Evidentiary Hearing Exerpts Redact

3

Wilmington, Delaware

1 UNITED STATES BANKRUPTCY COURT

2 DISTRICT OF DELAWARE

- - - - - - - - - -x

4 In the Matter of:

5 NEW CENTURY TRS HOLDINGS, INC., et al.,

6 Debtors.

7 - - - - - - - - - - - - - - - - - - - - -x

8 ANITA B. CARR, Plaintiff,

9 - against -

10 NEW CENTURY TRS HOLDINGS, INC., Defendant.

11 - - - - - - - - - - - - - - - - - - -x12 LESLIE MARKS, Plaintiff,

13 - against -14 NEW CENTURY TRS HOLDINGS, INC., Defendant.

15 - - -x

16 U.S. Bankruptcy Court

17 824 North Market Street

18

19

20 February 24, 2011

21 10:00 AM

22 B E FOR E:

23 HON. KEVIN J. CAREY

24 U.S. BANKRUPTCY JUDGE

25 ECR OPERATOR: AL LUGANO

Case No.

07-10416 (KJC)

Adv. Proc. No.

09-52251 (KJC)

Adv. Proc. No.

09-50244 (KJC)

eScribers, LLC I (973) [email protected] I www.escribers.net

1

1


NEW CENTURY TRS HOLDINGS, INC.

THE COURT: All right, again, that's all there is to211 be said today about your matter. Youlre welcome to be excused311 at this point, but you are, of course, welcome to remain on the411 line and to hear the remainder of today's proceedings, if you511 like.6 MS. CARR: Thank you, Your Honor.7 THE COURT: Okay, Mr. Indelicato, go ahead.8 MR. INDELICATO: Thank you, Your Honor. The final911 matter, Your Honor, it's listed as item number 3. It's one

1011 matter. I do believe, really, it is two matters with respect1111 to Ms. Marks. It is her motion for request for stay of the1211 dismissal, as well as the application for a TRO and a1311 preliminary injunction.1411 Your Honor, this is going to be an evidentiary1511 hearing, today. My suggestion would be, these are Ms. Marks I1611 initial motions, that both parties be allowed to make brief1711 opening statements. Then we proceed to the evidence, and then1811 we will address any other issues the Court has, if that's1911 acceptable to the Court.20 THE COURT: Let me ask this. In the trusteels view,2111 what should the scope of the evidentiary hearing set for today2211 involve?23 MR. INDELICATO: Your Honor, with respect to the2411 evidentiary hearing on the request for the stay of dismissal,2511 we believe it's a very narrow focus. This is merely her motion

9


1 to stay the dismissal in accordance with the terms of the

2 settlement agreement. I believe the evidence should be limited

3 to whether or not the Trust has complied with the terms of the

4 settlement agreement. I don't believe any issues related to

5 the foreclosure going on in California is relevant to that, so

6 I believe on that issue, it's a very narrow focus as to what

7 the negotiations were, what the discussions were with the

8 parties, what the e-mails indicate, what the final settlement

9 agreement indicates, and what the effects of the release will

10 be under the terms of that settlement.

11 With respect to the ex-parte application for the TRO

12 and preliminary injunction, Your Honor, quite honestly, from

13 the Trust's perspective, as we indicated in our papers, this is

14 really a legal argument. We don't believe there are any

15 factual issues relevant to this, at least in an initial matter,

16 we believe, as welve said before, that controlling -- well, not

17 controlling law, but as Judge Shannon has indicated in Aegis

18 (ph.), since the Trust does not have an ownership interest in

19 this mortgage and note, it was not property of the estate under

20 541, and as a result, we believe this Court lacks jurisdiction

21 to deal with the issues related to the foreclosure.

22 So from that perspective, Your Honor, we think it's

23 very narrow with respect to the request for the stay of

24 dismissal, and we believe it's a legal argument with respect to

25 the TRO/preliminary injunction.


10

--------------------------------------------------------------------------------------~----------

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

*' 23

24

25

1


11NEW CENTURY TRS HOLDINGS, INC.

THE COURT: All right, thank you. Let me speak with

2 Ms. Marks for a moment.

3 Ms. Marks, if you1d come forward, please.

MS. MARKS: Good morning, Your Honor. I have nice

to meet you. I have Exhibit Z for you. Would you like that?

THE COURT: Certainly. Has it been provided to

trusteels counsel?

MS. MARKS: Yes.

MR. INDELICATO: Yes.

THE COURT: All right, yes.

All right, thank you.

Okay. You heard the question that I asked Mr.

Indelicato, and I think in general terms, I agree with what he

said, and that is the evidence to be presented today should be

that evidence which, in your view, surrounds the issues that

you raise in connection with entry into the settlement

agreement. And I was wondering whether you had a -- whether

you agreed or whether you had a different view about that.

MS. MARKS: I definitely have a different view.

THE COURT: Okay, tell me what you think I should

hear, today.

MS. MARKS: Well, Your Honor, what1s -- the problem

is, after we did the settlement, Mr. Indelicato said to me

whatever evidence to go after whoever was attempting to

foreclose on me because the Trust no longer had an interest. I

1

2

3

*4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25


received the trustee's statement which says the mortgage never

transferred anywhere. So because I'm not a real estate person,

I went to the Alameda County Recorder's office, and I found

that the note actually did not go to Ocwen, who claimed to hold

my note, or Green Tree, who still who actually effected the

12

foreclosure. The note still names New Century -- I'm sorry,

Home123, which is one and the same, as the beneficiary. Also,

the Trust attempted to the Trust part of the settlement

was that the Trust was going to fix my credit report because

all three banks have the same mortgage note with different

numbers, so it looks as though I'm in debt for over a million

dollars for one house. So when I spoke with Mr. Indelicato, he

said we can fix this.

So when I got the settlement documents, I received a

letter from somebody who claims to be actively working at New

Century in Irvine, stating that they sent a letter to the

credit bureaus and the credit bureaus wouldn't change it. But

the bigger issue is that the note that has been foreclosed on,

according to the Trust, has been satisfied in 2007. So there's

no lawful assignments from New Century or Home123 to any

entity. I have been in litigation since 2006 defending these

matters. And what I want is fair and just closure. The reason

why I settled with Mr. Indelicato, because he'd made it

perfectly clear, well, the Trust has no interest, and just like

we have always -- people have always believed what the bank


1

2

~

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25


tells you, when they said, we, we transferred the note here, I

continued litigation fighting against banks, until I got the

document from the Trust which said, oh, we didn't transfer it

anywhere. And then when I looked at the recorder's office,

that turned out to be true. The note was never recorded

anywhere. So, I mean, that leaves me in limbo. I can't

actually close out these without actually having some kind of

closure to this matter.

THE COURT: Well, the two issues that I think have

been properly identified as being before me today are distinct

but related.

MS. MARKS: Um-hum.

