18:U.S.CODE SECTION 1001 AND SECTION 1010. Previous edidens are obsolete Pape 4 of 4 HUD-1 e Nartreof 8mroxer. Name cf Seger: He Number, AJ34•OR Paull WNppo Jennifer S.Person WNppo Neto:This pago displays an Itemization of the adjusted origination charges shown In section 900 of the HUD4 Settlement Statomarn. This page accompanies but is not a putt of the HUD-1 Settlement Statement.If a discrepancy exists,the Information on the HUD•1 Settlement Statement applies. Borrower Seger Your Loan od9lnatlon Charges 901. Ourorl muvncrwuA (Indadea0dghraVonPoinl0.000%or50.00} 799.00 Lawn Origination Fee N Ca I Flnandal Man e S 802 Youraeddwchaye(palms)Jar the cmfttnteresiratedwsen Laan Obcounl to S 799.00 0.00 803. Your agvsted aripinegon charges r . Name alSellar, File Numbe: Nameolsanoaar. A134.O11 Paul E WMppo JBTger S.Pinson WhippD Note:This pago displays an Itomtzation of the chargee shown on line 1101 of the HUD-1 Settlement Statement.This pago accompanies but Is not a part of the HUD-1 Settlement Statement.If a discrepancy exists,the Information on the HUD-1 SelUement Statement applies. :. Sortower Seller '1100:TUIel:harges::::�•��:.. .. .. .. ... •. 1101•TtOe servlets and landefs INa Insurance to ArSn lend Services.LLC 40.00 40.00 Notary Fee to Land Sarvkes.11.0 5 4020 4o.ag EuuWrII Fee toA15a Land S.tvices,LLC 5 40A0 40.00 Courier Fee to LandSerAws,llC S 30.00 WireServica Fee to Land Sarvrces,LLC $ 30.00 50.00 50.00 Tax CergruaOanServIce inAftl tend Semms,LLC $ 280,00 80. 280A0 1102 Saillementordosingtoo toAlr Lend Services,LLC 5 1,299.75 1.299.75 1104,lender s We Im ear w•OW RepvOge National Tte At0 land Serhcel,LLC 5 51,770.15 OAO 1,779 75 0.0 To101s • Shco}tt6ndei2redlts-s'hoJrn;oir'a et:•" .......•�POC=Pald OURide Llosl CR=Lefidlr HI1D•I Previous editions arc oDSolete Pape I ai L ADDENDUM TO HUD-1 Loan Number. 17607616 File Number: A13-4-Ott Borrower: PAIIL E t%weo Paid Itom Paid From Borrower's Seller's Funds at Funds at Settlement Settlement 800. ITEMS PA)MBLE IN CONNECTION WITH LOAN 809. LOAN ORTIGIATION FLEE to: Capital Financial 799.00 1100. TITLE CHARGES 1109. Tax Cert to: SITTLE70iT'AGENT 50.00 1110. WIRE to: SETTLEMENT AGENT 30.00 1111. COURIER to: SETT2d3+=AGENT 40.00 1112. EDOC to: SETITZM?NT AGENT 40.00 1113. VOTARY PEE to; SETTLEMENT AGENT 40.00 ---------------PAYOFFS--------------- PAYOFF to WELLS FARGO HM MORRMS 160,667.18 ------------ ADDENDUM PAYOFF 70TAL 160,667.18 za F�zoi3 gnature PAUL fi PO Date Signature Date Signature Date Signature Date Signature Date Signature Date ADDENDUM TO HUD-1 /c DaU61 Page 1 a HUDIADD.MSC 12/09/09 www.dogmag/cmm Hudl.mx.�M CERTIFICATION ADDENDUM TO HUD-.1 SETTLEMENT STATEMENT Loan Number: 17607616 PropertyAddress: 102 COUNTRY CLUB ROAD Carlisle, Pennsylvania 17015 1 have carefully reviewed the HUD-1 Settlement Statement and to the best of my knowledge and belief,it is a true and accurate statement of all receipts and disbursements made on my account or by me in this transaction. I further certify that I have received a copy of the HUD-1 Settlement Statement. 2Z zai3 �s PAUL 13 WHIP Borrower Seller Borrower Yeller Borrower Seller Borrower Seller Borrower Seller Borrower Seller The HUD-1 Settlement Statement which I have prepared is a true and accurate account of this transaction. I have caused or will cause the funds to be disbursed in accordance with this statement. Settlement Agent Date AFFINITY LAND SERVICES, LLC WARNING: It is a crime to knowingly make false statements to the United States on this or any other similar form. Penalties upon conviction can include a fine and imprisonment. For details see: Title 18 U.S. Code Section 1001 and Section 1010. CERTIFICATION ADDENDUM TO HUD-1 SETTLEMENT STATEMENT Dacha Ic HUD-1 CERT.6186 9 CA,LSR 03/30/10 www.docmaglc.mm G.IsrmJ EXHIBIT E Y FIRST LIEN LETTER Loan Number: 17607616 Case Number: Date: FEBRUARY 22, 2 013 Lender: CAPITAL FINANCIAL MORTGAGE CORPORATION Borrower(s): PAUL E WHIPPO Property Address: 102 COUNTRY CLUB ROAD, Carlisle, Pennsylvania 17015 Title Commitment Number: A13-4-OR Title Company: AFFIXITY LAND SERVICES, LLC We have closed and completely disbursed theproceeds of the loan covered by the above captioned commitment/report intheamountof$ 167,000.00 The Mortgage/Deed of Trust is a valid first lien on the property described in the commitment/report,subject only to the acceptable exceptions shown in Schedule B therein, and there are no outstanding or unpaid taxes or special assessments on the subject property as to the date thereof. A Mortgagee's Title Policy,conforming to the requirements of the commitment/report, dated as of the date of recording of the Mortgage/Deed of Trust,and subject only to those exceptions referred to above,will be issued in due course. This letter is an endorsement to the captioned commitment/report,and is subject to the schedules,conditions and stipulations of the Title Policy Form. Clostng�Settlement/Escrow Officer AFFINITY LAND SERVICES, LLC FIRST LIEN LETTER Doeafag/c 4%tmo www.docmaglc.com, flt.mx.mu EXHIBIT F 1:13-cv-01329-MMM-JAG # 1 Page 1 of 9 E-FILED Tuesday, 23 July, 2013 05:20:45 PM Clerk, U.S. District Court, ILCD IN THE UNITED STATES DISTRICT COURT FOR THE CENTRAL DISTRICT OF ILLINOIS PEORIA DIVISION MORTGAGE SERVICES III,LLC 502 N.Hershey Road Bloomington,IL 61704, Case No. 13-CV-1329 Plaintiff, V. CUSTOMERS BANK 99 Bridge Street, Phoenixville, PA 19460, Defendant. COMPLAINT Plaintiff, MORTGAGE SERVICES III, LLC ("MSI"), by and through its undersigned counsel, complains against Defendant, CUSTOMERS BANK ("Customers'),as follows: PARTIES 1. MSI is an Illinois limited liability company, which has its principal place of business located in Bloomington,McLean County,Illinois. 2. First State Bank is MSI's sole member. First State Bank is an Illinois corporation licensed and registered with the Illinois Department of Financial and Professional Regulation. First State Bank's principal place of business is located in Mendota,LaSalle County,Illinois. 1:13-cv-01329-MMM-JAG # 1 Page 2 of 9 3. Upon information and belief, Customers is a Pennsylvania state-chartered bank with its principal place of business at 99 Bridge Street, Phoenixville, Pennsylvania 19460. JURISDICTION AND VENUE 4. This Court has jurisdiction pursuant to 28 U.S.C. § 1332(a). There is complete diversity of citizenship between the parties. The value of the matter in controversy exceeds$75,000.00,exclusive of interest and costs. 5. Venue is proper pursuant to 28 U.S.C. § 1391(b)(2) and (3). FACTUAL BACKGROUND 6. On February 22, 2013, Mr. Paul Whippo executed and delivered a Note to Capital Financial Mortgage Corp. ("Capital„), which was to be secured by a mortgage on Mr. Whippo's home (the"Whippo Loan"). 7. Upon information and belief, Capital originated, underwrote, and worked with a title company, Affinity Land Services, LLC ("Affini!y"), to close the Whippo Loan. 8. Upon information and belief, Customers entered into an agreement with Capital to fund the loan by transferring the loan proceeds to Affinity. Upon funding the loan,Customers was to purchase the Whippo Loan from Capital. 9. On March 4, 2013, Customers sent a letter to MSI that offered to sell to MSI the Whippo Loan and transmitted to MSI the loan file for the Whippo Loan ("Customers Letter"), a copy of which is attached hereto as Exhibit A and incorporated herein by reference. 2 1:13-cv-01329-MMM-JAG # 1 Page 3 of 9 10. In the Customers Letter, Customers represented to MSI that it held title to the Whippo Loan. Customers' representation implies that it funded the Whippo Loan by transferring the loan proceeds to Affinity. 11. Customers requested MSI to wire payment to Customers within 30 days to purchase the Whippo Loan from Customers. 12. Customers represented to MSI that Customers' interest in the Whippo Loan would terminate upon receipt of the wire. 13. On March 6, 2013, in response to and in reliance on the Customers Letter, MSI's warehouse lender wired $166,347.67 to Customers to allow MSI to purchase the Whippo Loan. This created an obligation from MSI to its warehouse lender. 14. In late-March 2013, MSI was informed that Customers failed to fund the Whippo Loan by transferring the loan proceeds to Affinity and that the Whippo Loan never closed. Thus, Customers never held title to the Whippo Loan. 15. Despite the various representations in the Customers Letter, Customers failed to transfer the Whippo Loan to MSI. 16. On or around June 6, 2013, MSI demanded Customers to return $166,347.67 to MSI. Customers failed to respond to this letter or return the $166,347.67 to MSI. COUNTI Breach of Contract 17. MSI restates allegations 1 through 16 as if set forth in full. 18. Customers offered to sell the Whippo Loan to MSI. 3 1:13-cv-01329-MMM-JAG #1 Page 4 of 9 19. MSI accepted the offer. 