226639-• 226639.-,,• 226639•'(Y•secure.wbsvlaw.com/documents/PlaintiffsMotionFor... · 2009. 5. 14. · CV 226639 Case No. 00 CV 226639-• vs. Case No. 00 CV 226639.-,,•

IN THE CIRCUIT COURT OF JACKSON COUNTY, MISI AT KANSAS CITY

JOHN AND JEANNETTE SCHWARTZ, et al.

Plaintiffs. Case No. 00 CV 226639 Case No. 00 CV 226639-•

vs. Case No. 00 CV 226639.-,,• Case No, 00 CV 226639•'(Y•

BANN-COR MORTGAGE, et al.,

Defendants. Division 14 [ c•

PLAINTIFFS' MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT

Plaintiffs, on behalf of the Settlement Class, defined below, hereby move this Court for

the entry of an Order pursuant to Rule 52.08(e) of the Missouri Rules of Civil Procedure which

•reliminarily approves the settlement of the Settlement Class Members' claims against

Defendants Wachovia Equity Servicing, LLC and The Money Store, LLC (the "HomEq

Defendants") and also makes the following related orders, set forth below, which are necessary

prerequisites under Missouri law and the terms of the Settlement Agreement, 2 for Final

Approval of the Settlement.

The settlement, which is explained in detail in the accompanying Suggestions, is without

question fair, adequate and reasonable. Class Counsel believes it to be exceptional. The

settlement provides a benefit of up to $4 million to the Settlement Class as to the 52 loans

purchased or assigned to and/or serviced to the HomEq Defendants.

The Court of Appeals for the Western L,•mct,•':-"•" in State ex tel. Byrd v. t•rtudw•ck,'-" "•':-y.•u "•.'9'v.•d• 369 (Mo. App. W.D. 1997), addressed the process for preliminary approval of class action settlements. This motion and the accompanying suggestions follow the analytical framework espoused therein.

2 The parties' Settlement Agreement is attached hereto as Exhibit 1. A Proposed Order Preliminarily Approving the Class Action Settlement granting this Motion is attached as Exhibit B to the Settlement Agreement.

The $4 million provides the following benefits to the Settlement Class:

1) An Initial Payment to the Settlement Class of $1,188,032 proportionately to each member of the Settlement Class which is comprised of the sum of the following:

a. All alleged illegal fees violating the SMLA;

b. All past interest paid on their loans in alleged violation of the SMLA and Missouri law;

c. Prejudgment interest on all alleged illegal fees calculated from the date of their loans;

d. Prejudgment interest on all interest payments, calculated from the date of each interest payment;

2) An additional payment to each member of the Settlement Class of their pro-rata share of 65% of the Common Fund Recovery, which is the amount that remains after payment of the Initial Payment to each member of the Plaintiff Class, actual attorney and paraprofessional time, litigation costs and expenses and Named Plaintiffs' incentive award;

3) Reimbursement of attorneys' fees in an amount not to exceed $1,8785,000 for actual time expended and 35% of the Common Fund Recovery;

4) Reimbursement of litigation costs and expenses in an amount not to exceed $150,000; and

5) An incentive award to the Named Plaintiffs in the amount of $18,000.

The Settlement Class members' claims against the HomEq Defendants were severed

from the Litigation Class Members' other claims against the other Defendants by Order dated

March 26, 2008. 3 The proposed settlement does not affect the claims of the Named Plaintiffs

and the Litigation Class against Defendants other than Defendants Wachovia Equity Servicing,

LLC and The Money Store, LLC (the "HomEq Defendants")

The Litigation Class is defined as follows:

All individuals who, on or after October 31, 1994, obtained a "Second Mortgage Loan" as defined by § 408.231.1 RSMo, from Bann-Cor Mortgage, secured by real property located in Missouri.

See Order Certifying Plaintiff Class, dated March 25, 2008.

The matters to be addressed in the Proposed Order Preliminarily Approving the Class

Action Settlement, and explained below in the accompanying Suggestions, are as follows:

Preliminary Certification of a Settlement Class;

Preliminary Approval of the Settlement as Presumptively Fair, Adequate and 2.

Reasonable;

3. Approval of the Notice Plan and Notice of Class Action Settlement, including the

instructions to Class Members regarding such things as their opt-out and objection rights,

including related deadlines; and

4. Scheduling the Fairness Hearing and Related Deadlines; and

5. Miscellaneous Matters set forth in the Proposed Order Preliminarily Approving

the Class Action Settlement. 4

Plaintiffs further advise the Court that Defendants Wachovia Equity Servicing, LLC and

The Money Store, LLC consent to the relief requested in this motion and the grounds therefore.

WHEREFORE, for these reasons, and the reasons more fully set forth below in the

accompanying Suggestions, Plaintiffs respectfully request the Court to certify the Settlement

Class and to appoint Plaintiffs John & Jeannette Schwartz as the Representatives of the

Settlement Class and R. Frederick Walters, J. Michael Vaughan, Kip D. Richards, David M.

Skeens and Garrett M. Hodes of Walters, Bender, Strohbehn & Vaughan, P.C. as Class Counsel.

Furtl•er, Plaintiffs, for reasons set forth in the accompanying Suggestions, request the Court grant

4 These "Related Deadlines" and "Miscellaneous Matters" include such things set forth in the Proposed Order Preliminarily Approving the Class Action Settlement (1) placing duties on Class Counsel to file certifications regarding the mailing of the Notice of Class Action Settlement and the number of opt-out or exclusion requests; (2) to set deadlines for Plaintiffs to file their motions and memoranda in support of final approval of the settlement and their application for attomeys' fees; (3) to stay further proceedings in the lawsuit by the Settlement Class related to their claims against the HomEq Defendants, pending approval of the settlement; (4) directing that the non- Settlement Class Members' claims against the Defendants other than the HomEq Defendants are not suspended or stayed; and (5) confirming that the settlement is not an admission of liability or wrongdoing by the HomEq Defendants. See Exhibit B, at ¶¶ 11, 13, 17, 22, 23, 25.

preliminary approval of the settlement of this class action as presumptively fair, adequate and

reasonable, and enter its Order Preliminarily Approving the Class Action Settlement in the form

attached as Exhibit B to the Settlement Agreement.

Dated: May 11, 2009 Respectfully submitted,

WALTERS BENDER STROHBEHN & VAUGHAN P.C. •

BYR.,I•c•::" Walters-Mo. Bar 25069

J. lyIij/hael Vaughan Mo. Bar #24989 KilO. Richards Mo. Bar # 39743 David M. Skeens Mo. Bar #35728 Garrett M. Hodes Mo. Bar #50221 2500 City Center Square 12 th •5 Baltimore P.O, Box 26188 Kansas City, MO 64196 (816) 421-6620 (816) 421-4747 (Facsimile)

ATTORNEYS FOR PLAINTIFFS AND CLASS COUNSEL

CERTIFICATE OF SERVICE

It is hereby certified that a copy of the above and foregoing document was hand-delivered this 11 th day of May 2009, to:

Randolph Willis Rassmussen Willis Dickey & Moore, LLC 9200 Ward Parkway, Ste. 310 Kansas City, Missouri 64114 (816) 960-1669 (fax)

Mary J. Hackett Jeremy D. Feinstein Reed Smith, LLP 435 Sixth Avenue Pittsburgh, PA 15219-1886 Attorneys for Wachovia Equity Servicing, LLC, as successor to HomEq Servicing Corporation, and The Money Storel LLC

Hon. William F. Mauer 901 Burning Tree Drive Kansas City, MO 64145 (816) 943-3444 (fax)

A'nT@'for Pi-a•ntiffs

,)

SETTLEMENT AGREEMENT _AND RELEASE

This Settlement Agreement and P,.elease (this "Agreement") dated as of May 11, 2009, is

entered into by and between plaintiffs John A. Schwartz and Jeannette A. Schwartz (the "Named

Plaintiffs"), individually and as representatives of the "Settlement Class" (as defined herein), and

defendants Wachovia Equity Servicing, LLC (as successor in interest to HomEq Servicing, LLC,

f/k/a TMS Mortgage, Inc, d/b/a The Money Store) and The Money Store, LLC (f/k/a The Money

Store, Inc.) (collectively, the "HomEq Defendants"), subject to approval by the Court (as defined

herein). The Named Plaintiffs, the HomEq Defendants and the Settlement Class are collectively

referred to as the "Parties."

WHEREAS, the Named Plaintiffs filed an action which is currently pending in the

Circuit Court of/lackson County, Missouri at IndependenCe (the "Court"), entitled 3ohn A. and

Jeanette A. Schwartz, et al. v. Bann-Cor Mortgage, et al., Case Nos. 00 CV 226639, 00 CV

226639-01, 00 CV 226639-02, and 00 CV 226639-03 (the "Litigation")•

WHEREAS, the Named Plaintiffs have asserted claims against the HomEq Defendants

for alleged violations of the Missouri Second Mortgage Loan Act, P,..S. Mo. § 408.231 et seq.,

(the "SMLA") and seek compensatory and punitive damages and other relief, on their own

behalf and on behalf of a class of persons similarly situated, as a result of certain loan fees and

interest amounts that the Named Plaintiffs contend Defendant Bann-Cor Mortgage and/or the

Horn.Eq Defendants, and each of them, directly or indirectly charged, contracted for or received

in connection with certain loans made to the Settlement Class (as defined herein), which loans

were purchased by and asslgnea t the HomEq •,•xe•uan• L•-avu•,x ttl•t/t

business.

WHEREAS, on March 25, 2008, the Court certified a litigation class in the Litigation

comprised of those persons who obtained a second mortgage loan from Barm-Cor Mortgage on

or after October 31, 1994 (the "Litigation Class").

WHEREAS, notice was provided to the members of the Litigation Class of their

opportunity to opt out or exclude themselves from the Litigation Class and no member of the

Litigation Class timely elected to exercise his, her, or its right to opt out of the Litigation Class.

WHEREAS, on March 26, 2008, the Court severed the claims of those members of the

Litigation Class whose Barm-Cor Loans were purchased by and assigned to TMS Mortgage, Inc.

d/b/a The Money Store from those members of the Litigation Class whose Bann-Cor Loans were

purchased or assigned to someone other than TMS Mortgage, Inc. d/b/a The Money Store (the

"Non-HomEq Plaintiff Borrowers").

WHEREAS, the HomEq Defendants deny each of the claims asserted against them in the

Litigation and deny any and all liability.

WHEREAS, counsel for the Named Plaintiffs and the proposed Settlement Class

("Plaintiffs' Counsel) and counsel for the HomEq Defendants have thoroughly investigated the

facts relating to the claims alleged and the underlying events and transactions in the Litigation,

including formal and informal discovery, and have made a thorough study of the legal principles

applicable to the claims asserted against the HomEq Defendants.

WHEREAS, the Parties have reached an agreement, subject to Court approval, to resolve

the Litigation as between them in accordance with the terms set forth herein.

arm's length negotiations concerning the settlement of the claims asserted in the Litigation.

WHEREAS, the Named Plaintiffs and Plaintiffs' Counsel have concluded, based upon

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their investigation, study, negotiations and discovery taken, and taking into account the contested

issues involved, the expense and time necessary to prosecute the Litigation against the HomEq

Defendants through trial, the delays and the risks and costs of further prosecution of the

Litigation against the HomEq Defendants, the uncertainties of complex litigation, and the

benefits to be received pursuant to this Agreement, that a settlement with the HomEq Defendants

on the terms set forth herein is fair, just, equitable, reasonable, adequate and in the best interests

of the Named Plaintiffs and the Settlement Class.

WHEREAS, the HomEq Defendants desire to settle the claims asserted against them in

the Litigation on the terms and conditions set forth herein, for the purpose of avoiding the

burden, expense, and uncertainty of Continuing litigation, and for the purpose of putting to rest

ai1 controversies that have been or could be raised against either or both of them as a part of the

Litigation.

WHEREAS, the Parties acknowledge and agree that this Agreement constitutes a

compromise in settlement of the claims and causes of action that have been or could be raised by

the Named Plaintiffs and the Settlement Class against the HomEq Defendants in the Litigation

and shall in no way release or otherwise affect (a) the existing or future claims, causes of action,

remedies, and/or rights to relief of James Wong, Daniel and Wanda Jensen and/or any of the

other ',Non-HomEq Plaintiff Borrowers" against Bann-Cor Mortgage, the Master Financial

Defendants and/o• any other person, association or entity other than the Released Persons (as

defined herein); or (b) the existing or furore claims, causes of action, remedies, and/or rights to

retiet asser•ea or to •e assertea in any lawsuit or pro..,•ul•,g, ea.•.• •-•.•,.--*---*,r -'.,•......'.• including,

without limitation, any claims, causes of action, remedies, motions and requests for sanctions,

and/or any other rights to relief asserted or to be asserted against Wachovia Equity Servicing,

LLC (as successor in interest to HomEq Servicing, LLC, f/k/a TMS Mortgage, Inc, d/b/a The

Money Store), The Money Store, LLC, their attorneys, or any other "Released Party" in the

lawsuits entitled Steven R. and Ruth E. Mitchell v. Residential Funding Company LLC, et al,,

Case No. 03 CV220489 (currently on appeal) and Baker v. Century Financial Group, Case No.

CV 100 4294 (Clay County, Missouri).

NOW THEREFORE, the Parties, intending to be legally bound and acknowledging the

sufficiency of the consideration and undertakings set forth below, do hereby agree, subject to the

approval of the Court and the provisions contained herein, that the Litigation and the Released

Claims (as defined herein) against the Released Persons (as defined herein) are finally and fully

compromised and settled and that the Litigation shall be dismissed with prejudice against the

HomEq Defendants as follows:

1. Denial of LiabilitT; No Admissions

The Parties are entering into this Agreement for the sole purpose of resolving vigorously

disputed claims that have arisen between them and in the interest of avoiding the burdens,

expense, and risk of further litigation. By entering into any preliminary settlement discussion,

agreeing to the terms of this Agreement, or seeking the approval of the settlement, the Parties are

not making any admissions or concessions whatsoever with respect to any claims or defenses

alleged or asserted, or any factual or legal assertions in the Litigation. Neither this Agreement,

nor any of its terms or probisions,

nor any of the negotiations between the Parties or their

counsel, shall be construed as an admission or concession by any of the Parties or their counsel

or duty, any alleged fraud, misrepresentation or deception, or any alleged violation of any

federal, state, or local law, role, regulation, guideline or legal requirement (or any other

applicable law, rule, regulation, guideline or leg•. zequirement). Except as necessary in a

proceeding to enforce the terms of this Agreement, this Agreement and its terms and provisions

shall not be offered or received as evidence in any action or proceeding to establish any liability

or admission on the part of the HomEq Defendants or their parent or affiliated companies, or to

establish the existence of any condition constituting a violation of or non-compliance with any

federal, state, local or other applicable law, rule, regulation, guideline or other legal requirement,

or the propriety of class certification in any other proceeding or action. The Parties expressly

agree that, in the event that the Court does not approve the Agreement, or any appeIlate court

disapproves of the Agreement in any way that prevents the settlement from becoming final and

effective, no Party will use or attempt to use any conduct or statement of any other Party in

connection with this Agreement or any effort to seek approval of the Agreement to affect or

prejudice any other Party's rights in any ensuing litigation. The HomEq Defendants expressly

reserve all rights and defenses to any claims and do not waive any such rights or defenses in the

event that the Agreement is not approved for any reason.

2. Definitions

As used in this Agreement, the following terms shall be defined as set forth below:

2.1 Bann-Cor Loan. "Bann-Cor Loan" means any "Second Mortgage Loan" as

defined in R.S. Mo. § 408.231.1, that was originated on or after October 31, 1994, secured by a

mortgage or a deed of trust on residential real property locatedin the State of Missouri,

originated by Bann Cor Mortgage, and purchased by and assigned to TMS Mortgage, Inc., d/b/a

I-he Money Store.

2.2 Class Counsel. "Class Counsel" shall mean Plaintiffs' Counsel,

2.3 Class Mail Notice. "Class Mail Notice" means a document in the form attached

hereto as Exhibit A to this Agreement and made a part hereof, or a substantially similar form.

2.4 Common Fund Recover,(. "Common Fund Recovery" means the amount by

which the Final Settlement Amount exceeds (a) the "Initial Settlement Class Member Payment"

for all of the Settlement Class Member loans, (b) the amount of any incentive award made to the

Named Plaintiffs by the Court, and•lc) the amount of any attorney's fees and expense awards

made to Plaintiffs • by the Co]Yn•t•

2.5 Defendants' Counsel. "Defendants' Counsel" means, collectively, Reed Smith

LLP, 435 Sixth Avenue, Pittsburgh, Pennsylvania 15219.

2.6 Effective Date. The "Effective Date" of this Agreement.means the date when all

of the conditions set forth in Paragraph 12 have occurred, provided, however, that the HomEq

Defendants have not exercised their right of rescission under Paragraph 9.

2.7 Final Approval Order. "Final Approval Order" means an Order of the Court

finally approving this Agreement and the settlement provided herein, under Rule 52.08 of the

Missouri Rules of Civil Procedure, substantially similar to Exhibit C to this Agreement and made

a part hereof.

2.8 Final Hearing Date. "Final Hearing Date" means the date set by the Court for the

hearing on final approval of the class action settlement embodied in this Agreement.

2.9 Final Judm•ent. "Final Judgment" means a Judgment of the Court, substantially

similar to Exhibit D to this Agreement and made a part hereof.