THE COURT: I will tell you, for reasons that are

discussed in the cases that both parties have talked about

well, there are other cases that parties have talked about, but

with respect to that particular issue, the law is pretty clear

in this circuit that it is not the place of a federal court, to

say it plainly, to look behind or second-guess a state court

foreclosure judgment. So to the extent there were flaws --

MS. MARKS: Um-hum.

THE COURT: in the state court foreclosure process,

and you, of course, say that there were, your recourse, I will

tell you, is to the state court.

MS. MARKS: Your Honor, there has been no state court

foreclosure judgment.


13

1

2

3

4

5

t 6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25


THE COURT: Well, hold on, you argue that, and then a

couple minutes -- a couple paragraphs later, you say that a

foreclosure actually took place but it was in -- obtained by

fraud.

MS. MARKS: Yup.

THE COURT: So I think from what you tell me in your

papers, alone, forgetting what the trustee says, there has been

a foreclosure but you challenge that it was legitimately

obtained, to put it plainly.

MS. MARKS: Right.

THE COURT: And if I -- even if I were to assume what

you say is true, that doesnlt change my view, that to the

extent there was a flaw in the state court foreclosure

proceeding, your recourse is to the state court. Federal

courts do not sit as appellate courts for state courts, and the

law in this circuit, I will tell you, is clear. So my

suggestion to you is that you confine your evidentiary

presentation today to the events surrounding the settlement

agreement and whether the trustee has abided by the obligations

in the settlement agreement.

MS. MARKS: Your Honor, may I also say -- I mean, I

understand that. 11m not asking this Court to be an appellate

venue. What 11m saying is the Trust needs to provide me

evidence that the note ha been satisfied.

THE COURT: Well


14

1

2

3

4

5

6

7

8

9

10

11

*12

13

14

15

16

17

18

19

20

21

22

23

24

25


MS. MARKS: I mean, that's not --

THE COURT: I

MS. MARKS: -- they're saying that they -- they have

to do that. I mean, that leaves my entire house, my credit and

everything in limbo.

THE COURT: I don't know that that's strictly true,

but let me hear the evidence.

MS. MARKS: Okay.

THE COURT: Let me see the settlement agreement, and

then weill decide.

Okay, so the reason that -- one of the reasons that I

required that you appear in person today is that to the extent

you wish to give your testimony, you must do so in person under

oath. Sometimes, with individuals who represent themselves, I

have our court personnel swear you in, and you may remain at

the podium and tell me under oath what you'd like to tell me,

directly, or you may sit in the witness box and do so. I leave

the choice to you. For cross-examination, if there is any,

1111 ask you to take a place in the witness box. So tell me

where you'd like to begin.MS. MARKS: Whatever the Courtls normal procedure is.

THE COURT: I give you the choice.

MS. MARKS: But I do have to ask a question, Your

Honor. For the purpose of submitting evidence, people had to

be here in person; that's what your order said.


15

1

2

3

4

5

6

t 7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25


THE COURT: That's -- absent agreement of the parties,

that would be correct.

MS. MARKS: Excuse me?

THE COURT: Absent agreement of the parties, that

would be correct.

MS. MARKS: Okay, because I just -- I filed my

objection because I just received before I flew out a notice

from Mr. Eikenberry that he wanted to present evidence, and

they have evidence on the docket, and they're not here.

MR. EIKENBERRY: Your Honor, this is Kevin Eikenberry.

I'm appearing by telephone through CourtCall. I am a

California attorney that represents TRA Partners, LLC, the

purchaser of the property at a foreclosure sale that occurred

on October 20th last year.

THE COURT: Good morning.

MR. EIKENBERRY: Good morning, Your Honor. I would

like to ask the Court's permission, even though I'm not

licensed to practice in Delaware, to speak on behalf of my

client at this hearing. If that's not acceptable, my client is

here, Trenor Askew, the managing member of TRA Partners, LLC.

He could also speak.

THE COURT: Well, Mr. Eikenberry, you may participate

in so far as if you wish to make argument. I will not accept

testimony, however, by telephone.

MR. EIKENBERRY: I wasn't planning on presenting any


16

1

2

3

4

5

~

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25


testimony, Your Honor.

THE COURT: Okay.

MR. EIKENBERRY: Thank you very much.

THE COURT: All right.

MS. MARKS: Your Honor, they were given adequate

notice of this hearing and the Court's order, and it's unfair

that I had to travel out here and they don't, if they're going

to present evidence.

THE COURT: Well, you heard Mr. Eikenberry, he doesn't

intend to present evidence. But I hear argument, as I have in

your case

MS. MARKS: All right.

THE COURT: -- and others by telephone. But if you

wish to present testimony that I should be considered as fact,

you need to be here.

Okay, Mr. Lugano, will you please swear in Ms. Marks?

You may stand there, if you like.

MS. MARKS: Okay.

(Plaintiff sworn)

THE COURT RECORDER: Please state your full name for

the record and spell your name.

MS. MARKS: Okay. Leslie, L-E-S-L-I-E, Marks,

M-A-R-K-S.

Shall I stay here?

THE COURT: The floor is yours. The floor is yours.


17

10

8



1 MS. MARKS: Well, Your Honor, like I said, what I want

2 to note for the record is that the Home123 note, I believe,

3 this Court does have jurisdiction because the actual documents

4 have not been finalized in any way. When you refinance, you

5 get the first note stamped paid-in-full, and then the

6 beneficiary is transferred, and the name of the new beneficiary

7 is on the new note. So that didn't happen here.

The party who sold the house to Mr. Eikenberry's

9 clients went to the Alameda County Recorder's office, pulled

11 documents which I've submitted to the Court that says they were

the Home123 note, filed fraudulent statements, including

12 signing on behalf of Home123.

13 THE COURT: Let me ask you to pause there, and ask

14 specifically, which documents you are moving into evidence.

15

16

t 17

18

19

20

21

22

23

24

25

MS. MARKS: All right.

THE COURT: I do have your binder that you submitted

previously and I'm assuming the trustee has it, as well. And I

will tell you, it's the first time I got a purple binder.

MS. MARKS: They were on sale, Your Honor.

Okay, I'm looking at Exhibit C.

THE COURT: Have you, by the way, discussed this with

the trustee at all in terms of whether there are any objections

to the admission of any of the exhibits in the binder?

MS. MARKS: They did not say anything. I gave them

my --

18

1

2

*3

4

5

6

7

*8

9

10

11

12

13

14

15


THE COURT: Well, all right, let's go through the list

of what you'd like to have admitted. C?

MS. MARKS: Okay, Exhibit C shows the substitution of

trustee, and as you can see, it says -- it names Home123

Corporation was the original beneficiary. And as you can see,

there, below, it's signed by somebody from Green Tree.

Also, I want to bring to the Court's attention on this

note, while I was in bankruptcy, Ocwen claimed that they

transferred the note to Green Tree. So if they transferred the

note to Green Tree, this assignment should be from Ocwen to

Green Tree. But there is no assignment of any kind from

Home123 to Ocwen.