20. MSI directed payment of $166,347.67 to Customers to purchase the Whippo Loan from Customers. 21. There was a valid and binding contract between Customers and MSI whereby MSI agreed to purchase the Whippo Loan from Customers for$166,347.67. 22. MSI complied in full with the terms of the contract. 23. Customers breached the contract by failing to deliver to MSI the Whippo Loan. 24. MSI has been damaged in an amount of at least$166,347.67 by Customers' breach of contract. COUNT II Breach of Implied Contract 25. MSI restates allegations 1 through 16 as if set forth in full. 26. According to the ordinary course of dealings and the common understanding,MSI and Customers showed a mutual intention to enter into a contract. 27. There was a meeting of the minds between MSI and Customers and mutual undertakings 28. Based on the conduct between Customers and MSI, there was an implied contract to purchase the Whippo Loan for$166,347.67. 29. MSI complied in full with the terms of the contract. 30. Customers breached the contract by failing to deliver to MSI the Whippo Loan. 4 1:13-cv-01329-MMM-JAG # 1 Page 5 of 9 31. MSI has been damaged in an amount of at least$166,347.67 by Customers' breach of contract. COUNT III Promissory Estoppel/Detrimental Reliance 32. MSI restates allegations 1 through 16 as if set forth in full. 33. Customers made a promise to MSI that it reasonably expected or should have expected to induce action by MSI. 34. MSI took action by directing a payment of $166,347.67 to Customers in reliance on the promise. 35. Injustice can be avoided by ordering Customers to return the payment to MSI because Customers failed to fulfill its promise. 36. MSI has been damaged in an amount of at least$166,347.67 by Customers' promise. COUNT IV Unjust Enrichment/Quantum Meruit 37. MSI restates allegations 1 through 16 as if set forth in full. 38. MSI conferred a benefit upon Customers by transmitting $166,347.67 to Customers. Customers transmitted nothing in return to MSI. 39. Customers appreciated this benefit. 40. The acceptance and retention of this benefit under the circumstances is inequitable and unjust. 41. Customers has been unjustly enriched in an amount of at least$166,347.67 by the benefit conferred upon Customers by MSI. 5 1:13-cv-01329-MMM-JAG #1 Page 6 of 9 COUNT V Negligence 42. MSI restates allegations 1 through 16 as if set forth in full. 43. Customers owed a duty to MSI to exercise reasonable care to protect MSI against an unreasonable risk of harm to MSI arising out of Customers' conduct. This duty encompassed at least the funding and closing of the Whippo Loan, and representing to MSI that Customers held title to the Whippo Loan. It was reasonably foreseeable to Customers that the Whippo Loan would not close if Customers failed to provide the closing funds to Affinity and likewise reasonably foreseeable to Customers that it could not sell to MSI a loan that was not properly funded and closed. 44. Customers breached the duty it owed to MSI by failing to exercise ordinary care by at least failing to properly fund the Whippo Loan and otherwise transfer the closing funds to Affinity. 45. Customers' breach of its duty to MSI harmed MSI. Indeed, had Customers properly funded the Whippo Loan by transferring the closing funds to Affinity, the Whippo Loan would have properly been funded and closed, causing no harm to MSI. 46. MSI suffered actual harm in the amount of at least$166,347.67 on account of Customers' breach of its duty. COUNT VI Negligent Misrepresentation 47. MSI restates allegations 1 through 16 and 42 through 46 as if set forth in full. 6 1:13-cv-01329-MMM-JAG # 1 Page 7 of 9 48. Customers made a misrepresentation of material fact to MSI. 49. Customers made the misrepresentation under circumstances in which Customers knew or ought to have known its falsity. Indeed, Customers failed to use reasonable care when making the representation and also failed to make a reasonable investigation into the truth of the representation. 50. Customers made the misrepresentation with the intent to induce MSI to act on the misrepresentation. 51. MSI acted in justifiable reliance on the misrepresentation. 52. : MSI suffered actual harm in the amount of at least$166,347.67 on account of Customers' misrepresentation. COUNT VII Innocent Misrepresentation 53. MSI restates allegations 1 through 16 as if set forth in full. 54. Customers made an innocent misrepresentation of material fact to MSI. 55. MSI justifiably relied upon the misrepresentation in transmitting $166,347.67 to Customers. 56. MST was injured in an amount of at least $166,347.67 by the misrepresentation. 57. MSI demands rescission in the amount of at least $166,347.67 from Customers and otherwise placing the parties in the position they were in prior to time Customers made the misrepresentation. 7 1:13-cv-01329-MMM-JAG # 1 Page 8 of 9 COUNT VIII Conversion 58. MSI restates allegations 1 through 16 as if set forth in full. 59. Customers is depriving MSI of its right, use, and possession of its property. 60. MSI demanded Customers to return the property to MSI. Customers failed to return the property to MSI. Customers does not have MSI's consent to use the property. 61. Customers' use of the property is without lawful justification. 62. MSI has been damaged in an amount of at least$166,347.67 by Customers' deprivation of MSI's use of its property. WHEREFORE, Plaintiff, Mortgage Services III, LLC, demands judgment against Defendant, Customers Bank, including costs and attorneys' fees as allowed by law, and/or at equity,and for other such relief as the Court deems proper and just. Dated: July 23,2013 MICHAEL BEST&FRIEDRICH LLP /s/ Michelle L. Dama Michelle L. Dama (ARRC# 6278042) Attorneys for Plaintiff, Mortgage Services III,LLC 8 1:13-cv-01329-MMM-JAG # 1 Page 9 of 9 MICHAEL BEST&FRIEDRICH LLP Daniel A. Kaufman(ARDC # 6194714) dakaufman@michaelbest.com Two Prudential Plaza, 180 North Stetson Avenue,Suite 2000 Chicago, IL 60601 Telephone: 312.222.0800 Facsimile:312.222.0818 Michelle L. Dama (A RDC# 6278042) mldama@michaelbest.com One South Pinckney Street,Suite 700 P.O. Box 1806 Madison,Wisconsin 53701-1806 Telephone: 608.257.3501 Facsimile: 608.283.2275 9 EXHIBIT "D" to Plaintiff' s Complaint LAW OFFICES OF COUNSEL OF JEFFREY R. SOLAR, P.C. Matthew Sherlock 349 Bustleton Pike Front Office Building Feasterville,PA 19053 Telephone: (215) 354-0501 Facsimile: (215)354-9546 ALSO ADMITTED IN NJ May 23,2014 Mr.Nathan L.Moenck One south Pinckney Street Suite 700 Madison,WI 53703 Re: 102 Country Club Road Carlisle,PA 17015 My Client: Affinity Land Services,LLC Mortgagors:Paul E.Whippo and Jennifer S.Person Whippo Your Client:Mortgage Services III,LLC Dear Mr.Moenck: Please be advised that I represent the above-captioned client relative to your May 19, 2014 correspondence. I would respectfully suggest that you check your facts and you will conclude that this loan was never funded. Therefore,my client never received the funds and did not make disbursements. In the event that you proceed against my client,we will file a Dragonetti action against your firm and your client. All future communications should be made to my office only. cry truly yours, ey .Solar JRSIbg cc:Affinity Land Services,LLC via email EXHIBIT "E" n iff' s Complaint * James D. Partin,Vice President and senior Claims OLD REPUBLIC Counsel National Title Insurance Company Old Republic National Title Insurance Company I Independent Drive,Suite 2207 Jacksonville,Florida 32202 jpartin@O]dRepublicTitle.com Voice:(904)354-0361 May 29, 2014 Nathan L. Moenck,Esq. Michael Best&Friedrich, LLP One South Pinckney Street, Suite 700 Madison, Wl 53703 RE: Claim 235745 Capital Financial Mortgage Corporation Closing Service Letter Affinity Title File A13-4-OR Paul E. and Jennifer Person Whippo 102 Country Club Road, Carlisls,PA 17015 Dear Mr. Moenck: This will acknowledge receipt of your letter of May 19, 2014 and the claim submitted therein on behalf of Mortgage Services III, LLC. We,have reviewed this matter initially but need additional information and documentation to review your client's claim. We have discussed this transaction with Affinity Land Services and they represented