2.10 Final Settlement Amount. "Final Settlement Amount" means the "Settlement

Funds" less any reduction pursuant to •uu-Pmagiapn ••• T•- .• .... •.• •:m.+ •

the "Settlement ru•_ct• and the "Final Settlement Amount" will be the same.

2.11 Initial Settlement Class Member Payment. "Initial Settlement Class Member

6

Payment" means the amount $1,188,032.

2.12 Master Financial Defendants. "Master Financial Defendants" means Master

Financial, Inc., Master Financial Asset Securitization Trust 1997-1, Master Financial, Inc.,

Master Financial Asset Securitization Trust 1998-1, Master Financial Asset Securitization Trust

1998-2, and their joint or respective parents, subsidiaries, affiliates, predecessors, successors or

assigns.

2.13 Net Settlement Funds. 'q',let SettIement Funds" means the "Settlement Funds,"

(or the Final Settlement Amount, if different) less (a) any incentive award approved by the Court

and paid to the Named Plaintiffs; (b) the amount of .any attorneys' fees, litigation expenses

and/or costs approved by the Court and awarded to Plaintiffs' Counsel; (c) the amounts of the

claims shown on Schedule A for those members of the Settlement Class, if any, who timely opt

out of this Settlement pursuant to Sub-Paragraph 9(a); and (d) any interest earned and

attributable to these three sums, respectively while in escrow.

2.14 Non-HomEq Plaintiff Borrowers. The "Non-HomEq Plaintiff Borrowers"

includes plaintiffs in the class certified by the Court in the Litigation who obtained a loan from

Barm-Cor but whose loan was not_ purchased by and assigned to TMS Mortgage, Inc. d/b/a The

Money Store. This includes, but is not limited to, James Wong, and Daniel and Wanda Jensen,

who are also named plaintiffs in the Litigation.

el" 2.15 Plaintiffs' Counsel. "Plaintiffs' Couns means, collectively, Waiters Bender

Strohbelm & Vaughan, P.C., 2500 City Center Square, 1100 Main Street, Kansas City, Missouri

6410•.

2.! 6 Preliminarg Approval Order. "Preliminary Approval Order" means an Order of

Court preliminarily approving the settlement set forth in this Agreement, conditionally or

preliminarily certifying a class for settlement purposes, directing the issuance of a class notice

and scheduling a settlement hearing in accordance with Rule 52.08 of the Missouri Rules of Civil

Procedure, substantially similar to Exhibit B to this Agreement and made a part hereof.

2.17 Released Persons. "Released Persons" shall be defined to include the HomEq

Defendants and each of their parmers, affiliates, parent companies, subsidiaries, divisions or

other organizational units of any kind doing business in their own names, and doing business

under any other names, any entity now or in the past controlled by, controlling or under the

common control with any of the foregoing and doing business under any other names, including

but not limited to Wachovia Corporation and Wells Fargo &. Co., and any and all of their

respective affiliates and subsidiaries, and each of their respective predecessors, successors and

assigns, and each of their past and present officers, directors, partners, shareholders, associates,

trustees, employees, agents, attorneys (including any consultants hired by counsel), accountants,

representatives, beneficial owners, investment advisors, investment bankers, insurers,

independent contractors, heirs, executors, and administrators, and each of their respective

predecessors, successors, and assigns. Notwithstanding the above, the term "Released Persons"

does not include (a) Bann-Cor Mortgage, (b) the Master Financial Defendants, (c) any former

defendant named in the Litigation and/or the companion case entitled John A. and Jeanette A.

Schwartz• et al. v. Bann-Cor Mortgage, et al., Case No. 03 CV 224614, other than the HomEq

Defendants, (d) or any other person, association or entity who is not a Released Party including,

but not limited to, Residential Funding Company, LLC, Franklin Credit Management

of the Non-HomEq Plaintiff Borrowers, and/or any person, association or entity to whom the

loans of any of the Non-HomEq Plaintiff Borrowers were sold, assigned or otherwise transferred

or conveyed.

2.18 Releasors. "Releasors" means the Named Plaintiffs, all Settlement Class

Members, and each of their respective heirs, executors, administrators, assigns, predecessors, and

successors, and any other person claiming by or through any or all of them. The Reteasors shall

not include any members of the Settlement Class who opt out of the Settlement Class in

accordance with Paragraph 9 below.

2.19 Released Claiz•.. "Released Claims" means any and all claims, demands, actions,

causes of action, rights, offsets, setoffs, suits, damages, lawsuits, liens, costs, surcharges, losses;

attorneys' fees, expenses or liabilities of any kind whatsoever, in law or in equity, for any relief

whatsoever, including monetary, injunctive or declaratory relief, rescission, general,

compensatory, special, liquidated, indirect, incidental, consequential or punitive damages, as

weI1 as any and all claims for treble damages, penalties, attorneys' fees, costs or expenses,

whether known or unknown, alleged or not alleged in the Litigation, suspected or unsuspected,

contingent or vested, accrued or not accrued, liquidated or unliquidated, matured or unmatured,

that in any way concern, relate to, or arise out of the Class Members' Bann-Cor Loans, and

which any of the Releasors have, had, or now have, from the begirming of time up through and

including the Effective Date, against the Released Persons ("Claims"), including but not limited

to, any and all Claims arising out of or relating to: (1) allegations that were or could have been

asserted in the Litigation in any way relating to the Class Members' Bann-Cor Loans; (2) the

Fifth Amended Petition or the facts and circumstances giving rise thereto; (3) any activities the

/'d• .qP.V or•nrl,•ot

undertaken by any of the Released Persons to defend the Litigation, including but not Iimited to,

any alleged improper discovery conduct and/or any request for sanctions in this Litigation;

9

and/or (5) any alleged representations, misrepresentations, disclosures, incorrect disclosures,

failures to disclose,.acts (legal or illegal), omissions, failures to act, deceptions,acts of

unconscionability, unfair business practices, breaches of contract, usury, unfulfilled promises,

breaches of warranty or fiduciary duty, conspiracy, excessive fees collected, or violations of any

consumer protection statute, any state unfair trade practice statute, or any other body of case,

statutory or common law or regulation, federal or state, including but not limited to the Missouri

Second Mortgage Loan Act, R.S. Mo. § 408.231, et seq., or any other similar state statute; Truth

in Lending Act, 15 U.S.C. § 1601, et seq., and its implementing regulations, 12 C.F.R. part 226;

the Home Ownership and Equity Protection Act, 15 U.S.C. § 1639, et seq., and its implementing

regulation, 12 C.F.R. part 226.31-32; the Real Estate Settlement Procedures Act 12 U.S.C.

§ 2601, and its implementing regulation, 24 C.F.R. part 3500; the Equal Credit Opportunity Act,

15 U.S.C. § 1691, et seq., and its implementing regulation, 12 C.F.R. part 202; the Home

Mortgage Disclosure Act, 12 U.S.C. § 2801, et seq., and its implementing regulation, 12 C.F.R.

part 203; the Fair Housing Act, 42 U.S.C. §§ 3601, et seq.; the Fair C•'edit Reporting Act,

15 U.S.C. § § 1681, et seq.; the Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692, et seq.;

and the Federal Trade Commission Act, 15 U.S.C. §§ 45, et seq. Released Claims also include,

without limitation, any allegation that any Released Party has conspired with, aided and abetted,

or otherwise acted in concert with any other third parties, including, but not limited to, Bann-Cor

Mortgage, with regard to any of the facts, acts, events, transactions, occurrences, courses of

conduct, business practices, representations, omissions, circumstances or other matters related to

general release of all Released Claims against the Released Persons; provided, however, that, to

the extent a Settlement Class Member obtained another loan originated by a third-party other

10

than Barm-Cor Mortgage, which was subsequently purchased by and assigned to one or both of

the HomEq Defendants, this Release does not apply as to that loan and/or loan transaction. To

the extent a Settlement Class Member does not have such a "'non-Bann-Cor Loan," all of his, her

or its Released Claims against the Released Persons are released. Notwithstanding the above, the

term "Released Claims" does not include (a) any existing or future claims, causes of action,

remedies, motions for sanctions and/or rights to relief that James Wong, Daniel and Wanda

Jenson, and any of the other Non-ttomEq Plaintiff Borrowers are asserting or may hereafter

assert in the Litigation against any person, association or entity who is not a Released Person as

defmed above; (b) any claims or causes of action by any person or entity other than a Releasor

including, without limitation, the claims, causes of action, remedies, motions or requests for

sanctions and/or any other rights to relief arising from, related to or based on the alleged

improper discovery conduct, fraud on the court, representations, misrepresentations, disclosures,

incorrect disclosures, failures to disclose, acts (legal or illegal), omissions, failures to act, and/or

deceptions of the Released Persons, or any one or more of them, by the plaintiffs and/or the

plaintiffs' class in the lawsuit entitled Steven R. and Ruth E. Mitchell v. Residential Funding

Company LLC, et al., Case No. 03 CV220489 (currently on appeal), or any lawsuit or

proceeding other than this Litigation.

2.20 Settlement Class. "Settlement Class" shall have the meaning set forth in

Sub-Paragraph 3(a) hereof. "Settlement Class" does not inciude James Wong, Daniel Jensen,

Wanda Jensen, or any of the other "Non-HomEq Plaintiff Borrowers"

-•: --,, r•- .•.•.•, "Sett!ement Class M•mb•r" '•ea,,.q •-v member of the

Settleme_nX Class (as defined herein), who does not timely opt out of this Settlement pursuant to

Sub-Paragraph 9(a) below.

11

2.22 Settlement Funds. "Settlement Funds" means the amount to be delivered to

Plaintiffs' Counsel by the HomEq Defendants in accordance with Sub-Paragraph 4(a).

2.23 Settlement Hearing. "Settlement Hearing" means the hearing on final approval of

the class action settlement embodied in this Agreement.

3. Certification of Settlement Class

a. The Named Plaintiffs and Plaintiffs' Counsel shall file a motion requesting that

the Court approve the settlement for a class (referred to and defined herein as the "Settlement

Class") for settlement purposes defined as follows:

All persons who, on or after October 31, 1994, obtained a "Second Mortgage Loan" as defined in R.S. Mo. § 408.231.1, that was secured by a mortgage or a deed of trust on residential real property located in

the State of Missouri, originated by Bann-Cor Mortgage, and purchased by and assigned to TMS Mortgage, Inc., d/b/a The Money Store.

b. A list of all members of the Settlement Class shall be made a part of this

Agreement as Exhibit E, but said Exhibit shall be filed under seal with the Court pursuant to the

terms of the Stipulated Protective Order dated April 8, 2003 to protect the privacy of the names

and addresses of the members of the Settlement Class.

c. If this Agreement is not approved by the Court pursuant to the proposed Final

Approval Order and Final Judgment, this Agreement, the conditional class certification provided

herein, the settlement proposed herein (including any modifications made with the consent of the

Parties), and any action taken or to be taken in connection therewith shall be terminated and shall

become null and void and have no further force or effect, the Preliminary Approval Order shall

be vacated, the Parties shall be restored to their respective positions existing prior to the

execution of this Agreement, and the Parties' rights and obligations with respect to the use of this

Agreement and the settlement contemplated hereby will be subject to Paragraph 1 hereof. In

12

addition, neither this Agreement, the preliminary certification of the Settlement Class, the

Preliminary Approval Order, nor any other document in any way relating to any of the foregoing,

shall be relied on, referred to or used in any way for any purpose in connection with any further

proceedings in this Litigation or any related action. In such case, or in the event that this

Agreement shall terminate or the settlement embodied herein does not become effective for any

reason, the Agreement and all negotiations, court orders and proceedings relating thereto shall be

without prejudice to the rights of the Parties, and each of them, who shall be restored to their

respective positions existing prior to the execution of this Agreement, and evidence relating to

the Agreement and all negotiations shall not be discoverable or admissible in the Litigation or

otherwise,

4. Settlement Consideration to the Settlement Class and Distribution of the Settlement Funds

a. Within three (3) business days after entry of the Final Approval Order and receipt

by Defendants' Counsel in writing of appropriate wiring instructions and a completed W-9 Tax

Form from Plaintiffs'Counsel, the HomEq Defendants shall detiver four million dollars

($4,000,000), subject to Sub-Paragraph 4(d) below (referred to and defined herein as the

"Settlement Funds") to the Escrow Agent, as defined below, by wire transfer at their own

expense.

b. The Settlement Funds shall be wired into an interest-bearing escrow account that

the Parties shall establish, pursuant to mutually agreeable terms, at Missouri Bank & Trust, 1044

Main Street, Kansas City, Missouri, or some other insured depository institution in Missouri

selected by Plaintiffs' Counsel (the "Escrow Agent"). All interest edmed on the Settlement

Funds while in escrow shall be added to and included within the definition of "Settlement

Funds" and shall be allocated to each person or entity on Schedule A in proportion to his, her or

13

its share of the Settlement Funds. The Settlement Funds, including any interest earned in

escrow, shall be returned to the HomEq Defendants in the event that the settlement is rescinded,

terminated, vacated, or the Effective Date does not arrive for any other reason. The Settlement

Funds while in the escrow account shall be invested in a manner that generates the highest remm

that can be obtained without risk to the principal.

c. The Parties' escrow agreement shall provide that the Settlement Funds will be

released to Plaintiffs' Counsel from escrow the first business day after the Effective Date.

Plaintiffs' Counsel, subject to such supervision and direction of the Court as may be necessary,

shall be responsible for and shall administer and oversee the distribution of the Settlement Funds

in accordance with the terms of this Agreement and Schedule A, which also shall be filed under

seal with the Court pursuant to the terms of the Stipulated Protective Order dated April 8, 2003

to protect the privacy of the members of the Settlement Class.

d. If any member of the Settlement Class opts out of the Settlement Class but the

HomEq Defendants do not terminate this Agreement pursuant to Sub-Paragraph 9(b), then the

Settlement Funds shall be reduced by the amount(s) allocated on Schedule A to the member(s) of

the Settlement Class who opted out of the Settlement. If such a reduction occurs, the Parties

shall submit a revised Schedule A to the Court under seal prior to the Final Hearing Date, and the

mount to be wire-transferred to the Escrow Agent pursuant to Sub-Paragraph 4(a) above shall

reflect the reduction. If such a reduction occurs, the remaining balance shall be the Final

Settlement Amount and shall be treated as the •Settlement Funds." If no such reduction occurs,

interest earned in escrow.

e. Upon release of the Settlement Funds by the escrow agent, Plaintiffs' Counsel

14

shall distribute the Net Settlement Funds (plus any interest earned in escrow) to the Settlement

Class Members (i.e., those members of the Settlement Class, if any, who did not timely opt-out)

in the amounts and to the payees at the addresses as shown on Schedule A, or as the Court may

otherwise determine and approve. Plaintiffs' Counsel shall distribute the Net Settlement Funds

to the Settlement Class within 30 days of the Effective Date by checks mailed to the Settlement

Class Members or, in the event of a Settlement Class Member bankruptcy under Chapter 7, to the

Chapter 7 bankruptcy trustee with notice of said mailing to said Settlement Class Member.

Plaintiffs' Counsel will re-mail any returned checks to any new address disclosed. To the extent

any check is returned a second time, Plaintiffs' Counsel shall undertake reasonable efforts to

locate a current address for said Settlement Class Member. If any Settlement Class Member

refuses to accept receipt of a distribution check, or does not cash a distribution check within 30

days of receipt, Plaintiffs' Counsel shall undertake reasonable efforts to locate and/or contact the

Settlement CIass Member and inquire about receiving and/or cashing the check. Within 210

days of the Effective Date, Plaintiffs' Counsel shall file a report with the Court conftm•ing that

the entirety of the Net Settlement Funds have been distributed to the Settlement Class Members

pursuant to Schedule A and checks cashed or, if such a confirmation cannot be provided,

outlining the steps that remain to distribute any unclaimed portion of the Net Settlement Funds.

Plaintiffs' Counsel shall reallocate the amounts of any unclaimed checks to the paid Settlement

Class Members pro rata based on their allocable share of their total paid distributions of claimed

checks at such time as Plaintiffs' Counsel determines appropriate in their sole discretion, but

which in any event shall be prior to ul• •,•l•lra•it)l• u• an•. •,•.•iuu

f. Plah•tiffs' Counsel shall be responsible for preparing, filing and addressing any

requisite IRS Form 1099s. Settlement Class Members shall be responsible for any taxes due or

15

any tax liability arising out of the distribution of the Settlement Funds.

g. The Released Persons shall have no responsibility for, interest in, or Iiability

whatsoever with respect to or arising out of the investment, allocation or distribution of the

Settlement Funds, the determination, administration, calculation, or payment of claims, the

payment or withholding of taxes, or any losses incurred in connection therewith.

h. Any Settlement Class Member who receives a payment under this Settlement

Agreement shall be solely responsible for distributing or allocating such payment between or

among all co-borrowers on his, her, or its Bann-Cor Loan, regardless of whether a payment

check has been made out to all or only some of the Settlement Class Member's co-borrowers.

i. No person shall have any claim against the Released Persons, Plaintiffs' Counsel,

or other agent designated pursuant to this Agreement based upon the distributions made

substantially in accordance with this Agreement or any Orders of the Court.