THE COURT: All right, let me ask. Is there any

objection to the admission of Exhibit C?

MR. SCHNITZER: Yes, Your Honor. Edward Schnitzer

16 from Hahn & Hessen. We do object to the admission.

17

18

THE COURT: Okay, what's the basis for your objection?

19 it's irrelevant. I believe under Rule of Evidence 402, there's

MR. SCHNITZER: Your Honor, I believe -- initially,

20 no -- it has no connection to the issue here before this Court,

21 which is the issue of the settlement agreement. This is not

22 related to it. I also think this document by itself, I don't

23 think there!s necessarily a basis for its admission, regardless

24 of even if it was considered relevant.

25 THE COURT: Do you consider its authenticity or


19

1

2

-. 3

4

5

6

7

8

9

10

~

11

12

13

14

15

16

17

¥J1819

20

21

22

23

24

25


accuracy?

MR. SCHNITZER: I have no ability to do that at this

time, Your Honor. I have no way of knowing one way or the

other whether it's true or not. I would assume, as Ms. Marks

indicated, if she stated that she pulled this from Alameda

County's records, I would assume that's correct, but I go back

to the point, Your Honor, that with respect to what you've

heard regarding the settlement agreement, this has no relevance

to the settlement agreement.

THE COURT: The objection's overruled. C is admitted.

(Substitution of Trustee was hereby received into evidence as

Plaintiff's Exhibit C, as of this date.)

THE COURT: Next, Ms. Marks.

MS. MARKS: Okay, also, Your Honor, Exhibit B is the

assignment, which you can see, from the same person on Exhibit

B from Green Tree signed the thing from Home123 on Exhibit C.

It's the exact same person. So, I mean, since I've been in

litigation with -- on and off with New Century since 2006, I've

never seen New Century should know if this person is

authorized by this Court or by the trustee to sign on behalf of

Home123 which lost its ability to do business in California in

2007.

THE COURT: Is there any objection to the admission of

Exhibit B?

MR. SCHNITZER: Your Honor, we think Exhibit B is

eScribers, LLC I (973) 406 [email protected] I www.escribers.net

20

1

2

~

3

4

5

6

7

8

9

~

10

11

12

13

14

15

16

17

18

~

19

20

21

22

23

24

25

NEW CENTURY TRS HOLDINGS, INC. 21

similar to Exhibit C in terms of the issue of relevance. We do

think, I mean, this goes to her state fore the action

currently pending. As I understand it, there are two actions

currently pending in California state court, one of her

against, I believe, Mr. Askew or his company and vice versa,

one of Mr. Askew against her for eviction, I believe. It

perhaps is relevant in that action. We donlt believe itls

relevant here.

In terms of your question with Exhibit C with regard

to authentication, based upon Ms. Marks I representation, which

Ilm -- I donlt know whether she specifically made or not, but

assuming she does that she pulled this from Alameda County

records, we have no challenge to its actual authenticity.


MS. MARKS: I have certified copies, Your Honor.

THE COURT: The objection is overruled. Exhibit B is

admitted.

(Assignment was hereby received into evidence as Plaintiffls

Exhibit B, as of this date.)

THE COURT: Whatls next?

MS. MARKS: Okay, so Exhibit A is the actual sale, the

trustee sale, which Mr. Eikenberry -- thatls the notice of

default which was filed in my case. As you notice, the notice

of default, if you look at the top right corner of Exhibit A,

it says 5/21/2010. So thatls when they filed the notice of


1

~

2

3

4

5

6

~

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25


default. But even if you look at it -- note Exhibit C and B,

they were recorded on 8/23/2010. So that, in effect, makes it

defective because you can't file a default before you actually

own a note.

Further.more, I do understand what Mr. Rigano is

saying, but -- I think that's Mr. Rigano -- but the situati~n

is that this begins and ends with Home123 and the status of

that note and whether or not that note is paid. I have gone

through five years of litigation, and that has to be resolved

before we can move forward.

THE COURT: Are you moving the admission of Exhibit A?

MS. MARKS: Yes, Your Honor.

THE COURT: Okay, is there any objection?

MR. SCHNITZER: Your Honor, again, we don't believe

it's relevant to the proceeding, but we have no objection to it

being admitted.

THE COURT: ALL RIGHT.

MR. SCHNITZER: I'm assuming, again, that this is a

correct certified copy of actual state county records.

THE COURT: All right, submitted without objection.

(Notice of Default was hereby received into evidence as

Plaintiff's Exhibit A, as of this date.)

THE COURT: What's next?

MS. MARKS: Okay, Your Honor, these -- Exhibit E is

the order revoking the mortgage residential license from the


22

1

2

3

4

5

6

7

8

~

9

10

11

12

13

14

15

16

17

18

19

~

20

21

22

23

24

25


California Department of Corporations for Home123. There's

also one for New Century, but I just put Home123 in. And as

you can see, Home123 could not do business in California since

2007, so it's impossible for Home123 to effect a foreclosure

sale in 2010.

THE COURT: Is there any objection to the admission of

this order?

MR. SCHNITZER: Yes, Your Honor, a couple bases for

Exhibit E, Your Honor. A, I believe it's irrelevant, much like

the other exhibits. B, we do have a question about

authenticity. We have -- we do not know the source,

necessarily, of this document. And lastly, we believe there is

an objection as this document, we believe, is inadmissible

hearsay, and we're not aware of a basis that accepts it from

the hearsay rules.

THE COURT: Do you have a certified copy of this, Ms.

Marks?

MS. MARKS: Your Honor, I attempted to get a certified

copy. I have the e-mail from the Department of Corporations

from the individual who actually e-mailed it directly to us.

In the Department of Corporations, for security reasons, they

don't put -- excuse me -- signed copies on the public docket.

So you have to contact them directly. I'm confident that I can

get a certified copy, if need be, or some other evidence from

the Department of Corporations, should you need it.


1

2

3

4

5

6

7

8

9

10

\ij 11

12

13

14

15

16

17

18

19

20

21

22

23

24

25


THE COURT: No, today's the day. The objection is

sustained. What's next?

MS. MARKS: Well, again, it's the order from the

Department of Corporations. That's Exhibit E.

THE COURT: That's what we were just talking about.

MS. MARKS: Oh, I'm sorry.

THE COURT: That's okay.

MS. MARKS: Exhibit F is the letter that I received

from New Century, some person in New Century, and as you can

see, this is the loan number which is the subject of the

foreclosure sale and this entire episode. And you can see that

the letter, which was part of the settlement agreement, says

that I don't owe the debtors, including Home123 Corporation or

the Trust any monies on account of the loan. And that is on

the second page of Exhibit F.

THE COURT: All right, is there any objection to the

admission of F?

MR. SCHNITZER: There is not, Your Honor.