to us that they never received the funding for the subject transaction. Your letter submits two situations that you allege are claims under the Closing Services letter. You allege that Affinity title did not comply with the lender's written closing instructions and did not obtain documents and disburse funds necessary to establish such status of title or lien. Also, your letter alleges Affinity committed fraud and misapplied the closing funds , However, if Affinity never received any funding,how could it mishandle these funds and if the loan was never funded how could a lien in favor of the lender be created? Please forward us any documents or other evidence that the subject loan was funded to Affinity Land Services either by Mortgage Services III, LLC, Customers Bank, or Capital Financial Mortgage Corporation. February 17, 2014 Capital Financial Mortgage Page 2 In the case at hand, it appears Affinity Title never received the loan proceeds and therefore had no funds to create a Iien or mishandle. Based on our investigation of other claims,it appears Capital Financial and its principles were engaged in a fraud scheme whereby they would direct the loan fundings to be paid to them rather than the closing agent. Also, it appears that the Closing Protection Letter was addressed to Capital Financial Mortgage,its successors and/or assigns and not directly to Mortgage Services.As an assignee,any successors and assigns of Capital would only have the same rights as Capital Financial and be subject to any and all defenses that are available against Capital. Finally,based on our investigations of these claims, we believe that the purchasing lenders actually paid Capital Financial directly to purchase the loans.Please confirm whether Mortgage Services III funds were paid directly to Capital Financial or provide evidence as requested above that the funds were sent by Mortgage Services directly to Affinity for disbursement. If you have any questions,please contact me at your convenience. Yours truly, James D.Partin Vice President and Senior Claims Counsel EXHIBIT "F" to Plaintiff' s Complaint MICHAEL �+ e Michael Best&Friedrich LLP i V� ` FL Attorneys at Law One South Pinckney Street ix FRIEDIZICH LLP Suite 700 Madison,Wl 53703 P.O.Box 1806 Madison,WI 53701-1806 Phone 608.257.3501 May 29, 2014 Fax 608.283.2275 Nathan L.Moenck Direct 608.283.4438 Email nimoenck@michaetbest.com VIA EMAIL AND U.S. MAIL James D. Partin Vice President Senior Claims Counsel Old Republic National Title Insurance Company 1 Independent Drive, Suite 2207 Jacksonville, FL 32202 Re: Your Claim No. 235745 Closing Service Letter("Letter°) Affinity Title File: A13-4-OR Lender: Capital Financial Mortgage Corporation ("Lender) Warehouse Lender: Customers Bank ("Warehouse Lender") Assign: Mortgage Services III, LLC ("Insured") Issuing Agent: Affinity Land Services, LLC ("A ent") Borrowers/Mortgagors: Paul E. Whippo and Jennifer S. Person Whippo ("Mort a ors") Property: 102 Country Club Road, Carlisle, PA 17015 ("Property") Dear Mr, Partin. I write in response to your letter, dated May 29, 2014, relating to the above-reference d claim. Below I attempt to address the questions raised in your letter in the order in which the question is presented, You state that Agent informed you that Agent never received the funding for the subject transaction ("Loan"). Agent's statement to you directly contradicts the representations made by Agent in the Loan documents that were assigned to and relied upon by Insured. First, Agent executed the HUD-1 Settlement Statement, under penalty of perjury, and represented: "The HUD-1 Settlement Statement which I have prepared is a true and accurate account of this transaction. I have caused or will cause the funds to be disbursed in accordance with this statement." Agent also signed the Certification Addendum to HUD-1 Settlement Statement, under penalty of perjury, and made the same representation. (See Exhibit D to Notice of Claim.) Second, Agent signed the First Lien Letter and made the following additional representations: We have closed and completely disbursed the proceeds of the loan covered by the above captioned commitment/report in the amount of$167,000.00. michaelbest.com MICHAEL BEST & FRIEDRICH LLP Old Republic National Title Insurance Company May 29, 2014 Page 2 The Mortgage/Deed of Trust is a valid first lien on the property described in the commitment/report . . . . A Mortgagees Title Policy, conforming to the requirements of the commitment/report, dated as of the date of recording of the Mortgage/Deed of Trust . . . will be issued in due course. This letter is an endorsement to the above captioned commitment/report, and is subject to the schedules, conditions and stipulations of the Title Policy Form. In three separate documents, Agent represented that it disbursed the proceeds or would do so (implying that it actually had the proceeds in its possession and that it would disburse such proceeds in the future). Thus, Agent's own representations affirm that it not only received the funding for the transaction, but that it actually disbursed the funds. This apparently never happened, and Insured has no way of knowing what Agent actually did with such closing funds. In your letter, you pose the following question: "[I]f Affinity never received any funding, how could it mishandle these funds and if the loan never funded how could a lien in favor of the lender be created?" This question ignores the foundational premise that Agent represented — under penalty of perjury — that it in fact did receive the funds relating to the Loan. Thus, as Agent made these representations, it certainly mishandled the funds and never created a lien in favor of Insured. Simply put, Insured does not know what Agent did with the funds and why it never disbursed the proceeds on the Loan. Further, to the extent that Agent did not actually receive the funds, Insured likewise does not know why Agent would represent to Insured that Agent in fact had received and disbursed the funds, when Agent in fact had not done so. It is this conduct by Agent that gives rise to Insured's claim. To address your last question, Insured wired $166,347.67 to Warehouse Lender and the loan subsequently was assigned to Insured. Insured did not send funds directly to Agent for disbursement. But based on Agent's representations, it received funding for the loan, possibly from Warehouse Lender or directly from Capital Financial. You also argue that Insured, as an assignee of Capital Financial, "would only have the same rights as Capital Financial and be subject to any and all defenses that are available against Capital_" This statement is not supported by the express language of the Letter. The Letter states: "If you are a lender protected under the foregoing paragraph, your borrower, your assignee and your warehouse lender in connection with a loan secured by a mortgage shall be protected if this letter was addressed to them." This provision makes clear that the Letter actually is addressed to Insured. There also is nothing in the Letter stating any protections afforded to an assignee are otherwise limited by potential defenses against Capital Financial. The Letter does exclude fraud of "your" employee, but because the Leiter is addressed to michaelbest.com MICHAEL BEST & FRIEDRICH LLP Old Republic National Title Insurance Company May 29, 2014 Page 3 Insured, the term "your' refers to Insured and there is no allegation of any fraud by Insured. Simply put, the Letter is addressed to Insured as an assignee and Insured is entitled to coverage based on the misconduct of Agent, despite any potential defenses that may exist against Capital Financial. Overall, Insured does not have personal knowledge of the underlying conduct of Agent, Capital Financial, and Warehouse Lender. To the extent that fraud may have occurred with or between some of afl of these parties, Insured was not a part of such fraud and cannot speculate as to who was involved in what wrongdoing. Despite any such alleged fraud, it is a fact that Agent made multiple representations that it had closed and fully disbursed the Loan, which we now know never happened. It also is a fact that Insured wired $166,347.67 to purchase a loan secured by a first-position mortgage and relied upon the documents and representations made by Agent under penalty of perjury. In exchange for that transfer of funds, Insured received absolutely nothing. Finally, the Letter provides coverage to