MBIA Insurance Corporation v. Countrywide Home Loans Inc., Exhibit 70

7/30/2019 MBIA Insurance Corporation v. Countrywide Home Loans Inc., Exhibit 70

1/91

EXHIBIT 70

ILED: NEW YORK COUNTY CLERK 12/11/2012 INDEX NO. 602825/

YSCEF DOC. NO. 3970 RECEIVED NYSCEF: 12/11/


2/91

In The Matter Of:

MBIAINSURANCE

CORPORATION

v.

COUNTRYWIDEHOMELOANS,INC.,etal

___________________________________________________

CYNTHIASIMANTEL

Vol.

3

August24,2012

_________________________________________________CONTAINS HIGHLY CONFIDENTIAL

INFORMATION


3/91

a6984548-ea1c-495c-8b4e-555

CONTAINS HIGHLY CONFIDENTIAL INFORMATION

CYNTHIA SIMANTEL - 8/24/2012

1-800-325-3376 www.merrillcorp.com/law

Merrill Corporation - New York

Page 866

SUPREME COURT OF THE STATE OF NEW YORK

COUNTY OF NEW YORK

---------------------------------------x

MBIA INSURANCE CORPORATION,

Plaintiff,

- against - Index No.

COUNTRYWIDE HOME LOANS, INC., 08/60285

COUNTRYWIDE SECURITIES CORP.,

COUNTRYWIDE FINANCIAL CORP.,

COUNTRYWIDE HOME LOANS SERVICING, LP

and BANK OF AMERICA CORP.,

Defendants.

-------------------------------------- x


VIDEOTAPED DEPOSITION OF:

CYNTHIA SIMANTEL

FRIDAY, AUGUST 24, 2012

9:08 A.M.

VOLUME III

(PAGES 866-1218)

REPORTED BY:

SUSAN NELSON

C.S.R. No. 3202


4/91

a6984548-ea1c-495c-8b4e-555





2 (Pages 867 to 870)

Page 867

1 Videotaped deposition of CYNTHIA SIMANTEL, the

2 witness, taken on behalf of the Plaintiff, commencing

3 at 9:08 A.M., on FRIDAY, AUGUST 24, 2012, at

4 865 South Figueroa Street, Los Angeles, California,

5 before SUSAN NELSON, C.S.R. No. 3202.6

7 APPEARANCES OF COUNSEL

8

9 FOR PLAINTIFF:

10 QUINN EMANUEL URQUHART & SULLIVAN, LLP

11 BY: PETER CALAMARI, ESQ.

12 51 Madison Avenue

13 22nd Floor

14 New York, New York 10010

15 (212) 849-7000

16 -- and --

17 QUINN EMANUEL URQUHART & SULLIVAN, LLP

18 BY: RENEE BELTRANENA BEA, ATTORNEY AT LAW

19 50 California Street

20 22nd Floor

21 San Francisco, California 94111

22 (415) 875-6600

23

24

25

Page 868

1 APPEARANCE OF COUNSEL (CONTINUED):

2

3 FOR THE COUNTRYWIDE DEFENDANTS AND THE WITNESS:

4 GUNSTER

5 BY: AARON W. TANDY, ESQ.6 One Biscayne Tower

7 2 South Biscayne Boulevard

8 Suite 3400

9 Miami, Florida 33131

10 (305) 376-6000

11

12 FOR DEFENDANT BANK OF AMERICA:

13 O'MELVENY & MYERS LLP

14 BY: TAD ALLAN, ESQ.

15 400 South Hope Street

16 Los Angeles, California 90067-2899

17 (213) 430-6000

18

19 ALSO APPEARING:

20 JAMES GABRIEL, VIDEOGRAPHER

21

22

23

24

25

Page 869

1 I N D E X2 WITNESS EXAMINATION PAGE3 CYNTHIA SIMANTEL4 By Mr. Calamari 875

5 (P.M. Session) 10316 Highly Confidential Section

7 Pages 1076 to 10908

9 E X H I B I T S10 NO. PAGE DESCRIPTION11 Exhibit 751 1141 Origination Business Controls12 (CWMBIAGO0000113735-No Bates)13 (Confidential)

14 (Previously Marked)

15 Exhibit 4015 879 6/28/11 Deposition of16 Cynthia Simantel17 (CWMBIAG0000130303-3042)18 (Confidential)19 Exhibit 4016 881 2/25/11 Deposition of20 Cynthia Simantel21 (CWMBIAG0000110390-0519)

22 (Confidential)

23 Exhibit 4017 936 10/5/09 Emails, Attachment24 (CWMBIA0018627714-7735)25 (Highly Confidential)

Page 870

1 E X H I B I T S

2 NO. PAGE DESCRIPTION

3 Exhibit 4018 943 Countrywide Internal

4 Repurchase Policy

5 (CWMBIA0018538028-8036)6 (Highly Confidential)

7 Exhibit 4019 945 May 2008, February 2009 Emails

8 Repurchase Guidance Document

9 (CWMBIA0018607415-7438)

10 (Highly Confidential)

11 Exhibit 4020 964 February 2009 Emails,

12 Attachment

13 (CWMBIA00185548919-9478)


15 Exhibit 4021 992 January 2009 Emails

16 (CWMBIA0018540052-0057)


18 Exhibit 4022 1003 Investor Audit - Credit Loss

19 Monolines

20 (CWMBIA0018630449-0455)


22 Exhibit 4023 1010 Investor Audit - Monolines

23 (CWMBIA0018631116-1142)


25


5/91

a6984548-ea1c-495c-8b4e-555





3 (Pages 871 to 874)

Page 871

1 E X H I B I T S


3 Exhibit 4024 1036 3/15/06 Document to Terry Wolfe

4 (CWMBIA0009458890)

5 (Confidential)6 Exhibit 4025 1049 7/15/08 Email, Repurchase

7 Process Deck

8 (CWMBIA0018536381-6395)


10 Exhibit 4026 1066 1/26/09 Email, Attachment

11 (CWMBIA00185596183-6186)


13 Exhibit 4027 1076 4/9/10 Emails, Monoline Info

14 (BACMBIAX0000430500-0534)


16 Exhibit 4028 1091 Repurchase Oversight Group

17 (BACMBIAX0000427891-7913)

18 (Confidential)

19 Exhibit 4029 1098 10/27/08 Email, Reports, Disc

20 (CWMBIA0018574938-No Bates)


22 Exhibit 4030 1102 3/2/09 Emails, Stats Report

23 (CWMBIA0018610112-0114)


25

Page 872

1 E X H I B I T S


3 Exhibit 4031 1106 12/29/08 Emails

4 (CWMBIA0018595925)

5 (Highly Confidential)6 Exhibit 4032 1110 4/3/09 Email Stats Report, Disc

7 (BACMBIAX0000015553-5554)


9 Exhibit 4033 1120 CMD Credit Risk Management

10 (CWMBIAG0000103488-3500)

11 (Confidential)

12 Exhibit 4034 1127 March 2006 Emails SOP/SLA Data

13 (CWMBIA001001648-1662)

14 (Confidential)

15 Exhibit 4035 1136 Summary Review: Quality Control

16 (CWMBIAG0000106281-6292)

17 (Confidential)

18 Exhibit 4036 1153 Severely Unsatisfactory

19 Analysis

20 (BUTLER00000027-No Bates)

21 (Confidential)

22 Exhibit 4037 1158 9/16/08 Emails, Attachment,

23 Disc

24 (CWMBIAB0000006104-6105)


Page 873

1 E X H I B I T S


3 Exhibit 4038 1178 12/21/09 Emails, 100 MBIA Final

4 Review

5 (BACMBIAX0000016370-6514)6 (Highly Confidential)

7 Exhibit 4039 1195 January 2009 Emails,

8 1/9 Meeting

9 (CWMBIA0018596053-6039)


11 Exhibit 4040 1196 November 2008 Emails

12 (CWMBIA0018594433-4435)

13 Exhibit 4041 1198 December 2008 Emails

14 (CWMBIA0018595894-5904)


16 Exhibit 4042 1201 10/13/09 Email

17 Monthly ROG Presentation

18 (BACMBIAX0000429484-9518)

19 (Confidential)

20 Exhibit 4043 1207 11/10/09 Email

21 Monthly ROG Presentation

22 (BACMBIAX0000429635-9661)

23 (Confidential)

24

25

Page 874

1 LOS ANGELES, CALIFORNIA;

2 FRIDAY, AUGUST 24, 2012;

3 9:08 A.M.

4

509:08:22 THE VIDEOGRAPHER: Here begins Volume609:08:23 Number 3, videotape number 1, in the deposition of

709:08:26 Cynthia Simantel. Today's date is August 24th, 2012.

809:08:30 The time on the video monitor is 9:08 a.m.

909:08:34 The video operator today is James Gabriel, a

1009:08:38 videographer contracted by Merrill Legal Solutions in

1109:08:40 Los Angeles through Merrill Legal Solutions in

1209:08:42 New York located at 225 Varick Street, Tenth Floor,

1309:08:47 New York, New York, 10014.

1409:08:51 Counsel, please voice-identify yourselves

1509:08:52 and state whom you represent.

1609:08:54 MR. CALAMARI: Peter Calamari -- excuse

1709:08:57 me -- Quinn Emanuel, representing MBIA.

1809:08:59 MS. BEA: Renee Bea, Quinn Emanuel,

1909:09:01 representing MBIA.

2009:09:02 MR. TANDY: Aaron Tandy, Gunster,

2109:09:05 representing the Countrywide defendants and the

2209:09:07 witness Ms. Simantel.

