Supreme Court, Appellate Division, Second Department, New York. MERSCORP, INC.

and Mortgage Electronic Registration Systems, Inc., PetitionersAppellants, v. Edward P. ROMAINE, as Clerk of the County of Suffolk, State of New York and County of Suffolk, State of New York, Respondents-Respondents. No. 2001-04792. Suffolk County Clerk's Index No. 01-9688. November 21, 2001. Brief for Petitioners-Appellants Hiscock & Barclay, LLP, Attorneys for Petitioners-Appellants, Key Bank Towers at Key Center, Suite 301, 50 Fountain Plaza, Buffalo, New York 14202, (716)856- 0911 1. The Index Number of the case in the Court below is 01-9688, Suffolk County Clerk's Office. 2. The names of the parties to the instant appeal are: Petitioners-Appellants: MERSCORP, Inc. and Mortgage Electronic Registration Systems, Inc. Respondents: Edward P. Romaine, as Clerk of the County of Suffolk, State of New York and County of Suffolk, State of New York. Although not required to be named as a party, Petitioners have served all pleadings on the Office of the Attorney General of the State of New York ("Attorney General") pursuant to CPLR 7804(c). There have no changes in the names of the parties, and no parties have been added or dismissed from the proceeding., 3. The proceeding was commenced in the Supreme Court, County of Suffolk, State of New York. 4. The proceeding was commenced on May 2, 2001 and the pleadings have been served as follows: On May 2, 2001, Petitioners served Respondents with the Order to Show Cause containing Temporary Restraining Order, as granted by the Honorable John Bivona on May 2, 2001, the underlying Petition, dated May 1, 2001 and Petitioners' Motion for a *2 Preliminary Injunction, consisting of the aforesaid Petition, the Affidavit of Sharon McGann Horstkamp, Esq., sworn to on April 27, 2001 and the Affirmation of Charles C. Martorana, Esq., dated May 1, 2001. On May 3, 2001, Petitioners served the Attorney General with the Order to Show Cause containing Temporary Restraining Order, as granted by the Honorable John Bivona on May 2, 2001, the underlying Petition, dated May 1, 2001 and Petitioners' Motion for a Preliminary Injunction, consisting of the aforesaid Petition, the Affidavit of Sharon McGann Horstkamp, Esq. and the Affirmation of Charles C. Martorana, dated May 1, 2001.

 On May 11, 2001, Petitioners served Respondents and the Attorney General with the Affidavits of R. K. Arnold, Daniel McLaughlin, James Maher and Joanne Moore, all sworn to on May 10, 2001 and made in further support of Petitioners' Motion for a Preliminary Injunction. On May 14, 2001, Respondents served Petitioners with their joint Answer, dated May 14, 2001 and attached Affidavits in support of their application to vacate the Temporary Restraining Order and in opposition to Petitioners' Motion for Preliminary Injunction. Such Affidavits were made by Edward P. Romaine, sworn to on May 14, 2001, John M. Kennedy, Jr., sworn to on May 14, 2001, Christina L. Lotz, sworn to on May 9, 2001, John J. Woodward, sworn to on May 10, 2001, Karen V. Murphy, sworn to on May 11, 2001 and Richard C. Cahn, Esq., sworn to on May 11, 2001. The case was assigned to the Honorable James M. Catterson, and on May 15, 2001, Justice Catterson vacated the Temporary Restraining Order and denied the Petitioners' Motion for a Preliminary Injunction. On May 23, 2001, Respondents served Justice Catterson's bench decision (consisting merely of the transcribed stenographic transcript) as "So Ordered" on Petitioners. On May 25, 2001, Petitioners served Respondents with the Notice of Appeal, "Form A-Request for Appellate Division Intervention-Civil" and the decision (constituting the order) appealed from. On May 31, 2001, Justice Sondra Miller, Associate Justice of the Appellate Division, Second Department, granted a Temporary Restraining Order to require Respondents to accept mortgages and other instruments where MERS is named as the mortgagee, as nominee for the lender, ("MERS Instruments") for recording. Justice Miller further ordered Respondents to show cause why a preliminary injunction should not be issued pursuant to CPLR 5518 and 6301 enjoining Respondents from refusing to accept MERS Instruments and to compel performance of Respondent Suffolk County Clerk's statutory duties to record conveyances of real property interests. On June 19, 2001, this Court issued an Order to require Respondents to accept such MERS Instruments for recording through the earlier of this Court's disposition of the instant appeal or the lower Court's disposition of the case on the merits. *3 5. Petitioners commenced this proceeding to compel basic compliance with New York statutes which direct Respondent Suffolk County Clerk to record MERS Instruments and to properly index them in the Clerk's indices. The Suffolk County Clerk had been accepting MERS Instruments, until it announced that it would stop recording them as of May 1, 2001. Indeed, as of April 27, 2001 (i.e., four days prior to the commencement of this proceeding), the Suffolk County Clerk had accepted over 16,000 instruments wherein MERS is named as a party to the mortgage loan transaction, including 3,259 "MOM" mortgages naming MERS as original mortgagee of record, and 13,139 assignments of mortgages naming MERS as assignee of record under the mortgage. 6. The appeal is from the May 15, 2001 bench decision of the Honorable James M. Catterson, JSC. There is no written order or judgment. Respondents have merely used the transcribed stenographic transcript of Justice Catterson's bench decision "So Ordered" as the lower Court's order, which transcript and order was served by Respondents on Petitioners on May 23, 2001. 7. The appeal is on the full, reproduced Record. TABLE OF CONTENTS TABLE OF AUTHORITIES ... i

QUESTIONS PRESENTED ... 1 PRELIMINARY STATEMENT ... 2 STATEMENT OF FACTS ... 3 A. MERS and the MERS(R) System ... 3 B. The MERS(R) System Provides Substantial Benefits to Lenders, Title Companies, and Borrowers ... 6 C. The Informal Opinion and Respondents' Incorrect Interpretation of the Opinion ... 10 D. Procedural History ... 11 ARGUMENT ... 15 A. Standard for Injunctive Relief ... 15 B. Injunctive Relief is Warranted Where a County Clerk Fails to Perform Its Statutory Duty ... 16 C. Appellants Have Established a Reasonable Probability of Success on the Merits ... 17 1. Mandamus to Compel the Suffolk County Clerk's Compliance with a Purely Ministerial Act Enjoined by New York State Law Is Warranted ... 17 a. Principles Governing a Mandamus to Compel ... 17 b. New York Law Compels the Suffolk County Clerk to Record All Mortgages Presented to Him ... 20 c. MERS Mortgages Are "Conveyances" within the Meaning of RPL ... 22 291

d. MERS Mortgages are "Mortgages" as Defined by New York Law ... 23 D. In Suffolk County, the MERS Mortgages Have Been Enforced in Foreclosure Actions ... 29 E. The Suffolk County Clerk Misconstrued the Informal Opinion ... 29 1. Even if it were Interpreted Correctly, the Informal Opinion was Not Entitled to Deference by the Lower Court ... 30 F. Irreparable Harm ... 32 1. Harm to the Public ... 32 2 Harm to MERS ... 34 G. Balance of Equities ... 35 H. The Lower Court (Catterson, J.) Erred in Vacating the Temporary Restraining Order and Refusing to Grant a Preliminary Injunction Pending a Final Determination of this Case ... 38 1. The Lower Court Improperly Interjected its own Notions of Public Policy ... 38

2. The Lower Court Improperly Refused to Consider Affidavits Submitted by Appellants on May 11, 2001 ... 39 CONCLUSION ... 41 *i TABLE OF AUTHORITIES FEDERAL CASES 99 Commercial Street Inc. v. Goldberg, 811 F. Supp. 900 (S.D.N.Y. 1993) ... 27 Cabrera v. Jakabovitz, 24 F.3d 372 (2d Cir. 1994), cert. denied, 513 US 876 (1994) ... 27 In Re Cushman Bakery, 526 F.2d 23 (1st Cir.), cert. denied, 425 U.S. 937 (1976) ... 25 In Re Fried Furniture Corp., 293 F. Supp. 92 (E.D.N.Y. 1968), affd, 407 F.2d 360 (2d Cir. 1969) ... 26 In Re Stockbridge Funding Corp. 145 B.R. 797 (Bankr. S.D.N.Y. 1992) ... 33 STATE CASES Aetna Insurance Co. v. Capasso, 75 N.Y.2d 860, 552 N.Y.S.2d 918 (1990) ... 15 Albany Medical Center Hospital v. Bresland, 47 Misc. 2d 208, 262 N.Y.S.2d 285 (Sup. Ct. Albany County 1965) ... 16 American Telephone & Telegraph Co. v. State Tax Comn, 61 N.Y.2d 393, 474 N.Y.S.2d 434 (1984) ... 31 Amherst Factors, Inc. v, Kochenburger, 4 N.Y.2d 203, 173 N.Y.S.2d 570 (1958) ... 25 Arens v. Shainswitt, 37 A.D.2d 274, 324 N.Y.S.2d 321 (1st Dep't 1971), aff'd 29 N.Y.2d 663, 324 N.Y.S.2d 954 ... 27 Association of Surrogate and Supreme Court Reporters within the City of New York v. Bartlett, 40 N.Y.2d 571, 388 N.Y.S.2d 882 (1976) ... 22 Baccari v. DeSanti, 70 A.D.2d 198, 431 N.Y.S.2d 829 (2d Dep't 1979) ... 20 *ii Bhutta Realty Corporation v. Sangetti, 165 A.D.2d 852, 560 N.Y.S.2d 315 (2d Dep't 1990) ... 26 Central Trust Co. v. Sheahen, 66 A.D.2d 1015, 411 N.Y.S.2d 741 (4th Dep't 1978) ... 27 Cymbol v. Cymbol, 122 A.D.2d 771, 505 N.Y.S.2d 657 (2d Dep't 1986) ... 27 Fingerlakes Racing Association v. New York State Racing, 45 N.Y.2d 471, 410 N.Y.S.2d 268 (1978) ... 30, 36 Finn v. Wells, 135 Misc. 53, 237 N.Y.S. 580 (Sup. Ct. Tioga Co. 1929) ... 22 Gambar Enterprises, Inc. v. Kelly Services, Inc., 69 A.D.2d 297, 418 N.Y.S.2d 818 (4th Dep't 1979) ... 15