Insured for its loss in this transaction for the reasons set forth more fully in the initial Notice of Claim and as further outlined above. In the Notice of Claim, I provided a copy of a Complaint for a lawsuit pending against Warehouse Lender. Discovery closes in that case on June 16, 2014 and we currently are in the process of attempting to set up various depositions. Thus, as there are tight deadlines in that case, I'd respectfully request a response as to coverage as quickly as you are able. If you would like to discuss this matter further or request additional information or documents, please let me know. Very truly yours, MRC Et_ BEST F D CH LLP at an L. Moenck NLM/fmw michaelbest.com EXHIBIT "G" to Plaintiff' s Complaint >t James D. Partin,Senior Claims Counsel * OLD REPUBLIC Old Republic National Title Insurance Company National Title Insurance Company 1 Independent Drive,Suite 2207 Jacksonville,Florida 32202 jpartin@OldRepublicTitle.com Voice:(904)354-0361 Fax: (866)669-4910 May 30, 2014 Nathan L. Moenck, Esq. Michael Best& Friedrich, LLP One South Pinckney Street, Suite 700 Madison,WI 53703 RE: Claim 235745 Capital Financial Mortgage Corporation Closing Service Letter Affinity Title File A13-4-OR Paul E.and Jennifer Person Whippo 102 Country Club Road, Carlisls,PA 17015 Dear Mr. Moenck: This will acknowledge receipt of your letter of May 29,2014. Please see the attached opinions of the trial court and the 4th Circuit Court of Appeals in Wells Fargo Bank,N.A., v. Old Republic National Title Insurance Company. In this case,the originating lender converted loan funding proceeds to his own use and the Courts also found that the title agent was complicit in this fraud. However,the courts held that the assignee of the loan,although covered by the Closing Services Letter,had no greater than the rights of the originating lender and Wells Fargo was subject to any defenses that could be asserted against the lender that committed the fraud. Further, generally an indemnity agreement does not indemnify against the consequences of the indemnitee's his own negligence or willful act unless the contract of indemnity clearly expresses such terms. We submit that any losses caused by the willfull acts of the indemnitee, Capital Financial Mortgage,are not covered by the Closing Protection Letter. We believe this same principal is the law in Pennsylvania and that the fraud of the originating lender operates against any Closing Services Letter liability to assignees. February 17,2014 Capital Financial Mortgage Page 2 As mentioned in our previous letter, the Closing Protection Letter was addressed to Capital Financial Mortgage, its successors and/or assigns and not directly to Mortgage Services. As an assignee, any successors and assigns of Capital would only have the same rights as Capital Financial and be subject to any and all defenses that are available against Capital. In any event,the loss caused by the indemnitee's own acts are not covered by the Closing Protection Letter. If you have any questions,please contact me at your convenience. Yours truly, h/ James D. Partin Vice President and Senior Claims Counsel EXHIBIT "H" to Plaintiff's Complaint Michael Best&Friedrich LLP MICHAEL BEST Attorneys at Law One South Pinckney Street & FRIEDRICH LLP Suite 700 Madison,WI 53703 P.O.Box 1806 Madison,WI 53701-1806 Phone 648.257,3501 Fax 608.283.2276 June 25, 2014 Nathan L.Moenck Direct 608.283.4438 Email nlmoenck@michaelbest.com VIA EMAIL AND U.S. MAIL James D. Partin Vice President Senior Claims Counsel Old Republic National Title Insurance Company 1 Independent Drive, Suite 2207 Jacksonville, FL 32202 Re: Your Claim No. 235745 Closing Service Letter("Letter") Affinity Title File: A13-4-OR Lender: Capital Financial Mortgage Corporation ("Lender") Warehouse Lender: Customers Bank ("Warehouse Lender") Assign: Mortgage Services III, LLC ("Insured") Issuing Agent: Affinity Land Services, LLC ("A ent") Borrowers/Mortgagors: Paul E. Whippo and Jennifer S. Person Whippo ("Mortgagors") Property: 102 Country Club Road, Carlisle, PA 17015 ("Progert_v"} Dear Mr. Partin: I write in response to your letter, dated May 30, 2014, relating to the above-referenced claim, which was emailed to me on June 6, 2014. In your letter, you make various arguments against coverage in this matter. As explained below, these arguments are without merit. You claim that a federal case that applies Virginia law holds that an assignee of a loan obtains no greater rights than the originating lender and that the assignee was subject to any defenses that could be asserted against the lender (the "_Virginia Case"). This case provides no support to Old Republic to deny coverage. First, the Virginia Case applies Virginia law and does not control this matter. Second, the Virginia Case is poorly reasoned as it relates to the breach of the closing protection letter ("CPL") in the case. Indeed, there is no actual analysis of the terms of the CPL and an application of those terms to the controlling law. Further, the Fourth Circuit Court of Appeals did not even address the CPL issue and the district court devoted a single paragraph (comprised primarily of case citations) of an eighteen page opinion to the CPL issue. This case would provide no meaningful guidance to any other court on the issue of coverage under the Letter in this matter. michaelbest.com MICHAEL BEST & FRIEDRICH LLP Old Republic National Title Insurance Company June 25, 2014 Page 2 Third, the court in the Virginia Case does not analyze the terms of the CPL and assumes that the plaintiff was a mere assignee of the CPL and that any breach of contract claim was also assigned to the plaintiff. Here, Insured is not simply an assignee and Capital certainly did not assign to Insured any breach of contract claim. Instead, Insured has an independent right to sue under the Letter. Old Republic drafted the Letter, which states: "If you are a lender protected under the foregoing paragraph, your borrower, your assignee and your warehouse lender in connection with a loan secured by a mortgage shall be protected if this letter was addressed to them." "This language unambiguously requires that [an assignee] read the letter from the beginning as though they were its recipient in order to determine under what circumstances they would be afforded protection." See Cauthorne v. American Home Mortgage Corp., No. 3:08CV84, 2008 U.S. Dist. LEXIS 69293, * 7 (E. D. Va. Sept. 15, 2008). The Virginia Case is irrelevant for the simple reason that the Letter that controls here is addressed to Insured. Insured has an independent right to rely upon and sue under the Letter. The Virginia Case apparently dealt with a CPL (and related breach of contract claim) that simply was assigned to the plaintiff and not a CPL that actually was addressed to the plaintiff. Either way, the Virginia Case fails to address this important distinction. You also make the following point at the end of your letter: "the Closing Protection Letter was addressed to Capital Financial Mortgage, its successors and/or assigns and not directly to Mortgage Services." As noted above, this statement is incorrect and there is no good faith basis to argue otherwise. The Letter clearly states that Insured "shall be protected as if this letter were addressed to them." The Letter is addressed to Insured and Insured is directly protected under the Letter as the insured party. As such, no defenses that may be applicable against Capital apply to Insured. There is no question that the Letter does not limit coverage in the way now argued by Old Republic. There also is no question that Old Republic drafted the Letter and that it certainly could have limited its liability under the Letter, but chose not to do so and instead chose to expand coverage directly to Insured. Even if the Letter were ambiguous on this point—it is not—it is black-letter law that the terms of the Letter will be construed in favor of Insured and in favor of providing coverage. Indeed, any reasonable interpretation of the Letter will be decided in favor of providing coverage to Insured. See, e.g., McMillan v. State Mut. Life Assur. Co., 922 F.2d 1073, 1075 (3d Cir. 1990) ("Ambiguous provisions in an insurance policy must be construed against the insurer and in favor of the insured; any reasonable interpretation offered by the insured, therefore, must control."). At a bare minimum, Insured's interpretation certainly is reasonable and Old Republic has offered no alternative