2309:09:09 MR. ALLAN: Tad Allan, O'Melveny & Myers,

2409:09:11 representing the Bank of America defendants.

2509:09:14 THE VIDEOGRAPHER: The court reporter today


6/91

a6984548-ea1c-495c-8b4e-555





4 (Pages 875 to 878)

Page 875

109:09:20 is Susan Nelson with Merrill Legal Solutions. Would

209:09:20 the reporter please swear in the witness.

3

4 CYNTHIA SIMANTEL,

5 having been first duly sworn, was6 examined and testified further as follows:

7

8 THE VIDEOGRAPHER: Please begin.

9

10 EXAMINATION (RESUMED)

11 BY MR. CALAMARI:

1209:09:31 Q. Ms. Simantel, did you do anything to prepare

1309:09:34 for today's deposition since the last day of your

1409:09:38 deposition?

1509:09:41 A. I did meet with counsel yesterday.

1609:09:42 Q. And for how long did you meet?

1709:09:44 A. About three-and-a-half hours.

1809:09:46 Q. And that was yesterday?

1909:09:49 A. Yes.

2009:09:50 Q. And who was present at that meeting?

2109:09:55 A. Tad Allan and Aaron Tandy and myself.

2209:09:57 Q. No one else?

2309:09:59 A. No one else.

2409:10:00 Q. Did you review any testimony of any

2509:10:04 witnesses in the case?

Page 876

109:10:07 A. I did not.

209:10:09 Q. Okay. Did you review any documents?

309:10:13 A. I did look at a few documents.

409:10:15 Q. Okay. And did any of those documents

509:10:20 refresh your recollection about events in connection609:10:21 with this matter?

709:10:22 A. No.

809:10:23 Q. Since your prior deposition in this case,

909:10:34 which was April 28th, 2011, has your employment

1009:10:39 changed in any way?

1109:10:40 A. No, it has not.

1209:10:41 Q. So you're still employed by Bank of America?

1309:10:44 A. I am, yes.

1409:10:45 Q. And have your responsibilities changed in

1509:10:48 any respect?

1609:10:48 A. No, they have not.

1709:10:49 Q. Has your title changed?

1809:10:52 A. It has not.

1909:10:53 Q. Do you still report to Mr. Schloessmann?

2009:10:57 A. That -- that has changed. My reporting

2109:11:00 structure has changed.

2209:11:01 Q. Okay. And in what way has that changed?

2309:11:04 A. John Dixon is now head of reps and warrants,

2409:11:08 and I report to Kathryn Martin, who reports to John

2509:11:12 Dixon.

Page 877

109:11:12 Q. And who is Kathryn Martin?

209:11:14 A. She is the SVP claims management executive

309:11:21 for the GSEs.

409:11:25 Q. And can you tell me a little about her

509:11:33 history? Was she employed by Bank of America prior609:11:36 to your assignment to her?

709:11:40 MR. TANDY: Objection.

809:11:42 MR. ALLAN: Mr. Calamari, may we have a

909:11:44 stipulation that any objection made by Mr. Tandy will

1009:11:47 be joined in by Bank of America?

1109:11:48 MR. CALAMARI: Yes.

1209:11:48 MR. ALLAN: Thank you.

1309:11:54 THE WITNESS: She was with Bank of America

1409:11:56 prior to me reporting to her, but she was a

1509:11:58 Countrywide employee.

1609:11:59 BY MR. CALAMARI:

1709:12:00 Q. So she is a legacy Countrywide employee?

1809:12:03 A. She is, yes.

1909:12:04 Q. That moved over to Bank of America after the

2009:12:06 merger?


2209:12:09 THE WITNESS: She was a legacy Countrywide

2309:12:11 employee. And when Bank of America and Countrywide

2409:12:14 transitioned together, she became an employee of reps

2509:12:16 and warrants, stayed an employee of reps and

Page 878

109:12:20 warrants.


309:12:20 Q. Of Bank of America?

409:12:21 A. Yes. Under Bank of America, yes.

509:12:28 Q. Okay. And you mentioned that she reports in609:12:31 turn to -- I already forgot his name. Who is that?

709:12:34 A. John Dixon.

809:12:35 Q. John Dixon.

909:12:37 And can you tell me a little about

1009:12:38 Mr. Dixon's past employment?

1109:12:40 A. Mr. Dixon was a legacy Countrywide employee

1209:12:47 who then joined Bank of America.

1309:12:50 Q. And, again, that was at the time of -- of

1409:12:52 the merger?


1609:12:56 THE WITNESS: Right. He was Countrywide.

1709:12:57 And when we transitioned to Bank of America, he just

1809:12:59 stayed on with the company.


2009:13:00 Q. Okay. And in terms of people that report to

2109:13:08 you, has that changed in any way?

2209:13:12 A. Since February of -- no, it has not.

2309:13:16 Q. Okay. So the same people that you

2409:13:19 supervised since the last deposition on April 28th

2509:13:22 you still supervise?


7/91

a6984548-ea1c-495c-8b4e-555





5 (Pages 879 to 882)

Page 879

109:13:23 A. Yes, I do.

209:13:25 Q. Let me ask you to look at a few quick

309:13:29 documents. The first of these -- the first of these

409:13:41 is a transcript of testimony given in Financial

509:13:48 Guaranty Insurance versus Countrywide -- I can see609:13:54 I'm going to need my magnifying glass before this day

709:13:54 is over.

809:13:54 MR. TANDY: Countrywide Home Loans, Inc.

909:13:57 MR. CALAMARI: Thank you. Is the first name

1009:13:58 on the caption. And let me mark that as Exhibit --

1109:14:03 what was the --

1209:14:04 MS. BEA: 4015.

1309:14:04 (The document referred to was

1409:14:21 marked as Exhibit 4015.)


1609:14:21 Q. Let me ask you to take a quick look at that

1709:14:23 document that's entitled "Videotaped Deposition of

1809:14:26 Cindy Simantel," dated February 25, 2011. And it

1909:14:32 consists of pages 1 through 87 of the document.

2009:14:39 MR. TANDY: Peter, I hate to interrupt you,

2109:14:41 I think the one that you're looking at is now 4016.

2209:14:44 The one the witness has in front of her, 4015, is the

2309:14:48 FGIC transcript which was taken on June 28th, 2011

2409:14:53 and then --

2509:14:56 MR. CALAMARI: I've got the numbers

Page 880

109:14:57 backwards?

209:14:57 MR. TANDY: You do. Not -- not a big deal

309:14:59 but --

409:15:00 MR. CALAMARI: No, that's always a big deal.

509:15:02 So let's just be very careful and identify both609:15:07 documents for the record.

709:15:08 MR. TANDY: Sure.

809:15:09 MR. CALAMARI: First, 4015 is a transcript

909:15:12 of testimony given in the case of Financial Guaranty

1009:15:21 Insurance v. Countrywide --

1109:15:21 MR. TANDY: Home Loans.

1209:15:23 MR. CALAMARI: -- Home Loans, Inc. And the

1309:15:27 date of that appears to be Tuesday, June 28th, 2013.

1409:15:33 Is that --

1509:15:33 MR. TANDY: No, 2011.

1609:15:35 MR. CALAMARI: 2011. Sorry.

1709:15:36 MR. TANDY: That'd be very interesting if it

1809:15:38 was --

1909:15:38 MR. CALAMARI: So would I -- so would I. So

2009:15:40 would I. That's why I was taken aback by that.

2109:15:44 And the second one is a transcript of

2209:15:46 testimony, and that's Exhibit 4016, given in the case

2309:15:51 of Syncora Guarantee versus Countrywide Home Loans.

2409:15:53 And that one is dated February 25th, 2011. And

2509:15:58 fortunately on that one I can read the caption.

Page 881

109:15:58 (The document referred to was209:15:58 marked as Exhibit 4016.)309:15:58 BY MR. CALAMARI:409:16:05 Q. So I'll ask you these questions in tandem.

509:16:14 Do you recall giving depositions in the609:16:16 cases that these transcripts are from?709:16:17 A. Yes, I do.809:16:19 Q. And have you seen copies of these909:16:21 transcripts in the past?1009:16:22 A. I have not.1109:16:23 Q. So you've not had a chance to review these1209:16:25 transcripts?1309:16:26 A. No.1409:16:26 Q. But you do recall giving the depositions?1509:16:31 A. I do, yes.1609:16:31 Q. Okay. And do you -- is there any reason to1709:16:34 believe that anything you've said in these1809:16:37 transcripts is false or incorrect?1909:16:39 MR. TANDY: Objection.2009:16:42 THE WITNESS: No.2109:16:42 BY MR. CALAMARI:2209:16:43 Q. Okay. Did you testify truthfully, to the2309:16:44 best of your ability?2409:16:44 A. Yes.2509:16:47 Q. And that would be true for both transcripts?

Page 882

109:16:47 A. Yes.

209:16:51 Q. And is there anything that sticks out at you

309:16:53 that after the deposition you said, oh, my goodness,

409:16:56 I have to correct that?

509:16:57 A. No.609:17:00 Q. But you have not had a chance to review

709:17:03 these transcripts. Is that correct?

809:17:04 A. That's correct.

909:17:06 Q. Okay.

1009:17:07 MR. TANDY: And, Peter, I just want to make

1109:17:09 sure 'cause my copy had some highlights. Did you

1209:17:11 intend us to have the copies that have highlights?

1309:17:15 MS. BEA: No.