Gibson v. Thomas, 180 N.Y. 483 (1905) ... 22 Harris v. Crossland Mortgage Corp., 160 Misc. 2d 520, 610 N.Y.S.2d 423 (Dist. Ct. Nassau Co. 1994) ... 33 Heine v. Papp, 97 A.D.2d 929, 471 N.Y.S.2d 18 (3d Dep't 1983) ... 27 Industrial Packaging Products Co. v. Fort Pitt Packaging International, Inc., 399 Pa. 643, 161 A.2d 19(1960) ... 26 Karls Mariner Inn, Inc. v. Incorporated Village of Northport, 39 Misc. 2d 951, 242 N.Y.S.2d 297 (Sup. Ct. Suffolk Co. 1963) ... 15, 34, 35 Klostermann v. Cuomo, 61 N.Y.2d 525, 475 N.Y.S.2d 247 91984) ... 18, 28 Kursh v. Verderame, 87 A.D.2d 803, 449 N.Y.S.2d 500 (1st Dep't 1982) ... 26 Larco Maintenance Co. v. Culkin, 255 A.D.2d 560, 681 N.Y.S.2d 79 (2d Dep't 1998) ... 15 Matter of Claim of Gruber, 89 N.Y.2d 225, 652 N.Y.S.2d 589 (1996) ... 29 *iii Matter of Town of Brookhaven v. New York State Board of Equalization and Assessment, 88 N.Y.2d 354, 645 N.Y.S.2d 436 (1996) ... 30 Maurillo v. Park Slope U-Haul, 194 A.D.2d 142, 606 N.Y.S.2d 243 (2d Dep't 1993) ... 27 McCain v. Koch, 70 N.Y.2d 109, 517 N.Y.S.2d 918 (1987) ... 15 Munoz v. Wilson, 111 N.Y. 295 (1888) ... 25 Mutual Life Insurance Co. v. Nichols, 144 A.D. 95, 128 N.Y.S. 902 (1st Dep't 1911) ... 26 Natural Resource Defense v. Department of Sanitation, 83 N.Y.2d 215, 608 N.Y.S.2d 957 (1994) ... 20 Nelson v. New York State Civil Ser. Comn, 96 A.D.2d 132, 469 N.Y.S.2d 224 (3d Dep't 1983) ... 31 In Re Orfali, 123 A.D.2d 275, 568 N.Y.S.2d 506 (1st Dep't. 1986) ... 21 People v. Grifenhagen, 209 N.Y. 569 (1913) ... 16, 19 People v. McQuade, 118 Misc. 785, 195 N.Y.S. 408 (Sup. Ct., Kings Co. 1922) ... 16, 19 People v. Prince, 110 Misc. 2d 55, 441 N.Y.S.2d 586 (Sup. Ct. Queens Co. 1981) ... 23 People v. Woodbury, 213 N.Y. 51 (1914) ... 17, 18 Phillips v. Town of Clifton Park Water Authority, 243 A.D.2d 911, 662 N.Y.S.2d 867 (3d Dep't 1997) ... 15 Preston v. Albee, 170 A.D. 89, 105 N.Y.S. 33 (1st Dep't 1907) ... 25 Presutti v. Suss, 254 A.D.2d 785, 678 N.Y.S.2d 187 (4th Dep't 1998) ... 40 *iv Putnam v. Stewart, 97 N.Y. 411 (1884) ... 20

Randisi v. Mira Gardens, Inc., 272 A.D.2d 387, 707 N.Y.S.2d 204 (2d Dep't 2000) ... 15 Tucker v. Toia, 54 A.D.2d 322, 388 N.Y.S.2d 475 (4th Dep't 1976) ... 15 W.L. Development Corp. v. Trifort Realty, Inc., 44 N.Y.2d 489, 406 N.Y.S.2d 437 (1978) ... 23, 24, 26 Westminster Heights Co. v. Delany, 185 N.Y. 539(1906) ... 16 Williams v. Wisner Building Co., 121 Misc. 32, 200 N.Y.S. 802, affd, 208 A.D. 783, 203 N.Y.S. 959 (1st Dep't 1924) ... 24 Wood v. Travis, 231 A.D. 331, 248 N.Y.S.2d 22 (3d Dep't 1931) ... 25 FEDERAL STATUTES Truth in Lending Act and Real Estate Settlement Procedures Act 12 U.S.C. 2601 et seq. ... 4 STATE STATUTES New York Civil Practice Law and Rules ("CPLR") Article 78 ... 13 CPLR CPLR CPLR CPLR 2004 ... 40 3001 ... 13 6301 ... 15 7803(1) ... 16 525(1) ... 17, 20, 21

N.Y. County Law ("County Law") County Law 525 ... 20

County Law Article 12 ... 21 Gen. Obl. Law 5150(1) ... 27 1921(9)(a) ...

*v New York Real Property Actions and Proceedings Law 24 N.Y. Real Prop. Law ("RPL") RPL RPL RPL 275(2)(a) ... 25, 33 290(3) ... 22 316 ... 10, 28 129(a) ... 31 129(b) ... 30

291 ... 17, 19, 20, 21, 22, 28, 29

Statutes Statutes

MISCELLANEOUS Blacks Law Dictionary 727 (6th ed. 1991) ... 25 J. Krasnowiecki, et al. The Kennedy Mortgage Company Bankruptcy Case: New Light Shed on the Position of Mortgage Warehousing Banks, 56 Am. Bankr. L.J. 325 (Fall, 1982) ... 6 Restatement (Second) of Agency l(b)(c), 1958 ... 27

9 Warrens Weed

7.02(1) ... 22 *vi APPENDIX

A. Copy of the Supreme Court, Appellate Division (Second Department) Order dated June 19, 2001. B. Opinion of the New York State Attorney General (Informal) I 97-15. C. Opinion of the New York State Attorney General (Informal) I 96-38. *1 QUESTIONS PRESENTED 1. Did the Court below abuse its discretion in vacating the temporary restraining order? The Court below answered this question in the negative. PetitionersAppellants maintain that the Court below abused its discretion in vacating the temporary restraining order. 2. Should the Court below have granted Petitioners'-Appellants' motion for a preliminary injunction? The Court below answered this question in the negative. PetitionersAppellants maintain that the Court below should have granted the Petitioners'-Appellants' motion for preliminary injunction. 3. Under the New York Real Property Law and related statutes, is the Respondent Suffolk County Clerk required to accept for recording the mortgage documents at issue? The Court below answered this question in the negative, PetitionersAppellants maintain that under applicable New York law, the Respondent Suffolk County Clerk is required to accept for recording the mortgage documents at issue. 4. Was the lower Court's Order, which is being appealed, properly issued? The Court below answered this question in the affirmative. PetitionersAppellants maintain that the lower Court's Order, which is being appealed, was not properly issued. *2 PRELIMINARY STATEMENT This brief is respectfully submitted by petitioners-appellants ESCORT, INC. and Mortgage Electronic Registration Systems, Inc. ("MERS") (collectively "Appellants"). Appellants commenced the underlying action to enjoin respondents Edward P. Romaine, as Clerk of the County of Suffolk, State of New York ("Suffolk County Clerk"), and County of Suffolk, State of New York (collectively "Respondents") from implementing an erroneous interpretation of an informal opinion of the New York Attorney General (the "Informal Opinion," Record on Appeal, pp. 68-71) [FN1] , to the extent the Suffolk County Clerk refuses to record mortgage instruments wherein MERS is denoted, named or listed as the mortgagee, and as nominee for the lender (the "MERS Mortgages"). In addition to such mortgage instruments, MERS is also a party as the mortgagee, and as nominee for the lender, to other instruments such as assignments of mortgages, consolidations, modifications and extensions of mortgages, and releases, satisfactions or discharges of mortgages. These instruments, including MERS Mortgages, shall be referred to collectively as "MERS Instruments." The MERS Mortgages are uniform mortgage or

security instruments approved by the Federal National Mortgage Association ("Fannie Mae") and Federal Home Loan Mortgage Corporation ("Freddie Mac") [R. 58, 129, 204-205, 216], and are used by numerous mortgage lenders in New York State. (R. 55, 126-128). The underlying action has been narrowly drawn to compel basic compliance with New York statutes which direct the Suffolk County Clerk to record mortgage conveyances and to *3 properly index mortgages in the clerk's indices [R. 65-66] - which presumably it would continue to do, had it not adopted an erroneous interpretation of the Informal Opinion. FN1. All future references to the Record on Appeal shall be made as "R. ___". Respondents have adopted an erroneous interpretation of the Informal Opinion (which, itself was based upon an erroneous assumption of fact and conclusion of law), resulting in a refusal to comply with a statutory duty to record the MERS Mortgages. Respondents' actions, if not enjoined, will cause irreparable harm to Appellants, New York consumers - homebuyers and homeowners alike, the secondary mortgage market and title insurers: a. Mortgages that are now "in the pipeline" will not be recorded, causing upcoming mortgage closings to be canceled. The ensuing "ripple effect" on consumers' travel plans, contingency deals on the homes they are selling, increased mortgage rates and the concomitant additional cost to consumers will result in an untenable and unwarranted situation. (R. 125-130,215-220). b. Thousands of MERS Mortgages were accepted for recording in the public records prior to the adoption of the Suffolk County Clerk's erroneous interpretation of the Informal Opinion. (R. 126). The validity of these mortgages will likely be called into question. Lien priority will be affected, rights of creditors in bankruptcies will be severely impacted, and there will be numerous claims on title policies. (R. 125130, 215-220). In addition, as of the commencement of this action, almost one thousand mortgage foreclosure proceedings were pending in New York wherein MERS Mortgages constitute the lien, and the validity of such liens will likely be contested as part of each proceeding. (R. 128). STATEMENT OF FACTS A. MERS and the MERS(R) System In 1993, the Government National Mortgage Association ("Ginnie Mae"), the Mortgage Bankers Association of America ("MBA"), Fannie Mae, Freddie Mac and others within the real estate finance industry created an electronic registration system and clearinghouse for title that is similar to the process used with great success by the Depository Trust Company for the securities industry. MERS was formed to facilitate the transfer of the beneficial interests in mortgage loans *4 by serving as the mortgagee of record in a nominee (that is, agency) capacity for all members of MERS. (R.54-55). MERSCORP, Inc., is the operating company that owns and operates the MERS(R) System. The MERS(R) System is a national electronic registry established to track beneficial ownership interests and servicing rights in mortgage loans. MERS is the mortgagee of record for mortgage lenders registered in the MERS(R) System (the "MERS Members") by serving as the mortgagee of record in the public land records for all mortgage loans registered on the MERS(R) System. As such, MERS is the mortgagee in MERS Mortgages. (R. 55). MERS Members have contractually agreed, under the Rules Governing MERS,