explanation. michaelbest.com MICHAEL BEST & FRIEDRICH LLP Old Republic National Title Insurance Company June 25, 2014 Page 3 Fourth, even if Insured was subject to defenses that may apply to Capital, Old Republic has failed to identify what defenses may be available against Capital as they relate to this matter. In the Virginia Case, both the lender and the title agent were involved in a fraudulent scheme. Further, it was that joint fraud that led to the loss of the plaintiff in the Virginia Case. Does Old Republic claim that Affinity also was involved in any potential fraud with Capital and that it is such fraud that led to Insured loss? As outlined in my letter, dated May 29, 2014, 1 note that Insured was not a part of any potential fraud and cannot speculate as to who was involved in any wrongdoing. If you contend that Affinity was involved in any fraud, please explain the nature of that fraud and the basis for your contention. The conduct that gives rise to Insured's claim is that Agent inaccurately made representations that that it disbursed the proceeds of the Loan or would do so (implying that it actually had the proceeds in its possession and that it would disburse such proceeds in the future). In your prior letter, you noted that Affinity claims that it never received the proceeds from Capital. Please advise whether Affinity did in fact receive the funds— and was then part of any fraud with Capital —or did not receive the funds and was unaware of any unrelated fraud by Capital. Based on your prior statements, if Affinity did not receive any funds, then any supposed fraud by Capital is unrelated to this matter and did not otherwise cause the loss to Insured. The loss was caused independently by the conduct of Agent in making the various representations to Insured. You conclude your letter by stating: "In any event, the loss caused by the indemnitee's own acts are not covered by the Closing Protection Letter." This statement is incorrect for various reasons. Here, the "indemnitee" is Insured. No loss was caused by Insured. Further, even if the indemnitee were only Capital, you fail to explain what actions by Capital caused Insured's loss. In this matter, the cause of Insured's loss is the misrepresentations made by Agent. Old Republic appears to contend that Agent never received the closing funds from Capital, but nonetheless represented that it not only received such funds but also fully disbursed the loan. It is this conduct by Agent that caused Insured loss and this conduct that clearly gives rise to coverage by Old Republic. Old Republic has no good faith or reasonable basis to deny coverage. Accordingly, Insured again demands under the Letter that Old Republic provide Insured its actual loss in connection with this claim, including the amount that Insured paid for the Loan ($166,347.67), and Insured's costs and expenses, including attorneys' fees. If you would like to discuss this matter further or request additional information or documents, please let me know. michaelbest.com MICHAEL BEST R P.IDRICH LLP Old Republic National Title Insurance Company June 25, 2014 Page 4 Very truly yours, MICH L & FRIED LLP athan . Moenck NLM/f w michaelbest.com THE GRANGER FIRM Blair H. Granger, Esquire Attorney I.D. # 56025 David J. Scaggs, Esquire Attorney I.D. #82117 1800 East Lancaster Avenue Paoli, PA 19301 (610) 640-7500 FILL- 20/4 SEP -8 PM 2: . PFERSf7? C p YL4 ,�I.ii Ty� Attorneys for Plaintiff Old Republic National Title Insurance Company 400 South Second Avenue Minneapolis, MS 55401 Plaintiff, Mortgage Services III, LLC 502 N. Hershey Road Bloomington, IL 61704 Defendants. IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PA CIVIL ACTION 114-4(089 No: 2444-41401L AFFIDAVIT OF SERVICE I, Seta George, being duly sworn, depose and say that on. August 12, 2014, I served the Complaint on Mortgage Services III, LLC, an out of state defendant, by United States Postal Service, Certified, Return Receipt, Restricted pursuant to PA.R.C.P. 404. I am attaching a copy of said receipt. Date: 09-04-14 Subscribed and Sworn to before me On this Y-Hday of Sep/ 2014 otar P.. is By: COMMONWEALTH OAMD 1$CM0$ Natant Polk TANYFFIIi1► rnw, PESTER COUNTY My Commission Expires May 14, 2017 THE GRANGER FIRM Seta " eorge, Paralegal UNITED STATES PCS • Sender: Please print your name, address, and ZiP+41h this box • David J. Scaggs, Esquire THE GRANGER FIRM 1800 E. Lancaster Avenue Paoli, PA 19301 SENDER COMP -Erg THIS'SECT/6 ■. Complete items 1, 2, and 3. Also complete item 4 if Restricted Delivery is desired. • Print your name and address on the reverse so that we can return the card to you. ■ Attach this card to the back of the mailpiece, or on the front if space permits. . Article Addressed to: ❑ Agent Addressee C. Date of Delivery D. Is di livery address diffem item 1? 0 Y tf YES, enter.deliyery address below: l 4 o &Jar S ace s 07— /v. //e/3 - (/ e.3(/ i'yt a-5 IVJ/) L 2. Article Nutnber (Transfer from §ervice lab& PS Form 3811, February 2004. Type .Certified Mail OExpress Mall 0 Registered " Return Receipt for Mer Insured,Mail - ..G]-G.O.D. 4. Restricted Delivery? (Extra Pee) 701,0 3090 0003 6882 8988 Domestic Return Receipt ... _ . 102595-02-M-1540 BUCHANAN INGERSOLL & ROONEY PC Patrick D. Doran, Esq. (PA Bar ID 308781) Two Liberty Place 50 S. 16th Street, Suite 3200 Philadelphia, PA 19102 (215) 665-8700 patrick.doran@bipc.com Attorneys for Defendant, Mortgage Services III, LLC . F QihIJN 0Tt 2014 SEP 30 f C ?I5ERLD COIN FY PENNSYLVANIA Old Republic National Title Insurance Company, Plaintiff, v. Mortgage Services III, LLC, Defendant. IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PA Civil Action No. 14-4689 ANSWER AND NEW MATTER TO PLAINTIFF'S COMPLAINT Defendant, Mortgage Services III, LLC ("Defendant"), by and through its attorneys, Buchanan Ingersoll & Rooney PC and Michael Best & Friedrich LLP, hereby answers and responds to the Complaint of Plaintiff, Old Republic National Title Insurance Company ("Plaintiff'), as follows and asserts the following affirmative and other defenses: ANSWER THE PARTIES 1. The Plaintiff is Old Republic Title Insurance Company, a Minnesota corporation with a principal place of business at 400 South Second Avenue, Minneapolis, MN 55401. ANSWER: The allegations in this paragraph are denied because Defendant is, after reasonable investigation, without sufficient knowledge or information to form a belief as to truth of the allegations. 2. The Defendant is Mortgage Services III, LLC, an Illinois limited liability company which has its principal place of business located at 502 N. Hershey Road, Bloomington, IL 61704. ANSWER: Defendant admits the averments in Paragraph 2. JURISDICTION AND VENUE 3. Jurisdiction and venue are proper because this is a dispute arising out the refinancing of real property located in Cumberland County, PA. ANSWER: Defendant admits that the property is located in Cumberland County, PA, and that Plaintiff alleges jurisdiction and venue on those grounds. The remaining averments in this paragraph constitute conclusions of law such that no response is required. To the extent an answer is required, the allegations of this paragraph are denied. 4. No Paragraph 4 is contained in the Complaint. INTRODUCTION 5. This is an action for declaratory relief to settle questions concerning the Defendant Mortgage Services' claims for coverage under a Closing Service Letter ("CSL"), dated January 21, 2013 issued by Old Republic, which claims persist despite written correspondence from Plaintiff to Defendant Mortgages Services that there is no valid claim against Old Republic under the Closing Service Letter. See copy of the Closing Service letter attached hereto as Exhibit "A ". ANSWER: Admitted in part, denied in part. Defendant admits that Plaintiff purports to bring this action for declaratory relief regarding coverage under the Closing Service Letter. Defendant denies the remaining allegations in Paragraph 5. By way of further answer, Defendant stated that it has a valid claim against Plaintiff under the CSL. 6. Old Republic files this lawsuit in order to obtain a declaration that it has no obligations for any of the alleged claims asserted by Defendant which claims are set forth in detail below. 