1409:17:15 MR. TANDY: Okay. Well --

1509:17:16 MR. CALAMARI: Mine does, too.

1609:17:18 THE WITNESS: Mine does, too.

1709:17:19 MR. TANDY: They all do.

1809:17:20 MR. CALAMARI: Okay. So we'll have to take

1909:17:21 those back.

2009:17:23 MR. TANDY: Okay.

2109:17:24 MR. CALAMARI: And we'll substitute

2209:17:25 nonhighlighted copies. And at least for the instant,

2309:17:29 I won't ask any more questions about these exhibits

2409:17:31 until we get it straightened out.

2509:17:37 MR. TANDY: I figured before you started to


8/91

a6984548-ea1c-495c-8b4e-555





6 (Pages 883 to 886)

Page 883

109:17:39 ask the questions, I should point that out.

209:17:42 MR. CALAMARI: Okay.


409:17:59 Q. Now -- now, the -- the merger of the

509:18:16 Countrywide businesses with Bank of America609:18:23 businesses took place in two steps. Is that correct?


809:18:31 THE WITNESS: I'm not clear on what you're

909:18:32 asking me.


1109:18:33 Q. Okay. There was a -- a period where Bank of

1209:18:38 America had signed contracts to acquire -- to acquire

1309:18:46 Countrywide. And then there was a closing date. And

1409:18:52 after the closing date, the two entities actually

1509:18:55 came together.

1609:18:56 Do you recall that?


1809:18:59 THE WITNESS: I wasn't involved in any

1909:19:01 contract signing. I was aware that Bank of America

2009:19:07 was going to acquire Countrywide and we would

2109:19:11 transition under that umbrella. And I was aware of

2209:19:13 legal day one and that concept.


2409:19:17 Q. Okay. And -- and when you say that -- that

2509:19:22 Bank of America was going to acquire Countrywide,

Page 884

109:19:26 that -- that awareness became publicly known and

209:19:29 known to you in or around February of 2008?

309:19:35 A. I don't recall the exact date. I do recall

409:19:39 that, you know, it became widely known. It was in

509:19:41 the newspapers.609:19:44 Q. And that's how you learned about it, from

709:19:46 the newspapers?

809:19:48 A. No. I learned about it from my boss, my

909:19:52 manager, about the same time that the newspapers came

1009:19:54 out.

1109:19:55 Q. And in terms of what you called "legal day

1209:19:58 one," was that July 1st, 2008?

1309:20:01 A. Yes.

1409:20:01 Q. And was there a period between February of

1509:20:05 2008 and July 1st, 2008 that Bank of America and

1609:20:11 Countrywide worked together to discuss transition

1709:20:14 plans?

1809:20:17 A. I did have meetings with Bank of America

1909:20:21 associates to -- the areas that I was managing. I

2009:20:25 did meet with them to discuss how they operated. I

2109:20:28 met with their associates that managed those areas

2209:20:30 and we talked about, you know, merging the two teams.

2309:20:33 Q. Right. And then you made plans to

2409:20:35 effectuate that merger?

2509:20:38 A. We -- we did not make any plans really to

Page 885

109:20:42 merge the two departments until after legal day one.

209:20:45 What we just talked about was how we both

309:20:48 operated. We discussed what we thought were best

409:20:51 practices. There were Bank of America and

509:20:56 Countrywide teams that oversaw like operations that609:20:59 were talking about it as well. And so that was going

709:21:02 on. But we didn't actually talk about how we were

809:21:04 going to do it until after legal day one.

909:21:08 Q. Okay. And then after legal day one, you --

1009:21:11 you made and then implemented plans to accomplish the

1109:21:13 merger of the departments. Is that right?


1309:21:18 THE WITNESS: After legal day one, we then

1409:21:22 started actively discussing how we were going to do

1509:21:25 it. We took information that we received from the

1609:21:26 operations teams that did overviews as well. We

1709:21:30 started introducing ourselves, talking, and, you

1809:21:33 know, we then started working on a plan to merge the

1909:21:36 operations as far as how we operated.

2009:21:39 It wasn't something that happened overnight.

2109:21:41 I mean, it was a process over months.


2309:21:45 Q. Okay. Now, I want to take you back to the

2409:21:47 period before the merger was announced, that is, the

2509:21:53 period prior to February of 2008.

Page 886

109:22:01 In that period, you were -- well, let me --

209:22:17 let me say it differently.

309:22:17 In that period, how were repurchase claims

409:22:22 from investors or insurers processed?

509:22:28 MR. TANDY: Objection.609:22:33 THE WITNESS: So prior to February of 2008?


809:22:37 Q. Yes.

909:22:39 A. We had started to make some changes in our

1009:22:42 process, starting about October of '07, in our

1109:22:46 repurchase process. And that was due to my manager,

1209:22:49 Rod Williams, announcing that he was going to leave

1309:22:51 the company. And because he was leaving the company,

1409:22:57 we had to start thinking about how we were going to

1509:22:59 handle repurchase claims with that change.

1609:23:02 We had a monthly meeting that we talked

1709:23:04 about repurchase claims and we knew we had to

1809:23:07 reassess the process. So we started working on that.

1909:23:10 But we -- I mean, we continued to process repurchase

2009:23:13 claims through the time that he left in a very

2109:23:18 similar manner. He actually left I believe about

2209:23:20 February of '08.

2309:23:22 Q. So I would like to focus and if -- if -- we

2409:23:29 need to focus on the period pre-October '07 before

2509:23:33 you started to change the plans. I just want to get


9/91

a6984548-ea1c-495c-8b4e-555





7 (Pages 887 to 890)

Page 887

109:23:36 a general description of how it was done pre-October

209:23:39 '07.

309:23:41 A. Okay. And how in-depth? I mean, just --

409:23:44 you want me just to tell you how we handled the

509:23:47 finalization or --609:23:49 Q. Well, I'll try to be more specific with my

709:23:51 question.

809:23:52 If an investor or a monoline insurer wanted

909:23:58 to pursue a repurchase claim, how would they initiate

1009:24:03 that?


1209:24:07 THE WITNESS: Anyone that wanted to initiate

1309:24:09 a claim against Countrywide was required to send that

1409:24:13 claim in to us in writing. It had to be a written

1509:24:17 claim, and one -- and it had to also tell us what

1609:24:21 they were requesting, why they felt it was a breach,

1709:24:26 cite sections of the contract that they felt were

1809:24:28 breached. And once we received that, we would then

1909:24:33 start reviewing it.

2009:24:35 I had senior underwriters that were

2109:24:37 reviewing these loans. And they would assess the

2209:24:40 validity of the claim, make a determination whether

2309:24:44 or not they agreed or that they felt that the claim

2409:24:47 was not something that we should repurchase. And

2509:24:52 then they would go ahead and write an appeal on that.

Page 888

109:24:55 If it was a claim that they felt should be

209:24:58 repurchased, they discussed that with their manager.

309:25:00 If they both agreed, then they prepared what we

409:25:02 called a repurchase authorization. And that

509:25:05 repurchase authorization was put into a meeting that609:25:09 we held once a month and we actually discussed them

709:25:12 in those meetings.


909:25:14 Q. And just to be clear, what group within

1009:25:22 Countrywide would that -- would that repurchase claim

1109:25:30 be funneled to?



1409:25:35 Q. What is the name of the group that handled

1509:25:36 the repurchase claims?

1609:25:37 A. During that time period, it was called

1709:25:39 "investor audit."

1809:25:43 Q. And was that the only group that would be

1909:25:45 the initial reviewer of repurchase claims?

2009:25:50 A. Investor audit was the initial repository we

2109:25:53 received the claims. I mean, that wouldn't -- didn't

2209:25:56 mean that we didn't reach out to other parties within

2309:25:58 the company. Our contract review departments, our

2409:26:01 servicing departments, our legal departments. I

2509:26:03 mean, we reached out to other parties. But the

Page 889

109:26:07 initial requests came to the investor audit

209:26:09 department.

309:26:10 Q. Okay. And if the investor audit group

409:26:15 decided to, in your words, appeal the repurchase,

509:26:23 would that decision be implemented without further609:26:28 review within Countrywide?


809:26:33 THE WITNESS: It -- the underwriters, senior

909:26:36 underwriters had the ability to appeal loans on their

1009:26:39 own. They, you know, had the ability also to talk to

1109:26:43 their managers or senior managers. They, too, could

1209:26:46 get information from outside parties. But every

1309:26:50 appeal that went out did not go through, you know,

1409:26:53 committee review.


1609:26:54 Q. And if they decided to recommend repurchase

1709:26:58 of the loan, you said that that would go to a

1809:27:01 committee review?

1909:27:02 A. Just for the final -- it went to a committee

2009:27:05 review for the final sign-off and approval.

2109:27:07 Q. Okay. And what was the name of that

2209:27:09 committee?

2309:27:09 A. It was loss exposure group. It was actually

2409:27:13 a group. It was a working group.

2509:27:16 Q. Loss exposure group?

Page 890

109:27:18 A. Hm-hm. It was LERG, L-E-R-G.

209:27:26 Q. Was that sometimes referred to as LERC,

309:27:28 L-E-R-C?

409:27:29 A. It was originally called LERC, loss exposure

509:27:33 review committee, and then it became LERG because it609:27:35 changed from a committee to a working group.

709:27:38 Q. Do you know when that change took place?

809:27:42 A. I don't remember specifically. I mean, it

909:27:45 was '06-'07 time frame.

1009:27:53 Q. And you were a member of first that

1109:28:01 committee and then that group?