to appoint MERS to act as the mortgagee on all loans they register on the MERS(R) System. (R. 56). All mortgage loans registered on the MERS(R) System must be recorded in the appropriate public land records where the security real property is located. The MERS(R) System allows MERS Members to access the central database. MERS Members can only access information on loans in which they have a legal interest, that is, typically the holder of the promissory note or servicer of the mortgage loan. Once MERS becomes the mortgagee of record, MERS remains the mortgagee of record when beneficial ownership interests or servicing rights are sold from one MERS Member to another, and the transfer is tracked electronically on the MERS(R) System. MERS Members transfer their beneficial ownership interests by endorsement of promissory notes and delivery of such notes to the transferee or agents or custodians for the transferee. At all times during this process, the mortgage remains of record in the public land records. The homeowner is notified by both the selling MERS Member and buying MERS Member under the Truth in Lending Act and Real Estate Settlement Procedures Act (12 U.S.C. 2601 et seg.) of any transfer. *5 Anyone with an interest in the mortgage has access to the updated mortgage servicer by calling a toll free number that appears on every recorded document naming MERS as the mortgagee. In addition, the MERS(R) System identifies each county clerk's office in which MERS Mortgages are recorded. MERS does not, however, maintain or keep copies of any documents which are recorded with each county clerk. (R. 56-57). MERS becomes the mortgagee of record with respect to such mortgage loans, as nominee for such lenders, in one of two ways: (i) the borrower and the lender name MERS as the mortgagee of record at the time the mortgage loan is originated (sometimes referred to by the acronym "MOM", standing for "MERS as Original Mortgagee"), or (ii) the lender causes a mortgage loan which was previously originated or acquired by such lender to be assigned of record to MERS, so that MERS becomes the mortgagee of record in the land records in which the mortgage was recorded. In either case, the security instrument constitutes a MERS Mortgage. (R. 57). Nominees serving as the mortgagee of record in county land records are very common. As of May 2, 2001, the date the Appellants, as Petitioners, filed the instant application for aftemporary restraining order, the MERS(R) System had 240 member lenders [FN2] (R. 55) who, already either act as nominees, or have representatives that act for them as nominees. They have recently elected to use MERS as their common nominee because technology and electronic commerce now permit it. (R. 57). FN2. Today the MERS(R) System has 385 member lenders throughout the United States. Mortgages naming MERS as mortgagee of record in the original security instrument or in an assignment list the name and address of the mortgagor (the borrower) and the mortgagee *6 (MERS) as well as the date and other pertinent information. (R. 57,108, 110). Please see a form of the MERS Mortgage beginning at R. 108. The documents recorded or filed by MERS comply with all requirements for the filing or recording of mortgages. MERS Members include many large and prominent national and international lenders, including: Countrywide Home Loans, Inc., GMAC Mortgage, Chase Manhattan Mortgage Corporation, Bank of New York and First Union Mortgage Corporation, as well as agencies such as Fannie Mae, Freddie Mac and the MBA. (R. 55,126). MERS Members also include many of the largest and most well-known title associations and insurance companies in the industry, including: American Land Title Association, First American Title Insurance Co.,

Stewart Title Guaranty and First Southwestern Title Company of Texas. (R, 55). B. The MERS(R) System Provides Substantial Benefits to Lenders, Title Companies, and Borrowers In the year 2000, there were over $5 trillion in residential mortgage loans outstanding in the United States. Over the life of a mortgage loan, servicing rights of a loan may be sold and resold many times. The MERS(R) System provides tremendous benefits to, and has been lauded by the secondary mortgage market. [FN3] (R. 58-60, 72-101). FN3. See generally J. Krasnowiecki, et al. The Kennedy Mortgage Company Bankruptcy Case: New Light Shed on the Position of Mortgage Warehousing Banks, 56 Am. Bankr. L. J. 325 (Fall, 1982) for a comprehensive discussion of the operation of the modern secondary mortgage market. The use of MERS as the mortgagee of record has been approved by Ginnie Mae, the U.S. Department of Housing and Urban Development, the U.S. Federal Housing Administration, and the U.S. Department of Veterans Administration. These approvals are significant because these *7 governmental agencies constitute the primary regulatory agencies charged with governing and regulating the mortgage lending industry. (R. 58), hi addition, Fannie Mae, Freddie Mac, Federal Home Loan Bank Systems, State of New York Mortgage Agency and the California Housing Finance Agency have also approved of using MERS as the mortgagee of record. (R. 58, 205). MERS has received correspondence from regulatory agencies in the lending industry and title insurance companies relative to the approval of the MERS(R) System. These documents are quoted below in relevant part: Letter from U.S. Department of Housing and Urban Development to MERS, dated November 26, 1997: We have determined that, for our purposes, this request [to have MERS act as nominee for the original mortgagee on FHA-insured loans] represents no substantive change to the current practice of assigning the mortgage to MERS after the initial recording. (R. 58, 72). We recognize, however, that this change will greatly benefit our mutual customers by reducing their up-front costs of loan recordation and are pleased with the efforts that MERS is making in that area. (Emphasis added) (R. 58-72). We are very pleased with the responsiveness MERS has shown to provide the most comprehensive savings to the mortgage industry while giving them the means to enhance their processing by use of electronic technology. (R. 59, 72). Letter from Chicago Title Insurance Company to Freddie Mac, dated December 19, 1997: We will be happy to consider making any policy necessary to support your having the full coverage the purchasers of mortgages *8 made to MERS as the original mortgagee. However, it appears to us that present form now accomplish this. (R. 59, 75). changes which are of the policies as nominee of the our policies in their

Letter from First American Title Insurance Company to Freddie Mac, dated December 16, 1997:

Please be advised that with respect to the existing MERS(R) System, First American is willing to name either or both MERS and the actual owner of the indebtedness secured by the insured mortgage as the named insured in each policy of title insurance even though MERS is the only record mortgagee. The lender closing instructions need only to identify whom we are to insure, (R. 59, 77). First American is a supporter of MERS and wants to do what it can to help the system flourish. (R. 59, 77). Fannie Mae announcement No. 97-08: Fannie Mae has been an active supporter of MERS since the concept of electronic tracking was first discussed in 1993, contributing substantial resources and effort to help the concept come to fruition. We are pleased that the benefits of this system are now available to all lenders. (R. 59, 80). By electronically tracking interests in mortgages. MERS is expected to streamline- and reduce the costs associated with - servicing transfers, lien releases, and quality control processes (Emphasis added). (R. 59,60, 80). Freddie Mac Bulletin Number 98-2, dated March 31, 1998: We are also announcing that we will purchase Mortgages originated with MERS as the original mortgagee of record, (R. 60,91). The use of MERS as the mortgagee of record has also been approved by all major Wall Street rating agencies, consisting of Moody's, Fitch and Standard & Poor's as well as the Federal Home Loan Banks. (R. 60). *9 The MERS(R) System benefits both lenders and consumers. Lenders are benefited because transfers among MERS Members can be reflected instantaneously on the MERS(R) System electronically on the date on which they occur. Consumers are benefited because originating lenders typically pass the costs of assignments onto the borrowers to the extent they know in advance that the loan will be sold immediately subsequent to the closing. Through the use of the MERS(R) System, these costs are eliminated. In May 2001, there were over four million mortgages registered in the MERS(R) System, in the aggregate these cost savings to consumers are substantial. (R. 57). The MERS(R) System further benefits consumers by speeding up the flow of funds, and enabling the consumer to easily and instantly determine which lending institution owns or services his or her mortgage loan by calling a toll free number which is available 24 hours a day - seven days a week. The present cost to register a loan on the MERS(R) System is $3.50. (R. 300). The lender may pass this cost on to the consumer, as borrower, (as disclosed on the HUD-1 Settlement Statement) as the lender's transaction cost to enroll the borrower's mortgage loan in the MERS(R) System. By contrast, if the MERS Mortgage is not used, the lender passes on to the borrower approximately $20.00 or more to record an assignment of a traditional mortgage from the lender to another lender or to MERS, as nominee for the lender, and usually additional document preparation fees to prepare such assignment. (R. 60-62, 127). The MERS(R) System benefits title insurance companies by substantially reducing their risks in insuring title to mortgage liens because the transfer of beneficial ownership of a mortgage loan is reflected in the MERS(R) System instantly at the time it occurs. In addition, the MERS(R) System eliminates the burden on title companies to arrange for the recording of *10 subsequent assignments of mortgage liens where MERS is already the mortgagee. (R. 61, 216- 217).