2 ANSWER: Admitted in part, denied in part. Defendant admits that Plaintiff purports to bring this action for declaratory relief regarding coverage under the Closing Service Letter. Defendant denies the remaining allegations in Paragraph 6. By way of further answer, Defendant states that Plaintiff does have obligations under the Closing Service Letter. FACTUAL BACKGROUND 7. The dispute between the parties arises out of a real estate refinance closing for certain real property known as 102 Country Club Road, Carlisle, Pennsylvania 17015 (the "Property"). The refinance took place on February 22, 2013 and involved a loan in the amount of $167,000.00 from Capital Financial Mortgage Corporation ("Capital Financial") to Paul E. Whippo to refinance a prior loan with Wells Fargo. In consideration for the new loan, Paul E. Whippo and Jennifer S. Person Whippo, the title holders to the Property, were to grant a first lien mortgage to Capital Financial on the Property. ANSWER: Defendant admits the averments in Paragraph 7. 8. However, as a result of the apparent failure of Capital Financial to actually fund the loan, the refinance was not completed, as is set forth in further detail below. ANSWER: Admitted in part, denied in part. Defendant admits only that Capital Financial failed to fund the loan. Defendant denies the remaining averments in Paragraph 8. By way of further answer, Defendant states that its loss arises out of the failure of Plaintiffs agent, Affinity, to comply with the closing instructions and that Affinity made multiple false representations regarding the loan, some under penalty and perjury, on which Defendant relied to its detriment. 9. Thereafter, on or about May 19, 2014, Defendant Mortgage Services sent correspondence to Old Republic, wherein Defendant nonetheless made a claim under the CSL for alleged losses it claims it suffered from the Whippo refinance closing. ANSWER: Defendant admits that on May 19, 2014, Defendant sent correspondence to Plaintiff regarding coverage under the Closing Service Letter. Defendant further states that the 3 correspondence is a writing that speaks for itself, and Defendant denies any characterization of the writing. 10. Defendant Mortgage Services was not itself a direct lender for the Whippo refinance. Rather, it provided funds for the loan to Capital Financial, who in turn was to provide the funds for closing the refinance. Mortgage Services was then to take an assignment of the mortgage on the Property from Capital Financial. ANSWER: Defendant admits the averments in Paragraph 10. 11. The CSL referenced in and attached to the May 19, 2014 correspondence from Mortgage Services names Affinity Land Services, LLC as an Issuing Agent for Old Republic under the terms and conditions in the CSL. ANSWER: Defendant admits the averments in Paragraph 11. 12. Affinity Land Services, LLC ("Affinity") also acted as the settlement agent for the closing for Capital Financial. ANSWER: Defendant admits the averments in Paragraph 12. 13. Affinity prepared and signed a HUD -1 Settlement Statement indicating that it had or would cause the funds to be disbursed in accordance with the settlement statement. ANSWER: Defendant states that the HUD -1 Settlement Statement is a writing that speaks for itself, and Defendant denies any characterization of the writing. 14. Affinity signed a letter dated February 22, 2013 prepared by Capital Financial that stated that the refinance closed and the $167,000.00 loan had been disbursed with a resulting first mortgage on the Property in favor of Capital Financial. See First Lien Letter attached hereto as Exhibit "B ANSWER: Admitted in part, denied in part. Defendant admits that Affinity signed a letter dated February 22, 2013, that stated that the refinance closed and that Affinity had "completely disbursed the proceeds of the loan covered by the above captioned commitment/report in the amount of $167,000.00." The remaining averments set forth in Paragraph 14 are denied because Defendant is, after reasonable investigation, without sufficient knowledge or information to form a belief as to truth of the remaining averments. -4 15. While Capital Financial was to provide the funds to Affinity for the refinance, it appears that in fact no funds were actually sent by Capital Financial to Affinity. Since Capital Financial never sent the closing funds, no disbursement was made by Affinity. ANSWER: The averments set forth in Paragraph 15 are denied because Defendant is, after reasonable investigation, without sufficient knowledge or information to form a belief as to truth of the averments. 16. Nonetheless, based on the First Lien Letter and the HUD 1 closing statement, Defendant alleges that it has been harmed because it purchased the mortgage from Capital Financial. ANSWER: Defendant admits that it was harmed in at least the amount of $166,347.67 plus costs and fees, based upon Affinity's multiple false representations on which Defendant relied. 17. Defendant has now demanded payment from Old Republic under the CSL for its alleged actual loss of $166,347.67, along with its costs and expenses and attorney fees. See correspondence Defendant to Plaintiff dated May 23, 2014 attached hereto as Exhibit '`C". ANSWER: Defendant admits that on May 23, 2014, Defendant demanded payment from Old Republic in the amount of $166,347.67 along with costs and expenses and attorney fees. 18. Specifically, Defendant has alleged that Affinity failed to comply with the closing instructions of the lender, Capital Financial, and that as a result, Mortgage Services suffered a loss that Old Republic was responsible for pursuant to the CSL issued by Old Republic. ANSWER: Defendant admits that it alleges Affinity failed to comply with the closing instructions of the lender, Capital Financial. By way of further answer, Defendant states that its loss arises out of the failure of Plaintiff's agent, Affinity, to comply with the closing instructions and that Affinity made multiple false representations regarding the loan, some under penalty and perjury, on which Defendant relied to its detriment. 19. No Paragraph 19 is contained in the Complaint. 5 20. Upon receipt of the May 19, 2014 correspondence, counsel for Affinity notified Defendant that no disbursements were made because the loan was never funded by Capital Financial. See copy of correspondence from counsel for Affinity dated May 23, 2014 attached hereto as Exhibit "D ". ANSWER: Admitted in part, denied in part. Defendant admits that its counsel received the May 19, 2014, correspondence. Defendant states that the correspondence is a writing that speaks for itself, and Defendant denies any characterization of the writing. As to the statements themselves, Defendant is, after reasonable investigation, without sufficient knowledge or information to form a belief as to truth of the averments set forth in Paragraph 20 and therefore denies the same. 21. Thereafter, on May 29, 2014, Old Republic sent a letter to Defendant indicating that it appeared that Capital Financial itself was engaged in a fraudulent scheme whereby it would direct loan fundings to itself and not the closing agent, Affinity. The letter pointed out that if Affinity never received the funding for closing, it could not have mishandled those funds. The letter went on to ask Mortgage Services to advise whether it had itself sent any funds directly to Affinity for the closing or had evidence that Capital Financial had sent any funds to Affinity. See copy of correspondence attached hereto as Exhibit "E". ANSWER: Defendant states that the correspondence is a writing that speaks for itself, and Defendant denies any characterization of the writing. As to the statements themselves, Defendant is, after reasonable investigation, without sufficient knowledge or information to form a belief as to truth of the averments set forth in Paragraph 21 and therefore denies the same. 22. In the correspondence from Old Republic to Defendant on May 29, 2014, Old Republic also reminded Defendant that the CSL was directed to Mortgage Services in its capacity as an assignee of Capital Financial. ANSWER: Defendant states that the correspondence is a writing that speaks for itself, and Defendant denies any characterization of the writing. As to the statements themselves, those statements constitute conclusions of law such that no response is required. To the extent an answer is required, the allegations of this paragraph are denied. 