1309:28:03 THE WITNESS: I was when -- after I had

1409:28:06 joined the investor audit department.


1609:28:08 Q. When did you join the investor audit

1709:28:10 department?

1809:28:10 A. June of 2003.

1909:28:12 Q. Okay. And at that point in time, you became

2009:28:15 a member of that committee, that is, LERC?

2109:28:15 A. Yes.

2209:28:20 Q. And did you remain on the committee at the

2309:28:25 time it changed its name to LERG?


2509:28:29 THE WITNESS: I did.


10/91

a6984548-ea1c-495c-8b4e-555





8 (Pages 891 to 894)

Page 891


209:28:30 Q. Okay. And you had written procedures that

309:28:52 were used in dealing with the repurchase process?

409:28:57 A. We had written policies and procedures

509:29:01 within the department.609:29:03 Q. And those policies and procedures were

709:29:06 available to the underwriters who were handling the

809:29:10 specific review of the repurchase claims?

909:29:10 A. Yes.

1009:29:20 Q. What kinds of information would you utilize

1109:29:24 to review the repurchase claims aside from the

1209:29:30 information provided by the investor or insurer?


1409:29:36 THE WITNESS: Every claim was different, so

1509:29:38 there wasn't a specific set of information that we

1609:29:43 used. We had to review what the claim was and, you

1709:29:47 know, access any necessary information in order to

1809:29:51 analyze that claim.

1909:29:52 So there wasn't anything set. It was based

2009:29:55 solely on what came in and what we needed to review.


2209:29:58 Q. Would you look at the contract with the

2309:30:00 investors?


2509:30:04 THE WITNESS: At one point in time, we were

Page 892

109:30:06 looking at contracts, but we did get a contract

209:30:10 review department involved to actually review the

309:30:14 contracts. We had legal helping us with the

409:30:18 contracts. We weren't reviewing them on our own, but

509:30:21 I did have copies of the contracts.609:30:23 BY MR. CALAMARI:

709:30:24 Q. You say at one point in time, you had a

809:30:26 contract review department that -- I'm sorry.

909:30:30 You said at one point in time, you began to

1009:30:32 utilize a contract review department. Do you

1109:30:35 remember what that point in time was?

1209:30:40 A. Well, it -- we always used contract review

1309:30:42 employees that had that expertise and the legal

1409:30:45 department and -- from the time that I joined the

1509:30:48 investor audit department. But what we had a more

1609:30:52 formalized contract review department and that really

1709:30:58 came into play later on. I -- I don't know

1809:31:04 specifically the date, but -- when we started calling

1909:31:07 them specifically contract review, but we always used

2009:31:11 outside contract -- people that were knowledgeable in

2109:31:13 the contracts to help us.

2209:31:14 Q. And when you say you don't recall the date,

2309:31:16 can you give me the approximate time frame?

2409:31:22 A. I -- you know, I can't. I can't tell you.

2509:31:23 Q. Was it before the -- was it before the

Page 893

109:31:28 announcement of the Bank of America transaction?


309:31:33 THE WITNESS: I don't recall.


509:31:38 Q. Did you also review the Countrywide609:31:40 technical manual?


809:31:46 THE WITNESS: I mean, we had access to the

909:31:47 Countrywide technical manual. But really when you're

1009:31:53 dealing with repurchases, you're dealing more with --

1109:31:57 I mean, that's kind of like processing. And you're

1209:31:59 not really dealing with processing per se, dealing

1309:32:02 with repurchases.


1509:32:05 Q. And did you review the applicable guidelines

1609:32:07 for a particular investment?


1809:32:13 THE WITNESS: We had access to the loan

1909:32:14 program guidelines. We would review guidelines in

2009:32:16 conjunction with the contracts and all the other

2109:32:20 facts that were necessary.


2309:32:22 Q. And did you also have access to quality

2409:32:25 control audits?

2509:32:29 A. Investor audit did not have access to the

Page 894

109:32:31 quality control audits.

209:32:35 Q. So one of the things you would -- so would

309:32:39 you look -- strike that.

409:32:39 Would you look at the results of an

509:32:43 investor -- of a -- I'm sorry.609:32:44 Would you look at the results of a quality

709:32:46 control audit of a loan that happened to be in the

809:32:52 securitization that you were examining for a

909:32:56 repurchase claim?


1109:32:59 THE WITNESS: Quality control had an

1209:33:00 internal process that wasn't -- they didn't know who

1309:33:02 the loans were going to be sold to. So our QC

1409:33:06 process was not in any way related to the

1509:33:08 repurchases. So the investor audit department didn't

1609:33:10 review quality control audits. They weren't -- you

1709:33:13 couldn't correlate them. The QC audits was a process

1809:33:17 that we developed internally, whereas investor audit

1909:33:20 was not.

2009:33:22 Very early on, back before we started

2109:33:26 looking at contracts and when we sold most of our

2209:33:29 loans to Fannie Mae, we did look at QC audits. But

2309:33:32 after we started selling loans to other parties, we

2409:33:35 already had different contracts and we had no idea

2509:33:37 who we were selling to, we stopped looking at the


11/91

a6984548-ea1c-495c-8b4e-555





9 (Pages 895 to 898)

Page 895

109:33:39 audits at all.


309:33:40 Q. So even if the repurchase claim related to a

409:33:48 loan that had been the subject of a quality control

509:33:52 audit, you would not look at that quality control609:33:57 audit to assist you in analyzing the repurchase

709:33:59 claim?


909:34:02 THE WITNESS: I did not see it as being an

1009:34:04 assistance in any way in looking at the claim because

1109:34:07 they were two different ways of reviewing loans with

1209:34:09 different processes.


1409:34:10 Q. And are you saying you did not access the

1509:34:13 results of quality control audits in terms of

1609:34:18 reviewing repurchase claims?


1809:34:20 THE WITNESS: No, I did not.


2009:34:22 Q. And your -- is it -- are you also saying

2109:34:24 that your underwriters did not access quality control

2209:34:29 audits in determining repurchase claims?


2409:34:33 THE WITNESS: It was not part of our

2509:34:34 process, except as I indicated earlier on, and I

Page 896

109:34:38 can't tell you the exact date we stopped doing it.

209:34:41 But when we were selling most of our loans to Fannie

309:34:44 Mae and Freddie Mac, we did look at them. And that

409:34:46 was like '03-'04 time frames, I believe.

509:34:48 BY MR. CALAMARI:609:34:49 Q. And when do you think you stopped doing

709:34:51 that?

809:34:52 A. I -- I can't tell you a specific date. I

909:34:54 just know that we made the change on it because every

1009:34:58 loan was sold uniquely under different contracts.

1109:35:01 And our QC process was not looking at who we sold the

1209:35:04 loan to, what the contract was. It didn't take that

1309:35:07 into consideration. So it was like comparing apples

1409:35:11 to oranges. It wasn't relevant.

1509:35:12 Q. So you're saying that a loan that could be

1609:35:14 rated, for example, severely unsatisfactory, let's

1709:35:17 say because it was missing the mortgage note, would

1809:35:23 not be considered severely unsatisfactory in

1909:35:27 connection with a purchase by an investor?


2109:35:32 THE WITNESS: Well, I'm say- -- I can't

2209:35:34 really address that and answer that because, you

2309:35:36 know, this is kind of a hypothetical. I -- I'm

2409:35:39 not -- I can't answer that.

2509:36:19 MS. BEA: This has been previously marked so

Page 897

109:36:20 we don't need to re-mark it.

209:38:40 MR. CALAMARI: Okay.


409:38:59 Q. Quality control had a -- quality control had

509:39:10 a severely unsatisfactory rating. Is that correct?609:39:15 MR. TANDY: Objection.

709:39:16 THE WITNESS: Yes.


909:39:17 Q. And they applied that loans [sic] to loans

1009:39:23 that for whatever reason quality control felt were

1109:39:28 not underwritten correctly. Is that correct?


1309:39:34 THE WITNESS: No. We had a definition for

1409:39:36 severe unsat. There was a ratings grid that we used

1509:39:41 that outlined sort of the thought process that we

1609:39:45 went through. And we did an assessment of that loan

1709:39:50 and, you know, made a determination based upon, you

1809:39:54 know, all the facts when we reviewed it .


2009:39:55 Q. Okay. And that process continued right up

2109:40:02 through the period of the Bank of America

2209:40:08 transaction?

2309:40:08 A. Yes.

2409:40:10 Q. So even though you were -- you were still

2509:40:14 selling -- you were now selling loans in great

Page 898

109:40:17 numbers to investors, the quality control process

209:40:20 continued?


409:40:24 MR. CALAMARI: You're right. That's a bad

509:40:25 question. I'll withdraw it.609:40:25 BY MR. CALAMARI:

709:40:27 Q. Is it fair to say that the QC process of

809:40:31 examining loans continued through February of 2008?

909:40:40 A. Countrywide had a quality control process

1009:40:44 that was in existence and we continued to review

1109:40:47 loans that were originated, you know, in accordance

1209:40:49 with the QC guidelines, you know, up through

1309:40:53 February, yes.

1409:40:55 Q. Yes. And when you say you continued to

1509:40:57 review loans through February of 2008, that included

1609:41:05 loans that were sold to investors as opposed to

1709:41:09 government services?

1809:41:12 A. Yes. Our QC process was developed using the

1909:41:16 most restrictive guidelines. So because we used the

2009:41:20 most restrictive guidelines and loans that were sold

2109:41:22 to whole loan investors or into securities had much

2209:41:28 broader reps and warrants than the most restrictive,

2309:41:29 we were looking -- since we were being the most

2409:41:31 restrictive, we were looking at loans much harder

2509:41:34 than they would be by the investors.