C. The Informal Opinion and Respondents' Incorrect Interpretation of that Opinion On April 5, 2001, the Attorney General of the State of New York (Office of the Solicitor General) issued the Informal Opinion which concluded, in response to an inquiry from the Nassau County Attorney, that: Real Property Law 316 prohibits the Nassau County Clerk from naming MERS as mortgagee for the purposes of recording a mortgage where MERS holds no legal interest in that mortgage.... [and that] [t]he Clerk must record the mortgage under the name of the actual mortgagee. (R. 68). The Attorney General did not afford Appellants an opportunity to be heard prior to, or after the rendering of the Informal Opinion. Indeed, the Attorney General refused to review the form of an actual MERS Mortgage or consider any other information which Appellants offered to provide. (R. 135-136, 144-145). The Attorney General did not direct or advise the Nassau County Clerk (or any other county clerk) to reject MERS Mortgages. Instead, as emphasized above, the Informal Opinion directed the Nassau County Clerk to record the MERS Mortgages. (R. 68). Respondents, however, have misconstrued or wrongly extended the Informal Opinion, and, in doing so, have refused to record the MERS Mortgages and other MERS Instruments. The Informal Opinion itself relied upon the erroneous assumption that MERS "holds no legal interest" in mortgages in which it is named. As demonstrated below and in the MERS Mortgages, MERS does hold a legal interest in the MERS Mortgages. *11 Apart from relying upon an erroneous "informal opinion" which was rendered without affording Appellants an opportunity to be heard, Respondents have caused irreparable harm by refusing to record valid mortgage loan conveyances: mortgage loan closings in Suffolk County have been disrupted, causing consumers to cancel contract closings and reschedule mortgage loan transactions, creating unreliable loan closing in Suffolk County, causing MERS Members to abandon the MERS(R) System in New York and causing MERS Members to purchase new non-MERS loan documents and software. (R. 126-129). Notably, the Informal Opinion itself describes a two step process, by which a county clerk must first accept and record MERS Mortgages, and then index them against the lender. (R. 68-71). D. Procedural History On April 5, 2001, the New York Attorney General issued the Informal Opinion. (R. 68-71). Respondents have misconstrued the Informal Opinion, wrongly determining that it directs the State's county clerks to reject MERS Mortgages for recording. On April 17, 2001, Respondent Suffolk County Clerk issued a memorandum to "All Title Companies" directing that "our department will no longer accept instruments where MERS is listed as the mortgagee or nominee of record unless MERS, in fact, is the actual mortgagee." (R. 102). One week later, on April 24, 2001, Respondent Suffolk County Clerk issued a memorandum to "All Title/Insurance/Abstract Companies" which, again advised that "our department will no longer accept instruments where MERS is listed as the mortgagee or nominee of record, unless MERS, in fact, is the actual mortgagee, 1' and also indicated that Respondent's ban on MERS Mortgages would "become effective Tuesday, May 1, 2001," (R. 103). *12 In response to these directives from the Suffolk County Clerk, Appellants' counsel wrote to Robert Cimino, Esq., Suffolk County Attorney, by letter dated April 26, 2001, wherein, among other things, counsel requested additional time on behalf of Appellants prior to the

May 1, 2001 effective date of the Suffolk County Clerk, to provide further information to both the Suffolk County Attorney, Suffolk County Clerk, and the New York State Attorney General with respect to why MERS Mortgages should be accepted for recording. (R. 104- 105, 135), Counsel's letter requested that Respondent Suffolk County Clerk "withdraw its directive, dated April 24, 2001, so that we may work with the Attorney General and provide an appropriate response to the opinion that has been rendered." (R, 105). In addition, because the Suffolk County Clerk indicated that the Informal Opinion was the basis for ceasing to accept MERS Mortgages for recording, Appellants' counsel also contacted the New York State Attorney General, Assistant Solicitor General, James Cole by letter dated April 26, 2001 to request additional time to review the issues presented by the Informal Opinion. (R. 135,144-145). On April 27, 2001, Appellants' counsel followed up with a telephone conversation with both James Cole, Esq., at the office of the Attorney General and with Robert Cimino, Esq., the Suffolk County Attorney. Notwithstanding Appellants' various efforts to obtain more time and to present further information about MERS Mortgages to these two attorneys, they both refused to accommodate the requests contained in counsel's letters, notably, so as to provide further time to accept MERS Mortgages in Suffolk County, while their issues with MERS Mortgages could be answered without judicial intervention. (R. 135-136). In light of the May 1, 2001 effective date of Respondents' directive and Respondents' refusal to delay such effective date to review the issues with Appellants, Appellants had no *13 choice other than to commence this proceeding, and did so on May 2, 2001 in Supreme Court, Suffolk County, by filing a Petition, and by obtaining an order to show cause, pursuant to Article 78 and CPLR 3001 for an order (i) determining and declaring that the MERS Mortgages submitted for recording in the Suffolk County Clerk's Offices are lawful in all respects and shall be accepted for recording by Respondents, and (ii) permanently enjoining Respondents from failing to perform their statutory duties to record the MERS Mortgages. (R. 50-67). On May 2, 2001, Supreme Court, Special Term (Bivona, J.), granted an order to show cause, with temporary restraining order, which required Respondents to accept the MERS Mortgages presented for recording in Suffolk County, after hearing argument on Appellants' application for the TRO from the parties' respective counsel. (R. 50-51,146-202). The case was thereafter assigned to the Hon. James M. Catterson, who on May 15, 2001, vacated the TRO and denied Petitioners' motion for a preliminary injunction on the erroneous conclusion that Appellants had no legal right to have the MERS Mortgages recorded in the Suffolk County Clerk's Office. (R. 6-49). On May 22, 2001, Respondents filed Justice Catterson's bench ruling, which was embodied in the transcript of the oral argument held on May 15, 2001 [R. 48], and served it on Appellants on May 23, 2001. Appellants filed a notice of appeal from Justice Catterson's "So Ordered" bench ruling in the Suffolk County Clerk's Office on May 25, 2001, and served a notice of appeal on Respondents' counsel and the New York State Attorney General on May 25, 2001. (R. 4-5). On May 31, 2001, Justice Sondra Miller, Associate Justice of this Court, granted a Temporary Restraining Order to require Respondents to accept mortgages and other instruments where MERS is named as the mortgagee, as nominee for the lender, collectively the MERS *14 Instruments, for recording. Justice Miller further ordered Respondents to show cause why a preliminary injunction should not be issued pursuant to CPLR 5518 and 6301 enjoining Respondents from refusing to accept

MERS Instruments and to compel performance of Respondent Suffolk County Clerk's statutory duties to record conveyances of real property interests. On June 19, 2001, this Court exercised jurisdiction over the appeal and issued an Order to require Respondents to accept such MERS Instruments for recording through the earlier of this Court's disposition of the instant appeal or the lower Court's disposition of the case on the merits. By the June 19, 2001 Order, this Court also denied Respondents' Cross-Motion to dismiss the instant appeal "as academic." To date, the lower Court has not disposed of the case and, therefore, this Court's Order requiring Respondents to accept MERS Instruments for recording remains in full force and effect. A copy of this Court's Order dated June 19, 2001 is attached hereto as Appendix A. Respondent Suffolk County Clerk's abrupt change in position and rush to judgment over the MERS Mortgages and refusal to review the issues with counsel should be viewed by this Court as inappropriate and unreasonable: Until April 27,2001, Respondent Suffolk County Clerk had accepted and recorded over 16,000 MERS Instruments, including 3,259 "MOM" mortgages naming MERS, as nominee, as original mortgagee of record, and 13,139 assignments of mortgages naming MERS, as nominee, as assignee of record under the mortgage. (R. 66-126). Indeed, counsel for the New York City Register concurred that the Informal Opinion only referred to indexing, not recording of the MERS Mortgages. (R. 138). Moreover, Appellants' counsel asked Respondents' counsel at the oral argument before Justice Catterson on May 15,2001 "to show where [the Informal Opinion says] do not record the *15 mortgage with MERS as the mortgagee." (R, 10- 11). While Respondents' counsel did not answer this question at that time, in the presence of Justice Sondra Miller on May 31, 2001, Respondents' counsel, Richard C. Cahn, conceded that the Informal Opinion does not direct county clerks not to record MERS Mortgages. ARGUMENT A. Standard for Injunctive Relief Preliminary injunctive relief is properly issued when necessary to preserve the status quo pending further proceedings on the underlying proceeding. CPLR 6301. Preliminary injunctive relief should be granted where the movant demonstrates a likelihood of success on the merits, irreparable injury in the absence of injunctive relief, and a favorable balancing of the equities. Aetna Insurance Co. v. Capasso, 75 N.Y.2d 860, 552 N.Y.S.2d 918 (1990); Randisi v. Mira Gardens, Inc., 272 A.D.2d 387, 707 N.Y.S.2d 204 (2d Dep't 2000); Larco Maintenance Co, v. Culkin, 255 A.D.2d 560,681 N.Y.S.2d 79 (2d Dep't 1998). Likelihood of success on the merits is properly demonstrated where "the moving party makes a prima facie showing of his right to relief; the actual proving of his case should be left to a full hearing on the merits." Tucker v. Tola, 54 A.D.2d 322, 326, 388 N.Y.S.2d. 475, 478 (4th Dep't 1976). See also Gambar Enterprises, Inc. v. Kelly Services, Inc., 69 A.D.2d 297, 418 N.Y.S.2d 818 (4th Dep't 1979). These standards apply equally to municipal defendants. See Karl's Mariner Inn, Inc. v. Incorporated Village ofNorthport, 39 Misc.2d 951, 242 N,Y.S.2d 297 (Sup. Ct. Suffolk County 1963); PhOlips v. Town of Clifton Park Water Authority, 243 A.D.2d 911, 662 N.Y.S.2d 867 (3d Dep't 1997); and McCain v. Koch, 70 N.Y.2d 109, 517 N.Y.S.2d 918, 920 (1987) ("There is no *16 question that in a proper case Supreme Court has power as a court of equity to grant a temporary injunction which mandates specific conduct by municipal agencies.")