5. Incentive Award and Attorneys' Fees and Costs

a. The Named Plaintiffs may petition the Court for the payment of an incentive

award in a total amount not to exceed $18,000 in recognition of services rendered for the benefit

of the Settlement Class throughout the course of the Litigation, which shall be in addition to the

amount to be paid on their individual claims. The amount of any incentive award approved by

the Court, and any interest attributable to said amount while in escrow, shall be deducted from

the Settlement Funds held in escrow pursuant to Paragraph 4 above in determining the Net

Settlement Funds to be distributed to the Settlement Class Members. The HomEq Defendants

in the above-stated amount. To the extent the Court approves an incentive award in an amount

less than $18,000, Plaintiffs' Counsel shall reallocate the difference to the Settlement Class per

16

Schedule A.

b. Plaintiffs' Counsel may petition the Court for an award of attomeys' fees and

litigation expenses not to exceed the following: (a) $1,875,000 as reimbursement for actual

attorney and paraprofessional time expended in connection with the Litigation, plus 35% of the

"Common Fund Recovery" which Fund is estimated to be $768,968; and (b) $150,000 for the

litigation expenses and court cost that Settlement Class Counsel has also incurred and advanced

in connection with the Lawsuit. The amount of any fee and/or expense awards approved by the

Court, and any interest attributable to said amount(s) wtiile in escrow, shall be deducted from the

Settlement Funds held in escrow under Paragraph 4 above in determining the Net Settlement

Funds to be distributed to the Settlement Class Members. The HomEq Defendants wiIl not

object to Plaintiff's Counsel applying to the Court for, and receiving, an award of attorneys' fees,

litigation expenses and court costs in the above-stated amounts. To the extent the Court awards

attorneys' fees, litigation expenses and/or court costs in amounts less than the not to exceed

amounts for which Plaintiffs' Counsel can apply, Plaintiffs' Counsel shall reallocate the

difference to the Settlement Class per Schedule A.

c. Except as provided in this Paragraph 5, each party shall bear its own attorneys'

fees, costs, and expenses incurred in the prosecution, defense, or settlement of the Litigation, and

specifically, without limitation, the HomEq Defendants shall bear no other attorneys' fees, court

costs or expenses.

6. Releases

c•.. +•.• •¢¢•,.,•,,• Date, •,, •vo•,,•,o f•r the l-lc, m•.a Defendants' a_m:eement to

make available and pay the Settlement Funds pursuant to the terms and conditions of this

Agreement, and for other good and valuable consideration, Releasors, including but not limited

17

to the Named Plaintiffs, on their own behalf and on behalf of each Settlement Class Member, by

operation of this Release and the judgment set forth in the Final Order and Judgment, do hereby

and shall be deemed to have fully, finally and forever released, settled, compromised,

relinquished, and discharged any and all of the Released Persons of and from any and all

Released Claims and, without further acl•ion by any person or the Court, will be deemed (i) to

have consented to dismiss with prejudice the Litigation as against the HomEq Defendants and

any and all Released Claims; (ii) to have released and forever discharged any and all Released

Claims; and (iii) to be forever barred and enjoined from instituting or further prosecuting, in any

forum whatsoever, including but not limited to any state, federal, or foreign court, or regulatory

agency, each and every Released Claim. The Parties agree that the Released Persons will suffer

irreparable harm if any Settlement Class Member takes action inconsistent with this

Sub-Paragraph 6(a), and that in that event the Released Persons may seek an injunction as to

such action without further showing of irreparable harm.

b. The Releasors acknowledge and agree that they are aware that they may hereafter

discover material or immaterial facts in addition to or different from those which they now know

or believe to be true with respect to the subject matter of this Release, but that it is their intention

to, and they do hereby, upon the Effective Date of this Agreement, fully, finally and forever

settle and release each and every of the Released Persons from each and every Released Claim,

known or unknown, suspected or unsuspected, accrued or not accrued contingent or matured,

which now exist, may hereafter exist, or may heretofore have existed, without regard to the

subsequent discovery or existence

c. Subject to Court approval, each Settlement Class Member shall be bound by this

Agreement and all of their claims shall be dismissed with prejudice and released even if they

18

never received actual, prior notice of the Litigation or its settlement in the form of the Class

Notice or otherwise. The Release and agreements contained in this Paragraph 6 shall apply to

and bind all Settlement Class Members, including those Settlement Class Members whose Class

Notices are returned as undeliverable, and those for whom no current address can be found, if

any.

d. On the Effective Date, Releasors hereby release the Released Persons from each

and every Released Claim.

7. Representations and Stipulations

a. The HomEq Defendants, and each of them, represent, warrant and declare that: (i)

they have acted in good faith and have used their best efforts in identifying the Members of the

Settlement Class and in producing the loan documents and loan payment and payoff information

on which the distribution of the Net Settlement Funds is based; and (ii) there are no Members of

the Settlement Class other than those identified on Exhibit E.

b Upon the Effective Date, the following stipulations shall be made:

i. Stipulation as to the Claims of Non-HomEq Plaintiff Borrowers. The

Named Plaintiffs and Plaintiffs' Counsel stipulate that the Non-HomEq Plaintiff Borrowers, that

is the remaining members of the Litigation Class (excluding the Settlement Class Members as

defined herein), certified by the Court in the Litigation pursuant to the Court's Order dated

March 25, 2008 are not asserting any claims against the HomEq Defendants in the Litigation and

cannot recover any damages from the HomEq Defendants as a result of the Bann-Cor Loans and

that a finding and/or conclusion to this effect, consistent with the Court's March 26, 2008 Order,

shall be included in the Final Approval Order.

ii. No Privilege Waiver. Each Party stipulates and acknowledges that neither

this Agreement nor a Party's decision to negotiate and/or execute the Agreement can be used to

19

show or establish that a Party' s conduct, including that of counsel, during this Litigation gives

rise to or constitutes a waiver of the attorney-client, common interest or joint defense privilege or

work product doctrine.

iii. Use of Discove• Information. The Parties agree to comply with the terms

of the Stipulated Protective Order entered April 8, 2003 except as the Parties have previously

agreed or may hereafter agree.

8. Preliminary Approval Order

The Parties shall promptly move the Court in the pending Litigation for a Preliminary

Approval Order substantiaIly similar to .Exhibit B that accomplishes the following:

a. Certifying the proposed Settlement Class under Rule 52.08 of the Missouri Rules

of Civil Procedure for settlement purposes;

b. Preliminarily approving this Agreement as fair, reasonable and adequate under

Rule 52.08 of the Missouri Rules of Civil Procedure subject to final determination by the Court;

c. Approving the appointment of the Named Plaintiffs as representatives of the

Settlement Class for settlement purposes;

d. Approving the appointment of Plaintiffs' Counsel as counsel for the Settlement

Class for settlement purposes;

e. Approving a form of mailed notice substantially similar to the Class Mail Notice

to be sent to the Settlement Class as shown on Exhibit E;

f. Directing Plaintiffs' Counsel to mail the Class Mail Notice promptly after entry

last known address of such persons•

g. Schedulin• a hearing on final approval of•his AgreementB

2O

h. Establishing a procedure for members of the Settlement Class to opt out and

setting a date, approximately thirty (30) days after the mailing of Class Notice, after which no

member of the Settlement Class shall be allowed to opt out of the Settlement Class;

i. Establishing a procedure for the Settlement Class Members to appear and/or

object to the Settlement and setting a date, approximately thirty (30) days after the mailing of

Class Notice, after which no Settlement Class Member shall be allowed to object;

j. Containing such other and further provisions consistent with the terms and

provisions of this Agreement as the Court may deem advisable.

9. Opt Outs and Obiections Bv Members of the Settlement Class

a. Procedure for Opt Outs. The deadline for opt-out requests shall be set forth in the

Preliminary Approval Order. Any request to opt out must be in writing and must include the

name, address, telephone number, and last four digits of the Social Security Number of the class

member seeking to opt out and a statement that the class member and all other borrowers named

on the class member's promissory note are seeking exclusion. The opt out request must be

personally signed by each person who was a party to the promissory note in connection with the

cIass member's Barm-Cor Loan, unless such person is deceased. In the event a party to the

promissory note is deceased, a copy of the death certificate for such person shall be submitted

with the opt out request. Any opt out request must include a reference to "Schwartz v. Bann-Cor

Mortgage, Case No. 00 CV 226639" and be mailed to

R. Fredrick Walters, Esquire Walters Bender Strohbehn & Vaughan, P.C.

1100 Main Street Kansas City., MO 64105 (on behalf of the Settlement Class)

and

21

Mary J. Hackett, Esquire Reed Smith LLP 435 Sixth Avenue Pittsburgh, PA 15219 (on behalf of the HomEq Defendants)

To be considered timely and effective, any opt out request must be received on or prior to the

date established by the Court in the Preliminary Approval Order. No member of the Settlement

Class may opt out by having a request to opt-out submitted by an actual or purported agent or

attorney acting on behalf of the class member. No opt-out request may be made on behalf of a

group of class nembers." Each member of the Settlement Class who does not submit an opt-out

request substantially in compliance with this Paragraph 9 shall be included in the Settlement

Class and deemed a Settlement Class Member. For purposes of determining timeliness, an opt

out request shall be deemed to have been submitted when received by either Class Counsel or

Defendants' Counsel. Class Counsel shall provide to the Court, on or before the date of the Final

Approval Hearing, a list of all persons who have timely and adequately filed a request to be

excluded from the Settlement.

b. Effect of Opt Outs By Members of the Settlement Class. If class member opt-

outs result in the exclusion from the settlement of 5% (five percent) of the number of loans that

would otherwise be included within the settlement, at the HomEq Defendants' option, each and

every of the HomEq Defendants' obligations under this Agreement shall cease to be of any force

and effect, and this Agreement and any orders entered in connection therewith shall be vacated,

rescinded, canceled, and annulled. If the HomEq Defendants exercise this option, the Parties

ig shall return to the status quo in the Lit ation as ix •il•

Agreement. In addition, in such event, the Agreement and all negotiations, court orders and

proceedings relating thereto shaIl be without prejudice to the rights of the Parties, and each of

22

them, and evidence relating to the Agreement and all negotiations shall not be admissible or

discoverable in the Litigation or otherwise. The HomEq Defendants must exercise its option

pursuant to this Sub-Paragraph 9(b) at least five (5) business days prior to the Final Hearing

Date, by giving written notice of such exercise to Plaintiffs' Counsel.

c. Bm•mptcv Trustees. In instances where a member of the Settlement Class has

filed for bankruptcy under Chapter 7 after obtaining his or her Bann-Cor Loan, if the class

member opts out of the Settlement, the Chapter 7 bankruptcy trustee shall be deemed to have

opted out of the Settlement. Conversely, if the Chapter 7 b•ptcy trustee opts out of the

Settlement, the member of the Settlement Class shall be deemed to have opted out of the

Settlement. If neither the member of the Settlement Class nor the Chapter 7 bankruptcy trustee

opts out of the Settlement, both shall be bound by the Release provisions of Paragraph 6.

d. Procedure for Obiections to Settlement. Settlement Class Members who wish to

object to the Settlement provided for in this Agreement or the incentive award or the award of

attorneys' fees and reimbursement of costs and expenses must file a notice of objection,

including supporting papers as described further below (hereinafter collectively referred to as the

"Notice of Objection"), with the Court on or prior to the date established by the Court in the

Preliminary Approval Order. For purposes of determining timeliness, a Notice of Objection

shall be deemed to have been submitted when received and filed by the Clerk of Court. Copies

of the Notice of Objecti0n must also be mailed to the following on or prior to the date established

by the Court in the Preliminary Approval Order, which shall be no later than ten (10) days prior

to the ginai Hearing Date:

R. Fredrick Walters, Esquire Walters Bender btronbehn & Vau•,han, P.C. 2500 City Center Square 1100 Main Street

23

Kansas City, MO (54105 (on behalf of the Settlement Class)

and

Mary J. Hackett, Esquire Reed Smith LLP 435 Sixth Avenue Pittsburgh, PA 15219 (on behalf of the HomEq Defendants)

The Notice of Objection shall specifically include:

(i) A statement of each objection asserted;

(ii) A detailed description of the facts underlying each objection;

(iii) Any loan documents in the possession or control of the objector and relied

upon by the objector as a basis for the objection;

(iv) If the objector is represented by counsel, a detailed description of the legal authorities supporting each objection;

(v) If the objector plans to utilize expert opinion and/or testimony as part of

the objection(s), a written expert report from all proposed experts;

(vi) If the objector plans to call a witness or present other evidence at the hearing, the objector must state the identity of the witness and identify any documents by attaching them to the objection and provide any other evidence that the objector intends to present;

(vii) A statement of whether the objector intends to appear at the hearing; and

(viii) A copy of any exhibits which the objector may offer during the hearing.

Attendance at the final hearing is not necessary. Any Settlement Class Member who does not

make his or her objection in the manner provided shall be deemed to have waived such objection

and shall forever be foreclosed from making any objection to the fairness, adequacy, or

reasonableness of the proposed settlement or any other provision of this Agreement.

10. Final Approval Order and Final Judgment

a. The Named Piaintiffs and Plaintiffs' Counsel agree that they will request the

24

Court to enter, after the hearing on final approval of this Agreement, an order substantially in the

form of attached Exhibit C. In accordance with Exhibit C, the Final Approval Order will certify

the Settlement Class and find that this Agreement is fair, reasonable, and adequate and in the best

interest of the Settlement Class. The Final Approval Order will require the Parties to carry out

the provisions of this Agreement.

b. The Named Plaintiffs and Plaintiffs' Counsel agree that they will request the

Court to enter, after the hearing on final approval of this Agreement, a Final Judgment in the

Litigation substantially in the form of attached Exhibit D. In accordance with Exhibit D., the

Final Judgment will dismiss all cIaims and motions of the Settlement Class Members, including

without limitation Plaintiffs' Motion for Sanctions, pending against the HomEq Defendants in

the Litigation on the merits with prejudice as to the Releasors; find and/or conclude that the Non-

HomEq Piaintiff Borrowers are not asserting any claims against the HomEq Defendants in the

Litigation, cannot recover any damages from the HomEq Defendants as a result of the Bann-Cor

Loans, and that the Non-HomEq Plaintiff Borrowers are forever barred from recovering damages

from the HomEq Defendants as a result of the Bann-Cor Loans; declare that the Settlement Class

Members are bound by the Releases set forth in Paragraph 6 of this Agreement; contain an

express determination by the Court that "there is no just reason for delay"; and reserve

continuing jurisdiction over the enforcement of this Agreement and the administration and

distribution of the Settlement Funds.

11. Certifications To The Court

3, •n or o•lOl• LII• r•lai iiearlng

in the Litigation an affidavit verifying that the Court-approved Class Mail Notices have been sent

by first-class mail.

25

b. On or before the Final Hearing Date, Plaintiffs' Counsel shall file with the Court

an affidavit verifying that they have complied with the procedures described in Sub-Paragraph

14(a) with respect to all Class Mail Notices returned as undeliverable.

12. Effectiveness of Settlement Agreement

The "Effective Date" of this Agreement shall be the date when each and all of the

following conditions have occurred:

a. This Agreement has been signed by the Named Plaintiffs, Plaintiffs' Counsel, and

the HomEq Defendants;

b. A Preliminary Approval Order has been entered by the Court, in substantially the

form of attached Exhibit B., granting preliminary approval of this Agreement, and approving a

form of Class Mail Notice, as provided in Paragraph 8;

c. The Court-approved Class Mail Notices have been duly mailed to the Settlement

Class as ordered by the Court in the Litigation;

d. A Final Approval Order has been entered by the Court, in substantially the form

of attached Exhibit C, as provided in Sub-Paragraph 10(a);

e. A Final Judgment has been entered by the Court, in substantially the form of

attached Exhibit D, as provided in Sub-Paragraph 10(b); and

f. The Final Approval Order and the Final Judgment entered as provided in

Sub-Paragraphs 10(a) and 10(b) have become final because of (i) the expiration of the time for

appeals therefrom without any appeal having been taken or, (ii) if review of the order, or any

portion thereof, is sought by any person, the •" •"'" :

appe!!ate couP(s) and the time for seeking any higher level of appellate review has expired.

g. If any material portion of the Agreement, the Final Approval Order, or the Final

26

Judgment is vacated, modified, or otherwise altered on appeal, any Party may, in its sole

discretion, within seven calendar days of such appellate ruling, declare that the Agreement has

failed to become effective, and in such circumstances the Agreement shall cease to be of any

force and effect as provided in Paragraph 13.

13. Failure of Condition

If, for any reason, this Agreement fails to become effective pursuant to Paragraph 12, the

orders, judgment, and dismissal to be entered pursuant to this Agreement shall be null and void

or otherwise vacated, and the Parties will be returned to the status quo prior to entering into this

Agreement with respect to the Litigation as if this Agreement had never been entered into. In

addition, in such event, the Agreement and all negotiations, court orders and proceedings relating

thereto shall be without prejudice to the rights of any and all parties hereto, and evidence relating

to the Agreement and all negotiations shall not be admissible or discoverable in the Litigation or

otherwise.

14. Class Notice Forms

a. Plaintiffs' Counsel has a list of the members of the Settlement Class to whom

notice pursuant to this Agreement shall be provided. Prior to mailing, Plaintiffs' Counsel will

update the addresses by use of the United States Postal Service's National Change of Address

database or another address database service (e.g., Accurint, Intelius). Plaintiffs' Counsel will

re-mail any returned notices tO any new address disclosed. To the extent any notice is returned a

second time, Plaintiffs' Counsel shall undertake reasonable efforts to locate current addresses for

Approval Order.

b. Subject to Court approval, all Settlement Class Members shall be bound by this

27

Agreement and the Released Claims shall be dismissed with prejudice and released, even if they

never received actual notice of the Litigation or its settlement. Further, the Parties expressly

acknowledge and agree that a Final Judgment shall be entered by the Court dismissing all

Released Claims and barring the relitigation of any Released Claims as provided herein,

regardless of whether they were actually asserted, to the fullest extent of the law and that any

dismissal order or judgment shall be entitled to Full Faith and Credit in any other court, tribunal,

forum, including arbitration fora, or agency.