12/91

a6984548-ea1c-495c-8b4e-555





10 (Pages 899 to 902)

Page 899

109:41:35 Q. Okay. And you were -- and those guidelines

209:41:42 were written guidelines, were they not?


409:41:47 THE WITNESS: The QC policies and procedures

509:41:49 were written.609:41:49 BY MR. CALAMARI:

709:41:51 Q. Correct.

809:41:51 A. The guidelines we used were really the GSE

909:41:56 reps and warrants guidelines.

1009:41:58 Q. Is that specified in the Q -- in the QC

1109:42:00 procedures?


1309:42:07 THE WITNESS: I don't know exactly how it's

1409:42:09 specified. I think it is that we talk about using

1509:42:11 the more restrictive guidelines of the GSEs.


1709:42:14 Q. Where did you talk about that?

1809:42:16 A. You know, I -- those documents I have not

1909:42:22 looked at in a very long time. I know that our

2009:42:25 process internally and we discussed in all of our

2109:42:28 meetings and everything that that's how we did it ,

2209:42:30 and that's how we initiated our reviews. I mean, I

2309:42:33 was part of the department. I just can't tell you

2409:42:35 exactly where it's written down.

2509:42:37 Q. Is there -- was it written down at all?

Page 900

109:42:40 A. I --


309:42:41 THE WITNESS: I can't tell you.


509:42:43 Q. QC department went through internal audit609:42:45 reviews. Is that correct?

709:42:45 A. Yes.

809:42:48 Q. Did internal audit ever indicate that that

909:42:51 was a measurement by which the QC department either

1009:42:57 was or should have been employed?


1209:43:04 THE WITNESS: No.


1409:43:06 Q. Did you respond to internal audit --



1709:43:10 Q. -- from time to time?

1809:43:12 A. If internal audit came in and they had any

1909:43:15 questions, then absolutely.

2009:43:18 Q. And did you in any of those responses say,

2109:43:19 the reason we have high levels of severely

2209:43:23 unsatisfactory loans is that we're measuring to a

2309:43:27 government standard but we're not marketing to a

2409:43:29 government standard?


Page 901

109:43:33 THE WITNESS: I -- I actually don't recall209:43:35 high levels of severe unsats. But I don't recall309:43:38 ever making a statement even similar to that.409:43:41 BY MR. CALAMARI:

509:43:41 Q. Okay. Is it also fair to say that there was609:43:52 a high level of correlation between loans that were709:44:00 repurchased -- I'm sorry. Let me strike that.809:44:03 From time to time, investors would put back909:44:06 loans that had been designated severely1009:44:08 unsatisfactory. Is that correct?1109:44:10 MR. TANDY: Objection.1209:44:12 THE WITNESS: I -- I wouldn't be able to1309:44:14 answer that. I --1409:44:16 BY MR. CALAMARI:1509:44:16 Q. You don't know if a loan that was rated1609:44:18 severely unsatisfactory was ever put back?1709:44:22 MR. TANDY: Objection.1809:44:24 THE WITNESS: I -- you know, I don't know1909:44:26 without looking at data. I mean, I -- I wouldn't be2009:44:29 able to say definitively.2109:44:31 BY MR. CALAMARI:2209:44:31 Q. Okay. So if your -- if you have documents2309:44:36 which refer to the fact that a putback request was a2409:44:39 putback of the severely unsatisfactory loan, that2509:44:44 that doesn't ring a bell to you? You just don't

Page 902

109:44:46 recall that ever happening?209:44:47 MR. TANDY: Objection.309:44:51 THE WITNESS: I -- I don't recall that.409:44:52 BY MR. CALAMARI:

509:44:55 Q. Would you have expected that if severely609:45:00 unsatisfactory loans were put back, that they would709:45:02 have been repurchased?809:45:03 MR. TANDY: Objection.909:45:06 THE WITNESS: I mean, that's a hypothetical1009:45:07 question, so it's very difficult for me to answer.1109:45:10 But I would say no, I wouldn't expect it.1209:45:13 BY MR. CALAMARI:1309:45:28 Q. Did Countrywide expect that that would1409:45:29 happen?1509:45:30 MR. TANDY: Objection.1609:45:32 THE WITNESS: I mean, I can't answer for1709:45:33 Countrywide.1809:45:35 BY MR. CALAMARI:1909:45:56 Q. Now, you said that some changes were made2009:46:05 between October '07 -- or let's strike that.2109:46:13 You said that changes in how things would be2209:46:16 done started to be made in October of '07.2309:46:22 MR. TANDY: Objection.2409:46:23 BY MR. CALAMARI:2509:46:23 Q. Is that correct?


13/91

a6984548-ea1c-495c-8b4e-555





11 (Pages 903 to 906)

Page 903

109:46:24 A. No. We started to discuss changes because

209:46:27 Rod Williams was going to leave and Rod was the

309:46:31 chairman of the loss exposure review group. And with

409:46:34 his departure, you know, we needed to talk about how

509:46:37 we were going to handle repurchase approvals going609:46:39 forward.

709:46:40 Q. Okay. And what did you discuss about how

809:46:46 you would handle the purchases -- repurchases going

909:46:48 forward?

1009:46:51 A. Well, we talked about the process that we

1109:46:53 wanted to use. Because Rod was the chair, there were

1209:46:58 other members on the committee that were what we

1309:47:03 called voting members. So, I mean, the decision, the

1409:47:04 interim decision was made that, after Rod left, I

1509:47:07 would take over as the chair making the final

1609:47:11 sign-off and that the other members would continue to

1709:47:13 be part of the meetings that we held.

1809:47:17 Q. Okay. And were there any other changes you

1909:47:19 discussed?

2009:47:23 A. Not during that time frame, no.

2109:47:24 Q. Did there come a later time frame when you

2209:47:26 discussed additional changes?

2309:47:32 A. We started -- I mean, after Rod left, I

2409:47:33 mean, a lot of discussions were going on because, you

2509:47:35 know, we had to figure out the processes.

Page 904

109:47:37 Also, you know, volumes in repurchases were

209:47:40 increasing and so we had to talk about that as well,

309:47:43 because you couldn't do things necessarily the same

409:47:47 way that we had in the past.

509:47:48 So there started to be ongoing discussions609:47:51 about a process. It was an evolution that took

709:47:54 place.

809:47:58 Q. Were any changes implemented in the period

909:48:00 of -- other than the one you mentioned, the Rod

1009:48:02 leaving and you taking over, were any changes

1109:48:04 implemented between October of 2007 and February of

1209:48:13 2008?


1409:48:22 THE WITNESS: Not that I recall.


1609:48:24 Q. Okay. And in February of 2008 as we

1709:48:28 discussed before, the merger with Bank of America was

1809:48:31 announced and you began to participate in discussions

1909:48:36 with Bank of America people. Is that fair to say?

2009:48:39 A. Not in February, I don't believe. I think

2109:48:42 it was later. But I did start having meetings with

2209:48:45 them, yes.

2309:48:45 Q. And were any changes to the processes and

2409:48:50 procedures implemented during the period that you

2509:48:53 were having meetings with them?

Page 905


209:48:57 THE WITNESS: No. I mean, I continued to

309:48:59 handle the approvals of the repurchases.


509:49:01 Q. And did you talk with people at Bank of609:49:03 America about proposed changes to the process and

709:49:06 procedures?

809:49:08 A. No.

909:49:08 Q. Was there a transition committee set up to

1009:49:25 deal with the plan for transition of the two

1109:49:31 businesses?


1309:49:34 THE WITNESS: Well, I mean, I know that

1409:49:35 there were transition teams, but I was not part of

1509:49:39 those. I have no idea --


1709:49:41 Q. Okay.

1809:49:41 A. -- how they operated.

1909:49:43 Q. Did you report to someone that was a member

2009:49:44 of the transition team?

2109:49:48 A. No.

2209:49:48 Q. Do you know which transition team was

2309:49:49 responsible for the integration of quality control?



Page 906


209:49:55 Q. Do you know which transition was responsible

309:49:57 for the integration of investor audit group?


509:50:02 THE WITNESS: No.609:50:03 BY MR. CALAMARI:

709:50:04 Q. When do you recall any further changes being

809:50:07 implemented to the processes by which the investor

909:50:14 audit group processed repurchase agreements --

1009:50:18 repurchase claims? I'm sorry.

1109:50:24 A. There was a change as far as the management

1209:50:27 of the investor audit department. So once that

1309:50:30 change was being discussed, which was latter part of

1409:50:34 '08, you know, we started talking about how that

1509:50:36 might impact, you know, with the new manager. It was

1609:50:41 a legacy Countrywide manager that was coming over.

1709:50:44 But really what it was is more not a change

1809:50:49 in how we were going to handle repurchases, but we

1909:50:51 were looking at how we could facilitate them, you

2009:50:54 know, given the increase in volume. The process

2109:50:58 per se as far as how we reviewed them and handled

2209:51:01 them didn't really change through any of this.

2309:51:04 Q. So the investment auditor group remained in

2409:51:10 place throughout 2008?

2509:51:10 A. Yes.


14/91

a6984548-ea1c-495c-8b4e-555





12 (Pages 907 to 910)

Page 907

109:51:14 Q. And LERC or LERG, depending on which

209:51:18 initials are used, remained in place throughout 2008?