THE COURT: Okay. I notice that it includes the front

page of a copy of a deed of trust.

MS. MARKS: Yes, this is the front page of the copy,

this is the deed that was foreclosed upon. As you can see, the

beneficiary is Home123. I do have a certified copy of it. And

then I italicized a note number which you can relate back to

Exhibit F, which is the same note number on the letter from the


24

2



1 Trust.

THE COURT: Okay. F is admitted without objection.

3 (Letter from New Century to Ms. Marks was hereby received into

4 evidence as Plaintiff's Exhibit F, as of this date.)

5 THE COURT: What's next?

6 MR. SCHNITZER: Your Honor, if I could actually

7 clarify, the letter that was sent, which is the first two pages

8 of Exhibit F, we do not object to. The third page, which is

10 separately, I go back to my earlier objections in terms of

9 not part of the letter, if it's being asked to be admitted

11 relevance, but assuming it's a certified copy, we have no

12 problem with it coming in, but it should not be part of F

13 because it did not go with that letter.

14

15

16

THE COURT: Understood. I'll admit it.

MS. MARKS: Well, I submitted it as F-2.

THE COURT: I'll admit it.

17 (Front Page of a Copy of the Deed of Trust of Foreclosed

18 Property was hereby received into evidence as Plaintiff's

19 Exhibit F-2, as of this date.)

20

21

22

23

24

25

MS. MARKS: Thank you.

THE COURT: What's next?

MS. MARKS: Okay, we can skip that. Okay, just going

through; I'm sorry. Okay, Exhibit L.

THE COURT: I have it.

MS. MARKS: Oh, wait a minute. I'm sorry. I don't

25

11

1 Q.


Do you take your obligation as an officer of the Court

2 seriously?

3 A.

4 Q.

5 A.

6 Q.

7 A.

8 Q.

I do.

Have you ever violated it?

No.

Have you ever committed a fraud upon the Court?

Not to my knowledge.

9 of the exhibits we have looked at violate that obligation?

Do you believe anything that you've said today or in any

10 A. Not to my knowledge.

MR. SCHNITZER: I have no further questions. Thank

13

12 you, Your Honor.

THE COURT: All right, Ms. Marks, would you like to

14 cross-examine Mr. Indelicato?

15

16

~17

MS. MARKS: Yes, Your Honor.


18 BY MS. MARKS:

CROSS-EXAMINATION

19 Q.

20 A.

21 Q.

Hi, Mr. Indelicato.

How are you?

22 clarification. You mentioned foreclosure, referring to New

Okay. I have a question for you. I just want some

23 Century Deutsche Bank. I don't understand, when you were

24 mentioning foreclosure you weren't talking about my

25 foreclosure?


112

1

~ 2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25


A. No, I was not.

Q. You were talking about -- so somehow Home123/New Century

ended up in foreclosure?

A. What happened was New Century, in the operation of its

business, had many lines of credit. One of the lines of credit

that was made available was a line of credit pursuant to a

master repurchase agreement with Deutsche Bank. Under the

terms of that facility New Century created what they called a

hospital line. And what that hospital line was, was a line

created to deal with loans which they could not otherwise sell

or securitize in the normal course of their business. Since

your loan was contested within a very short period of time from

when it was executed and closed, they were not able to sell

that loan as they would normally do in the ordinary course of

business. So it was placed as collateral on the hospital line

so that they could get the money to continue operations of

their business. In beginning -- sometime in March of 2007

Deutsche Bank, as they were entitled to do, made a margin call.

And what that means is Deutsche Bank believed that the

collateral that existed for this loan was insufficient to pay

their obligations. And as a result, New Century was required

to pay them money. Well, in March of 2007 New Century did not

have sufficient liquidity to pay all of the margin calls that

were being made. As a result, Deutsche Bank declared them in

default. Under the terms of the master repurchase agreement


113

10 Q.

2



1 Deutsche Bank was then allowed to seize the collateral, direct

New Century who the servicing should be transferred to, and

3 that was then taken over by DB, they became the owner of that

4 collateral and they were charged then with transferring

servicing and then administering the loans.

Q. Okay. Was my loan the only loan in this hospital?

7 A. No, no, no, there were many loans. The exact number I'm

8 not sure, but I believe the line was for about 200 million

9 dollars.

11 still state that New Century -- I mean, Home123 or New Century

Okay. So that would mean that there's several loans that

12 is still the beneficiary of those loans because they went to

14 A.

13 Deutsche Bank but they were never properly recorded.

Well, I don't know what they say because I haven't

15 examined them and I don't know whether the recordation is

16 proper or not. I'm a bankruptcy lawyer. I don't know

17 foreclosure or recordation law in each of the states that those

19 Q.

18 loans may have been originated in.

Okay. And California is a nonjudicial foreclosure state

21

20 so documentation is key; everything has to be --

22

23

24

25

THE COURT: Ms. Marks?

MS. MARKS: Yes.

THE COURT: Your job here is to ask questions.

MS. MARKS: Oh, I'm sorry.

THE COURT: Okay.

114

1 Q.

2 A.

3 Q.

4 A.

5 Q.

6 A.

7 Q.


Okay. So I wanted to ask you a question about my exhibit.

Um-hum.

Letls look at Exhibit C. Ilm sorry, Exhibit B.

B, um-hum.

May I ask how long youlve been a bankruptcy lawyer?

Twenty-five years.

Okay. And may I ask how long you've represented New

9 A.

8 Century?

I represented the official unsecured creditors' committee

10 of New Century beginning in April of '07 through confirmation 1

11 and confirmation 2. And then I represented the Liquidating

12 Trust thereafter.

13 Q.

14 A.

Okay.

15 their creditors first and now I represent the liquidating

I never actually represented the company; I represented

16 trustee.

17 Q.

18 best of your knowledge, during this time that they were in

Represented their creditors, okay. So have you, to the

19 bankruptcy, are you the only attorney that they represent or do

21 A.

20 they -- are they allowed to have several attorneys? In the --

Oh, no, no, no. There were many attorneys representing --

22 in the bankruptcy, there were many attorneys representing the

23 actual debtor. There were us and Blank Rome representing the

24 unsecured creditors' committee. There was an examiner who was

25 represented by counsel and the New Century estate had what they


115

1

2

3

4

5

6

~

7

8

9

10

~

11

12

13

* 14

15

~

16

17

18

19

~20

21

t 22

23

24

25


call in bankruptcy ordinary course professionals. And those

are attorneys and other advisors who would assist the debtor in

the ordinary course of its business, including there were a lot

of what we called foreclosure professionals who were retained

by New Century in the ordinary course of its business during

the Chapter 11 proceeding.

Okay. So this doc this exhibit B which shows someoneQ.

from Green Tree signing on behalf of Home123, you would have no

knowledge of that person or in 2010? I mean, Home123 to the

best of your -- does Home123 exist now as a corporation?

A. We have started dissolving some of the New Century

corporations, I just don't recall if Home123 still exists or

not.