15. General Provisions

a. Entire A•reement. This. Agreement constitutes the full, complete and entire

understanding, agreement and arrangement of and between the Named Plaintiffs and Settlement

Class Members on the one hand and the HomEq Defendants on the other hand with respect to the

settlement of the Litigation and the Released Claims against the Released Persons. This

Agreement supersedes any and all prior oral or written understandings, agreements, and

arrangements between the Parties with respect to the settlement of the Litigation and the

Released Claims against the Released Persons. Except those set forth expressly in this

Agreement, there are no other agreements, covenants, promises, representations or arrangements

between the Parties with respect to the settlement of the Litigation and the Released Claims

against the Released Persons.

b. Modification in Writing. This Agreement may be •/ltered, amended, modified or

waived, in whole or in part, only in a writing signed by all Parties to this Agreement. This

Agreement may no• be m'•e•,• •:•- :..^• •1• :_ ..,_•_• •_m•

c. Ongoing Cooperation. The Parties hereto shall execute all documents and

perform all acts necessary and proper to effectuate the terms of this Agreement. The execution

28

of documents must take place prior to the date scheduled for hearing on final approval of this

Agreement.

d. Triplicate Originals/Execution in Counterpart. All Parties and Plaintiffs' Counsel

shall sign three copies of this Agreement and each such copy shall be considered an original.

This Agreement may be signed in one or more counterparts. All executed copies of this

Settlement Agreement, and photocopies thereof (including facsimile copies of the signature

pages), shall have the same force and effect and shall be as legally binding and enforceable as the

original.

e. No Reliance. Each Party to this Agreement warrants that he, she or it is acting-

upon his, her, or its independent judgment and upon the advice of his, her, or its own counsel and

not in reliance upon any warranty or representation, express or implied, of any nature or kind by

any other parry, other than the warranties and representations expressly made in this Agreement.

f. Governing Law. This Agreement shall be interpreted, construed, enforced, and

administered in accordance with the laws of the State of Missouri, without regard to conflict of

laws rules. This Agreement shall be enforced in the Circuit Court of Jackson County, Missouri.

The HomEq Defendants and Settlement Class Members waive any objection that each such party

may now have or hereafter have to the venue of such suit, action, or proceeding and irrevocably

consent to the jurisdiction of the Jackson County court in any such suit, action or proceeding, and

agree to accept and acknowledge service of an)• and all process which may be served in any such

suit, action or proceeding.

entw of final judgment, the Court shall retain jurisdiction for purposes of enforcing the terms of

this Agreement.

29

h. Written Press Releases. Plaintiffs' counsel agrees not to issue any written press

releases concerning the Settlement. Plaintiffs' Counsel also agrees that to the extent they speak

with any media about the Settlement and/or post content or material concerning the Settlement

on the WBSV website, Plaintiffs' Counsel will not refer to or identify any Wachovia entities not

named in the Litigation, as well as any and all Wells Fargo & Co. entities, as being involved in

the Litigation. Plaintiffs' Counsel shall not be constrained in any other way in making comments

to the media.

i. :Binding on Successors. This Agreement shall be binding on and shall inure to the

benefit of the Pai•ies and their respective successors, ass.igns, executors, administrators, heirs and

legal representatives.

j. Mutual Preparation. This Agreement shall not be construed more strictly against

one party than another merely by virtue of the fact that it may have been prepared by counsel for

one of the Parties, it being recognized that because of the arm's length negotiations between the

Parties, all Parties have contributed to the preparation of this Agreement.

k, Gender Neutrality. All personal pronouns used in this Agreement, whether used

in the masculine, feminine or neuter gender, shall include all other genders, and the singular shall

include the plural and vice versa.

i. Taxes. All Settlement Class Members shall be responsible for paying and/or

reporting any and all federal, state and local income taxes due on the payments made to them

pursuant to the settlement provided herein.

be !iable or obligated to pay any fees, expenses, costs or disbursements to the Named Plaintiffs,

Plaintiffs' Counsel or Settlement Class Members, either directly or indirectly, in connection with

3O

the Litigation or the administration of this Agreement, other than the amounts expressly provided

for herein. Any miscellaneous settlement administration expenses of any kind shall be advanced

by Plaintiffs' Counsel and reimbursed from the Settlement Funds, subject to the Court's

approval.

n. Use of Settlement. Neither this Agreement, nor any related negotiations,

statements or court proceedings, shall be construed as, offered as, received as, used as or deemed

to be evidence or an admission or concession of any liability or wrongdoing whatsoever on the

part of any person or entity, including but not limited to the HomEq Defendants, or as a waiver

by the HomEq Defendants of any applicable defense, including without Iimitation any applicable

statute of limitations or statute of frauds.

o. Authori•. With respect to themselves, each of the Parties to this Agreement

represents, covenants and warrants that (a) they have the fuIl power and authority to enter into

and consummate all transactions contemplated by this Agreement and have duly authorized the

execution, detive• and performance of this Agreement and {b) the person executing this

Agreement has the fall right, power and authority to enter into this Agreement on behalf of the

party for whom he/she has executed this Agreement, and the full right, power and authority to

execute any and all necessary instruments in connection herewith, and to fully bind such party to

the terms and obligations of this Agreement.

31

• WITt•SS ••OF•,. •he und•igr•ed, being/duly a•thoi•i•i have caused this.

Agreement to be executed as o•fthi:s

Dated: May __,,

2009

JOHN A, SCHWARTZ

)ohn ka Schwartz, on his o•vn b•half aad on behalf, of the S•tlemem Class

Dated•' May ,2009

JEANETTE A. SCHWARTZ

Jeanette A• Sohwartz, on.her own behalf and on b•half of t•he S:etflerhent C•ass

Dated: iMay •_, 200•

W•fghovta :EqmtyServmmg, LLC

Dated: May___., 2009

The Money St0re, LLC

By•

Titte.•

Dated,: May ,2009

Plaintiffs CotmseI

Title:

2009 •ated, May __•

Defendant' Counsel

By:.

Title:

IN WITNESS WHEREOF, the undersigned, being duly authorized, have caused this

Agreement to be executed as of this I lth day of May, 2009.

JOHN A. SCHWARTZ

Dated: May ___,

2009 John A. Schwartz, on his own behalf and behalf of the Settlement Class

on


Dated: May__, 2009 Jeanette A. Schwartz, on her own behalf and on behalf of the Set•ement Class

Dated: May ___,

2009

Wachovia Equity Servicing, LLC

By:

Title:

Dated: May j_£_, 2009 The Mon• Store LLC

Title:

Dated: May__, 2009

Plaintiffs' Counsel

By:.

Title:

Defends_is' c,• o!

Dated: May.___, 2009 By:.

Title:

32

1N WITNESS WHEREOF, the undersigned, being duly authorized, have caused this

Agreement to be executed as of this lth day of May, 2009.

Dated: May __,

2009

Dated: May •,

2009

JOHN A. SCHWARTZ

John A. Schwartz, on his own behalf and behalf of the Settlement Class


on

Jeanette A. Schwartz, on her own behalf and on

behalf of the Settlement Class


Dated: May __,

2009 By:

Dated: May__., 2009

Dated: May ,2009

Dated: May •//,

2009

Title:

The Money Store, LLC

By:

Title:

Plaintiffs' Counsel

By:

Title:

Defendants'•Couns•k'• • {

32

Dated: May __,

2009

IN WITNESS WHEREOF, the undersigned, being duly authorized, have caused this

Agreement to be executed as of this• day of May, 2009.

on

Dated: May__, 2009


• A. Schwartz, o•a her own

behalf and on

behalf of the Plaintiff Class

Dated: May__, 2009


By:

Title:

Dated: May__, 2009

The Money Store, LLC

By:

Title:

Dated: May///f,

2009

Dated: May__, 2009

Defendants' Counsel

By:.

Title:

32

EXHIBITS AND SCHEDULES

Schedule A Proposed Distribution Schedule of Settlement Funds/Final Settlement Amount

Exhibit A Class Mail Notice

Exhibit B Preliminary Approval Order

Exhibit C Final Approval Order

Exhibit D Final Judgment

Exhibit E Class List

EXHIBIT A: PROPOSED NOTICE

IN THE CIRCUIT COURT OF JACKSON COUNTY, MISSOURI AT INDEPENDENCE

JOHN AND JEANETTE SCHWARTZ, et al.,

Plaintiffs,

V.


Defendants.

) ) ) CaseNo. 00 CV 226639 ) CaseNo. 00 CV 226639-01 ) CaseNo. 00 CV 226639-02 ) CaseNo. 00 CV 226639-03 ) ) Division 14 )

NOTICE OF PROPOSED CLASS ACTION SETTLEMENT AND OF SETTLEMENT HEARING

A Court has authorized this Notice. This is not a solicitation from a lawyer. Please read this Notice carefully and completely.

THIS NOTICE AND ANNOLrNCEMENT APPLIES TO YOU BECAUSE YOU ARE AMONG

A CLASS OF PERSONS WHO, ON OR AFTER OCTOBER 31, 1994, OBTAINED A

"SECOND MORTGAGE LOAN" AS DEFINED UNDER MISSOURI LAW, THAT WAS

SECURED BY A MORTGAGE OR A DEED OF TRUST ON RESIDENTIAL REAL

PROPERTY LOCATED IN THE STATE OF MISSOURI, ORIGINATED BY BANN-COR

MORTGAGE AND PURCHASED BY AND ASSIGNED TO TMS MORTGAGE, INC., D/B/A THE MONEY STORE.

YOU MAY BE ENTITLED TO RECEIVE A SUBSTANTIAL PAYMENT IN CONNECTION WITH THE SETTLEMENT. CLASS MEMBERS WHO DO NOT EXCLUDE THEMSELVES FROM THE SETTLEMENT WILL RECEIVE A SETTLEMENT PAYMENT RANGING

FROM AN ESTIMATED $6,737 TO $82,069 ($32,459 ON AVERAGE) PURSUANT TO A

SETTLEMENT REACHED WITH WACHOVIA EQUITY SERVICING, LLC, AS

SUCCESSOR IN INTEREST TO HOMEQ SERVICING CORP. (FORMERLY TMS

MORTGAGE, INC.) AND THE MONEY STORE, LLC. CLASS MEMBERS CAN REVIEW

WHAT PLAINTIFFS' COUNSEL CURRENTLY ESTIMATES THE AMOUNT OF THE

SETTLEMENT PAYMENT TO BE BY VISITING THE WEBSITE OF PLAINTIFFS' COUNSEL, www.wbsvlaw.com, AND CLICKING ON THE LINK "SCHWARTZ SETTLEMENT."

THIS NOTICE MAY AFFECT YOUR RIGHTS. PLEASE READ IT CAREFULLY!

1. WHY SHOULD I I-tLEAD THIS NOTICE?

This Notice has been mailed to you because the parties' records show that you obtained a second

mortgage loan that was originated by Barm-Cor Mortgage on or after October 31, 1994, which

was purchased by and assigned to TMS Mortgage Inc.• doing business as "The Money Store." Your second mortgage loan is currently the subject of a class action lawsuit filed in the Circuit Court of Jackson County, Missouri styled John and Jeannette Schwartz, et al. v. Bann-Cor Mortgage, et al., Case No. 00-CV-226639 (the "Lawsuit" or "Litigation"). You (and any co-

borrower(s) on your second mortgage loan) may be eligible to receive money from a proposed settlement (the "Settlement") that John and Jeanette Schwartz, two of the named plaintiffs in the Lawsuit, and Wachovia Equity Servicing, LLC, as successor in interest to HomEq Servicing Corp. (f/k/a TMS Mortgage Inc.) and The Money Store, LLC (collectively, the "HomEq Defendants") reached on May 8, 2009. Please share this Notice with any co-borrower(s) on your loan(s).

This Notice generally describes the class action lawsuit; your fights under the proposed Settlement, which has been preliminarily approved by the Circuit Court of Jackson County, Missouri (the "Court"); and the date and time of a public Fairness Hearing that will be held by the Court to consider the fairness of the proposed Settlement:

2. WHAT IS THE LAWSUIT ABOUT?

A class action lawsuit was commenced on October 31, 2000 in the Circuit Court of Jackson County, Missouri, at Kansas City, styled John and Jeannette Schwartz, et al. v. Bann-Cor Mortgage, et at., Case No. 00-CV-226639. The plaintiffs filed the lawsuit on their own behalf, and on behalf of a proposed class of other borrowers who also obtained junior or "second"

mortgage loans secured by Missouri residential real estate from Baun-Cor Mortgage ("Barm- Cor").

In the Lawsuit, the plaintiffs allege that Bann-Cor violated the Missouri Second Mortgage Loan

Act, R.S. Mo. §§ 408.231, et seq, by directly or indirectly charging, contracting for and/or receiving a number of different settlement charges or loan fees in connection with its Missouri second mortgage loans. The plaintiffs also allege in the Lawsuit that Bann-Cor sold and assigned its Missouri second mortgage loans after making them, and that the entities that purchased and/or serviced the loans also violated the Missouri Second Mortgage Loan Act by directly or indirectly charging, contracting for and/or receiving the illegal settlement charges and loan fees, as well as interest on the loans. The plaintiffs also allege that the entities that purchased and/or serviced the Missouri loans are derivatively liable as the assignees and holders of the second mortgage loans for Barm-Cor's violations of Missouri law. The defendants deny these allegations.

On March 25, 2008, the Court certified a litigation class in the Lawsuit comprised of those

persons •no obtained a second mor•g•tgw ioan •rom •a,-,.•u• ivioi•gag• on ux •c• ,J•u•.• •,

1994 (the "Litigation Class"). Notice was provided to the members of the Litigation Class of their opporttmity to opt out or exclude themselves from the Litigation Class that had been

certified. No class members timely elected to exercise his, her, or its right to opt out of the Litigation Class.

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On March 26, 2008, the Court separated or "severed" the claims of those members of the Litigation Class whose Barm-Cor Loans were purchased by and assigned to TMS Mortgage, Inc, (doing business as "The Money Store") (hereinafter referred to as the "Settlement Class") from those members of the Litigation Class whose Bann-Cor Loans were purchased or assigned to

someone other than TMS Mortgage, Inc. (hereinafter referred to as the "Non-HomEq Plaintiff Borrowers").

Plaintiffs John and Jeannette Schwartz (as members and representatives of the Litigation Class whose Bann-Cor Loans were purchased by and assigned to TMS Mortgage, Inc. d/b/a The Money Store) and the HomEq Defendants have now agreed to settle and resolve the Lawsuit as

between them on certain terms that are summarized in this Notice. The complete details of the proposed Settlement are contained in a "Settlement Agreement and Release" (the "Settlement Agreement")• which the Schwarztes and the HomEq Defendants (hereinafter, the "Parties") filed with the Court.

On May 11, 2009, the Court preliminarily approved the proposed Settlement as fair, reasonable, and adequate. The Court will conduct a "fairness hearing" on ••.• to consider, among other things, whether the Settlement should be finalls: approved. The proposed Settlement will become effective only if it is finally approved by the Court.

3. WHO IS COVERED BY THE PROPOSED SETTLEMENT?

According to the parties' records, you are a member of the Settlement Class and will be covered by the Settlement. The Settlement Class includes all persons who, on or after October 31, 1994 obtained a "Second Mortgage Loan" as defined in R.S. Mo. § 408.231.1 that was secured by a

mortgage or a deed of trust on residential real property located in the State of Missouri, originated by Bann-Cor Mortgage, and purchased by and assigned to TMS Mortgage, Inc., d/b/a The Money Store.

4. WHAT ARE THE TERMS OF THE PROPOSED SETTLEMENT?

The following is only a summary of some of the terms and conditions of the proposed Settlement. For more information, you may obtain a copy of the executed Settlement Agreement by contacting Plaintiffs' Counsel at the address listed in Section 6 of this Notice, or by visiting the website of Plaintiffs' Counsel, www.wbsvtaw.com, and clicking on the link "Schwartz Settlement."

If the Court approves the proposed Settlement, the members of the Settlement Class who do not exclude themselves from the Settlement will receive a settlement payment ranging front an estimated $6,737 to $82,069 ($32,458 on average). The amount of each Settlement Payment is determined per as ) .,-,! •_o_.,_•. loan the s-tm• of (a me --ii•.i•ti k•lgS• .tv.tcltluct

Payment" per loan; and (b) the Settlement Class Member's pro rata share of 65% of the "Conmaon F•und Re•overyo The "Initial Class Member Payment" per loan is the sum of the following: (a) all of the ailegedly illegal loan fees that were charged, contracted for or

received in connection with the loan: (b) all of the interest paid on the loan; (c) "prejudgment" interest at a yearly rate of 9% on the total amount of the allegedly itlegal

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loan fees from the date of the loan through May 11, 2009; (d) "'prejudgment" interest at a

yearly rate of 9% on the interest paid amounts from the date of each interest payment through May 11, 2009. The ""Common Fund Recovery" is the amount by which the Final Settlement Amount exceeds (a) the "Initial Class Member Payment" for all of the Settlement CIass Member loans, (b) the amount of any incentive award made to the Named Plaintiffs by the Court, and (c) the amount of any attorney's fees and expense awards made

to Plaintiffs' Counsel by the Court. The Common Fund Recovery is estimated to be $768,968. The amount of the incentive award and the amount of the awards of attorney's fees and expenses that the Named Plaintiffs and Plaintiffs' Counsel will ask the Court to

make are explained below in Section 10 of this Notice. Class Members can review what Plaintiffs' Counsel currently estimates the amount of their Settlement Payment to be by visiting the website of Plaintiffs' Counsel, www.wbsvlaw.com, and clicking on the link ""Schwartz Settlement."