B. Injunctiye Relief is Warranted Where a County Clerk Fails to Perform Its Statutory Duty Injunctive relief is especially apt where, as here, a party fails to perform statutory duties mandated by law, albeit the result of an erroneous interpretation of the Informal Opinion. CPLR 7803(1) See also Albany Medical Center Hospital v. Bresland, 47 Misc.2d 208, 262 N.Y.S.2d 285 (Sup. Ct. Albany County 1965) (Article 78 proceeding is appropriate vehicle to compel performance of a duty specifically compelled by law). Indeed, New York courts have compelled a county clerk to accept and record instruments in the county clerk's office. See, e.g., Westminster Heights Co. v. Delany, 185 N.Y. 539 (1906) (affirming order of the Second Department granting "motion for a preemptory writ of mandamus to compel the defendant to accept and record certain deeds of conveyance."); People v. Grifenhagen, 209 N.Y. 569 (1913) (affirming the "granting of a motion for a preemptory writ of mandamus to compel [the register of the County of New York] to receive and record a certain mortgage which he had refused to record on the ground that the realtor had not complied with the provisions of Section 256 of the Tax Law in regard to indeterminate mortgages."); People v. McQuade, 118 Misc. 785, 195 N.Y.S. 408 (Sup, Ct., Kings County 1922) (motion for mandamus to compel the register to record a deed granted). The New York State Court of Appeals has recognized proceeding by mandamus to compel a county clerk to record mortgage instruments: Had Mr. Franey, the county clerk, refused to record the mortgage in question, the mortgagor might then have proceeded by mandamus to compel the recording of the *17 same and the question of the validity of the tax claim by Mr. Franey would be determined in such proceeding, and, in that proceeding, the attorney-general would, if called upon, be required to defend the county clerk, and such has been the practice. People v. Woodbury, 213 N.Y. 51, 59-60 (1914). Thus, the lower Court erred in denying Appellants' motion for a preliminary injunction compelling the Suffolk County Clerk to record the MERS Mortgages. Moreover, this Court has already and recently reviewed the lower Court's action with disfavor. On June 19, 2001, this Court granted Appellants' motion for a preliminary injunction pending the instant appeal. C. Appellants jgavejJlstablished a Reasonable Probability of Success on the Merits 1. Mandamus to Compel the Suffolk County Clerk's Compliance with a Purely Ministerial Act Enjoined by New York State Law Is Warranted. a. Principles Governing a Mandamus to Compel. The Suffolk County Clerk has issued directives and notices that the MERS Mortgages will no longer be accepted for recording in Suffolk County. Aside from adopting an erroneous interpretation of the Informal Opinion, the Suffolk County Clerk's refusal to record MERS Mortgages violates Section 291 of the New York Real Property Law ("RPL"), and Section 525(1) of the New York County Law. These statutory provisions confer no discretion upon the Suffolk County Clerk when recording mortgages. Instead, the recording role of the County Clerk is purely ministerial: the statutes at issue provide that duly acknowledged conveyances "shall" be recorded by the County Clerk upon presentment of the document, and payment of the appropriate recording fee.

*18 The New York State Court of Appeals, in Klostermann v. Cuomo, 61 N,Y.2d 525, 539-540,475 N.Y.S.2d 247, 254-255 (1984), summarized New York law relating to a mandamus to compel a government official to act pursuant to state law as follows: Traditionally, "mandamus lies to compel the performance of a purely ministerial act where there is clear legal right to the relief sought." The long-established law is that "while a mandamus is an appropriate remedy to enforce the performance of a ministerial duty, it is well settled that it will not be awarded to compel an act in respect to which the officer may exercise judgment or discretion,". What must be distinguished, however, are those acts the exercise of which is discretionary from those acts which are mandatory but are executed through means that are discretionary. For example, the decision to prosecute a suit is a matter left to the public officer's judgment and, therefore cannot be compelled. In contrast, when a town council is directed by statute to designate up to four newspapers having the largest circulation for the purpose of receiving city advertising, the court can compel the council to___execute its statutory! duty, but it may not direct the particular papers to be named. What has been somewhat lost from view is this function of mandamus to compel acts that officials are duty-bound to perform, regardless of whether they may exercise their discretion in doing so. The general principle is that mandamus will lie against an administrative officer only to compel him to perform a legal duty, and not to direct how he shall perform that duty. (Emphasis added). (Quotations and citations omitted). Mandamus has been granted compelling county clerks to accept and record mortgages, deeds, and other instruments. Indeed, the New York courts have compelled county clerks to record instruments even where there is a dispute concerning the tax owed, or the content of the instrument to be recorded. See, e.g., People v. Woodbury, 213 N.Y. 51, 59-60 (1914) ("Had... the county clerk refused to record the mortgage in question, the mortgagor might then have *19 proceeded by mandamus to compel the recording of the same and the question of the validity of the tax claim by [the county clerk] would be determined in such proceeding."); People v. Grifenhagen, 209 N.Y. 569 (1913) (affirming a writ of mandamus to compel a county to receive and record a mortgage which the county had refused to record on the grounds that the provisions of Section 256 of the Tax Law were not followed). Jn People v. McQuade, 118 Misc. 785, 195 N.Y.S. 408 (Sup. Ct. Kings County 1922), the Register refused to record a deed to real property contending that the acknowledgment before a master and chancery in the State of New Jersey did not satisfy the requirements of New York law. The court granted the application for a preemptory mandamus compelling the county to record the deed and stated: And this certificate, right or wrong, must be accepted bv our recording officers, since they are given no power to determine the correctness of its conclusion, assuming what is at least doubtful, that recording officers ordinarily possess the qualifications to such a task. (Emphasis added). The simple fact is, the Suffolk County Clerk lacks authority to question the validity of the documents it records, beyond the statutorily prescribed, and narrowly drawn prerequisites for recording. b. New York Law Compels the Suffolk County Clerk to Record All Mortgages

Presented to Him. By statute, the Suffolk County Clerk must accept MERS Mortgages presented to him for recording. RPL 291 states: A conveyance of real property within New York State... may be recorded in the office of the clerk of the county where such real property is situated, and such county clerk shall, upon the request of any party, on tender of the lawful *20 fees therefor, record the same in his said office. (Emphasis added). In addition, Section 525(1) of New York County Law states that a county clerk "shall perform the duties prescribed by law as register and he shall perform such additional and related duties as need be prescribed by law and directed by the board of supervisors." (Emphasis added). It is beyond dispute that RPL 291 is a mandatory direction by the Legislature to the Suffolk County Clerk that it must record mortgage instruments presented to it for recording. As this Court clearly stated: Sections 291 and 316 [of the RPL] impose upon the county clerk the non-delegable duty of recording and indexing instruments affecting real property.... Baccari v. DeSanti, 70 A.D.2d 198, 203, 431 N.Y.S.2d 829, 833 (2d Dep't 1979). See also Putnam v. Stewart, 97 N.Y. 411, 416 (1884) (county clerk has duty to record conveyance instruments in the words as presented to him). (Emphasis added). The use of the word "shall" in RPL 291 and County Law 525(whi)h is contained in Article 12 of the County Law) establishes that the Suffolk County Clerk's duty to record the MERS Mortgages is mandatory, hi Natural Resource Defense v. Department of Sanitation, 83 N.Y.2d 215, 220-221, 608 N.Y.S.2d 957, 959 (1994), the Court of Appeals discussed the import of the word "shall" when it is used in a statute, holding: The use of the verb "shall" throughout the pertinent provisions illustrates the mandatory nature of the duties contained therein. The clear import of the words used is one of duty, not discretion.... *21 Compare In Re Oracle, 123 A,D.2d 275, 568 N.Y.S.2d 506 (1st Dept. 1986) which notes that New York statutory law at issue provided that the city clerk "may" take action to correct documents, to the mandatory verb "shall" contained in the statutes at issue in this proceeding. In 1997, the New York State Attorney General issued an informal opinion, addressing the mandatory nature of the county clerks' recording obligations: Similarly, other provisions of the RPL direct the Clerk to file instruments offered for recording when accompanied by the proper fee. See, e.g. [RPL] 291. OP. Attorney General (Inf) 197-15 (a copy of which is attached hereto as Appendix B). Indeed, the Attorney General explained that this obligation is not subject to any discretion: Article 12 of the County Law does not authorize the county clerk to evaluate documents presented for filing to determine their validity. In a prior opinion, we concluded that the County Clerk's duty under the RPL is to accept a deed for filing if it is submitted injrecordable form and that the clerk is not authorized or required to ascertain the accuracy

or veracity oL a deed. (Citing OP. AG (Inf) 196-38, which pertains to RPL 291)) (Emphasis added). Id. (A copy of Op. AG (Inf) 196-38, advising that the clerk may not question the accuracy of a deed presented for filing, is annexed hereto as Appendix C). See also 9 Warren's Weed New York Real Property (4th Ed.), 7.02(1): Upon the request of any party, the County Clerk or registrar must record the conveyance of an interest in real property when the conveyance is presented with lawful fees, duly acknowledged, and in compliance with all applicable legal requirements. (Emphasis added). It is settled beyond cavil that a county clerk "shall perform the duties prescribed by law as register and he shall perform such additional and related duties as need be prescribed by law and directed by the board of supervisors." N.Y. County Law 525(1). (Emphasis added), In *22 short, there is no "reasonable doubt or controversy" that the Suffolk County Clerk must comply with New York State law. Ass'n of Surrogate and Supreme Court Reporters within the City of New York v. Bartlett, 40 N.Y.2d 571, 574, 388 N.Y.S.2d 882, 884 (1976). Appellants have established a clear legal right to mandamus relief pending appeal. c. MERS Mortgages Are "Conveyances" within the Meaning of RPL 291.