Q. Okay. And would you know if they're still allowed to do

business in California?

A. Home123 is not doing business, so whether it's allowed to

do business is irrelevant. It's not doing business.

Q. Okay. And when did it stop doing business, as far as youknow?

A. When you say when did Home123 stop doing business, do you

mean originating loans?

Q. I mean originating loans, transferring loans, assigning

loans. Anything they had to with mortgages.

A. Well, it's a complicated question and if you don't mind,

I'll answer it in pieces.


1

2

3

4

5

6

7

8

9

10

11

12

13

~

14

15

16

17

18

19

20

21

22

23

24

25


Q. Okay.

A. Home123 was part of the New Century bankruptcy. When New

Century filed bankruptcy, they started -- they attempted to

sell their ongoing operations in April and May of 2007. We

were successful in selling the servicing business to

Carrington. The debtor was not successful in keeping together

its origination platform. So sometime after April of '07 or

May of '07 all of New Century stopped originating all types of

loans. So Home123 and any other affiliated entity of New

Century did not originate loans after the filing date, to the

best of my knowledge.

Q. Okay.

A. But in connection with the debtor's operation, they had

obligations under the various mastery purchase agreements and

loan agreements with their lenders. As part of that process,

loans were foreclosed upon. Loans were also sold to

purchasers, to the extent New Century had any equity in those

loans. And as part of that process, there may have been given

assignments in blank. And what that means is that New Century

would have given the purchaser an assignment of whatever

documentation was necessary to later record their rights in a

particular loan. And there are entities today who purchased

New Century loans either before the bankruptcy or after the

bankruptcy who are relying on the documentation that they got

from New Century to proceed with the foreclosure process,


117

12

f 345678

~1:111213141516

_~17181920

~ 2122232425


recording assignments and the like.Q. Okay. So, given that, the question I have is wouldn'twould it have been in the best interest of the New CenturyLiquidating Trust to sever its -- you know, to make that thedocuments that it transferred were actually transferred in sucha way that the Trust would not be involved anymore? Does thatmake any sense?A. The question actually does make sense and quite honestly,I would venture to say from New Century's perspective, theythought they had. They thought that when they had entered intothe appropriate documentation, that they were out of ht pictureand that the purchasers of the loans or however it wastransferred, as a purchase or an acquisition or a foreclosure,that they would be dealing with it forward and New Centurywould not be dealing with it.Q. Okay. In your testimony before lunch, I noticed that youmentioned that Ocwen received my loan from New Century. Isthat accurate?A. No, what I testified to is upon the examination of thedebtor's book and records, we discovered that upon the defaultof New Century with Deutsche Bank as part of that process, Ibelieve in early April, Deutsche Bank directed us to transferservicing of your loan among many others to Ocwen.Q. Okay. But then that -- in -- I'm sorry. That's not aquestion. Hold on one second, please.


118

123456789

101112131415161718

~

192021

-{ 22232425


A. Sure.Q. I want to look at Exhibit F in my binder.A. Yes.

Okay. We in sending this letter to the credit bureaus,

119

Q.

did you expect them to do anything or was just sending theletter a part of the going through the motions of settlement?A. As I said, Ilm a bankruptcy lawyer; I donlt deal withconsumer credit. We sent the letter indicating what the factswere. I had no idea what the credit bureaus would do with it.Q. Are you essentially saying that you knew that there wouldbe no change, or --A. Well--Q. I mean, the point

(Break in audio)THE COURT: Proceed.MS. MARKS: 11m sorry.

Q. And I may have used the term IIexpunge II a little -- I justmeant to clarify the credit reporting because, you know, I justwanted to know if sending out this letter was supposed to makethings clear, and is that not what you -- I mean, itA. Thatls clearly what I intended and in fact, the purpose ofthis letter was to deal with the issue that you had raised.And when we had our colloquy both via e-mail and maybe phone,the issue was that you had represented to us that your creditreport was showing that you owed money to three separate



1 entities and this letter was meant to address that. In fact,

2 in reviewing the credit report that we did this morning, that

3 both you submitted and we submitted, it appears to me at least

4 that the credit report always indicated that New Century had

5 transferred the loan and that in fact nothing was owed by you

6 to New Century at that point in time. That doesn't mean the

7 loan was paid in full; it means that, as indicated on that

8 credit report, that loan had been transferred to a third party

9 who was now the rightful party entitled to the receivement of

10 payment under that note.

11 Q. Okay. Under Exhibit V, in my book --

12 A. V or B?13 Q. V, as in Victor.

14 A. Okay, yes.

15 Q. And you -- and the trustee's statement -- the trustee

16 lists -- statement lists -- the trustee's sworn statement lists

17 several loans. As you could see on Exhibit V it says it's

18 closed, zero balance, but as you well know from the trustee's

19 statement, the mortgage was transferred to another party.

20 A. No, no, I believe that's -- I believe V indicates the 2004

21 loan

22 Q. Exactly

23 A. Which was actually refinanced with a third party and paid

24 off and then you cancelled the New Century loan, executed a new

25 note with a new lender and it's the 2006 loan which is V-1


120

14


111 which indicates it was transferred to another purchaser.

211 Q.

311 Let's find that. I think that's in your binder.

And -- okay, let's look at the trustee's statement, then.

411 A.

511 Q.

6

711 A.

811 Q.

911 A.

10 II Q.

1111 A.

1211 Q.

Okay.

22.

MS. MARKS: Thank you.

22?

Exhibit 22?

Um-hum.

On page 1 --

Yup.

-- and it talks about the New Cent -- oh, I have to ask a

1311 question.

1511 Q.

1611 A.

1711 Q.

THE COURT: Yes, you do, ma'am.

On page 1, it mentions the 2004 loan. Is that correct?

It does.

Okay. Okay, on page 2, it mentions a refinance, is that

1811 correct?

That's correct.1911 A.

20 II Q. Okay. And the -- 3, 4 and 5 also talk about -- 3 and 4

2211 A.

2111 also talk about refinancing?

That's correct.

2311 Q.

2411 report here, there's no -- each one of these were actually done

Now, we can -- even though I don't have the full credit

2511 right behind each other. So the only loan that mentions that


121

1

2

3

4

5

~

6

7

8

9

~10

11

12

13

14

15

16

17

18

~19

20

21

22

23

24

25


there was transfer was the second loan. So what Ilm saying is,

the first loan was -- the second loan. Give me a moment.

THE COURT: Itls all right.

MS. MARKS: Okay.

Q. Okay. V-1 says the account was transferred to another

office. Does that mean another office within New Century or an

outside agency?

A. Well, on payment status, youlre correct, it says, "Account

transferred to another office. II I don I t know what they mean by

that, quite honestly. But when you look at the bottom

comments, it says, "Transferred to another lender or claim

purchase. II SO, it does indicate that it was transferred to a

third party.