No If the Court approves the Settlement, the members of the Settlement Class who do not exclude themselves from the Settlement will receive the Settlement Payment for the loan by check. The check will be mailed iby first-class mail, postage prepaid, to the Settlement Class Members, or to the bankruptcy trustee if a Chapter 7 bankruptcy was filed. The check will be mailed by Plaintiffs' Counsel and will not come from the HomEq Defendants directly. Joint borrowers, such as a husband and wife, will receive a single payment per loan. Any Settlement Class Member who receives a payment under the Settlement is solely responsible for distributing or allocating the payment between or among any co-

borrower(s), regardless of whether the check is made payable to all or only some of the Settlement Class Member's co-borrowers. Settlement Class Members will also be responsible for paying any taxes due on the Settlement Payment received. Settlement Class Members are strongly encouraged to consult with their own tax advisor •concerning the tax effects of any money received pursuant to this Settlement. Plaintiffs' Counsel cannot provide you with any tax advice.

Co The proposed Settlement will only become effective if approved by the Court. If the proposed Settlement is approved, the Court will enter a judgment that releases and discharges the HomEq Defendants and certain other persons from certain claims that were

or could have been asserted against them. The release is further discussed below, in Section 11 of this Notice.

5. WHAT DO I NEED TO DO TO PARTICIPATE IN THE SETTLEMENT?

Nothing. You are currently a member of the Settlement Class and will participate in the Settlement and will receive the estimated sum as stated above unless you exclude yourself from the Settlement as described in Section 6, below. If you filed for Chapter 7 bankruptcy protection after you received the loan, you wiii stiii be a member of the m• •ememem •iass, out--• b•mcm•m

Payment will be made payable to you and/or your Chapter 7 bankruptcy trustee, who will also receive this Notice. If you filed for bankruptcy protection, you should consult with a bankruptcy attorney about this Notice.

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If you change your address, please contact Plaintiffs' Counsel by contacting them at the address provided in Section 7 below.

6. CAN I EXCLUDE MYSELF FROM THE SETTLEMENT?

Yes. If you exclude yourself from the Settlement, you will no__•t receive any payment from the Settlement Funds, and you will no__.tt be bound by any Final Order and Judgment that may be entered in the case with respect to the Settlement Class. You will be free to continue pursuing whatever legal rights you may have.

To exclude yourself from the Settlement, you must send a request for exclusion by first-class mail, postage prepaid, to Plaintiffs' Counsel and Defendants' Counsel (names and addresses provided in Section 7, below). To be effective, your request for exclusion must be in writing and be received by Plaintiffs' Counsel an__•d Defendants' Counsel at the addresses belov¢•'•• ••2009 The request for exclusion must include: (a)your name, address, telephone number and the last four digits of your social security number; (b) your Bann-Cor (or The Money Store or HomEq Servicing Corp.) loan number(s) (if known); (c) a statement that you and all other borrowers named on your promissory note are seeking exclusion from the Settlement; (d) your signature and the signature of any other borrower(s) named on the promissory note for

your loan; and (e) a reference to "Schwartz v. Bann-Cor Mortgage, Case No. 00 CV 226639." The request for exclusion must be signed personally by each Class Member who seeks to be excluded from the Settlement, or the personal representative of any deceased Class Member. No request for exclusion may be made on behalf of a group of Class Members. No Class Member

may opt-out or exclude himself or herself by having a request to exclude submitted by an actual

or purported agent or attorney acting on behalf of the Class Member.

If the request for exclusion is not timely received, or if you choose not to exclude vourseff from the Settlemen L you will be included in the Settlement Class and will be bound by any, Final Order and Judgment entered with respect to the Settlement Class. You also will be legally bound by the proposed Settlement if it is approved, including the provisions releasing the HomEq Defendants and certain other entities for the Released Claims, as more fully described in the Settlement Agreement.

If you want to receive a Settlement Payment as described above in Section 4.A of this Notice, DO NOT submit a request for exclusion.

7. WI-Pt', WHEN, AND WHERE WILL A FAIRNESS HEARING BE HELD?

A hearing on whether to grant final approval of the Settlement will be heId before the Honorable John M. Torrence of the Circuit Court of Jackson County, Missouri (Division 14) on July

__,

2009, at .m., in the Jackson County Courthouse (independence), 308 w. i•,an•as

Independence, MO 64050 (the "Fairness Hearing"). There is no need for you to attend the Fairness Hearing if you simply wish to benefit from the proposed Settlement. The purpose of the Fairness Hearing is to determine, among other things: (a) whether the terms and conditions of the Settlement are fair, reasonable and adequate; (b) whether named plaintiffs John and Jeanette Schwartz (the "Named Plaintiffs") are adequate representatives of the Settlement Class; (c)

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whether Plaintiffs' Counsel are entitled to attorneys' fees and expenses and, if so, how much; (d) whether the Named Plaintiffs should be entitled to a payment for their services and, if so, how much; and (e) whether the Final Order and Judgment should be entered dismissing the Lawsuit with prejudice on the merits as to the HomEq Defendants.

The Court has the power to adjoum or reschedule the Fairness Hearing from time to time without further notice of any kind.

At the Fairness Hearing, the Court will consider the statements of the parties and any objections that may have been made. Any Class Member who has not filed a timely written Request for

Exclusion has the right to object to the proposed Settlement. If you want to object, you must file

a written objection with the Clerk of Court, Jackson County Courthouse (Independence), 308 W,

Kansas, Independence, MO 64050, no later than •, .••, 21)1)9. All persons wishing to

object must also send a copy of their written objection to Plaintiffs' Counsel and Defendants' Counsel (identified below). The objection must include: (a) your name, address, and telephone number; (b) a statement that you object to the proposed Settlement; (c) a specific statement

explaining why you object to the proposed Settlement• (d) copies of all documents you wish the

Court to consider; (e) the names of all witnesses, and the report from any proposed ekperts you intend to call at the Fairness Hearing; (f) copies of any other loan documents upon which you rely for your objection; and (g) a reference to "Schwartz v. Barm-Cor Mortgage, Case No. 00 CV

226639."

Any Settlement Class Member who has not filed a timely written Request for Exclusion has the

right to appear and/or enter an appearance at the Fairness Hearing. If you wish to appear at the

hearing you or your attorney must: (a) file a Notice of Appearance with the Clerk of Court no

later than ••, 2009; and (b) serve the Notice of Appearance on Plaintiffs' Counsel

and Defendants' Counsel. Any subjects to be raised at the Fairness Hearing must be contained in

a written objection filed with the Court in the manner set out above. If you wish to call witnesses

or present other evidence at the Fairness Hearing, you must state the identity of the witnesses and

identify any documents or other evidence you intend to present in your Notice of Appearance.

The addresses for Plaintiffs' Counsel and Defendants' Counsel are as follows:

Plaintiffs' Counsel R. Frederick Walters Kip D. Richards Walters Bender Strohbehn & Vaughan, P.C, 2500 City Center Square 1100 Main Street Kansas City, MO 64105

Defendants' Counsel Mary J. Hackett Reed Smith LLP 435 Sixth Avenue Pittsburgh, PA 15219

Any Settlement Class Member who has not filed a timely written Request for Exclusion also

may request to irXervene in the Lawsuit, in person or ti-•rough an attorney reta•ed at tt'•e

Settlement Class Member's own expense. A request or motion to intervene must be in writing and reference "Schwartz v. Bann-Cor Mortgage, Case No. 00 CV 226639" and otherwise comply with the Missouri Rules of Civil Procedure and applicable law. A request to intervene must be

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filed with the Clerk of Court, Jackson County Courthouse (Independence), 308 W. Kansas, Independence, MO 64050, no later than ••, 201)9. Any persons wishing to

intervene must also send a copy of their written request to intervene to Plaintiffs' Counsel and Defendants' Counsel as identified above,

Any Settlement Class Member who does not comply with the above requirements shall be deemed to have waived all objections to and shall be forever foreclosed from challenging the proposed Settlement.

8. WHO REPRESENTS THE PLAINTIFFS?

The Settlement Class is represented by Plaintiffs' Counsel: R. Frederick Walters, Kip D. Richards, David M. Skeens, J. Michael Vaughan, and Garrett M. Hodes of the law firm Walters Bender Strohbehn & Vaughan, P.C.. If you have questions regarding the Settlement, this Notice

or your options, you can contact Plaintiffs' Counsel without charge by writing to them at the

address provided above, or by calling 1-877-472-6620 or 816-421-6620 (KC Metro Area) or by visi?ting the website of Plaintiffs' Counsel, www.wbsvlaw.com and clicking on the link "Schwartz Settlement."

9. WHAT ARE THE REASONS FOR SETTLEMENT?

The Named Plaintiffs and the HomEq Defendants have agreed to the Settlement after

considering, among other things, (i) the substantial benefits available to the Settlement Class

under the terms of the Settlement Agreement; (ii) the attendant risks and uncertainty of litigation, especially in complex Iitigation such as this, as well as the difficulties and considerable delays inherent in such litigation; (iii) the vigorousness of the defenses asserted by the HomEq Defendants; and (iv) the desirability of consummating the Settlement promptly to provide effective relief to the Settlement Class.

The Court has not ruled on the merits of the claims or defenses in this case, and the HomEq Defendants have denied and continue to deny each and every claim asserted against them. The

HomEq Defendants have denied and continue to deny all charges of wrongdoing or liability against them arising out of or relating to any of the conduct, statements, acts, or omissions alleged, or that could have been alleged in the Lawsuit. Nonetheless, the HomEq Defendants have concluded that further litigation would be protracted and expensive, and that it is desirable that the lawsuit be fully and finally settled.in the manner and upon the terms and conditions set

forth in the Settlement Agreement.

10. WILL THE NAMED PLAINTIFFS OR PLAINTIFFS' COUNSEL RECEIVE COMPENSATION?

Yes. The Named Plaintiffs, as representatives of the Settlement Class, will make an application to the Court for approval of what is called an "incentive award." Such awards are used and made in class action lawsuits to provide an "incentive" to individuals like the Mr. and Mrs. Schwartz to

file and prosecute class action lawsuits for the benefit of a class or people they do not know. The

award also compensates the representatives of a class for their work and time (in this case over

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nine years of service) as class representatives (being interviewed and deposed, reviewing documents, meeting and conferring with class counsel, etc.) The Named Plaintiffs will ask the Court to approve and make an incentive award to them in this case of up to $18,000 for their, time, services and expenses throughout the course of the Lawsuit. The HomEq Defendants will not object to the Named Plaintiffs' application, but the Court must still determine and approve the amount of any incentive award to be made. Any incentive award made to the Named Plaintiffs will be paid from the Final Settlement Amount before distribution to the Settlement Class.

Plaintiffs' Counsel has prosecuted this litigation on a contingent basis and has incurred or

advanced all of the costs associated with the lawsuit since its inception in 2000. Plaintiffs' Counsel has not yet been paid for their work or received reimbursement for the expenses incurred or advanced on behalf of the Plaintiffs and the Class. The Court must also determine and approve the amount of any awards to be made to Plaintiffs' Counsel for attorneys' fees and litigation expenses. The amount of any such award must be reasonable based on a number of factors including, but not limited to, the nature and extent of the work involved, the difficulty of the case and the issues presented, the skill needed to conduct the case properly, the experience, •reputation and ability of the lawyers, the contingency or certainty of compensation, the

customary charges for similar work, and the amount involved in the controversy and the benefits resulting to the client.

Based on these and other factors, and as a part of the Settlement, Plaintiffs' Counsel will request the Court to approve an award of attorneys' fees and litigation expenses not to exceed the following: (a) $1,875,000 as reimbursement for actual attorney and paraprofessional time expended in connection with the Lawsuit over the past nine (9) years, plus 35% of the "Common Fund Recover)"' as defined above in Section 4 of this Notice; and (b) $150,000 for the litigation expenses and court cost that Plaintiffs' Counsel has also incurred and advanced in connection with the Lawsuit over the past nine (9) years. The amounts of any attorneys' fees and expense awards made to Plaintiffs' Counsel will be paid from the Final Settlement Amount before distribution. The Common Fund Recovery is that amount that remains after the Settlement Class and Plaintiffs' Counsel have been made whole as to 100% of the alleged actual damages for the Settlement Class by payment of the Initial Pavment ($1,188,032) and Plaintiffs Counsel have been paid 100% of their actual time investment (not to exceed $1,875,000) and expense investment (not to exceed $150,000). The Common Fund Recovery is estimated to be $768,968. The Settlement Class will receive 65% or $499,829 and Plaintiffs Counsel will receive 35% or

$269,139 from the estimated Common Fund Recovery.

The HomEq Defendants will no• object to the above application for attornev's fees and expenses by Plaintiffs' Counsel but the Court must still determine and approve the amount of any attorney's fee and expenses awards to be made. Any attorney's fee and expenses awards made

to Piaintiff%' Counsel also will be paid from the semen-lore

Settlement Class.

debc•u•u above in Section 4 of tkds Notice The range and average of the Settlement Payments have been estimated with the expectation that the Court will approve the applications for an

incentive award and an award of attorney's fees and expense as reasonable given, among other

-8-

things, the Named Plaintiffs' years of service, the complexity of the case, the nature and extent

of the legal work provided by Plaintiff's Counsel since 2000, and the extraordinary results obtained for the Settlement Class. If the Court approves an incentive award or an award of attorneys' fees and expenses in an amount less than that applied for, the difference shall be reallocated to the Net Settlement Funds.

11. WHAT CLAIMS WILL BE RELEASED UNDER THE SETTLEMENT?

If approved by the Court, the proposed Settlement will be legally binding upon all Settlement Class Members who did not timely request exclusion from the Settlement Class. The Settlement will fully, finally and forever release, settle, compromise relinquish and discharge any and all of the Released Persons of and from any and all Released Claims.

This means that you could not bring any lawsuit against the HomEq Defendants, or any other Released Persons identified in the Settlement Agreement, for any reason whatsoever relating to

the Released CIaims. You would still be able to enforce your rights under the Settlement Agreement, if necess.ary. If you or someone acting on your behalf are currently Iitigating similar claims against the HomEq Defendants, either individually or as part of a Plaintiff Class, you may be barred from pursuing such claims if you do not timely exclude yourself from the Settlement Class. You should consult with an attorney concerning your rights.

"Released Persons" shall be defined to include the HomEq Defendants and each of their partners, affiliates, parent companies, subsidiaries, divisions or other organizational units of any kind doing business in their own names, and doing business under any other names, any entity now or

in the past controlled by, controlling or under the common control with any of the foregoing and doing business under any other names, including but not timited to Wachovia Corporation and Wells Fargo & Co., and any and all of their respective affiliates and subsidiaries, and each of their respective predecessors, successors and assigns, and each of their past and present officers, directors, partners, shareholders, associates, trustees, employees, agents, attorneys (including any consultants hired by counsel), accountants, representatives, beneficial owners, investment advisors, investment bankers, insurers, independent contractors, heirs, executors, and administrators, and each of their respective predecessors, successors, and assigns, Notwithstanding the above, the term "Released Persons" does not include (a) Batm-Cor Mortgage, (b) the Master Financial Defendants, (c) any former defendant named in the Litigation and/or the companion case entitled John A. and Jeanette A. Schwartz, et al. v. Bann-Cor Mortgage, et al., Case No. 03 CV 224614, other than the HomEq Defendants, (d) or any other

person, association Or entity who is not a Released Party including, but not limited to, Residential Funding Company, LLC, Franklin Credit Management Corporation, Bank One, and any other

person, association or entity that serviced the loans of any of the Non-HomEq Plaintiff Borrowers, and/or any person, association or entity to whom the loans of any of the Non-HomEq PiaintiffBorrowers were soid, assigned or otherwise transfer•ed or conveyed.

'°Releasors" means the Named Plaintiffs, all Settlement Class Members, and ea'ch of their respective heirs, executors, administrators, assigns, predecessors, and succ.essors, and any other

person claiming by or through any or all of them. The Releasors shall not include all members of the Settiement Class who opt out of the Settlement Class.