409:51:23 THE WITNESS: It -- the process remained in

509:51:26 place.609:51:27 What happened is, instead of having a

709:51:29 monthly meeting in Calabasas with Rod, I had a

809:51:34 meeting with the voting members in my office and we

909:51:38 went through loans.


1109:51:41 Q. Where was your office?

1209:51:43 A. It was in Westlake Village. And I held the

1309:51:45 meetings weekly instead of monthly.

1409:51:48 Q. And were records kept of those meetings?

1509:51:52 A. No, because it was a working group. Our

1609:51:55 records were the decisions that we made on the loans,

1709:51:57 our author- -- LERC -- what we called LERC

1809:51:59 authorizations.

1909:52:00 Q. Okay. Were there any other members of LERC

2009:52:06 or LERG during 2008?


2209:52:15 THE WITNESS: It wasn't -- it wasn't a

2309:52:18 committee, so, I mean, there weren't really members

2409:52:20 because it's not a committee. But the voting parties

2509:52:24 were still the same that they had been.

Page 908


209:52:29 Q. So informally they continued to operate in

309:52:31 the same way that they operated previously formally?


509:52:36 THE WITNESS: We did continue to have609:52:38 meetings and review loans just as we had in the past.

709:52:41 It just wasn't, you know, the same kind of meeting

809:52:44 that it had been. It was more -- done more often.


1009:52:49 Q. And you mentioned a change in management in

1109:52:52 this period. Can you tell me what that change was?

1209:53:00 A. There -- quality control and investor audit

1309:53:02 reported to the same manager. There was a decision

1409:53:06 to -- made to separate the two. And one -- quality

1509:53:11 control stayed with the manager, and the investor

1609:53:13 audit repurchase department went to a new manager.

1709:53:15 Q. And that was in 2008?

1809:53:17 A. No. The discussions started -- I don't

1909:53:20 believe it actually happened until early '09.

2009:53:25 Q. And who was the manager that they reported

2109:53:27 to when it was -- when they reported to the same

2209:53:31 manager?


2409:53:32 THE WITNESS: Hans Rusli.


Page 909

109:53:36 Q. And what was his title?

209:53:39 A. Let's see. Well, at Countrywide, he was an

309:53:45 executive vice president on credit risk management.

409:53:52 And then Bank of America, I know the title was SVP,

509:53:55 but I can't tell you exactly what the rest of it was.609:53:59 Q. Same person but different title?

709:54:00 A. Right.

809:54:01 Q. Who did he report to?

909:54:06 A. Mark Miller.

1009:54:07 Q. And what was Mark Miller's role?

1109:54:11 A. He was a credit risk manager.

1209:54:20 Q. What's his background?

1309:54:27 A. I mean -- I mean, he was legacy Countrywide,

1409:54:30 had been there a very, very long time in

1509:54:33 credit-related fields, but I cannot tell you his

1609:54:35 background.

1709:54:36 Q. Now, after -- and you said there came a time

1809:55:14 when the investment audit group and the quality

1909:55:19 control group split?

2009:55:22 A. From underneath the same manager, yes.

2109:55:24 Q. Right. Who was the manager that the quality

2209:55:26 control group reported to?

2309:55:27 A. The -- after the split? Or --

2409:55:31 Q. Yes, after the split.

2509:55:32 A. That was Hans Rusli.

Page 910

109:55:33 Q. Okay. And who was the manager that the209:55:37 investment audit group reported to?309:55:38 A. Mike Schloessmann.409:55:39 Q. Okay. And Mr. Schloessmann, who did he

509:55:42 report to?609:55:43 A. Oh, wow. You know, I'm sorry, I just --709:55:56 there's been a lot of changes.809:55:58 Q. Did -- did they ultimately -- was there some909:56:02 greater department that you were ultimately all part1009:56:05 of, whether it was investment audit or quality1109:56:08 control?1209:56:09 MR. TANDY: Objection.1309:56:15 THE WITNESS: We didn't -- I know they1409:56:16 didn't report up through the same management1509:56:18 structure.1609:56:18 BY MR. CALAMARI:1709:56:19 Q. That's pretty much what I'm asking.1809:56:20 A. Yeah. No.1909:56:21 Q. I'm trying to find out where those2009:56:22 management structures led.2109:56:24 A. I mean, Hans Rusli reported up through a2209:56:27 different mana- -- senior manager up to Barbara2309:56:30 Desoer at the bank once that happened --2409:56:32 Q. Okay.2509:56:32 A. -- once the merger happened. And --


15/91

a6984548-ea1c-495c-8b4e-555





13 (Pages 911 to 914)

Page 911

109:56:34 Q. And was that --209:56:34 A. -- Mike Schloessmann reported up to another309:56:37 manager -- oh, gosh, I can't recall. 'Cause there409:56:39 was an interim period before Terry Laughlin came,

509:56:43 but -- and she -- and then he reported, but it was609:56:44 separate reporting lines.709:56:45 Q. Okay. And in terms of those separate809:56:50 reporting lines, did they have separate descriptors909:56:51 as to their group? Was one credit risk and another1009:56:55 one something else, or you don't know?1109:56:57 MR. TANDY: Objection.1209:56:58 THE WITNESS: Yeah, you know, this was a1309:56:59 time of a lot of changes as far as, you know,1409:57:02 figuring out how -- you know, with the -- with the1509:57:06 transition. So, I mean, I -- I cannot tell you.1609:57:09 BY MR. CALAMARI:1709:57:19 Q. After the legal day one, what you referred1809:57:21 to as legal day one, were your repurchase groups --1909:57:31 was the investment audit group combined with a2009:57:34 similar group from legacy Bank of America?2109:57:38 MR. TANDY: Objection.2209:57:41 THE WITNESS: After legal day one, we then2309:57:43 started to transition the two departments in2409:57:48 together.2509:57:48 Again, this was a time where there was, you

Page 912

109:57:51 know, a lot of changes going on. At that point, at

209:57:57 legal day one, I initially did not take on the

309:57:59 repurchase department. I stayed in QC. Another

409:58:03 manager took on the repurchase department. And so,

509:58:08 you know, I wasn't really a party of it until later.609:58:11 So I don't know how much they did prior to me coming

709:58:13 back into the repurchase department.


909:58:15 Q. But throughout that period, you remained

1009:58:17 the -- the LERC person?


1209:58:21 THE WITNESS: Yeah. I was still involved in

1309:58:22 that department as well, and we were transitioning.

1409:58:25 And, yes, I remained the person that could do the

1509:58:28 approvals.


1709:58:29 Q. Okay. And was the new combined department

1809:58:35 given a new name?


2009:58:43 THE WITNESS: Not initially. I mean, it

2109:58:45 was -- you know, investor audit and the BAC

2209:58:50 repurchase department was the BAC repurchase

2309:58:54 department.


2509:58:54 Q. Okay. And eventually when those two

Page 913

109:58:56 entities were fully combined, did they have a new

209:58:59 name or did they just stay the investor audit



509:59:05 THE WITNESS: They are now called -- they're609:59:07 call investor audit.


809:59:08 Q. Still today?

909:59:09 A. They were called -- they're now called

1009:59:13 claims management.

1109:59:15 Q. Okay. When did they start -- become claims

1209:59:18 management?

1309:59:19 A. Gosh. That's a -- that's fairly recent.

1409:59:23 Probably 2010, 2011.

1509:59:27 Q. And although I hate to jump ahead in time

1609:59:38 for one question, I can't resist.

1709:59:41 Is there a reason why it became -- why the

1809:59:49 name was changed to claims management?


2009:59:53 THE WITNESS: It was just felt to be more

2109:59:55 descriptive of what we were doing than investor audit

2209:59:59 people. When you say "investor audit," no one knew

2310:00:02 what you were talking about.


2510:00:03 Q. Okay. Back into the time frame we've been

Page 914

110:00:07 talking about. The combined department was located

210:00:15 in Westlake Village?

310:00:17 A. Yes.

410:00:17 MR. ALLAN: Objection.

510:00:18 MR. TANDY: Objection.610:00:21 MR. CALAMARI: I better rephrase the

710:00:22 question because I just don't know if I made a

810:00:25 mistake.


1010:00:26 Q. Where was the combined department located?


1210:00:31 THE WITNESS: Quality control and investor

1310:00:31 audit were -- for legacy Countrywide were in Westlake

1410:00:38 Village. The quality control departments for Bank of

1510:00:41 America were not located in that facility.


1710:00:44 Q. Once the entities were combined, where was

1810:00:46 the location of the department?


2010:00:51 THE WITNESS: We had various different

2110:00:53 locations. We -- we had the Westlake. We had

2210:00:56 Arizona. We had Brea. We had some in Pasadena.


2410:01:03 Q. So there was no one location that

2510:01:05 constituted the -- the -- if you will, the location


16/91

a6984548-ea1c-495c-8b4e-555





14 (Pages 915 to 918)

Page 915

110:01:10 of the investor audit group?


310:01:15 THE WITNESS: I mean, we had associates in

410:01:18 different buildings. It --

510:01:20 BY MR. CALAMARI:610:01:22 Q. Where were most of the people located?


810:01:26 THE WITNESS: The legacy Countrywide

910:01:27 associates were predominantly in Westlake Village.


1110:01:32 Q. And where were the legacy Bank of America

1210:01:33 people located?

1310:01:36 A. The legacy repurchase department was located

1410:01:38 predominantly in Brea. And the legacy quality

1510:01:42 control was in Arizona.

1610:01:44 Q. Okay. And is that true today?