Pursuant to RPL 291, "a conveyance of real property" must be recorded by the County Clerk. The term "conveyance" is defined in RPL 290(3) as follows: The term "conveyance" includes every instrument by which an estate or interest in real property is created, transferred, mortgaged or assigned... (Emphasis added). There can be no dispute that mortgages and assignment of mortgages are "conveyances of real property" within the meaning of RPL 291(3). "A mortgage is a conveyance within the recording statute and is entitled to be recorded." 9 Warren's Weed 7.02(1). Moreover, the Court of Appeals, in Gibson v. Thomas, 180 N.Y. 483, 488 (1905), has held: Mortgages and assignments of mortgages are conveyances within the intendment of [the Recording Act]. That is clear from its language and is settled by authority. (Citation omitted). See also Finn v. Wells, 135 Misc. 53, 237 N.Y.S. 580 (Sup. Ct. Tioga County 1929) ("The assignment of the mortgage to plaintiffs was a conveyance within the meaning of Sections 290 and 291 of the Real Property Law.) d. MERS Mortgages are "Mortgages" as Defined by New York Law. Pursuant to New York law, a "mortgage" must contain these elements: *23 (i) an agreement to convey an interest in property; and (ii) an intent that the interest in property act as security for the payment of money or the doing of some prescribed act. W.L. Development Corp. v. Trifort Realty, Inc., 44 N.Y.2d 489, 406 N.Y.S.2d 437, 442 (1978). See also People v. Prince, 110 Misc.2d 55, 441 N.Y.S.2d 586 (Sup. Ct. Queens County 1981). The MERS Mortgages are uniform mortgage or security instruments

approved by Fannie Mae and Freddie Mac. The MERS Mortgages are used by numerous mortgage lenders in New York State. The fact that the MERS Mortgages create an interest in real property is clearly demonstrated in the MERS Mortgages: I [Borrower] mortgage, grant and convey the Property to MERS (solely as nominee for Lender and Lender's successors in interest) and its successors in interest subject to the terms of this Security Agreement. I [Borrower] understand and agree that MERS holds only legal title to the rights granted by me in this Security Instrument, but, if necessary to comply with law or custom, MERS (as nominee for Lender and Lender's successors and assigns) has the right: (A) to exercise any or all of those rights, including, but not limited to, the right to foreclose and sell the Property; and (B) to take any action required of Lender including, but not limited to, releasing and canceling this Security Instrument. I [Borrower] give MERS (solely as nominee for Lender and Lender's successors in interest) rights in the Property described in (A) through (G) below: *24 (R. 110). The critical significance of this conveyance is that the Borrower has, as part of the security, first designated MERS as the mortgagee to the mortgage contract, and second, conveyed specific rights and powers to MERS to act with respect to the security interest. Although the MERS Mortgages appear different than the traditional mortgage in which only the borrower and the lender have been identified, in New York, a mortgage is a contract, which the parties may adapt to meet the needs of the particular transaction. Williams v. Wisner Building Co., 121 Misc. 32, 200 N.Y.S. 802, aff'd, 208 A.D. 783, 203 N.Y.S. 959 (1st Dep't 1924). See also W. L. Dev. Corp., 44 N.Y.2d 489, 406 N.Y.S.2d at 442 ("A mortgage [is] an agreement.... [and] requires no specific statutory authorization to be valid...."). Moreover, New York law does not prevent a mortgagor from pledging his property to more than one party in the security instrument: "Mortgagee" means (i) the current holder of the mortgage of record or the current holder of the mortgage, or (ii) any person to whom payments are required to be made, or (iii) then: personal representatives, agents, successors, or assigns. (Emphasis added.) New York Real Property Actions and Proceedings Law ("RPAPL") 1921(9)(a). Whether MERS is identified as the "mortgagee" or the "nominee" (that is, the "agent") for the lender in a mortgage instrument, MERS fits squarely within the RPAPL 1921(9)(a) definition of "mortgagee" (a person with a legal interest in the security instrument), because the mortgagor has named MERS as the "holder of the mortgage of record," or in the role of "nominee" or "agent" for the lender. It is well settled in New York that where a mortgage is signed by the mortgagor, delivered to and accepted by the mortgagee, or its agent, the mortgage constitutes a valid *25 contract and security or lien. Munoz v. Wilson, 111 N.Y. 295 (1888); Wood v. Travis, 231 A.D. 331, 248 N.Y.S.2d 22 (3d Dep't 1931). The recording of a mortgage is presumptive evidence of delivery by the mortgagor and acceptance by the mortgagee. Preston v. Albee, 170 A.D. 89, 105 N.Y.S. 33 (1st Dep't 1907).

Indeed, MERS' status as a "nominee" is a common occurrence in New York law. Individuals frequently confer rights to a "nominee," "agent," "fiduciary," or "trustee" to enable that individual to act on their behalf. A "nominee" is defined as one designated to act for another in his or her place or one designated to act for another as his representative in a rather limited sense. Black's Law Dictionary 727 (6th ed. 1991). Nominees are often used by institutional investors in securities registration, which allow the investor to avoid onerous requirements of establishing the right of registration by a fiduciary. Id. In fact, RPL 275(2)(a) expressly recognizes the commercial practice of lenders selling mortgages in the secondary market, as well as the practice of designating "nominees" as representatives in mortgage loan transactions. The validity of nominees in real property transactions has been routinely upheld in New York. For example, in In Re Cushman Bakery, 526 F.2d 23, 30 (1st Cir.) (citing New York law), cert, denied, 425 U.S. 937 (1976), the court noted: ... it is clear that the recording of the real estate mortgages and financing statements was entirely proper despite the fact that Bakers, as Seaboard's nominee, rather than Seaboard, as the principal creditor, was named as the mortgagee and secured party. The use of a nominee in real estate transactions and as mortgagee in a recorded mortgage has long been sanctioned as a legitimate practice. (Citations omitted), (emphasis added). Indeed, the use of a nominee or agent as a representative of the mortgagor or the mortgagee has long been upheld in New York. See, e.g., Amherst Factors, Inc. v. Kochenburger, *26 4 N.Y.2d 203, 173 N.Y.S.2d 570, 573 (1958); Mutual Life Ins. Co. v. Nichols, 144 A.D. 95, 128 N.Y.S. 902 (1st Dep't 1911); In Re Fried Furniture Corp., 293 F.Supp. 92 (E.D.N.Y. 1968), aff'd, 407 F.2d 360 (2d Cir. 1969). The use of a nominee is also recognized under the Uniform Commercial Code. See, e.g., Industrial Packaging Products Co. v. Fort Pitt Packaging International, Inc., 399 Pa. 643, 161 A.2d 19, 21 (1960). In the MERS Mortgage, the lender discloses that MERS is acting as its mortgagee and as mortgagee for its successors and assigns. While this disclosure is not necessary to establish the validity of the mortgage, it is done openly to facilitate transfers of interests in the secondary mortgage market. Even without such disclosure New York courts have enforced real estate contracts with nominees. For example, a judgment of specific performance was granted to a purchaser who entered into a contract for the sale of real estate with an individual who held himself out as having authority to make the sale even though the property was owned by a corporation. The court held that the corporation, as undisclosed principal, was bound by the individual shareholder's actions and the consent of other shareholders. Kursh v. Verderame, 87 A.D.2d 803, 449 N.Y.S.2d 500 (1st Dep't 1982). See also Bhutta Realty Corporation v. Sangetti, 165 A.D.2d 852, 560 N.Y.S.2d 315 (2d Dep't 1990). Likewise, it is a fundamental principle that the courts, much less county clerks, should not interfere with the contractual rights set forth in a mortgage agreement: To treat this mortgage as a mechanic's lien, as the Appellate Division did, would constitute an impairment of the obligations of the contract that the parties chose to make. Absent clear statutory authorization to do so, the court should not interfere with such rights. W. L. Dev. Corp., 406 N.Y.S.2d at 442.

*27 MERS' relationship with its member lenders is that of agent and principal. This is a fiduciary relationship, which results from the manifestation of consent of one person to allow another to act on his behalf and subject to his control, and consent by the other to so act. The principal is the one for whom action is to be taken, and the agent is the one who acts. Restatement (Second) of Agency l(b)(c), 1958. See also Maurillo v. Park Slope U-Haul, 194 A.D.2d, 142, 146, 606 N.Y.S.2d 243 (2d Dep't 1993); and Cabrera v. Jakabovitz, 24 F.3d 372 (2d Cir. 1994), cert, denied, 513 US 876 (1994). An agency relationship may be established by conduct, oral agreement or a written instrument. Heine v. Papp, 97 A.D.2d 929, 471 N.Y.S.2d 18 (3d Dep't 1983). An agent may be appointed to do the same acts and to achieve the same legal consequences as if the principal had himself personally acted, except as to acts which by their nature, by public policy, or by contract require personal performance or acts which are illegal. Central Trust Co. v. Sheahen, 66 A.D.2d 1015,411 N.Y.S.2d 741, 743 (4th Dep't 1978). An agreement entered into by an agent pursuant to authority granted by the agency agreement or by instruction of the parties is valid and enforceable. 99 Commercial Street Inc. v. Goldberg, 811 F.Supp. 900, 906 (S.D.N.Y. 1993). One form of an agency agreement, a power of attorney, may take any form "desired by the parties concerned" Gen. Obi. Law 51501(1). Indeed, the public policy of New York requires that there be liberal use and judicial recognition of the efficacy of powers of attorney. Arens v. Shainswitt, 37 A.D.2d 274, 324 N.Y.S.2d 321 (1st Dep't 1971), aff'd, 29 N.Y.2d 663, 324 N.Y.S.2d 954. Powers of attorney are governed by general principles of agency. See, e.g., Cymbol v. Cymbol, 122 A.D.2d 771, 505 N.Y.S.2d 657 (2d Dep't 1986). MERS is appointed "nominee" by the lender, as written agreement. Pursuant to the MERS-Lender mortgagee and appointed as *28 nominee for the specific rights and duties to act with respect mortgaged property. (R. 56-57), a MERS Member, in a Agreement, MERS is the lender and is given to the mortgage and