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"Released Claims" means any and all claims, demands, actions, causes of action, rights, offsets, setoffs, suits, damages, lawsuits, liens, costs, surcharges, losses, attorneys' fees, expenses or

liabilities of any kind whatsoever, in law or in equity, for any relief whatsoever, including monetary, injunctive or declaratory relief, rescission, general, compensatory, special, liquidated, indirect, incidental, consequential or punitive damages, as well as any and all claims for treble damages, penalties, attorneys' fees, costs or expenses, whether known or unknown, alleged or

not alleged in the Litigation, suspected or unsuspected, contingent or vested, accrued or not

accrued, liquidated or unliquidated, matured or unmatured, that in any way concern, relate to, or

arise out of the Class Members' Bann-Cor Loans, and which any of the Releasors have, had, or

now have, from the beginning of time up through and including the Effective Date, against the Released Persons ("Claims"), including but not limited to, any and all Claims arising out of or

relating to: (1) allegations that were or could have been asserted in the Litigation in any way relating to the Class Members' Bann-Cor Loans; (2) the Fifth Amended Petition or the facts and circumstances giving rise thereto; (3) any activities the Released Persons took with respect to the

Class Members' Bann-Cor Loans; (4) any conduct undertaken by any of the Released Persons to

defend the Litigation, including but not limited to, any alleged improper discovery conduct and/or any request for san6tions in this Litigation; and/or (5)any alleged representations, misrepresentations, disclosures, incorrect disclosures, failures to disclose, acts (legal or illegal), omissions, failures to act, deceptions, acts of unconscionability, unfair business practices, breaches of contract, usury, unfulfilled promises, breaches of warranty or fiduciary duty, conspiracy, excessive fees collected, or violations of any consumer protection statute, any state

unfair trade practice statute, or any other body of case, statutory or common law or regulation, federal or state, including but not limited to the Missouri Second Mortgage Loan Act, R,S. Mo. § 408.231, et seq., or any other similar state statute; Truth in Lending Act, 15 U.S.C. § 1601, et

seq., and its implementing regulations, 12 C.F.R. part 226; the Home Ownership and Equity Protection Act, 15U.S.Co 8 1639, et seq., and its implementing regulation, 12C.F.R. part226.31-32; the Real Estate Settlement Procedures Act 12U.S.C. 82601, and its implementing regulation, 24 C.F.R. part 3500; the Equal Credit Opportunity Act, 15 U.S.C. 8 1691, et seq., and its implementing regulation, 12 C.F.R. part202; the Home Mortgage Disclosure Act, 12 U.S.C. 8 2801, et seq., and its implementing regulation, 12 C.F.R. part 203; the Fair Housing Act, 42 U.S.C. 88 3601, et seq.; the Fair Credit Reporting Act, 15 U.S.C. 88 1681, etseq.; the Fair Debt Collection Practices Act, 15 U.S.C. 88 1692, et seq.; and the Federal Trade Commission Act, 15 U.S.C. §§ 45, et seq. Released Claims also include, without limitation, any allegation that any Released Party has conspired with, aided and abetted, or

otherwise acted in concert with any other third parties, including, but not limited to, Bann-Cor Mortgage, with regard to any of the facts, acts, events, transactions, occurrences, courses of conduct, business practices, representations, omissions, circumstances or other matters related to

the Litigation or to discovery in the Litigation. It is the intention of Releasors :to provide a

general release of all Released Claims against the Released Persons; provided, however, that, to

than Bann-Cor Mortgage, which was subsequently purchased by and assigned to one or both of the HomEq Defendants, this Release does not apply as to that loan and/or loan transaction. To the extent a Settlement brass Member does not have such a •o•-Bann•Co, Loan," all of his, her

or its Released Claims against the Released Persons are released. Notwithstanding the above, the

term "Released Claims" does not include (a) any existing or furore claims, causes of action,

-10-

remedies, motions for sanctions and/or rights to relief that James Wong, Daniel and Wanda Jenson, and any of the other Non-HomEq Plaintiff Borrowers are asserting or may hereafter assert in the Litigation against any person, association or entity who is not a Released Person as

defined above; (b) any claims or causes of action by any person or entity other than a Releasor including, without limitation, the claims, causes of action, remedies, motions or requests for sanctions and/or any other rights to relief arising from, related to or based on the alleged improper discovery conduct, fraud on the court, representations, misrepresentations, disclosures, incorrect disclosures, failures to disclose, acts (legal or illegal), omissions, failures to act, and/or deceptions of the Released Persons, or any one or more of them, by the plaintiffs and/or the plaintiffs' class in the lawsuit entitled Steven R. and Ruth E. MitcheI1 v. Residential Funding Company LLC, et al., Case No. 03 CV220489 (currently on appeal), or any lawsuit or


12. WHAT IF THE SETTLEMENT IS NOT APPROVED BY THE COURT?

If the proposed Settlement is not approved by the Court as being fair, reasonable, and adequate, the Settlement Agreement will be null and void and the Named Plaintiffs will proceed with their claims in the Lawsuit. In that event, no payments will be made under the terms of the Settlement Agreement. The HomEq Defendants and the Named Plaintiffs could also attempt to enter into another settlement.

13. WHERE DO I GET _•DDITIONAL INFORMATION?

This Notice is only a summary of the proposed Settlement and does not describe all of the details of the Settlement Agreement. Accordingly, Settlement Class Members are referred to the Settlement Agreement and the other documents filed with the Court in the lawsuit, all of which

are available upon request from Plaintiffs' Counsel, or by visiting the website of Settlement Class Counsel, www.wbsvlaw.com and clicking on the link "Schwartz Settlement."

14. WHAT ARE THE RELEVANT DATES?

If you wish to request exclusion from the Settlement Class or appear at the Fairness Hearing, these are the relevant dates:

Deadline for mailing a request for exclusion (must be received by): June__, 2009

Deadline for filing and serving notice of appearance, motion to intervene or

written objection (must be received by the court by): June__, 2009

Date and time of Fairness Hearing: July__, 2009 at .m.

PLEASE DO NOT CONTACT THE COURT OR THE CLERK'S OFFICE FOR INFORM_ATION. This Notice provides only a surrkrnary of matters about the lawsuit. You

may also contact Plaintiffs' Counsel at the address listed in Section 7 of this Notice. if you have

any questions, please contact Plaintiffs' Counsel in writing at the address provided above or call 816-421-6620.

-11-

This notice is sent pursuant to Rule 52.08 of the Missouri Rules of Civil Procedure and BY ORDER OF THE COURT

DATED:

-12-

EXHIBIT B: PROPOSED PRELIMINARY APPROVAL ORDER



Plaintiffs.

VS.

BANN,COR MORTGAGE, et al.,

Defendants.

Case No. 00 CV 226639 Case No. 00 CV 226639-01 Case No. 00 CV 226639-02 Case No. 00 CV 226639-03

Division 14

[PROPOSED] ORDER PRELIMINARILY APPROVING T• CLASS ACTION SETTLEMEI'•I

WHEREAS, a Class Action Petition has been filed in this Court on behalf of John and

Jeannette Schwartz, et al., against Barm-Cor Mortgage, et al., Case No. 00-CV-226639 (the

"Litigation"); and


comprised of those persons who obtained a second mortgage loan from Bann-Cor Mortgage on

or after October 3 I, 1994 (the "Litigation CIass"); and


opportunity to opt out or exclude themselves from the Litigation Class and no class members

timely elected to exercise his, her, or its right to opt out of the Litigation Class; and


Litigation Class whose Bann-Cor Loans were purchased by and assigned to TMS Mortgage, Inc.,

twoney Store e "• .... -, •__ ,a^_ •'•'• Litigation Class

whose Barm-Cor Loans were purchased or assigned to someone other than TMS Mortgage, Inc.

d/b/a The Money Store ("Non-HomEq Plaintiff Borrowers"); and

WHEREAS, Plaintiffs John and Jeannette Schwartz (as members of the Litigation Class

whose Barm-Cor Loans were purchased by and assigned to TMS Mortgage, Inc. dJb/a The

Money Store) (the "Named Plaintiffs") and Defendant Wachovia Equity Servicing, LLC, as

successor in interest to HomEq Servicing Corp. (f/k/a TMS Mortgage Inc.) and Defendant The

Money Store, LLC (collectively, '•he HomEq Defendants") have entered into a "Settlement

Agreement and Release" dated May 11, 2009 (the "Agreement"), in which said parties have

agreed upon a settlement of the Litigation as between them and the members of a proposed

Settlement Class, subject to the approval of the Court; and

WHEREAS, the Named Plaintiffs have filed a Motion for Preliminary Approval of

Settlement with the Court.

NOW THEREFORE, upon careful consideration of the Motion for Preliminary Approval

of Settlement, and after review of the Agreement executed by Named Plaintiffs John and

Jeannette Schwartz and the HomEq Defendants (hereinafter the "Parties"), and for good cause

shown,

IT IS HEREBY ORDERED, ADJUDGED AND DECREED as follows:

1. The terms of the Agreement, and the Settlement provided therein, are approved

preliminarily as fair, reasonable and adequate to the Settlement Class as defined in the

Agreement, subject to further consideration at the Fairness Hearing described in paragraph 12 of

this Order,

2. The definitions set forth in the Agreement are hereby incorporated by reference

3. The Parties have executed the Agreement in order to settle and resolve the

Litigation as between them and the members of the Settlement Class, subject to the approval of

the Court.

4. Accordingly, for the purpose of a settlement in accordance with the Agreement,

and upon review of the Named Plaintiffs' Motion for Preliminary Approval of Proposed

Settlement, this Court hereby preliminarily certifies the following class of persons as a settlement

class (the "Settlement Class"):

"All persons who, on or after October 31, 1994, obtained a "Second Mortgage Loan" as

defined in R.S. Mo. § 408.231.1, that was secured by a mortgage or a deed of trust on

residentiai real property located in the State of Missouri, originated by Barm-Cor

Mortgage, and purchased by and assigned to TMS Mortgage, Inc. d/b/a The Money

Store."

5. Pursuant to the Agreement, and for settlement purposes only, the Court finds

preliminarily as to the Settlement Class that:

a. The Settlement Class is so numerous that joinder of all members is

impracticable;

b. There are questions of law or fact common to the Settlement Class which

predominate over questions affecting only individual members of the Settlement Class;

The claims of the Named Plaintiffs are typical of those of the Settlement Co

Class;

d. The Named Plaintiffs and their counsei will fairly and adequately protect

the interests of each of the members of the SettIement Class; and

e. Certification of the •e•tiemem t•ass is axi appropriate m•,•'-• •- •c •'•:-•

and efficient adjudication of the controversies between the Settlement Class Members

and the HomEq Defendants.

6. For the purpose of this preliminary approval and all matters relating to the

Settlement •and the Litigation, until further order of the Court, the Court appoints the Named

Plaintiffs, John and Jeannette Schwartz, as Representatives of the Settlement Class and R.

Frederick Walters, Kip D. Richards, David M. Skeens, J. Michael Vaughan, and Garrett M.

Hodes of the law firm Walters Bender Strohbehn & Vaughan, P.C., as Counsel for the

Settlement Class ("Class Counsel").

7. By this Order, the Court hereby exercises subject matter and personal jurisdiction

over the Settlement Class for purposes of evaluating the final certification of the Settlement

Class and the fairness and adequacy of the Settlement.

8. The Class Mail Notice, as set forth in Exhibit A to the Agreement, is approved.

9. The Class Mail Notice, in substantially the form set forth in Exhibit A, shall be

mailed by Class Counsel to all persons on the Settlement Class list, and any known Chapter 7

bankruptcy trustees of any Settlement Class member for a Chapter 7 bankruptcy filed after

origination of the Settlement Class member's loan, by first-class mail, postage prepaid. Such

mailing shall be completed within five (5) days of this Preliminary Approval Order.

10. The Agreement contemplates a notice methodology that protects the interests of

the Settlement Class and the Parties, is the best notice practicable under the circumstances and is

reasonably calculated to apprise the members of the Settlement Class of the pendency of the

Litigation, the Agreement, and the right to opt out and exclude themselves from or object to the

proposed Settlement. In addition, the Court finds that the notice methodology is reasonable and

proposed Settlement and meets all applicable requirements of law, including, but not limited to,

Mo. R. Civ. P. 52.08 and the Due Process Clause of the Fourteenth Amendment of the United

States Constitution.

11. Prior to the Fairness Hearing, Class Counsel shall serve and file a sworn statement

of a person with knowledge, evidencing compliance with the provisions of this Order concerning

the mailing of the Class Mail Notice.

12. Any member of the Settlement Class wishing exclusion from the Settlement Class

shall mail a request for exclusion ("Request for Exclusion") to the Parties' respective counsel.

To be valid, the Request for Exclusion must be received on or before June 2009. Such

Request for Exclusion shall include: (a) the name, address, telephone number and the last four

digits of the class member's social security number; (b) the applicable loan number(s) of the

class member's loan (if known); (c) a statement that the class member and all other borrowers

named on the class member's promissory note are seeking exclusion; (d) the signature of each

person who was a party to the promissory note made in connection with the class member's loan

(unless any such person shall be deceased, in which case the opt out submission shall include a

copy of such person's death certificate); (e) a reference to "John and Jeannette Schwartz, et al., v.

Barm-Cor Mortgage, et al., Case No. 00-CV-226639"; and (f) the signature of the class member.

Any member of the Settlement Class who does not properly and timely request exclusion from

the Settlement Class shall be included in the Settlement Class and be bound by any judgment

entered in this Action with respect to said Class.

13. Within a reasonable period after the deadline for submitting Requests for

Exclusion, but before the Final Approval Hearing, Class Counsel shall file with the Court a

sworn statement listing those persons who _, ,. ....... •,• .... ._.,_h_: si.ioiiil•eu tlnieiy •eques• r•xciubi•xl. 1

originals of all Requests for Exclusion shall be retained by the parties.

14. A hearing (the "Fairness Hearing") shall be held before the undersigned at

.m. on July __,

2009, in Division 14 at the Jackson County Courthouse, 308 W.

Kansas, Independence, MO 64050. At the Fairness Hearing, the Court will consider: (a) the

fairness, reasonableness, and adequacy of the proposed Settlement; (b) the entry of any final

order or judgment in the Litigation with respect to the Settlement Class; (c) the application for

attorney's fees and for reimbursement of expenses by Class Counsel; (d) the application for an

incentive award for the services rendered by the Named Plaintiffs; and (e) other related matters.

The Fairness Hearing may be postponed, adjourned or continued by Order of the Court without

further notice to the Settlement Class.

15. To be considered at the Fairness Hearing, any person.desiring to file an objection

or other comment on the Settlement shall be required to file all such objections and comments

and all supporting pleadings on or before June w,

2009, with service upon Class Counsel and

Defendants' Counsel. In his/her Objection, an objecting Settlement Class Member must (a) set

forth his&er full name, current address, and telephone number; (b) state that the Settlement Class

Member objects to the Settlement in whole or in part; (c) set forth a specific statement of the

legal and factual basis for the Objection; (d) provide copies of any and all documents that the

objector wishes the Court to consider in connection with the Objection; (e) provide the names of

any witnesses, and, provide a •¢itten expert report from all proposed experts who may be offered

at the Fairness Hearing; (f) provide copies of any other loan documents on which the objector

relies as a basis for the objection; (g) if the objector is represented by counsel, provide a detailed

description of the legal authorities supporting each objection; and (h) reference "John and

Jeannette Schwartz, et ai., v. •-cor iviortgage, e• al., •ase •'•o.

Objection to or other comment concerning the Settlement shall be heard unless timely filed in

accordance with the guidelines specified above and in the Agreement. Class Counsel and

6

Defendants' Counsel shall promptly furnish each other with copies of any and all objections or

written requests for exclusion that come into their possession.

16. Any Settlement Class Member who does not make his or her objection in the

manner provided in this Order shall be deemed to have waived any such objection and shall

forever be foreclosed from making any objection to Settlement, including but not limited to, the

propriety of class certification, the adequacy of any notice, or the fairness, adequacy or

reasonableness of the Settlement.

17. Submissions of the Parties relative to the Settlement, including memoranda in

support of the Settlement, applications for attorneys' fees and reimbursement of expenses by

Plaintiffs' Counsel, and any applications for the payment of services rendered by the Named

Plaintiffs, shall be filed with the Clerk of the Court on or before June __,

2009. Any attorney

hired by a Settlement Class Member at the Class Member's expense for the purpose of objecting

to the Settlement, or to any application for an incentive award, attorney's fees or expenses shall

file with the Clerk of Court and serve upon Class Counsel and Defendants' Counsel a written

notice of appearance no later than __,

2009.

18. Any Settlement Class Member may appear at the Fairness Hearing in person, or

by counsel if an appearance is filed and served as provided in the Notice, and such person will be

heard to the extent allowed by the Court. No person shall be permitted to be heard unless, on or

before •,

2009, such person (a) has filed with the Clerk of the Court a notice of such

person's intention to appear, and (b) has served copies of such notice upon Class Counsel and

Defendants' Counsel,

19. Any Settlement Class Member may intervene in the Litigation in person, or by

counsel if a motion to intervene is filed and served as provided in the Notice. No person shall be

permitted to intervene unless, on or before •,

2009, such person (a) has filed with the CIerk

of the Court a valid motion to intervene; and (b) has served copies of such notice upon Class

Counsel and Defendants' Counsel.

20. All other events contemplated under the Agreement to occur after this Order and

before the Fairness Hearing shall be governed by the Agreement, and the Class Mail Notice, to

the extent not inconsistent herewith. Class Counsel and Defendants' Counsel shall take such

further actions as are required under the Agreement.

21. The Parties shall be authorized to make non-material changes to the Class Mail

Notice so long as Class Counsel and Defendants' Counsel agree, and one of the Parties files a

notice thereof with the Court prior to the Fairness Hearing.

22. All claims against and motions involving the HomEq Defendants in the

Litigation, other than such as may be necessary to carry out the terms and conditions of the

Agreement or the responsibilities related or incidental thereto, are stayed and suspended until

•rther order of this Court.

23, The claims of Plaintiffs James Wong, Daniel and Wanda Jensen and/or any of the

other Non'HomEq Plaintiff Borrowers against Bann-Cor Mortgage, the Master Financial

Defendants and any other person, association or entity other than a Released Person are not

stayed or suspended by the Agreement, this Order, or otherwise. The claims and causes of action

of Plaintiffs James Wong, Daniel and Wanda Jensen and the other Non-HomEq Plaintiff

Borrowers against Bann-Cor Mortgage, the Master Financial Defendants and any other person,

as ictenii[leO, in i•u association or entity other fnax• a Released Person

by the Agreement

24. If Final Approval of the Settlement does not occur, or if the Settlement is

terminated for any reason whatsoever, the Settlement and all proceedings had in connection

therewith shall be null and void and without prejudice to the rights of the Parties before the

Settlement was executed and made, and all Orders issued pursuant to the Settlement shall be

vacated.