1710:01:55 A. No. Let me think here. I mean, we have

1810:02:00 more locations than we had then. I mean, it's --

1910:02:03 we've grown and we have other locations. We've got

2010:02:06 four -- there's other locations that have been added.

2110:02:10 Q. And was the Arizona location a former

2210:02:14 Countrywide location?

2310:02:16 A. It was both.

2410:02:17 Q. And do you have any recollection of, at the

2510:02:26 time the entities were combined, how many people were

Page 916

110:02:28 employed in the -- the combined investor audit



410:02:36 THE WITNESS: I -- I do not.

510:02:37 BY MR. CALAMARI:610:02:40 Q. But it is clear that the combined department

710:02:43 included employees from both former Countrywide and

810:02:46 former Bank of America?


1010:02:52 THE WITNESS: There were associates that had

1110:02:54 been formerly employed by both of those legacy

1210:02:57 entities.


1410:03:02 Q. Now, what was your role when you resumed

1510:03:04 working in the repurchase department?

1610:03:09 A. I really went back into my former role of

1710:03:13 investor audit, just handling repurchases from all

1810:03:18 the different entities.

1910:03:21 Q. And did you have a title?

2010:03:27 A. I did. It was SVP audit director.

2110:03:31 Q. And do you recall when that was? That is,

2210:03:44 when you rejoined the investor audit department?


2410:03:50 THE WITNESS: Well, I never fully left

2510:03:52 because we were through transition. So, I mean, I

Page 917

110:03:55 was very involved in both departments.

210:04:00 I -- I think it was like November, December

310:04:02 where, you know, it was sort of decided there was

410:04:05 going to be the formal split and I was going to go to

510:04:08 one group. But through the tran- -- I continued, you610:04:13 know, working with QC. I mean, I still sit in QC

710:04:17 meetings today. It's --


910:04:19 Q. Okay. And that LERC committee continued to

1010:04:24 decide on the ultimate decision as to whether a

1110:04:33 re- -- a repurchase should be approved?


1310:04:39 THE WITNESS: It wasn't a committee. But

1410:04:41 these same parties, myself included, continued to

1510:04:44 review repurchases throughout that entire period of

1610:04:47 time.


1810:04:48 Q. But you didn't keep formal records of the

1910:04:50 meetings?


2110:04:54 THE WITNESS: No. They weren't a committee.

2210:04:55 They were a working group.


2410:04:57 Q. How was the -- the -- if you will, the

2510:05:00 decision to repurchase a loan recorded internally for

Page 918

110:05:07 recordkeeping purposes?


310:05:11 THE WITNESS: We had a database. It was

410:05:14 called PAT. We recorded our approvals in PAT. Also,

510:05:19 at that time, I had LERC authorization that I signed610:05:25 that went over to the wire department.


810:05:28 Q. And when you say you recorded your decisions

910:05:31 in PAT, did you literally do that from the room that

1010:05:34 you were sitting in meeting? Or was there somebody

1110:05:37 who was responsible for entering the information into

1210:05:40 PAT?


1410:05:43 THE WITNESS: It could be either way. We

1510:05:46 could do them during the meeting, just sit there and

1610:05:48 do them on our computers, or we could go after the

1710:05:54 meeting and put them in. There was only certain

1810:05:56 people that could, you know, enter data. But we

1910:05:59 could do it either way.


2110:06:01 Q. And those entries would still be in PAT

2210:06:04 today, I presume?


2410:06:07 THE WITNESS: Yes.



17/91

a6984548-ea1c-495c-8b4e-555





15 (Pages 919 to 922)

Page 919

110:06:09 Q. And if the decision was not to repurchase

210:06:13 but rather to appeal the claim, how would that be

310:06:20 reflected in the records?

410:06:22 A. If we discussed a loan during a meeting and

510:06:26 we determined that we didn't agree with the610:06:28 repurchase recommendation, we would send the loan

710:06:34 back out to the underwriter and indicate in our

810:06:37 comments that we didn't agree with the repurchase and

910:06:40 give them guidance.

1010:06:43 Q. What was the repurchase oversight group?

1110:07:07 A. That was another group, you know, through

1210:07:08 this transition that came into play that was going to

1310:07:16 not make decisions on loans individually but would

1410:07:19 oversee the process, get reporting on what was being

1510:07:24 approved or, you know, in like data. So it was a

1610:07:30 group to oversee the repurchase process.

1710:07:32 Q. Let me just go back one question. You

1810:07:36 mentioned that you would "indicate in our comments we

1910:07:42 didn't agree with the repurchase and give them

2010:07:44 guidance."

2110:07:45 How would you give them guidance?


2310:07:50 THE WITNESS: We would explain to them why

2410:07:52 we didn't agree with their recommendation.


Page 920

110:07:59 Q. Would -- would the information as to why you

210:08:01 didn't agree with their recommendation be recorded in

310:08:08 PAT?


510:08:12 THE WITNESS: It could be. It may have been610:08:15 done via an email notification and then it would be

710:08:20 in the appeal letter that was sent out.


910:08:22 Q. Okay. Were there differences in the -- in

1010:08:23 the information that was recorded in PAT about your

1110:08:26 reasons for disagreement than the information that

1210:08:28 you would send out to the claimant?


1410:08:35 THE WITNESS: No. I mean, if we disagree

1510:08:38 with one, I mean, that would be the basis for our

1610:08:40 appeal.


1810:08:44 Q. Well, what I'm asking is whether there would

1910:08:46 be internal reasons for the decision that could be

2010:08:53 different from the reasons that were communicated to

2110:08:58 the claimant?


2310:09:03 THE WITNESS: I guess I'm a little confused

2410:09:06 on the question. I mean, you know, you have internal

2510:09:08 processes that you wouldn't give to a claimant. But

Page 921

110:09:11 the reason why we think a loan needs to be appealed,

210:09:15 I -- we put that in our appeal. I mean --


410:09:19 Q. Was there information that you gathered

510:09:22 about the appeal -- I'm sorry.610:09:25 Was there information that you gathered

710:09:27 about the -- the loan that was the subject of the

810:09:33 repurchase claim that you would not communicate to

910:09:39 the claimant?


1110:09:44 THE WITNESS: I mean, that's pretty broadly

1210:09:45 hypothetical. I mean, I -- I'm not sure what you're

1310:09:49 asking me. I -- I just really don't know.


1510:10:02 Q. Would you say that you provided the claimant

1610:10:09 all of the reasons and supporting information that

1710:10:14 you gathered that supported your decision to appeal

1810:10:20 the claim?


2010:10:23 THE WITNESS: I mean, if -- if the

2110:10:26 informa- -- we didn't always share everything that we

2210:10:28 got as far as like confidential information. I mean,

2310:10:31 if you had something confidential, there was

2410:10:33 discussions on credit reports and things like that

2510:10:35 where people didn't want to share those, we would

Page 922

110:10:38 reference that document that we obtained information

210:10:41 from a credit report.

310:10:43 So, you know, if it was confidential

410:10:44 documentation that we had, you know, we wouldn't

510:10:46 share something like that. But if we were appealing610:10:51 a loan and we had a reason for an appeal, we're going

710:10:53 to tell the requester why we don't agree with them.


910:10:56 Q. And if there was information you gathered

1010:10:59 that might support the investor's position, even

1110:11:04 though you were going to appeal the loan, would you

1210:11:09 also communicate that information?


1410:11:15 THE WITNESS: I -- I don't think -- I mean,

1510:11:18 I guess I'm -- it's so hypothetical, but I don't

1610:11:21 recall an instance like that.


1810:11:27 Q. In other words, you don't recall ever

1910:11:28 gathering information that -- all right. Let me

2010:11:38 strike it.

2110:11:39 You don't recall ever -- ever gathering

2210:11:43 information that was both positive and negative in

2310:11:47 connection with the appeal -- strike it again. Let

2410:11:52 me try to rephrase this so that it can be understood

2510:11:55 by anybody.


18/91

a6984548-ea1c-495c-8b4e-555





16 (Pages 923 to 926)

Page 923

110:11:56 Do you recall, in handling a repurchase210:12:02 claim, you would do an investigation of the issues310:12:06 set forth in the claim?410:12:07 MR. TANDY: Objection.

510:12:11 THE WITNESS: Part of our process in610:12:12 handling repurchases was to verify what an investor710:12:16 was telling us.810:12:17 BY MR. CALAMARI:910:12:17 Q. Okay. And did the information ever come1010:12:21 back -- and did the results of your investigation1110:12:28 ever include some information that might support the1210:12:33 claim and some information that might suggest1310:12:38 rejection of the claim?1410:12:39 MR. TANDY: Objection.1510:12:44 THE WITNESS: I mean, I think -- and, again,1610:12:46 I mean, it's -- there's not a simple answer here1710:12:50 because, you know, we also have to look. If an1810:12:52 investor does not have a value rep and I had an1910:12:56 appraisal that didn't support the value, that's not2010:12:58 relevant to the claim. I mean, and I'm just using2110:13:00 this as a hypothetical. I'm not saying that2210:13:02 happened.2310:13:02 So there are times where, because of the2410:13:05 contract with the investor, the information isn't2510:13:08 even relevant to the claim. So then I would not, you

Page 924

110:13:15 know, give them a copy of that.

210:13:19 I mean, it's just -- it's so hypothetical,

310:13:20 I'm just -- it's hard to answer something like that.

410:13:24 You have to look at the contracts. You have to look

510:13:27 at what the investor's requesting. You have to look610:13:29 at all the information before you know what's

710:13:31 relevant to that claim.