Q. But technically, I mean, is -- so is the loan or is the

loan not, the actual note -- what is the actual status of that

note?

A. I donlt know. I can tell you when the note was placed on

the hospital line with Deutsche Bank, it was outstanding. It

was in default, but it was outstanding. What Deutsche Bank has

done with it since then, we would have no way of knowing.

Welre not servicing that loan.

Q. Okay. Exhibit V-2 --

A. Yeah.

Q. Itls from Ocwen. Now this one also shows that itls closed

and it says it was transferred in bankruptcy. But therels no

eScribers, LLC I (973) 406 [email protected] I www.escribers.net

122

1

2

~

3

4

5

6

7

8

f 9

10

11

12

13

14

15

16

17

18

19

% 20

21

22

23

24

25


record that New Century -- oh, I'm sorry; I have to ask a

question. Put it in a question form.

Is -- do you have any documentation that the hospital loan

was transferred to Ocwen or DB or is there any documentation

anywhere that evidences that?

A. We have notices of default. We also have a listing of all

of the loans that were on the hospital line. Do I have an

actual document that says your 2006 loan was transferred to

Deutsche Bank individually? I do not. And -- but I think,

since we're referring to V-2, I think what the statement that

you read related to the bankruptcy is referring to, since it

says Chapter 13, I think it's there referring to your

bankruptcy, not the New Century bankruptcy. Because New

Century's was a Chapter 11 bankruptcy.

Exactly. And my bankruptcy oh, I can't. I have to ask

123

Q.

a question. I don't know how to do that, I'm sorry.

THE COURT: Take a minute if you need it.

Q. Okay. I just have one more question; I will not keep us

here all day. Okay, the notice of defaults in regard to my --

to the specific 2006 loan, is there any way I could get

something in writing to say that -- the status of that loan

or -- to the best of your knowledge, to the end of the point

where you handled it?

A. Other than the affidavit we've given you from the trustee,

I'm not sure there's anything -- we have a sworn statement from


12345

~6789

10111213141516171819202122

~

232425


a Chapter 11 trustee who's an officer of the court. I'm not sosure I could give you anything more than that that wouldindicate that the loan was transferred from New Century to DBas a result of the foreclosure on the hospital line.Q. Okay. So is it reasonable to assume that there's noevidence that the mortgage actually transferred to anyone?A. There are -- there is a notice of default. There is theunderlying mastery purchase agreement. There's the list of theitems that was on the mastery purchase agreement thereafter.There is Deutsche Bank's direction to us to transfer the loansto the -- to Ocwen as servicer. There is the evidence of Ocwenbeginning to service the loan. So, I'm not sure specificallywhat you're looking for. I don't have any document like youwould get in a refinancing indicating that the loan has beentransferred to a particular party, if that's what you'relooking for. That, we don't have. That's why we gave you theaffidavit of the trustee which sort of in essence put all ofthis stuff in one paragraph so that you have it in one place, asworn statement by the trustee that he no longer has ininterest in that loan and that loan has been transferred toDeutsche Bank.Q. Are you aware that the mortgage that Ocwen claimed totransfer, where they didn't record any documents, was notserviced at all from 2007 through 2009? No mor -- no paymentstatements, no loan modification, nothing for two years.


~

1

2

3

4

+ 5

6

7

8

9

10

11

12

13

14

15

~16

17

18

19

20

21

22

23

24

25


A. I'm not aware of what happened to the loan after it left

New Century.

Q. Okay. All right, just one itty bitty more thing. Based

on what you said under Exhibit B in my exhibits, even though

Green Tree in the Federal Bankruptcy Court said they acquired

the note from Ocwen and there's nothing recorded, but this

document says it was assigned from Home123. Is there any way

that you could explain this to me so I could understand it?

A. I can try,

Q. Okay.

A. As I indicated before, as part of our obligations to our

lenders, New Century may have provided -- or actually, Home123

may have provided an assignment in blank to Deutsche Bank to

deal with its obligations under the mastery purchase agreement,

allowing them to continue servicing of the loans. And, as you

know, a lot of sate courts and other parties have questioned

the wisdom of giving assignments in blank. But that affects

parties I rights in the foreclosure, but not our transfer of the

loan. So, it -- I don't have -- we did not -- because New

Century did so many transactions, we did not image every

assignment that New Century executed. So I canlt give you a

copy of the specific assignment they may be relying on. But

what I could tell you, it was ordinary course of business for

New Century and Home123 when transferring a loan, to assign an

assignment in blank that would be used by the then-holder of


125

1

2

3-k 4

5

6

t 7

8

9

10-*1112

13

14

15

~16

17

18

19

20

21

22

23

24

25


the note to record either the assign to record the

126

assignment of the mortgage so that they could proceed with the

foreclosure when and if it was necessary.

Q. So would that assignment in blank be something that they

would have to use? Would you say this is an assignment in

blank?

A. No, this is an assignment of the deed. The assignment in

blank may have been something else.

Q. Something else?

A. Yes. In other words, this was done to Green Tree

Servicing. This -- I'm not aware that we had executed anything

like this and since I don't have the actual document we

provided them to, I canlt tell you whether it was this or not.

Q. Can I ask one question? If you issued an assignment in

blank, if -- would it be dated the day that you issued it? In

other words, I give my assignment to my lender in blank and I

sign it today.

A. Yes.

Q. I give that to you now.

A. Yes.

Q. And when you come back in, would it be dated the day that

you -- that I handed it to you?

The assignment that we give and this is myA.

understanding. The assignment that we give would speak as of

the day we own the loan. So, for example, let's assume my


1

2

3

~4

5

6

7

8

9

10

11

12

13

14

15

16

~*17

18

19

20

21

22

23

24

25


example is correct with respect to Deutsche Bank and that we

transferred the loan to Ocwen on April 2nd, 2007. Our

assignment in blank would speak as of that date, meaning that

we're assigning the rights we had as of April 2nd, 2007. We

can't speak as of today because I don't know who that loan may

have been transferred to in the intervening period. So I speak

as of the date in which I had an interest in that loan and

that's when the assignment of blank would speak as of.

So they could take my assignment in blank, record it to

one party who then could use an assignment and record it yet to

another party. I don't know how it transferred after that, but

as of -- my assignment only speaks as of the time in which I

had an interest in the mortgage and loan.

Q. So, it would be fair to say if I don't have an assignment

in blank, that there's a good possibility it wasn't actually

assigned?

A. No, it was assigned. The questions you're getting to --

is whether or not it was properly assigned and whether or not

it's sufficiently assigned so that they could foreclose on it

in state court. I can't testify as to that. That's a legal

opinion. That's the issue you're really asking and I can't

answer that question.

Q. Okay. I need just one more minute.

A. Sure.

THE COURT: Okay.