25. Neither this Order, the Agreement, nor any of its terms or provisions, nor any of

the negotiations between the Parties or their counsel (nor any action taken to carry out this

Order), is, may be construed as, or may be used as an admission or concession by or against any

of the Parties or the Released Persons of the validity of any claim or liability, any alleged

violation or failure to comply with any law, any alleged breach, of contract, any legal or factual

argument, contention or assertion. Entering into or carrying out the Agreement, and any

negotiations or proceedings related to it, shall not in any way be construed as, or deemed

evidence of, an admission or concession as to the HomEq Defendants' denials, defenses, or

factual or legal positions, and shall not be offered or received in evidence in any action or

proceeding against any party in any court, administrative agency or other tribunal for any

purpose whatsoever, except as is necessary in a proceeding to enforce the terms of this Order and

the Agreement, or to prove or show that a compromise in settlement of the Released Claims per

the Agreement, in fact, was reached; provided, however, that this Order and the Agreement may

be filed in any action filed against or by the HomEq Defendants or the Released Persons to

support a defense of resjudicata, collateral estoppel, release, Waiver, good faith settlement,

judgment bar or reduction, full faith and credit, or any other theory of claim preclusion, issue

preciusion or similar defense or counterci'•m, ine •omEq Defendants expressly reserve all

rights and defenses to any claims and do not waive any such rights or defenses in the event that

the Agreement is not approved for any reason.

IT IS SO ORDERED

Date

John M, Torrence, Circuit Judge

10

EXHIBIT C: PROPOSED FINAL APPROVAL ORDER

IN THE CIRCUIT COURT OF JACKSON COUNTY, MISSOURI AT KANSAS CITY

JOHN AND JEANETTE SCHWARTZ, et al., ) )

Plaintiffs, ) )

v. ) )

BANN-COR MORTGAGE, et al., ) )

Defendants. )


Division 14

[PROPOSED] O•ER FINALLY APPROVING THE CLASS ACTION SETTLEMENT AND CERTIFYING A CLASS FOR SETTLEMENT PURPOSES

Upon careful review and consideration of the Settlement Agreement and Release dated

May 11, 2009 (the "Agreement") that has been entered into by the Parties; the evidence and

arguments of counsel presented at the Fairness Hearing held on July __,

2009; the memoranda

filed with this Court; and the timely objections to, and other filings in connection with, the

settlement between the Parties memorialized in the Agreement (the "Settlement"); and for good

cause shown,

IT IS HEREBY ORDERED, ADJUDGED AND DECREED as foltows:

1. Incorporation of Other Documents. This Order hereby incorporates and makes

a part hereof:

a.

b.

The Agreement filed with this Court on or about May 11, 2009;

The following exhibits to the Agreement: (i) Exhibit A (Class Mail

Se•Iement); (iii) E•ibit C (Proposed Order Finally Approv•g the Class Action

Se•iement and Ce•i•ing a Class for Se•lement P•oses); (iv) ExMbit D (Proposed

Final Judgment); (v) Exhibit E (list of Settlement Class members, filed under seal);

(vi) Schedule A @roposed Distribution Schedule of Settlement Funds, flied under seal).

Unless otherwise provided herein, all capitalized terms in this Order shall have the same

meaning as those terms in the Agreement.

2. Jurisdiction. Because adequate notice has been disseminated and all potential

members of the Settlement Class (as defined below) have been given notice and the oppommity

to opt-out of this class action, the Court has personal jurisdiction over all members of the

Settlement Class. The Court has subject matter jurisdiction over this Litigation, including,

without limitation, jurisdiction to approve the proposed Settlement, to grant final certification of

the Settlement Class, and to dismiss this Litigation on the merits with prejudice as against the

HomeEq Defendants.

3. Final Class Certification. The Settlement Class, which this Court previously

certified preliminarily, is hereby finally certified for settlement purposes under Rule 52.08 of the

Missouri Rules of Civil Procedure, the Court findir•g that the Settlement Class fully satisfies all

the applicable requirements of Rule 52.08 and due process. The Settlement Class is defined as

follows:

All persons who, on or after October 31, 1994, obtained a "Second Mortgage Loan"

as defined in R.S. Mo. § 408.231,1, that was secured by a mortgage or a deed of trust on residential real property located in the State of Missouri, originated by Bann-Cor Mortgage and purchased by and assigned to TMS Mortgage, Inc., d/b/a The Money Store.

[No members of the Settlement Class timely requested to be excIuded from or "opted out" of the

Settlement Class, and who therefore are not bound by the Settlement and the accompanying

2

Final Judgment, is attached hereto as Exhibit 1, and is incorporated herein and made a part

hereof.]

4. Adequacy of Representation. There are no apparent conflicts of interest

between the Named Plaintiffs, John and Jeanette Schwartz and the Settlement Class or among

the class, and the Representative Plaintiffs and their counsel will fairly and adequately protect

the interests of the Settlement Class. Accordingly, the Named Plaintiffs, John and Jeanette

Schwartz, and their counsel, R. Frederick Walters, Kip D. Richards, David M. Skeens, J.

Michael Vaughan, and Garrett M. Hodes of the law firm Waiters Bender Strohbehn & Vaughan,

P.•C., have satisfied the requirements of Rule 52.08 and are appointed and approved as

representatives of the Settlement Class and as :Counsel for the Settlement Class ("Plaintiffs'

Counsel" or "Class Counsel").

5, Class Notice. The Court finds that the Class Mail Notice and its distribution to

the Settlement Class implemented pursuant to the Agreement and this Court's Preliminary

Approval Order:

a. constituted the best practicable notice to the members of the Settlement

Class under the circumstances of this Litigation;

b. constituted notice that was reasonably calculated, under the circumstances,

to apprise the members of the Settlement Class (i) the pendency of this Litigation,

(ii) their right to exclude themselves from the Settlement Class and the proposed

Settlement, (iii) their right to object to any aspect of the proposed Settlement (including

proposed settlement; the adequacy of the Named Plaintiffs' or Class Counsel's

representation of the Settlement Class; and/or the award of attorneys' fees), (iv) their

right to appear at the Fairness Hearing if they did not exclude themselves from the

Settlement Class, and (v) the binding effect of the Orders and Judgment in this Litigation

on all Class Members who did not request exclusion from the Settlement Class,

c. constituted notice that was reasonable and constituted due, adequate and

sufficient notice to all persons and entities entitled to be provided with notice; and

d. constituted notice that fully satisfied the requirements of Rule 52,08, due

process, and any other applicable law.

6. Final Settlement Approval. The terms and provisions of the Agreement,

including all exhibits, have been entered into in good faith and as a result of arm's length

negotiations and are hereby fully and finally approved as fair, reasonable and adequate as to, and

in the best interests of, each of the Parties and members of the Settlement Class, and in full

compliance with all applicable requirements of the laws of the State of Missouri, the United

States Constitution (including the Due Process Clause), and any other applicable law. The

Parties are hereby directed to implement and consummate the Agreement according to its terms

and provisions.

7. Bindin• Effect. The terms of the Agreement, this Order and the accompanying

Final Judgment shall be forever binding on the Named Plaintiff and all other members of the

Settlement Class, as well as their respective heirs, executors, administrators, assigns,

predecessors, and successors, and any other person claiming by or through any or all of them.

The terms of the Agreement, this Order and the accompanying Final Judgment shall have res

judicata and other preclusive effect as to the Reieasors •or me i•eieasea •io.,•1•.

8. Releases. The Named Plaintiff and all other Settlement Class Members (defined

as those members of the Settlement Class who did not timely opt out of the Settlement) shall be

bound by the release provided in Paragraph 6 of the Agreement, which is incorporated herein in

all respects, regardIess of whether such persons received any compensation under the

Agreement. The Releases are effective as of the date of this Final Approval Order and the

accompanying Final Judgment. The Court expressly adopts all defined terms in paragraph 6 of

the Agreement, including but not limited to the following definition of the claims subject to the

Release (which is set forth at Paragraph 2.19 of the Agreement):

"Released Claims" means any and all claims, demands, actions, causes of action, rights, offsets, setoffs, suits, damages, lawsuits, liens, costs, surcharges, losses, attorneys' fees, expenses or liabilities of any kind whatsoever, in law or in equity, for

any relief whatsoever, including monetary, injunctive or declaratory relief, rescission, general, compensatory, special, liquidated, indirect, incidental, consequential or

punitive damages, as well as any and all claims for treble damages, penalties, attorneys' fees, costs or expenses, whether known or unknown, alleged or not alleged in the Litigation, suspected or unsuspected, contingent or vested, accrued or not

accrued, liquidated or unliquidated, matured or unmatured, that in any way concern, relate to, or arise out of the Class Members' Bann-Cor Loans, and which any of the Releasors have, had, or now have, from the beginning of time up through and including the Effective Date, against the Released Persons ("Claims"), including but

not limited to, any and all Claims arising out of or relating to: (1) allegations that

were or could have been asserted in the Litigation in any way relating to the Class Members' Barm-Cor Loans; (2) the Fifth Amended Petition or the facts and circumstances giving rise thereto; (3) any activities the Released Persons took with

respect to the Class Members' Bann-Cor Loans; (4) any conduct undertaken by any of the Released Persons to defend the Litigation, including but not limited to, any alleged improper discovery conduct and/or any request for sanctions in this Litigation; and/or (5) any alleged representations, misrepresentations, disclosures, incorrect disclosures, failures to disclose, acts (legal or illegal), omissions, failures to

act, deceptions, acts of unconscionabiIity, unfair business practices, breaches of

contract, usury, unfulfilled promises, breaches of warranty or fiduciary duty, conspiracy, excessive fees collected, or violations of any consumer protection statute,

any state unfair trade practice statute, or any other body of case, statutory or common

law or regulation, federal or state, including but not limited to the Missouri Second Mortgage Loan Act, R.S. Mo. § 408.231, et seq., or any other similar state statute; -Truth in Lending Act, t5 U.S.C: § 1601, et seq., and its implementing regulations, 12 C.F.R. part 226; the Home Ownership and Equity Protection Act, i5 U.S.C. § t639, et seq., and its implementing regulation, 12 C.F.R. part 226.31-32; the Real Es•uate Settlement Procedures Act 12 U.S.C. § 260 !, and its implementing regulation, 24 C.F.R. part 3500; the Equal Credit Opportunity Act, 15 U.S.C. § 169i, et seq., and its implementing regulation, 12 C.F.R. part 202; the Home Mortgage Disclosure Act, 12 U.S.C. § 2801, et seq., and its implementing regulation, 12 C.F.R. part 203; the

Fair Housing Act, 42 U.S.C. §§ 3601, et seq.; the Fair Credit Reporting Act, 15 U.S.C. §§ 1681, et seq. ;the Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692, et seq.; and the Federal Trade Commission Act, 15 U.S.C. §§ 45, et seq. Released Claims also include, without limitation, any allegation that any Released Party has conspired with, aided and abetted, or otherwise acted in concert with any other third parties, including, but not limited to, Bann-Cor Mortgage, with regard to any of the facts, acts, events, transactions, occurrences, courses of conduct, business practices, representations, omissions, circumstances or other matters related to the Litigation or

to discovery in the Litigation. It is the intention of Releasors to provide a general release of all Released Claims against the Released Persons; provided, however, that, to the extent a Settlement Class Member obtained another loan originated by a

third-party other than Barm-Cor Mortgage, which was subsequently purchased by and assigned to one or both of the HomEq Defendants, this Release does not apply as to

that loan and/or loan transaction. To the extent a Settlement Class Member does not

have such a "non-Bann-Cor Loan," all of his, her or its Released Claims against the Released Persons are released. Notwithstanding the above, the term "Released Claims" does not include (a) any existing or future claims, causes of action, remedies, motions for sanctions and/or rights to relief that James Wong, Daniel and Wanda Jenson, and any of the other Non-HomEq Plaintiff Borrowers are asserting or may hereafter assert in the Litigation against any person, association or entity who is not a

Released Person as defined above; (b) any claims or causes of action by any person or

entity o•er than a Releasor including, without limitation, the claims, causes of action, remedies, motions or requests for sanctions and/or any other rights to relief arising from, related to or based on the alleged improper discovery conduct, fraud on the

court, representations, misrepresentations, disclosures, incorrect disclosures, failures

to disclose, acts (legal or illegal), omissions, failures to act, and/or deceptions of the Released Persons, or any one or more of them, by the plaintiffs and/or the plaintiffs' class in the lawsuit entitled Steven R. and Ruth E. Mitchell v. Residential Funding Company LLC, et al., Case No. 03 CV220489 (currently on appeal), or any lawsuit or


9. Enforcement of Settlement. Nothing in this Final Approval Order or the

accompanying Final Judgment shall preclude any action to enforce the terms of the Agreement.

10. Attorneys' Fees and Expenses. Plaintiffs' Counsel are hereby awarded

attorneys fees and reimbursement of their disbursements and expenses to be paid out of the

Settlement Funds as foilowS: (a) $ as reimbursement for actual attorney and

professional time expended in connection with the Litigation, plus 35% of the $

"Common Fund Recovery" (as defined in the Agreement): and (b) $. for the

litigation expenses and court costs that Plaintiffs' Counsel has incurred and advanced in

connection with the Litigation. The Court finds and concludes that the award of such attorneys'

fees and expenses to Plaintiffs' Counsel for their work in this case is reasonable. [Plaintiffs may

propose additional language for the Court to consider including in the final order in support of

Plaintiffs' fee award.]

11. Additional Payment to Named Plaintiffs. The Court hereby awards $I 8,000 to

be paid from the Settlement Funds to the Named Plaintiffs as an incentive award for their

services as representative plaintiffs in this Litigation.

12. No Other Payments. The preceding paragraphs of this Final Approval Order

cover, without limitation, any and all claims for attorneys fees and expenses, costs or

disbursements incurred by Plaintiffs' Counsel or any other counsel representing the Named

Plaintiffs or the Settlement Class, or incurred by the Named Plaintiff or the Class Members, or

any of them, in connection with or related in any manner to this Litigation, the Settlement of this

Litigation, the administration of such Settlement, and/or the Released Claims except to the extent

otherwise specified in this Final Approval Order or the Agreement.

13. Retention of Jtwisdiction. The Court has jurisdiction to enter this Final

Approval Order and the accompanying Final Judgment. Without in any way affecting the

finality of this Final Approval Order and the accompanying Final Judgment, this Court expressly

retains jurisdiction as to all matters relating to the administration, consummation, and

enforcement of the Agreement and of this Final Approval Order and the accompanying Final

Judgment, and for any other necessary purpose, including, without Iimitation:

disputes, claims or causes of action that, in whole or in part, are related to or arise out of

the Agreement, this Finai Approval Order or the Final Judgment (including, without

limitation, whether a person or entity is or is not a Settlement Class Member; whether

claims or causes of action allegedly related to this case are or are not barred by this Final

Approval Order and the Final Judgment);

b. entering such additional Orders as may be necessary or appropriate to

protect or effectuate the Court's Final Approval Order and the Final Judgment, and

dismissing all claims on the merits and with prejudice, or to ensure the fair and orderly

administration of this Settlement; and

c. entering any other necessary or appropriate Orders to protect and

effectuate this Court's retention of continuing jurisdiction.

14. No Admissions. Neither this Final Approval Order, nor the accompanying Final

Judgment, nor the Agreement, nor any of its terms or provisions, nor any of the negotiations

between the Parties or their counsel, nor any action taken to carry out this Order or the Final

Judgment, is, may be construed as, or may be used as an admission or concession by or against

any of the Parties or the Released Persons of the validity of any claim or !iability, any alleged

violation or failure to comply with any law, any alleged breach of contract, any legal or factual

argument, contention or assertion. Entering into or cm•ing out the Agreement, and any

negotiations or proceedings related to it, shall not in any event be construed as, or deemed

evidence of, an admission or concession as to the HomEq Defendants' denials, defenses, factual

or legal positions, and shall not be offered or received in evidence in any action or proceeding

against any party in any court, administrative agency or other tribunal for any purpose

whatsoever, except as necessa-y in a

Agreement or to prove or show that a compromise in settlement of the Released Claims per the

Agreement, in fact, was reached; provided, however, that this Order and the Agreement may be

filed in any action against or by the HomEq Defendants or the Released Persons to support a

defense of resjudicata, collateral estoppel, release, waiver, good faith settlement, judgment bar

or reduction, full faith and credit, or any other theory of claim preclusion, issue preclusion or

similar defense or counterclaim.

15. Dismissal of Litigation. This Litigation against the HomEq Defendants,

including all individual and class claims resolved in it and Plaintiffs' pending motions for

sanctions, is hereby dismissed on the merits and with prejudice as to the Named Plaintiffs and all

other Settlement Class Members, without fees or costs to any party except as otherwise provided

in this Order and the Final Judgment.