D. In Suffolk County, the MERS Mortgages Have Been Enforced in Foreclosure Actions As of April 27, 2001, there were 976 foreclosure proceedings pending in New York in the name of MERS, and MERS had proceeded to judgment on 185 of these cases. None of such proceedings had been dismissed. (R. 128). Of necessity, each of the courts considering these matters has passed on the issue of MERS' legal interest in the mortgage documents at issue, and perforce, concluded that MERS had the lawful right to foreclose each such MERS Mortgage and extinguish the property owners' equity right of redemption. E. The Suffolk County Clerk Misconstrued the Informal Opinion The Suffolk County Clerk read the Informal Opinion as prohibiting it from recording the MERS Mortgages. However, a plain reading of the Informal Opinion warrants the conclusion that it was advising as to the indexing (RPL 316), not the recording (RPL 291) of the MERS Mortgages. This construction is consistent with New York law. Klosterman, 61 N.Y,2d at 539-540,475 N.Y.S.2d at 254-255. In the Informal Opinion, the Assistant Solicitor General advises (rather than "determines," or "rules") that indexing MERS as the "mortgagee" upon recording the MERS Mortgages, violates the terms of RPL 316(the)statute governing indexing of mortgages). In fact, the Assistant Solicitor General reiterates the fundamental rule regarding the clerk's obligation to record the MERS Mortgages:

Under New York Real Property Law, a County Clerk 'shall' record a 'conveyance of real property' upon the *29 'request of 'any party,' so long as that conveyance has been 'duly acknowledged by the person executing the same,' or approved and certified as required. N.Y. Real Prop. Law 291(McK) nney's 1989 & Supp. 2000). Each of these recording elements, under RPL 291 has been met: the MERS Mortgages are conveyances of real property, presented for recording with a duly executed signature of the borrower, and tender of the requisite recording fee. Nowhere in the Informal Opinion does the Assistant Solicitor General instruct the Suffolk County Clerk to refuse to record the MERS Mortgages. Indeed, Appellants' counsel asked Respondents' counsel at the oral argument before Justice Catterson on May 15, 2001 "to show where [the Informal Opinion says] do not record the mortgage with MERS as the mortgagee." (R. 10-11). While Respondents' counsel did not answer this question at that tune, in the presence of Justice Sondra Miller on May 31, 2001, Respondents' counsel Richard C. Cahn' V conceded that the Informal Opinion does not direct county clerks not to record MERS Mortgages. 1. Even if it were Interpreted Correctly, the Informal Opinion was Not Entitled to Deference by the Lower Court Although New York Courts have extended varying degrees of judicial deference to an interpretation of a statute made by an entity charged with implementing it, the Informal Opinion was not ehtitled to tieference by the lower court, because his office is not charged with implementing the Recording Act. In Matter of Claim ofGruber, 89 N,Y.2d 225,231,232, 652 NrY.k-2d 589, 593 1996), the New York State Court of Appeals discussed the standard of review when interpreting a state statute, as follows: By contrast, where "the question is one of pure statutory reading and analysis, dependent only on accurate *30 apprehension of legislative intent, there is little basis to rely on any special competence or expertise of the administrative agency." In such circumstances, the judiciary need not accord any deference to the agency's determination, and is free to ascertain the proper interpretation from the statutory language and legislative intent, (quotations and citations omitted.) The issues presented in this proceeding involve questions of pure statutory interpretation. As such, "there is little basis to rely on any special competence or expertise of the [Attorney General]." Id. See also Matter of Town ofBrookhaven v. New York State Board of Equalization and Assessment, 88 N.Y.2d 354, 360, 645 N.Y.S.2d 436, 440 (1996) ("Since matters of statutory construction and interpretation are particularly within the competence of the judiciary and present pure questions of law, we are not limited to determining whether [the agency's] determination was rational on this appeal.") When ruling on the interpretation of state law, the New York State Court of Appeals has cautioned lower courts: [C]ourts should be extremely hesitant in interpolating their notions of policy in the interstices of legislative provisions. Courts are constitutionally bound to give effect to the expressed will of the Legislature and the plain and obvious meaning of a statute is always preferred to any curious, narrow or hidden sense that nothing but a strained interpretation of legislative intent or discern. Fingeflakes Racing Ass'n v. New York State Racing, 45 N.Y.2d 471, 479480, 410 N.Y.S.2d 2,68,272-273 (1978) (citations omitted).

Moreover, Section 129(b) of Statutes provides, in pertinent part: Courts should not blindly follow the rulings of executive or administrative officers in construing statutes, and a practical construction by such officers should not be followedwherethe statute is unambiguous, (Emphasis in original). *31 See also American Telphone & Telgraph Co, v. State Tax Com 'n, 61 N.Y.2d 393, 474 N.Y.S.2d 434 (1984) ("Finally, an opinion of the Attorney-General is an element to be considered but is not binding on the courts"); Nelson v. New York State Civil Ser, Com'n, 96 AD.2d 132, 469 N.Y.S.2d 224, 225 (3d Dep't 1983) ("Because we interpret Section 131(Sub). 4) of the Civil Service Law in a manner different than the Attorney General, reversal is warranted and the petition must be dismissed."). Moreover, the "long continued course of action by [Suffolk County and other county courts throughout New York State in enforcing MERS Mortgages in foreclosure actions] is entitled to great weight unless manifestly wrong." Section 129(a) of Statutes. F. Irreparable Harm Appellants, consumers, mortgagors, homeowners, title insurers, financial institutions participating in the MERS(R) System, and the secondary mortgage market will suffer irreparable harm if Respondents are allowed to continue to misinterpret the Informal Opinion and refuse to record the MERS Mortgages and MERS Instruments. 1. Harm to the Public. As is explained in the affidavit of Sharon McGann Horstkamp, Esq., Appellants' Vice-President and Corporate Counsel [R. 125-130], the Respondent Suffolk County Clerk's abrupt refusal to record MERS Mortgages would have immediately adversely impacted homebuyers whose MERS Mortgages were "in the pipeline," had Supreme Court Justice John C. Bivona not enjoined the Clerk's actions by granting a temporary restraining order on May 2, 2001 (R. 50-51) and this Court's issuance of an Order on June 19, 2001 requiring the Suffolk County Clerk to *32 accept for recording all MERS Instruments. Those deals would have needed to have been restructured with new financing, different interest rates and different closing dates, Homebuyers relying on the funds they expected to receive from the closing of deals involving the MERS Mortgages may have defaulted on their purchases because of the unavailability of funds; travel plans by out-of-town buyers would have had to have been rearranged, as would arrangements made with moving companies. (R. 126-128), Respondents' harm to the public is further explained in the affidavit of Joanne Moore, Vice-President of GMAC Mortgage [R. 219-220], as follows: The Suffolk County Clerk's prior actions of refusing to accept MERS documents for recording and the threat that the TRO may be vacated has caused some closing agents to refuse to accept our MERS version of the Security Instrument. This refusal usually occurs at the settlement table, thereby, affecting our relationship with our new customers. While the new customer is sitting at the table ready to sign the mortgage documents, the closing agents have called up GMAC Mortgage to inform us that they refuse to close the loans on the MERS documents. The new customer is left sitting at the closing table wondering if the loan is going to close that day. We had more than ten fundings last week [the week of April 30, 2001] where this situation occurred in Suffolk County,

On one occasion, the Title Company would not complete the funding transaction unless GMAC Mortgage allowed an endorsement to the Title Policy that read that the title company will not insure against loss if closed on a MERS mortgage, (R. 220). Title companies that have insured the MERS Mortgages will have to cancel, and rewrite policies, causing further delays in closing dates. (R. 127, 132, 215- 218). Refusal to accept and record the MERS Mortgages will cause an immediate issue among creditors as to priority claims and may result in junior lien creditors attempting to negate the *33 MERS Mortgages, (R. 127). This would defeat one of the primary purposes of the recording statute, which is to establish priority among lienholders. 2. Harm to MERS. Over 3,220 counties across the United States in all fifty states and the District of Columbia have recorded MERS Mortgages. (R. 62). The nationwide MERS(R) System will be put at great risk as a result of the action by the Suffolk County Clerk, because MERS members (including primary mortgage lenders who grant residential mortgages to consumers and sell such mortgages in the secondary mortgage market to buyers, such as Fannie Mae and Freddie Mac), will be unable to market the MERS Mortgages on the secondary market if they cannot be recorded in the Suffolk County Clerk's office. If MERS members cannot sell their mortgages in the secondary market, then the very reason for membership in the MERS(R) System will be abrogated, which will put MERS out of business in New York, and elsewhere. (R. 129). This disruption in the secondary mortgage market and interstate commerce is unwarranted, even for one day, and a court of New York State should not give it approval, without a full and fair hearing on the merits. The New York Legislature and Courts recognize "the commercial practice of lenders trading or selling mortgages on the secondary market," RPL 275(2)(a). See also, Harris v. Crossland Mortgage Corp., 160 Misc.2d 520, 610 N.Y,S.2d 423, 425 (Dist. Ct. Nassau Co. 1994); In Re Stockbridge Funding Corp., 145 B. R. 797 (Bankr. S.D.N.Y. 1992). The MERS(R) System will no longer be able to facilitate this practice. MERS Member lenders will leave the MERS(R) System altogether, rather than using two different document preparation systems depending on whether a particular New York State county does or does not accept MERS Mortgages (R. 129). *34 In Karl's Manner Inn, 39 Misc.2d 951, 242 N.Y.S.2d 297 (Sup. Ct. Suffolk County 1963), the New York State Supreme Court, Suffolk County, granted the application of a restaurant to restrain the enforcement of an ordinance prohibiting egress of motor vehicles. In its application for a preliminary injunction, the restaurant owners asserted that the ordinance made it more difficult for its customers to find their restaurant. Although the ordinance merely required vehicles traveling from a certain direction to travel an additional 1.64 miles, this distance posed particular problems for a "stranger trying to find his way in the night-time around the circuitous route." Although the restaurant owners did not use the buzzwords "irreparable harm" in their application, nor did they explicitly set forth the manner in which they would be irreparably harmed if a preliminary injunction was not issued, the court imposed a preliminary injunction finding: If plaintiff loses customers because of this ordinance, it has been irreparably damaged. Sufficient cause has been shown in the moving papers to indicate a loss, actual or threatened, of some patronage. 242 N.Y.S.2d at 300.