127

1

~

2

') 3456789

10111213

%= 141516171819202122232425


Q. Just one second. Not going to take too much time.Okay, April 2nd -- on April 2nd, 2007, New Century filed

for bankruptcy?A. Thatls correct.Q. On that date, did New Century transfer any properties onthat date?A. I donlt believe so but I canlt be 100 percent sure. Ifthe question youlre asking is did New Century transfer anyproperty that would have been classified as property of theestate, I can answer that question and say no. To the best ofmy knowledge, the answer to that is no.Q. Okay. Ilm talking about Home123 and New CenturyMortgages.A. Well, the issue if youlre asking me is it possible that

128

mortgages originated by New Century were transferred on orabout April 2nd, 2007, the answer to that is probably yes.Q. Okay. As a bankruptcy attorney, how is that possible?I -- how is that possible?A. Well, itls complicated and IIII try and get through it ifI can. There were special provisions put into the BankruptcyCode for -- well, first, to the extent the loan was sold priorto the filing date and it was done pursuant to an assignment inblank, it is possible that a note and mortgage which was in thename of New Century in which New Century had only nominalinterest in it and really they had already sold their interest


1

2

3

4

~

5

6

7

8

9

10

11

12

13

14

t15

16

17

18

19

20

21

~

22

23

24

25


in that loan to somebody else, it's possible that loan could

have been sold on or bef -- on or after April 2nd, 2007. So

if, for -- let's take your loan.

If your 2006 loan had been sold to Deutsche Bank say in

January of 2007, is it possible that Deutsche Bank could have

sold that mor -- that loan and mortgage to somebody else in

April of 2007? The answer to that is yes. And it would have

been -- it could have been the mortgage could -- the note

129

and mortgage could have still been in the name of New Century

at the time of that sale. Okay?

As it related to what happened as of the bankruptcy, in

2005 there were amendments made to the Bankruptcy Code to

protect what in the Bankruptcy Code is securities contracts.

And our mastery purchase agreements qualify as securities

contracts under the Bankruptcy Code. The stay under 362 of the

Bankruptcy Code, which I think is what you're referring to,

does not apply to those types of transactions. So an entity,

DB or any other entity who had a security interest in our

mortgage and notes, as of the petition date would not have been

precluded from exercising their rights to seize that

collateral, even though we had filed.

Q. Okay. Now would New Century or Home123 have been estopped

from transferring on that date or within ninety days before?

A. Well, to the extent the loan was actually owned by New

Century, then we would have needed authorization from the


~~3

4

5

6

* 7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25


Bankruptcy Court to sell that loan. Unless New Century had

made a determination that that transfer was in the ordinary

course of business. I could continue to operate in the

ordinary course of business in Chapter 11 including

transferring loans.

Q. Okay. In the ordinary course of business in Chapter 11,

when you file, the filing date was April 2nd, 2007. Is it

similar to Chapter 13 where you that ninety days in between

130

you don't -- you can't transfer any property or --

A. Well, what -- the provision

THE COURT: Ms. Marks.

A. you're referring to

THE COURT: -- Mr. Indelicato, let me ask you to

pause. I know there's no objection from the trustee here, but

I will tell you we're really starting to go far afield from the

issues that are relevant --

MS. MARKS: Okay.

THE COURT: -- to the Court's disposition of the

issues before it.

MS. MARKS: Okay.

THE COURT: Okay? So I would say if you have other

questions, please -- on another topic, please ask them.

Otherwise, your time may be up.

MS. MARKS: Okay. Just give me one second, now.

Q. All right. Exhibit F.


1

~

2

3

4

5

~

6

7

8

9

10

11

12

13

14

15

16

{17

18

19

20

21

22

~ 2324

25


A. Yes.

Q. At the last page. The -- one of the iss -- do -- when you

say that I owe no obligation to the Trust, can you explain to

that so I could understand it?

A. Yes. What we mean by that is that as a result of our

transactions and our defaults with Deutsche Bank, we lost the

right to this note immediately before the bankruptcy. So they

actually took the note from us -- I don't know how else to

explain it, in the, sort of, the foreclosure process because

our default under the mastery purchase agreement. Therefore,

they now owned that note. So while you may still owe money on

that note, you owe it to Deutsche Bank or whoever their

successors and assigns are, but you do not owe any money to the

New Century Liquidating Trust or, for that matter, to New

Century prior to the establishment of the New Century

Liquidating Trust.

Q. Okay. I just have one teeny weeny question. I just want

to -- I know that you're saying it's off point, but I just need

to understand the April 2nd transfer thing. I just need to

know.

So Home123 or New Century could not transfer on April 2nd?

It would have to already have been done prior to that date? Am

I correct? Is that a correct statement?

A. In general, the statement you're making is correct.

However, it -- in this case, it's very complicated because it


131


111 goes to what was New Century's ordinary course of business. It211 also goes to whether or not it was subject to a mastery311 purchase agreement and whether or not they were entitled to the411 protections of those provisions in the Bankruptcy Code that511 eliminated them from sub -- from being subject to the automatic611 stay. So I can't answer that -- I could tell you that if New711 Century owned a piece of property or an office building that811 their headquarters were in, they probably couldn't transfer911 that without an order of the court because that clearly was not

1011 their business. Whether New Century could transfer a mortgage

\V 11~12

13141511 Q.1611 A.171819202122

after the filing date, if it was in their ordinary course ofbusiness, I think they might be able to. But weld have to knowthe specific facts about the specific loan and the specifictransaction to make that determination.

Okay. Thank you for your time and your patience.Youlre welcome.

THE COURT: Any redirect?MR. SCHNITZER: No, Your Honor. Thank you.THE COURT: Thank you. Sir, you may step down.THE WITNESS: Thank you.THE COURT: Call your next witness.

2311 calls Alan M. Jacobs.MR. SCHNITZER: Thank you, Your Honor. The Trust

242511 hand and place your left hand on the Bible.

THE CLERK: Please remain standing. Raise your right


132

1

2

3

4

5


(Witness sworn)

THE WITNESS: I do.

THE CLERK: Please be seated.

THE WITNESS: Thank you.

6 and spell it.

THE CLERK: Please state your full name for the record

7

8

12 A.

13 Q.

14 A.

THE WITNESS: Alan M. Jacobs, J-A-C-O-B-S.

THE CLERK: Thank you.

DIRECT EXAMINATION

BY MR. SCHNITZER:

Q. Good afternoon, Mr. Jacobs.

Good afternoon.

What is your involvement in the New Century bankruptcy?

15 been the liquidating trustee of the New Century Liquidating

Since the initial effective date of August 1, 2008, I have

16 Trust, as well as pursuant to the plan and the modified plan,

17 the sole officer and director of the various debtors.

18 Q.

19 those titles?

And as you sit here and testify today, do you still have

20 A.

21 Q.

22 A.

23 Q.

24 A.

25 Q.

Yes, I do, sir.

Mr. Jacobs, if I can direct your attention to Exhibit 22?

We're referring to the Trust exhibits?

Correct.