6 23. Mortgage Services rights under the CSL are only as an assignee of Capital Financial. The CSL identifies "Capital Financial Mortgage Corporation" by name, referencing it in the letter as "you" or "your" with regards to payment of funds or closing instructions. It does not appear that Defendant itself ever sent any funds or closing instructions for which it has made Old Republic aware of. As such, Mortgages Services cannot gain any rights greater than Capital Financial has under the CSL. ANSWER: Defendant states that this is a legal conclusion which is not subject to admission or denial. By way of further answer, Defendant states that the CSL provides that "[i]f you are a lender protected under the foregoing paragraph, your borrower, your assignee and your warehouse lender in connection with a loan secured by a mortgage shall be protected as if this letter was addressed to them." See Ex. A. This provision makes clear that the CSL actually is addressed to Defendant. 24. On May 29, 2014 Mortgage Services, through counsel, once again sent correspondence to Old Republic demanding payment under the CSL. See copy of correspondence attached hereto as Exhibit "F" ANSWER: Defendant admits that on May 29, 2014, it sent correspondence to Old Republic. Defendant states that the correspondence is a writing that speaks for itself, and Defendant denies any characterization of the writing. 25. On May 30, 2014, Old Republic notified Defendant in writing that any losses it had suffered were caused by the willful acts of the indemnitee Capital Financial and thus were not covered by the CSL. The correspondence went on to state that Mortgage Services rights under the CSL were that of an assignee and subject to all defenses available against Capital Financial. See copy of correspondence attached hereto as Exhibit "G ". ANSWER: Defendant states that the correspondence is a writing that speaks for itself, and Defendant denies any characterization of the writing. As to the statements themselves, the statements constitute conclusions of law such that no response is required. To the extent an answer is required, the allegations of this paragraph are denied. 26. On June 25, 2014 Mortgage Services sent yet another letter demanding payment by Old Republic under the CSL. See copy of correspondence attached hereto as Exhibit "H". 7 ANSWER: Defendant admits that on June 25, 2014, it sent correspondence to Old Republic. Defendant states that the correspondence is a writing that speaks for itself, and Defendant denies any characterization of the writing. 27. The June 25, 2014 letter continues to assert the position that because Affinity had represented that funds had been received and disbursed, Old Republic was liable for losses suffered by Mortgage Services. The correspondence also argued since Mortgage Services was to be considered an "addressee" under the CSL, it did just not stand in the shoes of Mortgage Financial (despite the fact that there is no allegation that Mortgage Services ever sent its own funds or closing instruction). ANSWER: Defendant states that the correspondence is a writing that speaks for itself, and Defendant denies any characterization of the writing. As to the statements themselves, the statements constitute conclusions of law such that no response is required. To the extent an answer is required, the allegations of this paragraph are denied. By way of further answer, Defendant denies the allegations as the June 25, 2014 letter does not reference a "Mortgage Financial." 28. The CSL is addressed to "Capital Financial Mortgage Corporation, its successors and/or assigned as their interest may appear". See copy of Closing Service Letter attached hereto as Exhibit "A ". ANSWER: Defendant states that the correspondence is a writing that speaks for itself, and Defendant denies any characterization of the writing. The CSL further states "[i]f you are a lender protected under the foregoing paragraph, your borrower, your assignee and your warehouse lender in connection with a loan secured by a mortgage shall be protected as if this letter was addressed to them." See Ex. A. This provision makes clear that the CSL actually is addressed to Defendant as an assignee. 29. Under the terms of the CSL, "If you are a lender protected under the foregoing paragraph, your borrower, your assignee and your warehouse lender in connection with a loan secured by a mortgage shall be protected as if this letter were addressed to them." 8 ANSWER: Defendant states that the CSL is a writing that speaks for itself, and Defendant denies any characterization of the writing. As to the statement itself, the statement constitutes conclusions of law such that no response is required. To the extent an answer is required, the allegations of this paragraph are denied. 30. Thus, under the plain language of the CSL, the "you" refers to Capital Financial and not any assignee of Capital Financial. ANSWER: Defendant states that the CSL is a writing that speaks for itself, and Defendant denies any characterization of the writing. As to the statement itself, the statement constitutes conclusions of law such that no response is required. To the extent an answer is required, the allegations of this paragraph are denied. Defendant denies that "you" does not refer to any assignee of Capital Financial. As the CSL itself makes clear, "[i]f you are a lender protected under the foregoing paragraph, your borrower, your assignee and your warehouse lender in connection with a loan secured by a mortgage shall be protected as if this letter was addressed to them." See Ex. A. This provision makes clear that the CSL actually is addressed to Defendant as an assignee. 31. Therefore, to the extent Capital Financial was acting as a lender in the transaction, any assignee or warehouse lender of Capital Financial is protected by the CSL. ANSWER: Defendant states that the CSL is a writing that speaks for itself, and Defendant denies any characterization of the writing. As to the statement itself, the statement constitutes conclusions of law such that no response is required. To the extent an answer is required, the allegations of this paragraph are denied. 32. The CSL also requires by its own terms that any claim under it be filed within one (1) year from the date of the letter. Specifically the document states in paragraph "G": G. The Company shall not be liable hereunder unless notice of claim is received by the Company within one year from the date of the Closing." 9 ANSWER: Defendant states that the CSL is a writing that speaks for itself, and Defendant denies any characterization of the writing. As to the statement itself, the statement constitutes conclusions of law such that no response is required. To the extent an answer is required, the allegations of this paragraph are denied. 33. No claim was filed or sent to Old Republic until the May 19, 2014 correspondence. ANSWER: Defendant admits that it first sent correspondence to Old Republic regarding its obligations on May 19, 2014. 34. Despite all of the above, Mortgage Services continues to pursue claim submissions under theories that allege that somehow coverage is owed under the CSL. ANSWER: Defendant states that its last correspondence regarding Old Republic's obligations was June 25, 2014. COUNT I -DECLARATORY JUDGMENT RELIEF 35. Plaintiff incorporates the above paragraphs herein by reference. ANSWER: Defendant realleges and incorporates the foregoing responses as though fully set forth herein. 36. As set forth above, a controversy exists between the Plaintiff and the Defendant based on the existence of the CSL, a written document. ANSWER: The averments in this paragraph constitute conclusions of law such that no response is required. To the extent an answer is required, the allegations of this paragraph are denied. 37. Old Republic denies that it has any obligations to reimburse or otherwise indemnify or pay any monies to Mortgage Services under the CSL, as none of the claim submissions from Mortgage Services qualify to trigger any obligation by Old Republic. - 10 - ANSWER: Defendant denies the averments in Paragraph 37. By way of further answer, as stated in Defendant's responses above, Old Republic has an obligation under the CSL to indemnify or pay monies to Mortgage Services. 38. Moreover, even if a claim was viable under the CSL, said claim was not timely made within one (1) year from the date of the CSL. ANSWER: Defendant denies the averments in Paragraph 38. By way of further answer, Defendant states that Old Republic is liable to defendant under the CSL. 39. No Paragraph 39 is contained in the Complaint. 40. No Paragraph 40 is contained in the Complaint. 