Injunctive relief in this proceeding is even more compelling than in Karl's Mariner Inn. In Karl's Mariner Inn, the Town's ordinance only made it more difficult for customers to patronize the restaurant. In this matter, Appellants face the prospect of the demise of an efficient and reliable nationwide system, established and promoted by approximately 240 members, including Fannie Mae and Freddie Mac. (R. 5455). G. Balance of Equities The public harm and harm to the Appellants and its members to be suffered far exceeds any possible harm or inconvenience to Respondents. Respondents, on the other hand, can point *35 to no real prejudice caused by complying with existing statutes. Moreover, the fact that Respondents have recorded numerous of the MERS Instruments (in excess of 16,000; see R. 62, 126), and have knowingly recorded the MERS Mortgages after Respondents' receipt of the Informal Opinion, further demonstrates that Respondents will not be prejudiced by the imposition of injunctive relief. Supreme Court Justice John C. Bivona recognized this fact when he granted Appellants' application for a Temporary Restraining Order on May 2, 2001 [R. 50-51], after a review of Appellants' papers and after hearing oral argument from Appellants' and Respondents' respective counsel. (R. 146-202). The lower Court (Justice Catterson) vacated the May 2, 2001 temporary restraining order issued by Justice Bivona and denied Appellants' motion for a preliminary injunction on May 15, 2001, almost six (6) weeks after the issuance of the Informal Opinion. The fact that as of May 15, 2001, none of the New York States' other County Clerks (including the New York City Register), other than Respondent Suffolk County Clerk, had elected not to record the MERS Mortgages, also demonstrates that injunctive relief is proper, (see R. 136, showing that as of the commencement of this proceeding, Appellants' counsel had contacted other county clerks, notably Erie County, Genesee County, Monroe County, Albany County and the New York City Register.) In its analysis of the "balancing of equities" prong of the test for a preliminary injunction in the Karl's Mariner case, discussed supra, the court found the following significant: The ordinance to date has not been given maximum enforcement and a further short delay will not jeopardize its future enforcement if it is upheld as to the plaintiff. Thus, the question answers itself. 242N.Y.S.2dat301. *36 Moreover, the refusal by the Suffolk County Clerk to accept the MERS Mortgages results in a troubling inconsistency, not only with respect to other counties throughout the State, but also with respect to those within the Second Department. Finally, unless the injunction issued by this Court on June 19, 2001 pending the instant appeal is effectively continued in the lower Court following disposition of the appeal, the enforceability of the MERS Mortgages already recorded in Suffolk County and elsewhere in New York will be called into question. H. The Lower Court (Catterson, J.) Erred in Vacating the Temporary Restraining Order and Refusing to Grant a Preliminary Injunction Pending a Final Determination of this Case 1. The Lower Court Improperly Interjected its own Notions of Public Policy, As set forth throughout this brief, Appellants have established a

"clear legal right" to the mandamus relief requested. New York law mandates that a county clerk record mortgages that are presented, upon payment of the requisite fee. The lower court (Catterson, J.), rendered a determination inconsistent with New York law, including precedent established by the New York State Court of Appeals. The lower Court also adopted Respondents' erroneous interpretation of the Informal Opinion. In so doing, and as is made abundantly clear in the transcript of the proceedings [R. 7-49], the lower Court erroneously, and improperly "interpolated] [its] notions of public policy in the interstices of legislative provisions." Fingerlakes Racing Ass 'n, 45 N. Y.2d at 479480. Notably, the statutes at issue in this application are unambiguous, and require the Suffolk County Clerk to record the MERS Instruments. Instead of enforcing the clear statutory mandate of the New York State Legislature, the lower Court improperly characterized the MERS(R) *37 System as a "private recording system" intended to supplant the county clerk's functions, and denied the application for a preliminary injunction. (R, 22-25). The MERS(R) System is an information service to its members, and was not designed to, nor does it function as a replacement or "privatization" of the County Clerk's role in the public recording process. The MERS(R) System is no more a threat to the public recording system than is the electronic tracking systems of the automobile industry. As with the MERS Mortgages, the automobile companies track the history of a given vehicle, by way of the vehicle's identification number ("VIN"). For example, if a consumer had a question concerning the service history of a particular Ford car, the consumer could call Ford Motor Company, provide it with the VIN, and obtain the necessary information. By no means does this "tracking system" interfere with, or supplant the requirement of New York law with respect to the registration of a vehicle in the county clerk's office and Department of Motor Vehicles. In the same way, the MERS "MIN" number does not interfere with recordation of mortgages in the county clerk's office. The MERS Mortgages must always be recorded in the local county clerk's office. The MERS(R) System merely confers additional benefits, as discussed more fully above. Since the MERS Mortgages must always be recorded, the lower court's concerns regarding "privatization" were unfounded. Likewise, as is more fully explained in the Affidavit of Daniel McLaughlin, Executive Vice-President of Appellant MERSCORP, Inc., extensive procedures and precautions have been developed to ensure the reliability and uninterrupted operation and security of the MERS(R) System. (R. 207-208). *38 2. The Lower Court Improperly Refused to Consider Affidavits Submitted by Appellants on May 11, 2001. On May 2, 2001, Appellants commenced the instant action and filed and served (by hand delivery) the May 2, 2001 TRO and the motion for a preliminary injunction on Respondents' counsel. Although the May 2, 2001 TRO scheduled the hearing on the preliminary injunction application for May 14, 2001 [R. 51,221], on May 10, 2001, counsel for the parties stipulated to adjourn the return of the hearing to May 15, 2001 to permit Appellants time to receive and review Respondents* opposition papers in accordance with Justice Bivona's Order. (R. 221). On May 11, 2001, Appellants submitted and served (by facsimile) the following short affidavits in further support of their motion for a preliminary injunction: The affidavit of Joanne Moore, consisting of two (2) pages and

describing the harm which Respondents' actions have caused lenders and consumers. (R. 219- 220). The affidavit of James Maher, consisting of four (4) pages and describing the harm which Respondents* actions have caused the title industry. (R. 215- 218). The affidavit of Daniel McLaughlin, consisting of two (2) pages (and a six (6) page attachment) and describing the safety and security measures MERS has implemented to maintain the integrity of the MERS(R) System. (R. 207-208). The affidavit of R. K. Arnold, consisting of four (4) pages and describing establishment of the MERS(R) System. (R. 203-206). These affidavits are very brief, consisting in the aggregate of twelve (12) pages in length. Despite this brevity, they are very pertinent to the underlying action and would have assisted the lower Court in ruling over Appellants' application. Most notably, the lower Court's unfounded concerns over Appellants' purported "privatization" of the public recording system and related concerns over the security of the MERS(R) System is fully addressed in the two page McLaughlin affidavit which the lower Court refused to read or otherwise consider. (R. 44). *39 Appellants' counsel submitted a letter to the lower Court and Respondents' counsel along with the aforementioned affidavits, explaining the difficult circumstances of the late filing and requesting that these affidavits be accepted and considered by the Court, as follows: Late in the afternoon on April 27, 2001 [Friday], we learned from Suffolk County Attorney Robert Cimino that Suffolk County would not provide our client an opportunity or any time to address the County Clerk's directive to stop accepting mortgages where MERS is named the mortgagee as of May 1, 2001, Accordingly, we moved expeditiously over the weekend and on Monday, April 30, 2001 to prepare an order to show cause and application for a temporary restraining order to enjoin the County Clerk from implementing such directive. Given the great and irreparable harm that the County Clerk had already and would impose on our client and consumers in Suffolk County, we simply did not have enough time to prepare and obtain the affidavits we now request that you accept and review. These affidavits are very germane to this proceeding and demonstrate the key role MERS serves in the secondary mortgage market [R. 203-206], how the title insurance industry supports and relies on MERS Mortgages [R., 215-218] and the harm that would befall, for example, GMAC Mortgage Company [R. 219-220] if it cannot use MERS Mortgages. In addition, the affidavit of Daniel McLaughlin [R. 207-208] demonstrates the safety and security measures MERS has implemented to maintain the integrity of the MERS(R) System. (R. 221-222). Despite claims to the contrary [R. 223-224], Respondents' counsel had a sufficient opportunity to consider and respond to Appellants' May 11, 2001 submission prior to the May 15, 2001 return date. Moreover, Respondents' counsel admitted to having reviewed the Appellants' four (4) affidavits at the oral argument before Justice Catterson. (R. 44). As previously stated, these affidavits consist of only twelve (12) pages of text in the aggregate and *40 the Moore and Maher affidavits [R. 215220] merely expand upon points already contained in the affidavit of Sharon McGann Horstkamp, dated April 27, 2001 [R. 125-130] and submitted as part of the original motion. [FN4] The lower Court abused its

discretion in rejecting Appellants' affidavits and should have considered them at the May 15, 2001 return date or adjourned such return date. Appellants' counsel's letter [R. 221-222], as quoted in part above, demonstrates both the reason for the delay in submitting the affidavits and their merit. The lower Court erred in not either accepting them or adjourning the motion. CPLR 2004; Presutti v. Suss, 254 A.D.2d 785,678 N.Y.S.2d 187 (4th Dep't 1998). FN4. The Moore and Maher affidavits demonstrate the harm Respondents' actions are causing Appellants, consumers and the title industry. To the extent, however, that this Court rejects the Moore and Maher affidavits, Appellants will have nonetheless addressed the issue of harm by way of the Horstkamp affidavit as reproduced in the record on Appeal at pages 125-130, The Moore and Maher affidavits expand on points already made in the Horstkamp affidavit. *41 CONCLUSION Based on the foregoing, it is respectfully submitted that the Order of the lower Court vacating the May 2, 2001 temporary restraining order and denying Appellants' motion for a preliminary injunction should be reversed with a direction that an injunction be issued pending the final disposition of this case to require the Respondents to accept for recording and indexing all MERS Instruments in the Office of the Suffolk County Clerk. Appendix not available.