Yes.

If you can go to the last page first, please?


133

111 A.

211 Q.

311 A.

411 Q.

511 A.

611 Q.

711 A.


Yes.

Is that your signature?

Yes, it is.

And did you sign this document on August 23rd, 2010?

Yes, I did.

And what is this document?

This document is my affidavit in connection with the

911 Q.

811 settlement agreement.

And is this a true and accurate and complete copy of the

1011 affidavit you signed in connection with this settlement?

1111 A.

1211 Q.

Yes, it is.

And at the time you signed this document, did you believe

1311 everything contained within it was true and correct?

1411 A.

1511 Q.

1611 A.

1711 Q.

Yes, I did.

And as of today, do you continue to hold that belief?

Yes, I do.

1811 with the Marks settlement?

Is this the only affidavit you executed in conjunction

1911 A.

20 II Q.

Yes.

2111 staff at the New Century Liquidating Trust to examine the

Prior to signing this affidavit did you instruct your

2211 debtors' books and records to determine what happened to Ms.

2411 A.

2311 Marks' loans?

2511 Q.

Yes, I did.

And is the results of that examination set forth in the


134

1

2

3

4

5

6

~

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25


affidavit, Exhibit 22?

A. Yes, it is.

Q. Does Ms. Marks owe any money to the Trust?

A. No, it does not at this time.

Q. Do you know what happened to her loan, and, specifically,

11m referring to the 2006 loan?

A. The 2006 loan, as per the prior testimony, was foreclosed

on and transferred to Deutsche Bank.

Q. After it was turned over to Deutsche Bank do you know what

happened to it?

A. No, I do not.

Q. Does the Trust have any interest in what happened to it

after it was transferred to Deutsche Bank?

A. The Trust does not have any interest, nor does the debtor,

as a distinct entity, subsequent to the transfer.

Q. Prior to its transfer to Deutsche Bank, do you know if her

loan was paid in full?

A. It was not.

Q. If I can direct your attention to Exhibit 20 -- 18.

A. 11m sorry?

Q. Exhibit 18. Sorry.

A. Yes.

Q. Are you familiar with this document?

A. Yes, I am.

Q. And what is it?


135

10



1 A. It's a letter prepared pursuant to the settlement

2 agreement. Diane Denney, who's the signer of this, is a staff

3 member working for me at the Liquidating Trust's offices in

4 California, and it's to comply with the provision of the

5 settlement agreement that we contact certain agencies.

6 Q. Did you authorize Ms. Denny to send out this letter in the

7 name of New Century Liquidating Trust?

8 A. Yes, I did.

9 Q. And did you

THE COURT: Let me ask this. Is there any dispute

11 that the letters were sent?

12 MR. SCHNITZER: I don't think so, Your Honor.

13 THE COURT: I'm assuming that's the purpose of this

14 inquiry.

15 MR. SCHNITZER: Yes, and, also, because Ms. Marks, I

16 believe, made a reference to Ms. Denney being a paralegal, and

17 so I wanted it to be clear, for at least the Court, that it was

18 sent with the full, I believe, and Mr. Jacobs can clarify, the

19 full authority of the trustee, so regardless of the particular

20 person of Ms. Denny, no offense to Ms. Denney, it's as if Mr.

21 Jacobs signed it. I admit, Your Honor, it's a stretch.

22 THE COURT: Oh. Well, as I understand the dispute

23 it's not that the letters didn't go it's that they didn't say

24 what Ms. Marks thought they should say. That's the dispute.

25 MR. SCHNITZER: I believe that's correct, Your Honor.

136

1

2

3 basis.

4


THE COURT: Okay. What's--

MR. SCHNITZER: I apologize. I'm trying to cover the

THE COURT: Well, my thought about that would be only

5 cover the necessary basis.

6

7 Q.

MR. SCHNITZER: Understood, Your Honor.

8 any agreements with any of the credit reporting agencies

Mr. Jacobs, does the New Century Liquidating Trust have

9 referenced in Exhibit 18?

10 A.

11 Q.

12

13 Q.

No, they do not. Or we do not.

Does the New Century Liquidating Trust --

MR. SCHNITZER: Strike that.

14 four credit reporting agencies as to how to list New Century

Can the New Century Liquidating Trust direct any of the

15 loans?

16 A.

17 Q.

18 A.

19 Q.

20 A.

21 Q.

22 A.

We have no control over them.

If I can direct your attention to Exhibit 7, please.

Yes.

Have you seen this document before?

Yes, I have.

And what is it?

23 Indelicato to enter into.

It's the settlement agreement that I authorized Mr.

24 Q. Fair to say it's a true and accurate copy of that

25 settlement agreement?


137

1

2

3

4

5

6

7

8

9

10

~

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25


A. Yes, it is.

Q. Did the Trust comply with its obligations under the

agreement?

A. Fully.

MR. SCHNITZER: I have no further questions, Your

Honor.

THE COURT: All right. Ms. Marks, would you like to

cross-examine Mr. Jacobs?

MS. MARKS: Yes.

THE COURT: You may do so now.

CROSS-EXAMINATION

BY MS. MARKS:

Q. Hi, Mr. Jacobs.

A. Good afternoon.

Q. I only have one or two questions, I promise. I would like

to know, as a trustee, did you -- you also said you represented

Home123 and New Century as trustee --

A. Yes.

Q. -- or just in the Liquidating Trust?

A. As I indicated, pursuant to the plan and the confirmation

order and the modified plan and its confirmation order, I am

the trustee of the New Century Liquidating Trust and the sole

officer and director of each of the debtors.

Q. Okay. As the trustee, is it part of your duties to see

that documents transferred are transferred appropriately or in


138

10-t 11

Of) 1213

6



1 a particular procedure?

2 A. Youlll have to put that

Q. Let me re -- yes. What is the procedure for transferring

notes as Mr. Indelicato stated was the procedure?

5 A. I have not established the formal procedure for

transferring notes, because as the successor to the debtors I

7 the Trust had no interest in any mortgages other than four.

8 Those mortgages are being serviced by Carrington, so there is

9 no formal procedure.

Q. So, technically, is there just a stack of papers and you

say here? Here you go. Youlre done.

A. There is no stack of papers, because I just indicated

14 referenced. Yours is not one of those four.

there are no owned mortgages other than the four that I

15 Q.

16 A.

17

18

19

20

21

22

Okay. All right. Thank you.

Youlre welcome.

THE COURT: Any redirect?

MR. SCHNITZER: No, Your Honor.

THE COURT: Thank you, sir. You may step down.

THE WITNESS: Thank you.THE COURT: Any other witnesses, Mr. Schnitzer?

23 no is my answer to that question. My answer is that way

MR. SCHNITZER: Your Honor, Ilm trying to -- yes and

24 because yes, I would like to move

25 THE COURT: Well, that covers all the bases, I guess.

139

Documents

Evidentiary Hearing Exerpts Redact