STIPULATION REGARDING PRIORITY BETWEEN HSBC BANK USA, N.A. AND THE UNITED STATES OF AMERICA

ROBERT S. LASNIK, District Judge.

Counterclaimant HSBC Bank USA, N.A. as trustee on behalf of Ace Securities Corp. Home Equity Loan Trust and for the Registered Holders of Ace Securities Corp. Home Equity Loan Trust, Series 2007-WN2, Asset Backed Pass-Through Certificates ("HSBC Bank"), and Counterdefendant the United States of America ("United States"), by arid through their undersigned counsel, hereby stipulate and agree as follows:

On April 11, 2017, HSBC Bank filed a Counterclaim in Case No. 16-2-09757-0-SEA in the Superior Court of Washington in and for the County of King, seeking judicial foreclosure of a Deed of Trust, naming the United States as a Counterdefendant. On June 22, 2017, the United States removed this action to this Court. Dkt. No. 1. On July 21, 2017, the United States filed its Answer and Claim, asserting an interest in the Subject Property pursuant to its Federal tax liens. Dkt. No. 19.

The Subject Property of this action is commonly known as 4003 92nd Avenue Southeast, Mercer Island, WA 98040, and legally described as:

On November 6, 2006, WMC Mortgage Corp. recorded a Deed of Trust in the County Recorder's Office in King County, Washington, serial number 20061106002692, encumbering the Subject Property. The loan secured by the Deed of Trust was obtained by Jessica Saepoff, the borrower, on or about November 2, 2006, from WMC Mortgage Corp., the lender, in the principal amount of $490,000.00. The beneficiary under the Deed of Trust was MERS (solely as nominee for Lender and Lender's successors and assigns) and the successors and assigns of MERS.

On or about April 7, 2011, MERS, as beneficiary of WMC Mortgage Corp., assigned its interest in the Subject Property to HSBC Bank through an Assignment of Deed of Trust. The Assignment of Deed of Trust was recorded with the County Recorder's Office in King County, Washington, on August 5, 2011, serial number 2011805000962.

On January 26, 2011, the United States recorded a Notice of Federal Tax Lien with the County Recorder's Office in King County, Washington against Jessica Saepoff, encumbering the Subject Property with regard to unpaid federal income tax assessments for the taxable year 2008, serial number 201101260005621.

On October 13, 2014, the United States recorded a Notice of Federal Tax Lien with the County Recorder's Office in King County, Washington against Jessica Saepoff, encumbering the Subject Property with regard to unpaid federal income tax assessments for the taxable years 2009 through 2012, serial number 201410130013232.

HSBC Bank and the United States agree and stipulate that HSBC Bank's interest in the Subject Property, by virtue of its Deed of Trust recorded on November 6, 2006, in the County Recorder's Office in King County, Washington, serial number 20061106002692, is senior to, and has priority over, the interests of the United States, by virtue of the Notices of Federal Tax Liens, recorded on January 26, 2011 and October 13, 2014, with serial numbers 20110126000562 and 20141013001323, respectively. Therefore, and by virtue of 26 U.S.C. § 6323(a), HSBC Bank is entitled to priority over the federal tax liens at issue in this lawsuit.

HSBC and the United States agree and stipulate that in the event the Court permits the sale of the Subject Property, after completion of the sheriff's sale, the parties will provide accountings of their interests in the Subject Property, including interest, setting forth the disposition of the Subject Property's sale proceeds pursuant to RCW 6.21.110. HSBC Bank will then submit a proposed order of disbursement providing that the proceeds from that sale should be applied as follows: First, towards any costs of sale. Second, to satisfy the outstanding loan secured by the Deed of Trust held by HSBC Bank, including attorney's fees and costs. Third; to any other party, including the United States, according to the order of priority, as determined by the Court. If the affected parties cannot stipulate to the amounts of their liens, the parties shall file written briefs setting forth their positions and the Court shall determine the disbursement of funds.

HSBC Bank and the United States shall bear their own costs and fees related to this litigation.

ORDER

The foregoing Stipulation between the HSBC Bank USA, N.A., and the United States is APPROVED. SO ORDERED.