41. Old Republic seeks adjudication that no liability or obligations exists under the CSL. ANSWER: The averments in this paragraph constitute conclusions of law such that no response is required. To the extent an answer is required, the allegations of this paragraph are denied. By way of further answer, Defendant states that Old Republic is liable to Defendant under the CSL. 42. An actual and justiciable controversy exists between Old Republic and Mortgage Services concerning the rights of the Defendant and the obligations of the Plaintiff under a written contract (i.e. the Closing Service Letter), and Plaintiff is entitled to have its legal obligations determined by this Honorable Court in a Declaratory Judgment Action. ANSWER: The averments in this paragraph constitute conclusions of law such that no response is required. To the extent an answer is required, the allegations of this paragraph are denied. 43. As such, Old Republic seeks a declaratory judgment that it owes no duty to reimburse or indemnify Mortgage Services for any of the claims asserted by Mortgage Services under the Closing Service Letter as set forth herein. -11- ANSWER: The averments in this paragraph constitute conclusions of law such that no response is required. To the extent an answer is required, the allegations of this paragraph are denied. By way of further answer, Defendant states that Old Republic has an obligation under the CSL to indemnify or pay monies to Mortgage Services for its losses. NEW MATTER Defendant submits the following affirmative and other defenses without conceding that such defenses are actually affirmative defenses: 1. Plaintiff's Complaint fails to state a claim upon which relief can be granted. 2. Plaintiff's Complaint and each purported claim for relief therein fails to state facts sufficient to constitute a claim for relief. 3. Plaintiff's Complaint and each claim for relief therein that seeks equitable relief is barred by the doctrine of unclean hands. 4. Plaintiff's Complaint and each claim for relief therein is barred by Plaintiff's bad faith. CSL. 5. Plaintiff has failed to join necessary and indispensable parties. 6. Plaintiff's Complaint is barred, in whole or in part, by a material breach of the 7. Plaintiff's Complaint is barred, in whole or in part, by the implied covenant of good faith and fair dealing. 8. Upon information and belief, Plaintiff's late notice claim necessarily fails because even if notice were given late, and it was not, Plaintiff was not prejudiced by any purportedly late notice. - 12 - 9. Inasmuch as Plaintiff's Complaint does not describe the alleged underlying claims with sufficient particularity to enable Defendant to determine all of its legal, contractual and equitable rights, Defendant reserves the right to amend and supplement the allegations of the Answer to Complaint and New Matter to assert any and all pertinent defenses ascertained through further investigation and discovery in this action. WHEREFORE, Mortgage Services III, Inc. demands judgment as follows: A. Dismissing Plaintiff's Complaint against Mortgage Services III, LLC on the merits and with prejudice; B. An award of any attorneys' fees, costs and disbursements incurred in defending against this action; and C. Any other relief this Court deems just and equitable. Dated: September 30, 2014 Respectfully submit • � _' By' . I fa.'a rick D. DI --q. (PA Bar ID 308781) uchanan Ingersoll & Rooney PC Two Liberty Place 50 S. 16th Street, Suite 3200 Philadelphia, PA 19102 (215) 665-8700 patrick.doran@bipc.com Local Counsel for Defendant Mortgage Services III, LLC Michelle L. Dama, Esq. - 13 - VERIFICATION Rene Shaffer, hereby certifies that I am the Executive Vice President of Defendant, Mortgage Services III, LLC, and verifies that the facts set forth in the foregoing Answer and New Matter to Plaintiffs Complaint are true and correct to the best of my knowledge, information and belief, and based on review of business documents. This statement is made subject to the penalties of 18 Pa. C.S. §4904 relating to unsworn falsification to authorities. Date: September2, 2014 Rene a fer Executive Vice President Mortgage Services III, LLC - 14 - BUCHANAN INGERSOLL & ROONEY PC Patrick D. Doran, Esq. (PA Bar ID 308781) Two Liberty Place 50 S. 16th Street, Suite 3200 Philadelphia, PA 19102 (215) 665-8700 patrick.doran@bipc.com Old Republic National Title Insurance Company, Plaintiff, V. Mortgage Services III, LLC, Defendant. IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PA Civil Action No. 14-4689 CERTIFICATE OF SERVICE I hereby certify that I served a true and correct copy of the foregoing Answer and New Matter to Plaintiff's Complaint today upon Plaintiff by first-class mail, postage prepaid, addressed as follows: Blair H. Granger, Esquire Attorney J.D. #56025 David J. Scaggs, Esquire Attorney J.D. #82117 THE GRANGER FIRM 1800 East Lancaster Avenue Paoli, Pennsylvania 19301 (610) 640-7500 Dated: September20, 2014 - 15- THE GRANGER FIRM Blair H. Granger, Esquire Attorney I.D. #56025 David J. Scaggs, Esquire Attorney I.D. #82117 1800 East Lancaster Avenue Paoli, Pennsylvania 19301 (610) 640-7500 THF AA''''tt t1 t t., t* it i '1O!' OTAR 2.0 !.1 OCT 20 P3 . 3 CIAND COUNTY D!�'„}:., S Vr' itra1 .3�'c j �� A 1 Attorneys far Plaintiff Old Republic National Title Insurance Company 400 South Second Avenue Minneapolis, MS 55401 Plaintiff, v. Mortgage Services III, LLC 502 N. Hershey Road Bloomington, IL 61704 Defendant. IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PA CIVIL ACTION No.: 2014-4689 PLAINTIFF'S REPLY TO DEFENDANT'S NEW MATTER Plaintiff, Old Republic National Title Insurance Company ("Old Republic") by and through its undersigned counsel, hereby replies to Mortgage Services III, LLC ("Mortgage Services")'s New Matter, as follows: REPLY TO NEW MATTER 1. Denied as a conclusion of law. 2. Denied as a conclusion of law. 3. Denied as a conclusion of law. 4. Denied as a conclusion of law. 5. Denied as a conclusion of law. 6. Denied as a conclusion of law. 7. Denied as a conclusion of law. 8. Denied as a conclusion of law. 9. Denied as a conclusion of law. WHEREFORE, Plaintiff Old Republic Title Insurance Company hereby respectfully requests this Court to enter judgment in its favor and against Defendant Mortgage Services, III, LLC as prayed for in Plaintiff's complaint. Date: iobt/ f y By: . Scagg , squire air H. Granger, Esquire Attorneys for Plaintiff THE GRANGER FIRM Blair H. Granger, Esquire Attorney I.D. #56025 David J. Scaggs, Esquire Attorney I.D. #82117 1800 East Lancaster Avenue Paoli, Pennsylvania 19301 (610) 640-7500 FILED -OFFICE Or THE TAR '¥ 2014 OCT 23 PM 3: 39 CUMBERLAND COs f'E�7�e'SY'(�y'�,lrl TY Attorneys for Plaintiff Old Republic National Title Insurance Company 400 South Second Avenue Minneapolis, MS 55401 Plaintiff, v. Mortgage Services III, LLC 502 N. Hershey Road Bloomington, IL 61704 Defendant. IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PA CIVIL ACTION No.: 2014-4689 CERTIFICATE OF SERVICE I, Seta George, hereby certify that on this date, I served a true and correct copy of Plaintiff's Reply to New Matter, via First Class, postage -prepaid on the following: Patrick D. Doran, Esq. Buchanan Ingersoll & Rooney, PC Two Liberty Place 50 S. 16th Street, Suite 3200 Phila, PA 19102 Counsel for Defendant Mortgage Services III, LLC Date: THE GRANGER FIRM Bv: Seta George, Paralegal THE GRANGER FIRM Blair H. Granger, Esquire Attorney T.D. #56025 David J. Scaggs, Esquire Attorney I.D. #82117 1800 East Lancaster Avenue Paoli, Pennsylvania 19301 (610) 640-7500 OFICE r- T1 E R O HONO TAR 20.i OCT 20 PH 3: 37 CUA iL3F!ZL IND COUNTY PENNS YLyA Attgneys for Plaintiff Old Republic National Title Insurance Company 400 South Second Avenue Minneapolis, MS 55401 Plaintiff, v. Mortgage Services III, LLC 502 N. Hershey Road Bloomington, IL 61704 Defendant. IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PA CIVIL ACTION No.: 2014-4689 CERTIFICATE OF SERVICE I, Seta George, hereby certify that on this date, I served a true and correct copy of: 1. Plaintiff's Interrogatories Directed to Defendant - Set One 2. Plaintiff's Request for Production of Documents Directed to Defendant - Set One, and 3. Plaintiff's Expert Interrogatories Directed to Defendant - Set One, via First Class, postage -prepaid on the following: Patrick D. Doran, Esq. Buchanan Ingersoll & Rooney, PC Two Liberty Place 50 S. 16t Street, Suite 3200 Phila, PA 19102 Counsel for Defendant Mortgage Services III, LLC Date: (p -'l Ce — By: THE GRANGER FIRM Seta George, Paraleg