16. Bar Order Regarding Severed Claims. On March 25, 2008, this Court certified

a litigation class that included certain borrowers whose loam were originated by Barm-Cor

Mortgage but were never purchased by, or otherwise assigned to The Money Store (such

borrowers, collectively, are the '•Non-HomEq Plaintiff Borrowers"). On March 26, 2008, this

Court severed the claims of the Non-HomEq Plaintiff Borrowers from those of the Settlement

Class Members. This Court finds and concludes consistent with its order of March 26, 2008, that

the Non-HomEq Plaintiff Borrowers are not asserting any claims against the HomEq Defendants

in the Litigation, and cannot recover any damages from the HomEq Defendants as a result of the

Barm-Cor Loans. This Court hereby Orders that the Non-HomEq Plaintiff Borrowers are forever

barred from reCovering damages from the HomEq Defendants as a result of the Barm-Cor Loans.

17. Separate Judgment. The Court will separately enter the accompanying Final

DATED: July __,

2009

John M. Torrence, Circuit Judge

l0

EXHIBIT D: PROPOSED FINAL JUDGMENT



Plaintiffs.

VS.

BANN-COR MORTGAGE, et aI.,

Defendants.


Division 14

[PROPOSED] FINAL JUDGMENT

IT IS HEREBY ORDERED, ADJUDGED AND DECREED THAT:

1. The settlement of this class action on the terms set forth in the parties' Settlement

Agreement and Release (the "Agreement"), dated May 11, 2009, is approved, and the following

Settlement Class is granted final certification for settlement purposes under Mo. R. Cir. P. 52.08:

"All persons who, on or after October 31, 1994,-obtained a "Second Mortgage

Loan" as defined in R.S. Mo. § 408.231.1, that was secured by a mortgage or a

deed of trust on residential real property located in the State of Missouri,

originated by Bann-Cor Mortgage, and purchased by and assigned to TMS

Mortgage, lnc. d/b/a The Money Store.

If applicable, a list of those persons who have excluded themselves from the Settlement Class,

and who therefore are not bound by this Final Judgment, is attached hereto as Exhibit 1, and is

incorporated herein and made a part hereof.

2. Individual notice complying with Rule 52.08 was sent to the Iast-known address

of each member of the Settlement Class. 1he court finds aii members of the bememen• t_,•as- to

be Settlement Class Members who are bound by this Final Judgment, except those Class

Members who have been timely excluded from the Settlement Class.

3. The claims in this Litigation against the HomEq Defendants, including Plaintiffs'

motions for sanctions, are dismissed on the merits and with prejudice according to the terms set

forth in the parties' Agreement and in the Court's Order Finally Approving the Class Action

Settlement and Certifying a Class for Settlement Purposes, dated this same

date ,2009 (the "Approval Order"), without costs to any party except as

provided therein.

4. On March 25, 2008, this Court certified a litigation class that included certain

borrowers whose loans were originated by Bann-Cor Mortgage but were never purchased by, or

otherwise assigned to The Money Store (such borrowers, collectively, are the "Non-HomEq

Plaintiff Borrowers"). On March 26, 200.8, this Court severed the claims of the Non-HomEq

Plaintiff Borrowers from those of the Settlement Class Members. This Court finds and

concludes that the Non-HomEq Plaintiff Borrowers are not asserting any claims against the

HomEq Defendants in the Litigation and cannot recover any damages from the HomEq

Defendants as a result of the Barm-Cor Loans. This Court hereby Orders that the Non-HomEq

Plaintiff Borrowers are forever barred from recovering damages from the HomEq Defendants as

a result of the Bann-Cor Loans.

5. The Named Plaintiffs and all Settlement Class Members who have not been

timely excluded from the Plaintiff Class shall be bound by the release provided in Paragraph 6 of

the Agreement. Persons requesting exclusion are listed in Exhibit A to the Approval Order.

6. The Court will retain continuing jurisdiction over this Litigation for the reasons

and purposes set forth in this Court's Approval Order. The Court expressly determines there is

no just reason for delay under Rule 74.01.

7. Unless otherwise provided herein, all capitalized terms in this Order shall have

the same meaning as those terms in the Agreement.

DATED: ,2009


EXHIBIT B: PROPOSED PRELIMINARY APPROVAL ORDER



Plaintiffs.

VS.


Defendants.


Division 14

[PROPOSED] ORDER PRELIMINARILY APPROVING THE CLASS ACTION SETTLEMENT.

WHEREAS, a Class Action Petition has been filed in this Court on behalf of John and

Jeannette Schwartz, et al., against Bann-Cor Mortgage, et al., Case No. 00-CV-226639 (the

"Litigation"); and


comprised of those persons who obtained a second mortgage loan from Bann-Cor Mortgage on

or after October 31, 1994 (the "Litigation Class"); and


opportunity to opt out or exclude themselves from the Litigation Class and no class members

timely elected to exercise his, her, or its right to opt out of the Litigation Class; and


Litigation Class whose Bann-Cor Loans were purchased by and assigned to TMS Mortgage, Inc.,

d/b/a The Money Store (the "Settlement Class") from those members of the Litigation Class

whose Bann-Cor Loans were purchased or assigned to someone other than TMS Mortgage, Inc.

d/b/a The Money Store ("Non-HomEq Plaintiff Borrowers"); and

WHEREAS, Plaintiffs John and Jeannette Schwartz (as members of the Litigation Class

whose Bann-Cor Loans were purchased by and assigned to TMS Mortgage, Inc. d/b/a The

Money Store) (the "Named Plaintiffs") and Defendant Wachovia Equity Servicing, LLC, as

successor in interest to HomEq Servicing Corp. (f/k/a TMS Mortgage Inc.) and Defendant The

Money Store, LLC (collectively, "the HomEq Defendants") have entered into a "Settlement

Agreement and Release" dated May 11, 2009 (the "Agreement"), in which said parties have

agreed upon a settlement of the Litigation as between them and the members of a proposed

Settlement Class, subject to the approval of the Court; and

WHEREAS, the Named Plaintiffs have filed a Motion for preliminary Approval of

Settlement with the Court.

NOW THEREFORE, upon careful consideration of the Motion for Preliminary Approval

of Settlement, and after review of the Agreement executed by Named Plaintiffs John and

Jeannette Schwartz and the HomEq Defendants (hereinafter the "Parties"), and for good cause

shown,

IT IS HEREBY ORDERED, ADJUDGED AND DECREED as follows:

1. The terms of the Agreement, and the Settlement provided therein, are approved

preliminarily as fair, reasonable and adequate to the Settlement Class as defined in the

Agreement, subject to further consideration at the Fairness Hearing described in paragraph 12 of

this Order.

2. The definitions set forth in the Agreement are hereby incorporated by reference

into this Order (with capitalized terms as set forth in the Agreement).

3. The Parties have executed the Agreement in order to settle and resolve the

Litigation as between them and the members of the Settlement Class, subject to the approval of

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the Court.

4. Accordingly, for the purpose of a settlement in accordance with the Agreement,

and upon review of the Named Plaintiffs' Motion for Preliminary Approval of Proposed

Settlement, this Court hereby preliminarily certifies the following class of persons as a settlement

class (the "Settlement Class"):

"All persons who, on or after October 31, 1994, obtained a "Second Mortgage Loan" as

defined in R.S. Mo. § 408.231.1, that was secured by a mortgage or a deed of trust on

residential real property located in the State of Missouri, originated by Bann-Cor

Mortgage, and purchased by and assigned to TMS Mortgage, Inc. d/b/a The Money

Store."

5. Pursuant to the Agreement, and for settlement purposes only, the Court finds

preliminarily as to the Settlement Class that:

The Settlement Class is so numerous that joinder of all members is go

impracticable;

b. There are questions of law or fact common to the Settlement Class which

predominate over questions affecting only individual members of the Settlement Class;

The claims of the Named Plaintiffs are typical of those of the Settlement

Class;

d. The Named Plaintiffs and their counsel will fairly and adequately protect

the interests of each of the members of the Settlement Class; and

e. Certification of the Settlement Class is an appropriate method for the fair

and efficient adjudication of the controversies between the Settlement Class Members

and the HomEq Defendants.

6. For the purpose of this preliminary approval and all matters relating to the

Settlement and the Litigation, until further order of the Court, the Court appoints the Named

Plaintiffs, John and Jeannette Schwartz, as Representatives of the Settlement Class and R.

Frederick Walters, Kip D. Richards, David M. Skeens, J. Michael Vaughan, and Garrett M.

Hodes of the law firm Walters Bender Strohbehn & Vaughan, P.C., as Counsel for the

Settlement Class ("Class Counsel").

7. By this Order, the Court hereby exercises subject matter and personal jurisdiction

over the Settlement Class for purposes of evaluating the final certification of the Settlement

Class and the fairness and adequacy of the Settlement.

8. The Class Mail Notice, as set forth in Exhibit A to the Agreement, is approved.

9. The Class Mail Notice, in substantially the form set forth in Exhibit A, shall be

mailed by Class Counsel to all persons on the Settlement Class list, and any known Chapter 7

bankruptcy trustees of any Settlement Class member for a Chapter 7 bankruptcy filed after

origination of the Settlement Class member's loan, by first-class mail, postage prepaid. Such

mailing shall be completed within five (5) days of this Preliminary Approval Order.

10. The Agreement contemplates a notice methodology that protects the interests of

the Settlement Class and the Parties, is the best notice practicable under the circumstances and is

reasonably calculated to apprise the members of the Settlement Class of the pendency of the

Litigation, the Agreement, and the right to opt out and exclude themselves fi'om or object to the

proposed Settlement. In addition, the Court finds that the notice methodology is reasonable and

constitutes due, adequate and sufficient notice to all persons entitled to receive notice of the

proposed Settlement and meets all applicable requirements of law, including, but not limited to,

Mo. R. Civ. P. 52.08 and the Due Process Clause of the Fourteenth Amendment of the United

4

States Constitution.

11. Prior to the Fairness Hearing, Class Counsel shall serve and file a sworn statement

of a person with knowledge, evidencing compliance with the provisions of this Order concerning

the mailing of the Class Mail Notice.

12. Any member of the Settlement Class wishing exclusion from the Settlement Class

shall mail a request for exclusion ("Request for Exclusion") to the Parties' respective counsel.

To be valid, the Request for Exclusion must be received on or before June 11, 2009. Such

Request for Exclusion shall include: (a) the name, address, telephone number and the last four

digits of the class member's social security number; (b) the applicable loan number(s) of the

class member's loan (if known); (c) a statement that the class member and all other borrowers

named on the class member's promissory note are seeking exclusion; (d) the signature of each

person who was a party to the promissory note made in connection with the class member's loan

(unless any such person shall be deceased, in which case the opt out submission shall include a

copy of such person's death certificate); (e) a reference to "John and Jeannette Schwartz, et al., v.

Bann-Cor Mortgage, et al., Case No. 00-CV-226639"; and (f) the signature of the class member.

Any member of the Settlement Class who does not properly and timely request exclusion from

the Settlement Class shall be included in the Settlement Class and be bound by any judgment

entered in this Action with respect to said Class.

13. Within a reasonable period after the deadline for submitting Requests for

Exclusion, but before the Final Approval Hearing, Class Counsel shall t•le with the Court a

sworn statement listing those persons who submitted timely Requests for Exclusion. The

originals of all Requests for Exclusion shall be retained by the parties.

14. A hearing (the "Fairness Hearing") shall be held before the undersigned at 1:30

5

p.m. on July 6, 2009, in Division 14 at the Jackson County Courthouse, 308 W. Kansas,

Independence, MO 64050. At the Fairness Hearing, the Gou• will consider: (a) the fairness,

reasonableness, and adequacy of the proposed Settlement; (b) the entry of any final order or

judgment in the Litigation with respect to the Settlement Class; (c) the application for attorney's

fees and for reimbursement of expenses by Class Counsel; (d) the application for an incentive

award for the services rendered by the Named Plaintiffs; and (e) other related matters. The

Fairness Hearing may be postponed, adjourned or continued by Order of the Court without

further notice to the Settlement Class:

15. To be considered at the Fairness Hearing, any person desiring to file an objection

or other comment on the Settlement shall be required to file all such objections and comments

and all supporting pleadings on or before June 11, 2009, with service upon Class Counsel and

Defendants' Counsel. In his/her Objection, an objecting Settlement Class Member must (a) set

forth his/her full name, current address, and telephone number; (b) state that the Settlement Class

Member objects to the Settlement in whole or in part; (c) set forth a specific statement of the

legal and factual basis for the Objection; (d) provide copies of any and all documents that the

objector wishes the Court to consider in connection with the Objection; (e) provide the names of

any witnesses, and, provide a written expert report from all proposed experts who may be offered

at the Fairness Hearing; (f) provide copies of any other loan documents on which the objector

relies as a basis for the objection; (g) if the objector is represented by counsel, provide a detailed

description of the legal authorities supporting each objection; and (h) reference "John and

Jeannette Schwartz, et al., v. Bann-Cor Mortgage, et al., Case No. 00-CV-226639". No

Objection to or other comment concerning the Settlement shall be heard unless timely filed in

accordance with the guidelines specified above and in the Agreement. Class Counsel and

6

Defendants' Counsel shall promptly furnish each other with copies of any and all objections or

written requests for exclusion that come into their possession.

16. Any Settlement Class Member who does not make his or her objection in the

manner provided in this Order shall be deemed to have waived any such objection and shall

forever be foreclosed from making any objection to Settlement, including but not limited to, the

propriety of class certification, the adequacy of any notice, or the fairness, adequacy or

reasonableness of the Settlement.

17. Submissions of the Parties relative to the Settlement, including memoranda in

support of the Settlement, applications for attorneys' fees and reimbursement of expenses by

Plaintiffs' Counsel, and any applications for the payment of services rendered by the Named

Plaintiffs, shall be filed with the Clerk of the Court on or before June 26, 2009. Any attorney

hired by a Settlement Class Member at the Class Member's expense for the purpose of objecting

to the Settlement, or to any application for an incentive award, attorney's fees or expenses shall

file with the Clerk of Court and serve upon Class Counsel and Defendants' Counsel a written

notice of appearance no later than June 11, 2009.

18. Any Settlement Class Member may appear at the Fairness Hearing in person, or

by counsel if an appearance is filed and served as provided in the Notice, and such person will be

heard to the extent allowed by the Court. No person shall be permitted to be heard unless, on or

before June 11, 2009, such person (a) has filed with the Clerk of the Court a notice of such

person's intention to appear, and (b) has served copies of such notice upon Class Counsel and

Defendants' Counsel.

19. Any Settlement Class Member may intervene in the Litigation in person, or by

counsel if a motion to intervene is filed and served as provided in the Notice. No person shall be

permitted to intervene unless, on or before June 11, 2009, such person (a) has filed with the

Clerk of the Court a valid motion to intervene; and(b) has served copies of such notice upon

Class Counsel and Defendants' Counsel.

20. All other events contemplated under the Agreement to occur after this Order and

before the Fairness Hearing shall be governed by the Agreement, and the Class Mail Notice, to

the extent not inconsistent herewith. Class Counsel and Defendants' Counsel shall take such

further actions as are required under the Agreement.

21. The Parties shall be authorized to make non-material changes to the Class Mail

Notice so long as Class Counsel and Defendants' Counsel agree, and one of the Parties files a

notice thereof with the Court prior to the Fairness Hearing.

22. All claims against and motions involving the HomEq Defendants in the

Litigation, other than such as may be necessary to carry out the terms and conditions of the

Agreement or the responsibilities related or incidental thereto, are stayed and suspended until

further order of this Court.

23. The claims of Plaintiffs James Wong, Daniel and Wanda Jensen and/or any of the

other Non-HomEq Plaintiff Borrowers against Bann-Cor Mortgage, the Master Financial

Defendants and any other person, association or entity other than a Released Person are not

stayed or suspended by the Agreement, this Order, or otherwise. The claims and causes of action

of Plaintiffs James Wong, Daniel and Wanda Jensen and the other Non-HomEq Plaintiff

Borrowers against Bann-Cor Mortgage, the Master Financial Defendants and any other person,

association or entity other than a Released Person as identified in the Agreement are not affected

by the Agreement

24. If Final Approval of the Settlement does not occur, or if the Settlement is

terminated for any reason whatsoever, the Settlement and all proceedings had in connection

therewith shall be null and void and without prejudice to the rights of the Parties before the

Settlement was executed and made, and all Orders issued pursuant to the Settlement shall be

vacated.

25. Neither this Order, the Agreement, nor any of its terms or provisions, nor any of

the negotiations between the Parties or their counsel (nor any action taken to carry out this

Order), is, may be construed as, or may be used as an admission or concession by or against any

of the Parties or the Released Persons of the validity of any claim or liability, any alleged

violation or failure to comply with any law, any alleged breach of contract, any legal or factual

argument, contention or assertion. Entering into or carrying out the Agreement, and any

negotiations or proceedings related to it, shall not in any way be construed as, or deemed

evidence of, an admission or concession as to the HomEq Defendants' denials, defenses, or

factual or legal positions, and shall not be offered or received in evidence in any action or

proceeding against any party in any court, administrative agency or other tribunal for any

purpose whatsoever, except as is necessary in a proceeding to enforce the terms of this Order and

the Agreement, or to prove or show that a compromise in settlement of the Released Claims per

the Agreement, in fact, was reached; provided, however, that this Order and the Agreement may

be filed in any action filed against or by the HomEq Defendants or the Released Persons to

support a defense of resjudicata, collateral estoppel, release, waiver, good faith settlement,

judgment bar or reduction, full faith and credit, or any other theory of claim preclusion, issue

preclusion or similar defense or counterclaim. The HomEq Defendants expressly reserve all

rights and defenses to any claims and donot waive any such rights or defenses in the event that

the Agreement is not approved for any reason.

IT IS SO ORDERED

Date


10