910:13:32 Q. Well, all I'm trying to find out is whether,

1010:13:35 after you looked at all the information that was

1110:13:37 relevant to the claim, did you pick and choose what

1210:13:40 you would provide to the investor? Or did you give

1310:13:42 the investor all information that was relevant to the

1410:13:45 claim?


1610:13:48 THE WITNESS: If we felt the information was

1710:13:50 relevant to the claim, I believe we would have

1810:13:54 provided it.


2010:13:55 Q. Okay. And you would not have withheld

2110:13:58 information that tended not to support your position.



2410:14:05 Q. Is that correct?

2510:14:05 A. If we believed that information is relevant

Page 925

110:14:10 to the claim, we would provide it. I -- I mean, I

210:14:15 don't know what else to say.

310:14:16 Q. And all you need to say is "yes" or "no."

410:14:20 Even if that information did not support

510:14:22 your position?610:14:23 MR. TANDY: Objection.

710:14:24 THE WITNESS: See, you're trying to make it

810:14:25 too simplistic. Because when I'm looking at a claim,

910:14:28 I'm looking at the claim that comes in. I'm looking

1010:14:33 at what the claimant has come to me for. I'm looking

1110:14:34 at the contract. I'm looking at all the information.

1210:14:35 So when you say a hypothetical like this, I

1310:14:38 can't tell you what's relevant, what's not relevant.

1410:14:41 I don't have any idea what you're talking about me

1510:14:43 having. I just -- I -- it's just not something I can

1610:14:46 answer a "yes" or a "no" to.


1810:14:48 Q. Okay. And you can't answer "yes" or "no" to

1910:14:51 the question of whether you picked and choosed [sic]

2010:14:53 information to give back to the investor?




2410:14:58 Q. No. Okay.

2510:14:59 And you can't answer the question "yes" or

Page 926

110:15:01 "no" as to whether you gave information that

210:15:04 supported your decision but withheld information that

310:15:07 did not support your decision?


510:15:11 THE WITNESS: It seems kind of hard to me610:15:13 that you could have such diverse information. But --

710:15:16 but no, I can't answer that.


910:15:17 Q. You can't answer that "yes" or "no"?

1010:15:18 A. No, because it's -- I guess it's just -- I

1110:15:21 don't know how I could even have one that supports

1210:15:24 and one that doesn't. I mean, that just seems kind

1310:15:27 of --

1410:15:27 Q. Well, here's a hypothetical. You're trying

1510:15:29 to get information about the income, the income of

1610:15:33 a -- a particular borrower, and you get two pieces of

1710:15:39 information that's directly contradictory. And you

1810:15:42 make a decision that the piece of information that

1910:15:45 you have that supports your rejection of the claim is

2010:15:49 the more persuasive of the two pieces of information.

2110:15:53 Do you nonetheless give the investor both

2210:15:56 pieces of information?


2410:16:02 THE WITNESS: I mean, if you've got a full

2510:16:03 doc loan and you have income information, I don't


19/91

a6984548-ea1c-495c-8b4e-555





17 (Pages 927 to 930)

Page 927

110:16:05 know how you're going to have two different income210:16:08 documentations. I just -- I -- I'm just not seeing310:16:12 this.410:16:12 BY MR. CALAMARI:

510:16:13 Q. You can't see that happening?610:16:14 A. No. If I send a verification to the710:16:16 employer and he sends me a verification back, he810:16:19 wouldn't send me two of them.910:16:21 Q. Well, what if you got a -- a statement from1010:16:26 an employer that was contradictory to a pay stub --1110:16:32 MR. TANDY: Objection.1210:16:32 BY MR. CALAMARI:1310:16:33 Q. -- that you received?1410:16:34 MR. TANDY: Objection.1510:16:35 THE WITNESS: If we had written1610:16:37 documentation, our policy was to obtain written1710:16:39 documentation back. I mean, we asked for the1810:16:43 information in writing.1910:16:47 BY MR. CALAMARI:2010:16:48 Q. And I'm asking you, did it never occur in2110:16:51 all of your work and in all of your investigations2210:16:54 that you had contradictory pieces of information that2310:16:56 came back?2410:16:57 MR. TANDY: Objection.2510:16:59 THE WITNESS: I mean, I'm not recalling

Page 928

110:17:02 that.


310:17:04 Q. You can't recall any situation like that?


510:17:07 THE WITNESS: No. I mean, not something610:17:12 that -- I mean, you can have an occupancy where one

710:17:17 says that they live there and one said they didn't.

810:17:19 But you have to look at the preponderance of

910:17:21 evidence. I mean, I've seen that on Fannie Mae loans

1010:17:24 but --


1210:17:25 Q. Okay. Well, that -- that's a good example.

1310:17:27 What would you -- in that question, when you

1410:17:29 looked at the preponderance of evidence, what would

1510:17:31 you supply the investor?


1710:17:35 THE WITNESS: Typically it's the LexisNexis

1810:17:39 and we give them a copy of it.


2010:17:40 Q. Both pieces of information?

2110:17:42 A. It's on the same --


2310:17:43 THE WITNESS: -- pieces of information.


2510:17:44 Q. Okay. All right. We'll come back to this.

Page 929

110:17:50 We were talking about the repurchase

210:17:51 oversight group, and when was that formed?


410:17:57 THE WITNESS: I can't tell you the exact

510:17:59 date. I mean, I don't recall exactly.610:18:00 BY MR. CALAMARI:

710:18:00 Q. Can you tell me the approximate time?

810:18:04 A. I believe '09.

910:18:07 Q. And can you describe again the function of

1010:18:11 the repurchase oversight group?


1210:18:15 THE WITNESS: That department was to oversee

1310:18:17 the repurchase process, you know, all aspects of it.

1410:18:21 You know, handle, you know, bulk repurchases. You

1510:18:26 know, interface with the investor audit department

1610:18:29 and investors. It was, you know, a group that

1710:18:31 oversaw the process.


1910:18:35 Q. And what was their role? Did -- what was

2010:18:39 their result -- role other than overseeing the

2110:18:41 process?


2310:18:50 THE WITNESS: I -- their -- I mean, I don't

2410:18:53 know. They had -- I don't know. I mean, they had

2510:18:55 jobs in addition to that, but I don't know what their

Page 930

110:18:58 role is other than overseeing the process.210:19:00 BY MR. CALAMARI:310:19:01 Q. Did they -- did they have to approve410:19:03 repurchases?

510:19:04 MR. TANDY: Objection.610:19:05 THE WITNESS: Not individual loan level710:19:07 repurchases, no.810:19:08 BY MR. CALAMARI:910:19:08 Q. Did they have to approve repurchases as a1010:19:12 policy matter?1110:19:13 MR. TANDY: Objection.1210:19:16 THE WITNESS: Excuse me, that -- as a1310:19:17 policy?1410:19:19 BY MR. CALAMARI:1510:19:20 Q. Yeah.1610:19:21 MR. TANDY: Objection.1710:19:25 THE WITNESS: No.1810:19:25 BY MR. CALAMARI:1910:19:26 Q. Did they set standards for repurchases?2010:19:30 MR. TANDY: Objection.2110:19:33 THE WITNESS: They could set standards as2210:19:34 far as what we reque- -- required come in as part of2310:19:40 the repurchase request.2410:19:40 THE REPORTER: I'm sorry. I missed words.2510:19:40 We could set standards --


20/91

a6984548-ea1c-495c-8b4e-555





18 (Pages 931 to 934)

Page 931

110:19:40 THE WITNESS: They could set standards for

210:19:41 what we required to come in as part of the repurchase

310:19:43 request, you know, the information that we required

410:19:45 the investor to give us.

510:19:46 BY MR. CALAMARI:610:19:46 Q. Did you have to report to them about the

710:19:48 status of repurchases?


910:19:52 THE WITNESS: A summary-type report.


1110:19:55 Q. And what form did the summary report take?

1210:20:00 A. It was a report that showed, you know, the

1310:20:02 repurchases that we had, the approvals, the re-sends,

1410:20:06 the in-process. It was just a summary of the status

1510:20:08 of the repurchases that were going through our

1610:20:10 system.

1710:20:10 Q. Did that go out on a monthly basis or a

1810:20:13 weekly basis?

1910:20:16 A. The ROG meeting was a monthly meeting.

2010:20:19 Q. And was it purely informational or was it

2110:20:35 also a necessary approval in order to effectuate

2210:20:39 repurchases?

2310:20:41 MR. ALLAN: Objection.

2410:20:43 THE WITNESS: They did not have to approve

2510:20:46 loan level repurchases, no. They could be done

Page 932

110:20:48 without any interaction with the committee.


310:20:50 Q. Okay. And did they ever set standards for

410:20:58 how many loans might be repurchased in any given

510:21:01 period?610:21:01 MR. TANDY: Objection.

710:21:08 THE WITNESS: No. I mean, we had what they

810:21:12 called -- we had a limit that, if we reached that in

910:21:16 a month, we just had to let them know so we could

1010:21:18 increase that limit just so they could keep track of

1110:21:21 how many we were approving.


1310:21:29 Q. What do you mean by "we had a limit that if

1410:21:32 we reached that"? What kind of limit did you have?


1610:21:38 THE WITNESS: It was just, you know, you set

1710:21:39 aside X amount of dollars for repurchases. And when

1810:21:42 you're going over that in a mont

Documents

MBIA Insurance Corporation v. Countrywide Home Loans Inc., Exhibit 70